Elgindy, 36, who also went by the name Anthony Pacific, was convicted by a federal jury in Brooklyn, New York, after about four days of deliberations. The trial began in November. The former agent, Jeffrey Royer, 41, was also convicted.
Authorities said Elgindy used inside information obtained from Royer to spread negative publicity about some of the companies being probed through his online newsletter, AnthonyPacific.com. Prosecutors said Elgindy would extort payments from the targets of his vitriol to get him to stop.
“We are gratified that the jury considered the evidence and rendered a just verdict,” U.S. Attorney Roslynn Mauskopf said in a statement.
Royer “violated the trust of the FBI by brazenly partnering with Elgindy to commit a laundry-list of crimes,” Mauskopf said.
“Under the guise of protecting investors from fraud, Royer and Elgindy used the FBI’s crime-fighting tools and resources actually to defraud the public, and to insulate themselves from detection and prosecution,” she said. “Elgindy’s conviction marks the end of his public charade as a crusader against fraud in the markets.”
Short-sellers profit by correctly predicting a stock’s decline. They sell borrowed shares and then replace the stock at a cheaper price, pocketing the difference.
Elgindy and Royer face a maximum of 20 years in prison for their conviction on racketeering, the most serious charge. No sentencing date was set by U.S. District Judge Raymond Dearie.
In all, they were convicted of 11 counts of racketeering and fraud and acquitted of 17 counts, including securities fraud, extortion and obstruction of justice. Elgindy’s lawyer, Barry Berke, said he would appeal.
“The many complex and controversial issues presented by the case will be the subject of a vigorous appeal, particularly given the number of counts Mr. Elgindy was acquitted of,” Berke said.
Elgindy didn’t testify in his own defense. Royer did. The former FBI agent told jurors he shared agency secrets with his co- defendant, though he said he only did it to get more information from Elgindy and subscribers to his Web site.
Elgindy has been in jail since April after trying to board a domestic flight to Phoenix with a connection to San Diego. He was carrying fake identification, $25,000 in cash and $40,000 worth of jewelry, according to court papers.
After his initial arrest in May 2002, federal prosecutors suggested Elgindy may have had advance knowledge of the Sept. 11, 2001, terrorist attacks because he’d predicted beforehand that the stock market would collapse and had tried to sell stock in his children’s trust funds.
Berke said his client worked with a group of “junior detectives” — individual investors who followed Elgindy’s advice and investigated companies — to perform a public service by exposing frauds.
“They were investigating, uncovering and exposing these fraudulent companies,” Berke said in his opening arguments last fall. Elgindy was an early skeptic of technology and Internet companies in the late 1990s, asserting on a Web site, Silicon Investor, that they were overvalued, Berke said.