Respectability Can't Be Purchased

No substitute for a conscience

It's always struck me how corporate and Wall Street miscreants try to buy respectability, using their ill-gotten gains to contribute to political and religious causes.

Randolph K. Pace, operator of the notorious Rooney Pace penny stock firm of the 1990s, gave large sums to Jewish charities in New York City. Bob Brennan of First Jersey Securities also tried to buy his way to respectability, before he was caught and hauled off to jail. More recently, Richard Altomare, the loudmouth ex-boss of Universal Express, was appointed to three committees by the U.S. Chamber of Commerce after a federal judge found his company to be rife with fraud.

So I was not surprised to read that Patrick Byrne, the wacked-out CEO of the Overstock.com corporate train wreck, has been busily trying to buy respectability. The Salt Lake City Tribune reported yesterday that Byrne has been a major bankroller of an effort to force a school voucher program down the throats of the parents of Utah:

A pivotal local contributor to the voucher effort is Utah entrepreneur Patrick Byrne. The founder and head of Overstock.com has pumped $290,000 into the "yes" effort. Byrne has single-handedly financed a Republican legislators' PAC, Informed Voter Project, with a $200,000 donation.

What Byrne does with his ancestral wealth -- Overstock is, of course, bleeding cash -- is his business. But it makes you wonder: Why is a confirmed, fortysomething, childless bachelor, a product of private schools all his life, meddling in a public education system that he has never experienced and knows nothing about--and cares about even less?

I can understand Byrne throwing money away on his nutty "naked shorting" obsession. It was recently reported that Byrne took $120,000 of Overstock's scarce cash and flushed it down the toilet by throwing it at a lobbyist to push his goofy stock market conspiracies. Not including state contributions or bucks to federal candidates, Overstock has pissed away $680,000 on influence-buying since 2005.

It's funny to see Byrne whine about "co-opted regulators," as he is a major "co-opter" -- and an abysmally inept one at that. Remember that this is the same individual who practically got involved in a fistfight with the majority leader of the Utah legislature, and who has called Alabama Senator Richard Shelby a "gangster" and a "cracker." Does he really think his bucks will make people overlook that he has behaved like a spoiled brat?

No surprise here. This is a co-opted regulatory system that swims on a river of corporate cash -- some of it hard-earned, some of it stolen, and some of it, as in the case of Byrne, obtained by selection of the right parents.

But what's with this school voucher thing? After all, it's not as if Byrne has ever shown any interest in kids learning. You don't see him donating his vast ancestral wealth to actual schools or kids or anything meaningful. Since his own education was private schools paid for by his millionaire daddy, ex-GEICO CEO John Byrne, it is not surprising that he would push a program that would undermine the educational system for ordinary working people.

One Utah commentator noted:

One of the most amazing facts about the money being spent on the November voucher referendum was published in this morning's Trib but it wasn't inside the big story, it was at the very end of it:

If all the money spent on the referendum campaign so far went directly to the classroom, it would have:
* Paid to educate 380 Utah public school students;
* OR covered the annual costs of 17 average-sized classrooms;
* OR funded a year's education, with plenty left over, of all 310 students enrolled last year in the Piute School District.
* OR provided 1,143 private-school vouchers, with a mean value of $1,750.

So Byrne's faux political posturing is not only grimy and cynical, but also typical of a man who has a special aptitude for wasting money. Just look at Overstock's financial statements, if you want to see more of that.

Sam Antar provided the best analysis of this phenomenon that I've found, describing how Crazy Eddie tried to buy its way into the good graces of respectable society:

Fraudsters like myself, we build a whole world of respectability around ourselves. I gave money to a lot of charities while I was committing my fraud. My cousin Eddie, he gave a lot of money with his stolen money to a lot of charities. He gave a lot of money to politicians. He built wings on to hospitals and built a big aura of respectability around him and people were in awe of him. This is what fraudsters do.

© 2007 Gary Weiss. All rights reserved.



-----------

Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.