Judge in Stock Adviser's Trial Bars Testimony on Terrorism

New York Times
By Eric Dash
November 9, 2004

For five days, jurors have seen dozens of e-mail messages, a litany of Internet chat room logs and countless company reports as federal prosecutors presented their conspiracy case against Anthony Elgindy, the San Diego stock adviser accused of obtaining illegal information from an F.B.I agent to manipulate the stock market.

But they will not hear evidence supporting an assertion that prosecutors once made suggesting that Mr. Elgindy might have had advance knowledge of the Sept. 11 terrorist attacks, a judge said yesterday.

The matter came up in the fourth full day of testimony in United States District Court in Brooklyn. Derrick Cleveland, a former business associate of Mr. Elgindy who is now a government witness, was asked by an assistant United States attorney, Kenneth Breen, about a mid-September 2001 F.B.I. investigation into Mr. Elgindy. When Mr. Cleveland responded that the investigation was related to "terrorism," Judge Raymond J. Dearie brought the hearing to a halt.

"This case has nothing to do with terrorism," he said to the jury in a planned set of instructions. "You will hear no evidence that Mr. Elgindy or others were involved in 9/11."

Mr. Cleveland was allowed to continue with his testimony, recounting how he learned that Mr. Elgindy was a subject in a criminal investigation. Mr. Cleveland said that Jeffrey A. Royer, an F.B.I. agent who was the source of that information and a defendant in the case, told him that investigators were looking into $6 million that Mr. Elgindy had liquidated from two brokerage companies, Charles Schwab and Salomon Smith Barney, shortly before Sept. 11.

Mr. Royer also relayed information that the government was examining the money Mr. Elgindy gave to Mercy International, which Mr. Breen described as a "Middle Eastern charity."

Mr. Royer promised to "keep an eye" on the case, Mr. Cleveland testified, "and as new things came out, he would let me know."

The judge's comments emerged from a 25-minute discussion early yesterday between the prosecutors and the lawyers for the defendants before the trial resumed, and sought to resolve months of legal wrangling.

In public reports and in court, Mr. Elgindy's lawyers have argued that there is no basis for suggesting that their client had ties to terrorism.

But in May 2002, Mr. Breen argued in a bail hearing that the decision of Mr. Elgindy to sell $300,000 in stock on the afternoon of Sept. 10 might suggest that he had "preknowledge of Sept. 11 and rather than report it he attempted to profit from it."

An F.B.I. spokesman said yesterday that "no evidence was found about any individual" to support that assertion. The judge's comments come a week into a trial on securities fraud. Mr. Elgindy is accused of having published negative information on several Internet chat rooms about small-capitalization companies to drive down their stock price. The information had been obtained by Mr. Royer from confidential government databases.

Mr. Elgindy also faces extortion and obstruction of justice charges related to the stock-selling arrangement.

 

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