SAN DIEGO, May 25 (UPI) -- An Internet investment adviser charged with insider trading was being held without bail on a parole violation Saturday after federal prosecutors in San Diego raised questions about a stock-sales order he placed the day before the September terrorist attacks on the World Trade Center and Pentagon.
Amir "Anthony" Elgindy, 34, of Encinitas, faces charges in New York of allegedly taking part in a stock manipulation and extortion scheme with four other people, including two current and former FBI agents. Prosecutors, however, raised questions during a detention hearing Friday about what he might have known about the deadly attacks.
Assistant U.S. Attorney Ken Breen argued that Elgindy, a native of Egypt who now lives in a $2.2 million home in an upscale beach community north of San Diego, had ordered the sale of $300,000 worth of stock in his children's trust fund on Sept. 10, and at the same time had told a stockbroker that he was expecting an imminent drop of some 3,000 points on the stock market.
"Perhaps Mr. Elgindy had pre-knowledge of the Sept. 11 attacks," Breen said. "Instead of trying to report it, he tried to profit from it."
Authorities say Elgindy is a short-seller on the market, someone who profits by borrowing stock shares and selling them in anticipation of a price drop in the near future. Once the stock falls below the sale price, the short-sellers buy up shares to pay back the loan, keeping the difference.
Elgindy was named in a federal indictment unsealed in Brooklyn May 22 that alleged racketeering, insider trading, market manipulation and extortion. The scheme allegedly involved two New Mexico-based FBI agents who fed Elgindy confidential and potentially damaging FBI information about companies that he and two other traders would in turn use to set up short-selling transactions, or to extort money or stock out of the companies involved in exchange for his not posting the damaging details on his Internet tip services, InsideTruth.com and AnthonyPacific.com.
Elgindy has had scrapes with securities regulators in the past. The state of Ohio denied his request for a sales license on 1997 on the grounds he was "not of good business repute."
Breen also told the court that there was evidence that Elgindy had recently wired about $700,000 to Lebanon, possibly indicating he was preparing to flee the country.
U.S. Magistrate John A. Houston agreed to hold Elgindy pending further proceedings in San Diego June 6, however he said he would disregard the speculation about Elgindy's possible knowledge of the Sept. 11 attack. Houston said he was ordering Elgindy to remain locked up because ammunition found in his home was a violation of his parole on an earlier conviction.
Elgindy's lawyer, Jeanne Knight, said the Sept. 10 sell order was placed after the market closed and was routine in nature. She called the prosecution's speculation about Sept. 11 a form of racial profiling aimed at smearing her client.
"This is just like the case of Wen Ho Lee, who the government tried to charge with spying just because he was Chinese," she told the Los Angeles Times. "My client was being watched only because he is of Middle-Eastern descent."
Elgindy, who has been an active supporter of causes aiding Muslim refugees in Kosovo, apparently attracted the attention of the FBI in the days after Sept. 11 when investigators began combing stock market transactions for signs that the terrorists or their supporters had sold off holdings or made deals such as selling short in order to make a quick profit as the stock market fell.
"There is no solid link indicating a connection between Elgindy and Sept. 11," Jan Caldwell, the FBI's spokeswoman in San Diego, told the San Diego Union-Tribune. "Elgindy's name came up during the terror probe."