With the release of the CNBC CYA piece Friday on Anthony Elgindy, the convicted felon, the exodus of his journalist supporters and apologists stage left has not only continued, but expanded. For over 10 years, this coterie of killer clowns has relentlessly attacked victims of illegal short selling manipulation with every slander imaginable. Then, in a single one hour piece, their world came crashing down, along with their co-conspirators at the regulatory agencies who made hay by attacking criminals and the defenseless in the name of hanging the easiest low hanging scalps from their belt.

The CNBC segment of the “American Greed” series, titled “Mad Max on Wall Street” was laughable in its defense of many of Elgindy’s supporters. While it attacked Elgindy personally, it left out little bites like his prior conviction for felony insurance fraud in Dallas before he appeared in San Diego.

Elgindy was a former pump and dump broker for the notorious Blinder, Robinson (known in the trade by the not so affectionate name “Blind ‘em and Rob ‘em”) in Denver, before he moved on to another bucket shop where the commissions were greater in Dallas. When he saw both these firms go under to regulatory and criminal findings, he astutely morphed himself into a short seller, one who postured himself as being only concerned with outing criminal pump and dump stocks like he had previously lived off of.

He opened a site called Anthony@investigations, on the Silicon Investor Board, which he morphed into Anthony@Pacific as he gained more traction and subscribers to his shorting service. He and his cohort would hit some 4000 companies, pretty much without discrimination, wrecking more than 2200. Many deserved such attention, but as many more did not. When Elgindy put his pack of wild dogs on a small company, they would be unable to find the resouces to defend themselves.

Milberg, Weiss would sue for the companies’ D&O Insurance policies if they had any, the SEC would be “tipped” about the fraud at the company (whether it existed or not), paid bashers would bury message boards with slanders of everything about the companies, legitimate business opportunities of the target companies would be eviscerated by wholesale attacks on the potential business partners, the SEC would open investigations on the company, its management, its financiers, and so on and so on, ad infinitum. By involving an FBI agent and his friends, Elgindy would gain access to insider information that could be used in an adversarial way against the companies. This last decision had more to do with the 11 year sentence to prison he received than anything else he did.

This was a bad week for bad people. Preceding the National Inflation Association’s blast that tax revenues equal to 100% of all income could no longer pay for our Federal Government on a coverage basis, the bankruptcy examiner revealed that Lehman was bankrupt for months before it actually filed, hiding its conditions with accounting technicalities, while Dick Fuld and his CFO gave Sarbanes-Oxley certifications to their financials they knew were false and misleading. Some might forget that one major media “Guru” touted the purchase of Lehman for three consecutive days prior to their bankruptcy filing, vastly benefitting his short seller friends who were raiding Lehman, while he described the Lehman stock as “the stock buying opportunity of a lifetime”.

This “Guru” described above had said for years that illegal short sellers provided a necessary function to the markets, forcing it to be more efficient, while at the same time increasing overall market liquidity. He advocated the validity of the argument for “Strategic” failures-to-deliver as being legitimate. So where is he now on these subjects? He has completely reversed field, now opposing (along with many other of his previous journalistic supporters who mouthed similar opinions) naked short selling. He peers used an interesting tactic throughout the last 10 years, repeatedly trying to confuse investors by mixing descriptions of the legal short selling of the previous 70 years with the new naked shorting ploy, in which no stock was ever borrowed.

The SEC produced shamelessly fraudulent and misleading articles supporting its positions that short sellers acted as a kind of unregulated policeman for smaller stocks. They produced highly prejudiced, pre-determined outcome economic studies on the impact of short selling to support their actions. It took the raids on Bear Stearns, Lehman, Merrill and Citigroup to take the wind out of their sails a bit, along with the disclosure the Bernie Madoff’s “pocket” broker-dealer was 5 to 10% of total market sales. Even then, they systematically refused to admit their errors and disgracefully conflicted positions on short selling.

I would estimate that about half of all journalists who denied naked short selling’s very existence for years are now saying that it is bad for markets, and for US markets in particular. They attempt now to “Revise” history, so that their previous positions supporting illegal short sellers’ very methods, motives and means would be lost in the maw of coverage, and the defective short term memory of American investors and markets. I think that this will not happen quite as easily as they would wish it. I saw this same kind of revisionist history created on the “First Progressive”, President Woodrow Wilson, with regard to his support of Fabian Socialism, Eugenics, opposition to the vote for Women, and the support of the catastrophic Treaty of Versailles, which became the foundation for the Second World War.

Their attacks on and slanders of people ranging from Patrick Byrne, to Overstock, to Fairfax Financial, to Eagletech Communications, Viragen, Sedona Corp, Nanopierce, and more, much more, including me, won’t just evaporate. Our Courts and Judges have determined to repeatedly shield the SEC from its own venality, incompetence and arrogance, the most disgraceful being the behavior of the 2nd Circuit Courts. The SEC’s own whitewash of its malfeasance in protecting Bernie Madoff was an appalling disgrace. Its protection of the manipulators of Bear and Lehman placed the priority on shielding the manipulators, rather than facing and fixing our markets so that such manipulation could never again damage individual investors.

Many people throughout our private and public sectors are responsible for the destruction of hundreds of billions of dollars in value, and the decimation of our markets on a level unprecedented since the 1929 Raid, and, most probably, the way of life we have known for most of our history. They must pay, and I mean with everything they have including their freedom. It stops here, or the Devil will take the hindmost.

– From “Front and Center”, by C. Austin Burrell –

I was informed this evening that the CNBC Series “American Greed” will air a 2 hour special on the notorious short seller and convicted felon Amir “Anthony” Elgindy. Elgindy was the operator of the most notorious criminal short selling syndicate of the last decade, known by several names, including “Anthony@Pacific”, etc. After being arrested in early 2002, and being released on bail, Elgindy was caught trying to fly from New York’s Islip Airport back to San Diego, in possession of $40,000 in cash, and more in precious jewelry, along with phony passports with different names on them from his own.

While Elgindy was operating, he attacked thousands of companies, 2200 plus, with impunity and aggressive arrogance. Working with lawyers specializing in suits for Directors and Officers liability insurance, paid bashers, pay for play journalists, NASD (now FINRA) boiler room broker-dealers, PIPES financiers, bloggers and hedge funds short sellers to destroy and preferably bankrupt his target companies.

His syndicate eventually grew to over 650 members, including many of the biggest hedge funds, law firms and more, all in turn supported by the SEC, FINRA, and other regulators. His activities attracted the partnerships of Milberg, Weiss, then the most successful law firm in the country, on both of the US Coasts, the SEC, FINRA, the DOJ, and many more, including firms specializing in producing negative research reports on companies his syndicate had targeted for short selling raids.

The tactics he employed were classic manipulation. Most frequently his network would “tip off” him to a potential company to be targeted, particularly where there was sufficient market capitalization to make it very, very profitable to rip them off. He would generally establish his position, then go out with his alert to his subscribers describing what he thought the shorting opportunity was, with them acting in concert with him to simply overload the market with supply of stock, thereby driving the Company’s stock into the ground. With their stock suppressed, financing became irrationally expensive and dilutive. More often than not, the companies would have to throw in the towel, selling out at an enormous discount, deregistering or bankrupting.

Elgindy loved to see his targets bankrupt. He knew from some of the more arcane rules of FASB’s GAAP accounting that if a short seller’s target deregistered or bankrupted, they didn’t have to cover their short sale. That made the proceeds of their short sale tax free, since there would be no revenue recognition event.

Elgindy came from what some objective minds would call a colorful background. A convicted felon for insurance fraud in Texas in the late 1990’s, he appeared in San Diego a couple of years later, reincarnated as at short selling guru. He had the support of a network of vermin who would do anything for him and his contacts, particularly touting his ideas to the public. In general, that network interfered with contracts of the target companies, slandered (sometimes with cause) senior management, tore up boards with his postings on his Silicon Investor Board, and on the companies’ Raging Bull or Yahoo Finance boards for public inquiry and exchange on the companies, or worse. His network included major journalists, major hedge fund operators, ruthless lawyers who did not blink at breaking the law, and regulators only looking for scalps, able to ignore his criminal past.

The worst of this story includes him trying to dump his childrens’ College Funds on 9/10, a fact his trial judge found to be too prejudicial, to personal attacks and death threats against his targets, their managements, and their investors. He would do or say anything to insure his shorts were profitable, and I mean anything.  When the SEC and FINRA were informed of his tactics and manipulations, they did the worst thing possible. Rather than focus on those issues of misconduct, or protecting the companies’ shareholders, they focused instead on their “Scalp” count over anything else, how many cases they could make against the target companies.

Mel Weiss would use “Proto-plaintiffs” over and over again, eventually facing a felony conviction for his misbehavior, and doing 33 months in a Federal prison along with being disbarred.

The DOJ promised the assembled victims of Elgindy many more indictments shortly after his conviction, but, repeating a pattern, they did nothing, but wait for the civil claims statute of limitations to run out. They were more interested in protecting the Courts from the potential burdens of thousands of lawsuits involving million of investors for losses in the hundreds of billions. Someday, they will have to explain their behavior. They now promise 5000 indictments for various financial fraudsters. If they don’t include all types of bad actors supporting Elgindy on every level, this will be their figurative Waterloo.

The Elgindy pack emulated the behavior of a pack of wild dogs on a hunting scent. The typical victims did not have the resources or assets to defend themselves against such a rabid pack, one that controlled the message that went out on MSM, with the cooperation and support of our regulators. This is a miss-conduct that should have ended the SEC by itself. Maybe we will get lucky yet. The SEC and FINRA have a new problem also of their own making, one Bernard Madoff. He was never as big as our financial markets short seller thieves, but he injured people with influence and proprietary personal media access that he could not control, particularly not from a Federal Prison. Maybe someday, we will find out how he was allowed on a computer to remotely manage his blog and websites with the help of his friend and supporters, including Jeffrey Mitchell and Floyd Schneider, among others.