Web Meister and Short-Seller Anthony Elgindy Indicted

Anthony Elgindy -- a short-seller and founder of investment Web sites InsideTruth.com and AnthonyPacific.com -- was indicted Wednesday for allegedly manipulating stocks by trading on confidential information obtained from FBI databases.

The U.S. Attorney's office in Brooklyn indicted Elgindy on charges of racketeering, insider trading, manipulation, extortion conspiracy and obstruction of justice.

Four others, including a current and a former FBI agent, were indicted as well.

The indictment alleges that Elgindy traded on material non-public information obtained through FBI sources about companies whose stocks he was short or considering short-selling.

According to the indictment, Elgindy used the information in buying and selling decisions and also allegedly disseminated it over the Internet to short-sellers.

Allegedly, Elgindy's paid subscribers would get the information first, so that they could position themselves to profit if the market reacted to the public release of the information.

Prosecutors also allege that Elgindy and others extorted cheap or free shares of stock from insiders of publicly traded companies, in exchange for agreeing not to short or speak negatively about them.

Elgindy allegedly used confidential information to decide whether the companies were susceptible to extortion, based on the premise that companies in peril would be disinclined to complain.

Separately, prosecutors charge that Elgindy used confidential information from the FBI to find out about a grand jury investigation of him, which began in October 2001.

On Tuesday, Elgindy and the others indicted were arrested in various states. The charges could carry a maximum of 20 years in prison. Elgindy's lawyer couldn't be reached for comment.