Two years ago, federal prosecutors cast a sinister spotlight on Amr Elgindy, a penny-stock tipster who was born in Cairo and graduated to the good life in Southern California.

Prosecutors made the headline-grabbing suggestion that Mr. Elgindy had advance knowledge of the September 11 attacks. The allegations were never backed up with evidence and have since receded from the public eye.

The government’s focus on Mr. Elgindy has not receded.

Today, when federal prosecutors begin presenting evidence at Mr. Elgindy’s racketeering trial in Brooklyn, they will detail an eyebrow-raising scheme that allegedly involved FBI agents working as investors around the country to deceive Wall Street.

Prosecutors accuse Mr. Elgindy of running a stock manipulation ring with the help of two FBI agents who allegedly supplied him with confidential information from the agency’s national crime database and from the Securities and Exchange Commission.

In one scheme, prosecutors say Mr. Elgindy, a prominent Wall Street short seller, and several associates used the confidential information to drive down the stock value of targeted companies. Prosecutors say they also extorted the targeted companies, demanding stock and other items.

Mr. Elgindy allegedly used his Web sites – including a subscription e-mail service andInsidetruth.com, which was run by Pacific Equity Investigations, his San Diego business – in the scheme.

Mr. Elgindy is standing trial with a former FBI agent, Jeffrey Royer. Prosecutors say the two men met in early 2000 through one of Mr. Elgindy’s associates, Derrick Cleveland. Cleveland has since pleaded guilty to racketeering charges and may testify today after opening statements in the case.

According to an indictment, Cleveland shared trading profits with Mr. Royer and wired him money, while Mr. Elgindy offered Mr. Royer a high-paying job, which the agent accepted in late 2001.

After he went to work for Mr. Elgindy, Mr. Royer allegedly continued to get confidential information from another agent. According to an indictment, the agents used the databases to monitor federal investigators looking into Mr. Elgindy’s business practices. The second agent, Lynn Wingate, as well as two Mr. Elgindy associates, Dallas-based fund manager Jonathan Daws and California investor Troy Peters, face separate trials.

Mr. Elgindy’s trial, which is expected to last six weeks, will delve into the world of short-selling, an often ill-regarded but legal Wall Street practice in which investors take risky bets that a stock price will drop. If it does, they can reap large profits.

Mr. Elgindy used his Internet sites to identify flaws in companies and pledged to expose penny stock fraud schemes. Mr. Elgindy’s own career was long dogged by legal problems, including run-ins with regulators and a stint as a government informant to avoid jail in a stock kickback investigation. He continuously managed to resurrect himself, however.

In 1997, he showed off his brash style and offered a window onto the world of penny stocks in an appearance on ABC’s “20/20.” Mr. Elgindy described thugs walking into Wall Street offices threatening beatings, and said he had received a bullet in the mail with his name on it.

“That’s not going to happen to me,” said Mr. Elgindy, noting that he carried a pistol.

Prosecutors now accuse Mr. Elgindy of squeezing companies in a less direct way. They say he and his associates used the law enforcement information to identify vulnerable companies in helping to decide what to buy and sell. They say Mr. Elgindy also made false statements to investors and coordinated the release of negative information while urging investors to sell short.

In court records, prosecutors cite one instance in which Mr. Elgindy allegedly used information from Mr. Royer that he received in November 2000 to launch a campaign against an unnamed company.

Prosecutors say Mr. Elgindy advised investors to sell the company’s stock short, writing in his chat rooms: “this is a real scam and a real investigation.” Later, he wrote that the company’s president was “involved in bank fraud case in Boston” and that its business was mired in three investigations – wire fraud, market manipulation, and mail fraud.

In court papers, prosecutors detailed some of the fruits from Mr. Elgindy’s alleged schemes, including a multimillion-dollar home near San Diego and a stable of cars that included a Ferrari, a Rolls Royce, and a Hummer.

In April, U.S. District Judge Raymond Dearie revoked Mr. Elgindy’s $2.5 million bail after federal agents accused him of trying to fly with a false ID that allegedly featured his picture under the name Herbert Manny Velasco.