I'm fascinated on several levels with the
libel suit that was brought against Overstock.com CEO Patrick Byrne last week by Ali Nazerali, a Vancouver stock promoter. This could easily be a crushing blow for both Byrne and his libel factory, the Deep Capture website that he created in 2007 to spin conspiracy theories and stalk his critics. But that's just one reason I'm fascinated.
It's also an example of what happens when you combine conspiracy-theory paranoia--as practiced by Byrne's employee Mark Mitchell, a disgraced former Columbia Journalism Review columnist--with warmed-over investigative reporting by real journalists.
Mitchell dragged in Nazerali as part of his preexisting agenda, which was to prove that there is a kind of comic-book global conspiracy that resulted in Al Qaeda joining forces with the Mafia to sabotage the world markets in 2008. That's part of Byrne's quasi-libertarian ideological conviction that Wall Street banks aren't to blame for the financial crisis (except to the extent that they criticize him).
So here's what happened:It seems that two respected financial journalists, Chris Byron and Lee Webb, had written a lot about Nazerali a few years ago, Byron in Red Herring and Webb in Stockwatch. (Ironically, Webb himself has been smeared by Byrne's website; see comments.)
Here is an example of the work these two reporters have done on this guy, most of which is long offline.
It's good work but, well, old. So what Mitchell did, to make it new, was to make stuff up, irresponsibly linking Nazerali to Al Qaeda, the Mafia, and the nonexistent terrorist conspiracy to take down the U.S. markets. (It's not the banks, you see, it's
them.)
I must say that in three decades in journalism I have never seen a more egregious case of libel by anyone. As I pointed out in a
post on some of Mitchell's earlier "work" a couple of years ago, he is incredibly sloppy on basic facts, and just simply makes stuff up. His tenure at CJR was also a disaster; see
here and
here for a sampling.
For example, Mitchell contended that a certain person in charge of stock clearing at Penson Financial was a top exec at "Adler Coleman, best known for being the clearing firm to the Genovese Mafia family." In fact he was not in charge of stock clearing for Penson and it was ridiculous to say that Adler Coleman cleared trades for a Mafia family. According to
my reporting for BusinessWeek in 1996, which Mitchell naturally didn't credit, one of Adler's clients, Hanover Sterling, had ties to the Genovese crime family. But it's absurd to claim that Adler cleared directly for a crime family, or to associate Adler with a crime family when most of the officials there probably had no idea of the mob involvement.
Nazerali got the same treatment from the incredibly inept Mitchell, and now Byrne is going to have to pay a few million bucks to make him go away. This is a good example of Mitchell's technique, which is to warm over the work of real reporters, embellish and make stuff up. The person he targeted at Penson could have sued for libel for this ridiculous fabrication but didn't, as is typical for most of Deep Capture's victims -- until Nazerali came along.
Apparently it never occurred to Byrne that he could be sued for libel, and in Canada, even though Nazerali sued Red Herring for libel, in Canada.
This decision in the case does not bode well for Byrne, though I would hesitate to draw any conclusions from that.
What I do know is that no matter the outcome of the previous suit, won, lost or settled (the case never came to trial), this time Nazerali has a winner. Unlike Byron, Mitchell is not a journalist but a parody of one. And he is sued in a jurisdiction that is almost ridiculously favorable to plaintiffs, as evidenced by the court order
shutting down Deep Capture.
What this means is that Byrne's goose is cooked, and he knows it, if this case is heard on the merits.
He talked bravely about "going a few rounds" with Nazerali in a message board post that
violated the court injunction against such statements. But unless he is completely demented -- a possibility that can't be completely excluded -- he knows that this case will be a loser for him. His boy Mitchell will be roasted like a Peking Duck if it were to ever to come to trial, and in his moments of clarity he may actually realize that.
The bottom line is that Byrne is going to work diligently to get this case thrown out of court as soon as possible on technical grounds, his posturing to the contrary notwithstanding. Except for that message board post, you can expect nothing further from Byrne on the suit or Nazerali. I think the libel suit explains Byrne issuing a press release, obediently picked up by the Salt Lake City papers, on a routine delay in his suit against Goldman Sachs and Bank of America.
It's the coward's way out, of course. But it's the only path that makes logical sense -- especially if Overstock itself gets dragged in. Someone has called his bluff, and Byrne simply cannot afford to fight this one for the simple reason that he will lose.
Byrne has only no choice but to run. The only question is whether the Canadian court will let him.
© 2011 Gary Weiss. All rights reserved.
------------------------------
AYN RAND NATION: The Hidden Struggle for America's Soul, will be published by St. Martin's Press on Feb. 28, 2012.
Click here to pre-order the book from Amazon.com, and
here to pre-order from Barnes & Noble.
Labels: Deep Capture, Mark Mitchell, Overstock.com, Patrick Byrne
