LOL "In the criminal court case, prosecutors acknowledged that most of the companies that Elgindy attacked were scam operations."
Encinitas-based stock guru intends to appeal
By Dean Calbreath
STAFF WRITER
June 20, 2006
Encinitas short-seller Anthony Elgindy was sentenced to more than 11 years in jail yesterday for manipulating stocks of small companies he was investing in.
Elgindy, who was found guilty in federal court in New York in January 2005 of securities and wire fraud, conspiracy and extortion, also was ordered to forfeit $1.5 million.
Eric Tirschwell, Elgindy's lead attorney, declined to comment on the sentencing but said his firm had told U.S. District Judge Raymond Dearie that it intended to appeal.
Elgindy has been in jail since April 2004, when he tried to use fake identification to board a flight to San Diego from New York – a flight that would have violated his bail agreement.
His two years behind bars will count as time served, shaving off time from yesterday's 135-month sentence.
Elgindy was found guilty 17 months ago of using insider information provided by then-FBI agent Jeffrey Royer to spread negative publicity about public companies through his online newsletter AnthonyPacific.com. Elgindy then engaged in short-selling stock in those companies – essentially betting that their share prices would go down after the negative information was released.
In addition to short-selling stocks on inside information, he was convicted of extorting payments from some companies to buy his silence.
Elgindy, who pleaded guilty to bail-jumping and using a false ID, has steadfastly denied doing anything else illegal.
“The prosecutors have portrayed me as a bad man who sought to hurt average people, and it is so sad because nothing could be further from the truth,” Elgindy wrote to Dearie in March.
In yesterday's hearing, he asked Dearie for leniency, but Dearie was not impressed.
“As intently as I listened, I heard not one word of genuine remorse,” Dearie responded. “I was so disappointed.”
Elgindy began investing in stocks in 1988, after briefly attending USC and San Diego State University.
Elgindy's career path took a turn in 1995, when the firm where he was working – Armstrong McKinley & Associates – became the target of a federal sweep of San Diego stock brokerages.
To avoid trial, Elgindy spent 16 months as an FBI informant, wearing a wire in conversations with his then-employer, Melvin Lloyd Richards, and co-workers who were making money by peddling worthless stocks through a network of boiler-room brokerages.
Elgindy's testimony was key to the government's conviction of Richards and several of his confederates. Assistant U.S. Attorney Jasmine Saide wrote that “the government could not have made its cases” without his help.
After the Richards case, Elgindy began ferreting out scam stocks and exposing them with his now-defunct blogs, Dear Anthony, AnthonyPacific and InsideTruth.
Elgindy made millions of dollars by identifying overpriced stocks and short-selling their shares.
“My trading, my timing, my skills at dissecting financial and news announcements for hidden clues and fraud are all blessings that I cherished and guarded,” Elgindy said in his letter to the judge.
Elgindy and his fellow bloggers bought stock in the companies and then slammed the companies on blogs and e-mails in often scatological terms, poking holes in their financial statements and news releases.
As the stock prices fell, Elgindy and other short-sellers reaped the benefits.
Elgindy made enough money to buy a $2.2 million estate in the Encinitas hills as well as a collection of cars that included a Humvee, Ferrari, Bentley and Jaguar.
In the criminal court case, prosecutors acknowledged that most of the companies that Elgindy attacked were scam operations. But they said he improperly manipulated their prices and that he used confidential information in his blogs, obtained from Royer, the FBI agent.
Elgindy, however, continues to deny that he made any money based on information that Royer gave him.
Royer was found guilty of conspiracy, securities fraud and obstruction of justice in January 2005 and is scheduled to be sentenced July 28.
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