Wednesday, February 28, 2007

The Problem With Planting Spyware

(Updated 3/2/07)

The potentially troubling legal issues facing Overstock.com and Judd Bagley, its director of social media, are illustrated by a case that received some attention today involving MySpace.

According to a Newsday article on the subject,
Shaun Harrison, 19, of Ronkonkoma, and Saverio Mondelli, 20, of Oakdale, were given three years' probation for illegal computer access. Each had faced up to nearly 4 years in prison.

Harrison and Mondelli . . were offering a means to acquire e-mail addresses and Internet protocol addresses of users, prosecution said.
Another article adds further detail:

The popular MySpace social-networking site — where people create elaborate profiles and personalize them with photos, music and video — is supposed to offer anonymity to visitors who browse the pages.

But Harrison and Mondelli's program collected e-mail addresses and Internet Protocol addresses, prosecutors said. Such information could have been used by stalkers trying to locate MySpace users, said Deputy District Attorney Jeffrey A. McGrath.

Hmmm... does this sound familiar? As in, for instance, all the instances of spyware-planting uncovered by Internet sleuth "ScipioAfricanus" (see his blog here and items in my blog tagged "spyware").

And then we have this boast by Bagley on the Investor Village message board:

"The cool thing I figured out was using ActiveMeter on remote sites. Maybe its been done before (In fact, I'm sure it must have) but this iteration was developed independently by me and you have no idea the insights it has yielded."
Guess it was done before.

As recently as five days ago, Bagley pointed the finger at himself yet again, bragging about "IV traffic data gathered by those who did the gathering" -- an obvious reference to purloining IP addresses from people reading posts on InvestorVillage. That kind of data is legitimately gathered by people running websites, whether it be IV or MySpace, but not by third parties like Bagley or those two MySpace users. (IV, typically, did nothing in response to this latest outrage.)

Sure, slipping codes into message board posts to gather data on puters comes in handy when you're running a smear campaign -- you use 'em to spin fairy tales, as Bagley did for Overstock.com's antisocialmedia.net corporate smear site. But there's a wee problem -- it's called the "penal code," at least in California.

Here's the press release that was issued when the two MySpace guys were arrested last year. Note in particular the reference to Sections 502(c) (1) and 502(c) (2) of the California Penal Code.

Section 502 (c) (2) says it's a crime when someone:

Knowingly accesses and without permission takes, copies, or makes use of any data from a computer, computer system, or computer network, or takes or copies any supporting documentation, whether existing or residing internal or external to a computer, computer system, or computer network.
Prosecutors in Los Angeles applied that statute to a couple of guys harvesting IPs and email addresses from MySpace users. Most states have similar laws. The New York anti-hacker law is here -- note the "computer trespass" section.

Will regulators and law enforcement apply the anti-hacking statutes against Bagley? Beats me. I wonder if it beats Bagley too. I'll bet that this issue has the potential to beat him, and his employer, pretty badly.

* * *

UPDATE: Bagley reacted to the above post and others in O-Smear in typical "strategic messaging" fashion, posting a crude frameup attempt on Overstock's antisocialmedia.net corporate smear site.

Bagley or a confederate created spyware and inserted it in a post in the Investor Village Apple message board, and then Bagley claimed on antisocialmedia.net that it was from me. The O-Smear blog has a good analysis of this latest Overstock fabrication, suitably titled "O-Frame O-Lame."

The smear, which was posted at http://antisocialmedia.net/?p=74, was so far-fetched that even the tinfoil hat crowd found it hard to swallow, and it was taken down after a few hours. But I preserved it for posterity, needless to say.

This latest idiocy demonstrates the extent to which Bagley, Patrick Byrne, and their accomplices in the cyberstalking endeavor are in very deep trouble. Since Byrne usually trots out crackpot diversions before announcing bad news, to maintain unity among his "followers," it makes me wonder: could the 10-K possibly be that bad?

© 2007 Gary Weiss. All rights reserved.

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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.

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Tuesday, February 27, 2007

Ooh Gawd, This Hurts!

The Wall Street Journal reported a few minutes ago as follows:

Stocks declined sharply Tuesday, with the Dow losing more than 200 points, as weakness in China sent markets around the world into the red, durable-goods data disappointed and uncertainty increased about Iran and Afghanistan.
Now, I'm not picking on the Journal, and I used to write stuff like this myself, but does anyone really know why the market is down just under 2% as of this moment? (Actually the S&P cracked 2% during the time I wrote this item.)

That's the fundamental problem with writing spot news about the markets. Nobody really knows why markets go up or down. It may actually be more accurate to report that the Dow lost more than 200 points because "traders watched other traders watching other traders watching other traders... sell."

Market reporting is a tough job on a day like this. Thank heavens someone else has to do it. Anyway, excuse me while I curl up in a fetal position under my desk.

© 2007 Gary Weiss. All rights reserved.

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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.

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Utah Gags on Baloney

(Updated 2/28/07)

When the Utah state legislature passed its idiotic "baloney law" last year -- forming a posse to fight the imaginary "naked shorting menace" -- it was obvious that the Utah pols were currying favor with the state's biggest political contributor, Patrick Byrne.

Well, it appears that this law was not just influenced by Byrne and Overstock.com, but was actually dictated by them. The Salt Lake Tribune has a fascinating story today which shows that small investors aren't the only ones capable of being snookered by the naked-shorting charlatans.

As I pointed out when the law was originally passed, the purpose of the law was to divert regulatory attention from real securities fraud -- such as the stock-touting schemes that have found a safe haven in Utah -- to provide a ready-made excuse for companies like Overstock, whose share prices have tumbled for reasons ranging from fraud to simple incompetence.

The lawmakers belatedly realized -- after the state racked up legal fees defending a slam-dunk lawsuit -- that it had been sold a bill of goods, and decided to repeal the bill.

Byrne reacted as he usually does when he doesn't get his way-- by throwing a tantrum and attacking the integrity of the state legislature: "This is worse than mere betrayal," he said. "It is selling out the state of Utah." (An apt description of the law's passage, not its repeal, as I point out below.)

Byrne trotted out his favorite imaginary playmate, the "unnamed national journalist," who "told him he 'smells skunk' in the rapid genesis" of the law's repeal. He also engaged in schoolyard taunting and almost got into a fistfight with a lobbyist for the securities industry.

As you can see, the state legislators of Utah were given a close-in look at the histrionics and paranoid drivel that is directed at anyone who crosses this perennial "worst CEO" candidate. I hope they enjoyed the exhibition, which they richly deserved.

By the way, you have to savor the hypocrisy of that "rapid genesis" line. The repeal is being carried out with glacial slowness compared to the baloney law itself, which was rushed into passage in two days, without hearings, in a mockery of the legislative process. What makes that even more unforgivable is that this law was little more than a gift to Byrne, in his effort to divert attention from his company's flagging financials.

According to the newspaper, Utah state senate majority leader
Curtis Bramble let slip that Overstock's crack legal team had taken time out from defending an SEC investigation to ride herd over the baloney bill:
If there was betrayal, Bramble says, the finger points at Overstock.
"We relied on certain facts and legal representations [from Overstock] during the last session," the senator said Monday. "Since we passed it, with the exception of Overstock's counsel, every other legal [authority] has advised us we would lose.
"We also anticipated a number of other companies would support this [but] no others have come forward to say this would help them, address their problems or that the law should be enforced," the senator added.
Gee. Don't you think that an honest, competent state legislature would ask for some second legal opinions before the law was passed? The mind-blowing incompetence is understandable. What is a bit stunning is that Bramble fessed up to it.

Even before this dust-up, Byrne was already cranking up the baloney propaganda machine, with an item that he obviously spoon-fed to his surrogate Phil Saunders a/k/a "Bob O'Brien," a stock tout who runs the thesanitycheck.com "stock counterfeiting" website, attacking the integrity of the lobbyist who pushed for repeal. (OK, maybe this wasn't spoon-fed to Saunders by Byrne. Maybe it came from an "unnamed national journalist.")

When it originally passed the baloney law, Utah proved that it couldn't care less about protecting investor interests, not when a politically powerful, free-spending CEO wants to have his way. Having realized that Utah was throwing money down the drain defending the law, it belatedly decided to put the state's interests over Byrne.

Byrne, of course, couldn't care less about the interests of the people of the state of Utah, any more than he does about his shareholders -- or the citizens of other states where similar baloney laws are being pushed. Hopefully those lawmakers will now realize that knuckling under to naked shorting conspiracy theorists is dumb, no matter how remunerative for their campaign coffers.

UPDATE: The following day, Byrne called Curtis Bramble -- one of the most powerful Republicans in the state -- a "a squish and a yellowbelly." The fumes you smell come from a burning bridge, this one connecting Byrne to whatever political support he may have had in his home state.

© 2007 Gary Weiss. All rights reserved.

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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.

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Monday, February 26, 2007

The Real Investor Pain Caused by Baloney

I sometimes refer to the anti-naked-shorting zealots as the Baloney Brigade, which is flip language prompted by the bizarre, sometimes unintentionally funny paranoid ravings of Baloney propagandists such as Phil Saunders (a/k/a "Bob O'Brien"), Patrick Byrne and so on.

But there's nothing funny about the pain these nightcrawlers cause to their shareholders (in the case of Byrne) or the people naive enough to buy in to their rhetoric (in the case of Saunders, Byrne and the rest).

Probably the best example of that can be found in the Investor Village message board for the naked shorting poster child NovaStar Financial, whose share price recently collapsed. NovaStar was a supposed naked-shorting victim and was mercilessly pumped by Saunders and by Mary Helburn, executive director of the National Coalition Against Naked Shorting.

Here's a sampling of the genuinely pathetic posts from some of the people who bought in to the NovaStar crock peddled by Saunders, Helburn and others. I just took these at random by word-searching "wife" and "401K." And I do mean sampling. There are dozens of others:

"The Worst Thing IS that

"I have to tell my wife that I blew our IRA because I listened to [Phil Saunders a/k/a] the Easter Bunny."

***

"I had borrowed a portion from a 401K plan & plugged it into NFI. It will hurt for a couple of years but will not be mortal....But it did take me a few days to break the news to my wife....She took it better than I expected."

***

"After being in NFI for over four years, it was a painful task to liquidate all my 21K shares on the opening today. I followed this stock closely, moved very slowly gradually building a substantial income stream for retirement. With that income stream now gone, I must find other means. Life will go on, but my less than extravigant lifestyle will be more modest. I realize that I was far to overweight in NFI all along, but the dividends kept comin, and I spent them.
Investing in NFI was entirely my doing. However, the NSS [naked short selling] and manipulation became very alarming as did management's lack of concern and the worst possible PR/IR. Oh well, shoulda, woulda, coulda. Can't look back anymore."

***
.... and then there's this NovaStar investor who was really pushed up against the wall:

"Was forced to sell out today--Schwab raised margin requirement to 50% and wouldn't budge.
Sold last of it; 4K @ 9 and 6K @ 8.50.
Paid off the margin loan.
Paid the only credit card balance I was running.
Have $22K left to pay taxes next year (probably will owe $28K--Argh).
I've paid the 2006 taxes already, and I'll send the IRS what I have left on 4/15 and be done with it.
No debt; SSI coming in, VA for medical plus Med part-B for extras.
Now it's a task of reducing cash out-flow to where it's not more than in-flow.
Going to be an exciting time--I've never had to live on a budget before.
First to go have to be the cows, our most heart-rending task--but they are expensive pets."

****

I don't feel massive amounts of sympathy for these investors. They were adults. But the charlatans who pumped this stock and harassed skeptics, and the message board operators who allowed them to do so, need to be held accountable for their actions.

© 2007 Gary Weiss. All rights reserved.

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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.

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Sunday, February 25, 2007

Message Board Operator's Anti-'Basher' Website

In recent posts I've examined how managers of the "Investor Village" message board have suppressed questioning of Overstock.com execs who frequent the board. The New York Post and other media outlets have observed that IV's message board for NovaStar Financial has become infested by stock pumpers who have contributed to shareholder agony.

Remember that these are hands-on administrators who "closely monitor" their boards. So why have IV's managers, particularly its CEO and site administrator Ralph "Blue" Kidd, allowed the NovaStar board to become a stock-touting forum? Why have they allowed their Overstock.com board to become an extension of Overstock's antisocialmedia.net corporate smear site, in blatant violation of their own policies?

Why was Kidd so anxious to kick out Sam Antar -- actually siccing his lawyer on the guy -- for asking sharp questions of Overstock CEO Patrick Byrne and resident stalker Judd Bagley? (Why did he at one point delete all of the posts by Internet sleuth ScipioAfricanus challenging Bagley's and antisocialmedia.net's smears?

Why do Overstock critics avoid Investor Village? Why was it described by Byrne as a forum that "keeps corruption at bay" -- Byrnespeak for discouraging criticism of Patrick Byrne while allowing Byrne and others to smear and libel critics?

Why would IV openly align itself the smear-happy CEO of a foundering company, thereby opening itself up to lawsuits?

Well, bad me. The answers to at least some of the above questions were available all the time and I just noticed it.

Kidd, it appears, shares Byrne's disdain for stock "bashers" -- people who voice negative opinions about, or address pointed questions toward, execs of public companies.

He thinks "bashers" are so awful that last March he started an infantile website called basherjokes.com, devoted to ridiculing stock "bashers." Kidd is listed as the owner of the site.


Note that there is no "pumperjokes.com" Kidd owns that site name too, but has just "parked" the site name, while starting up the infantile "basher" site.

"Basher," of course, is stock-pumper-speak for what the rest of the world calls "skeptics." That is, people who -- often rightly -- feel that stocks are heading into the toilet. Had the thousands of elderly investors who follow NovaStar listened to these "bashers" that Kidd despises, they'd have saved millions of bucks.

Kidd thinks "bashers" are to be "ignored" and derided. ("Ignoring them is half the fun," says he.) Here's a sample of Kidd's anti-"bashing" website:

BASHERS GATHER FOR ARTSY PHOTO-SHOOT

CRACKASS, Venezuela - More than 15,000 Venezuelan stock bashers and naked short sellers scurried from their basement boiler rooms clad in nothing more than their typical work attire, comprised primarily of brown and yellow stained underwear and the occasional leather face mask with matching restraints (a few even paraded around in nothing but their birthday suits).
Funny!

Observe the reference to "naked short sellers." Another thing I hadn't noticed was that Kidd has promoted a wacky "stock counterfeiting" website, "thefaulkingtruth.com," in a post on the Investor Village website. Kidd urged his readers to "stay informed"by reading the wacko junk on the website.

Explains a lot, I think. Not everything.

UPDATE: This web post has some interesting observations about Kidd's involvement with a penny stock called Eagle Broadband.

© 2007 Gary Weiss. All rights reserved.

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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.

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Friday, February 23, 2007

NovaStar's Agony Continues

Naked-shorting poster child NovaStar Financial continued to collapse today, declining another 9%. It is now down 51% for the week, after announcing financial results that could be summed up as, "We may be able to realize aftertax profits sometime before the next ice age."

Phil Saunders a/k/a the "Bob O'Brien," the anti-shorting loon who was second to none in pumping this dreck, appears to be back to pushing the notion that unseen market forces were responsible for NovaStar's demise (and not all that stuff I just mentioned about profits and the ice age).

Responding to a post poking fun at the naked shorting conspiracy nuts, Saunders posted as follows on the Investor Village message board:


Always nice to see the whole gang out. Congrats. You did well on this one. Never play against the house when they control all the cards, right? 4.7 years of being wrong, but guess what? If the guys running the boat decide to run it onto the rocks for reasons unknown, you win.

Wonder why they ran it onto the rocks? What's your guess?


Saunders reminds me of the fellow I wrote about in Born to Steal, superbroker Lou Pasciuto, who never let the facts get in the way of a good sales pitch. That has been the sustaining principle of the Baloney Brigade.

© 2007 Gary Weiss. All rights reserved.

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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.

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What do You Say About a Punt?

Several people have emailed me to ask why I haven't commented on that hedge fund thing that was released yesterday by the President's Working Group on Financial Markets. The reason is pretty simple: what do you say about a punt?

The study essentially says that everything is OK and that "market discipline" is all hedge funds need to stay in line. It did suggest some non-binding guidelines on transparency and stuff.

So in other words, the study group decided to pass this entire subject to future generations, for better or worse. That's not necessarily a bad idea. However, the next time a fund goes belly up, will there be a bailout as there was with Long-Term Capital Management, or will the response be, "Why not let the market determine what happens to you guys?"

© 2007 Gary Weiss. All rights reserved.

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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.

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India's Fight Against Wal-Mart Begins

As is hardly surprising, protests have commenced over Wal-Mart's move into India -- and what you see on the left is just a sample of things to come.

See this article in The Hindu. “We believe Wal-Mart is going to ruin this country and millions of people will lose their jobs,” one protest organizer told the New York Times.

He's right. Don't be gulled by the Times's description of the protest coalition as a "coalition of trade unions, traders, students and communist parties." In the U.S., such demonstrations could be easily dismissed. In India, those are mainstream forces, and are taken very seriously by the Congress-led government.

Here is the website of the FDI-Watch anti-Wal-Mart coalition. The website makes some very good points about the impact of foreign direct investment on the Indian retail sector, and on Indian society as a whole.

© 2007 Gary Weiss. All rights reserved.

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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.

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Thursday, February 22, 2007

Overstock's Latest Smear

It didn't take long for Overstock.com's resident stalker, Judd Bagley (left), to crank up a smear about Susan Antilla, who wrote a Bloomberg column yesterday on Overstock's campaign of lies against critics and the media.

This one is typical of the tactics that Bagley and his boss Patrick Byrne deploy, in their campaign to keep people from writing about or criticizing their actions.

First Byrne tried to bully Antilla and Bloomberg by publishing her questions and his slippery, evasive responses on the Internet.

That failed, so they have now moved into the Smear phase of the strategy, in a post that Bagley published on the Investor Village message board this morning. It is titled "A wee bit of context on Susan Antilla."

Said Bagley:

The conventional wisdom has been that her husband, Dennis H Leibowitz , is with Credit Suisse First Boston. Wrong. In 2002 he left SCFB to start his own hedge fund. It's called Act 2.

Act 2 specializes in investing in the media space. Included in Act 2's portfolio is several million dollars worth of News Corp stock. You may also know News Corp as the company that owns the New York Post.

So there you have it -- a media-hedge fund conspiracy! The only problem with this smear is that Antilla and Leibowitz are divorced, a fact that is not only "conventional wisdom" but is also something that Bagley could have easily extracted from the Internet.

As usual with a Bagley smear on behalf of his employer, he takes a faux-factual nugget and fashions it into a paranoid fantasy and lie.

This latest Overstock smear not only illustrates the intimidate-and-lie tactics used by this failing company, but also again focuses attention on Bagley's chosen forum for his smears -- the Investor Village Overstock message board.

As I pointed out in a post yesterday and previously, IV allows Bagley and Byrne -- officers of a public company -- to post with impunity on the Overstock board, smearing and libeling people by name in blatant violation of IV's terms of service. Even death threats like the one in this post are allowed, when they come from Byrne supporters. Yet IV management curbs, harasses and censors critics of this company. Yesterday IV boss Ralph Kidd had the audacity to call
Sam Antar's persistent and effective questioning of Byrne "harassment," and to ban him from the board.

So now, as you can see, Byrne, Bagley and their anonymous allies can post their lies, smears and touting without much in the way of interference, since critics know they can be banned at any moment by IV's crackerjack management team.

A member of the Byrne fan club made that point clear today to one of the rare critics of the company who posts on the board: "Keep on with this frantic pace and garbage like fashion and you'll gather enough tickets to end up in the fridge."

A similar mentality has prevailed in IV's NovaStar message board, where stock touters such as Phil Saunders, the anti-shorting loon who posts as "Easter Bunny," were allowed by IV administrators to abuse and harass skeptics and tout this doggy stock.

In effect, IV has become a willing participant in the campaign by Byrne, Bagley and Overstock.com to muzzle critics and to stalk and intimidate the media. You really have to wonder why a message board operator would be so irresponsible, blatantly biased, and just plain dumb.

UPDATE: The New York Post's Roddy Boyd has a great article on how IV's NovaStar message board became a stock-pumping mechanism, propagating one-sided stock touting to untold numbers of small investors.

A good example of the service rendered by Sam's questions can be found in this post from Bagley on the Yahoo Overstock message board, after Sam was bounced from IV.

As you can see, Bagley feigned ignorance of the SEC 's investigation of Overstock.com, which has been widely publicized and which Overstock itself has disclosed in its filings. I suppose this is what the lawyers might call a "materially misleading" statement by an officer of a public company. I prefer to call it a "bald-faced lie."

These kinds of things make me wonder: What exactly does Bagley have to do before the SEC takes action? Immolate himself in front of the SEC Headquarters?

© 2007 Gary Weiss. All rights reserved.

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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.

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Must Reading For Train Wreck Fans

A new blog is required reading for regulators or anyone following the self-destruction of Overstock.com.

It's called "O-Smear," and it was created by the Internet sleuth "ScipioAfricanus." Scipio was largely responsible for Overstock.com's "director of social media," Judd Bagley, being outed as operator of Overstock's corporate smear site antisocialmedia.net. He also has done excellent work chronicling Bagley's use of spyware to track Patrick Byrne's critics, and above all in tracking Byrne's dissembling and contradictory statements in public message boards.

Anyone probing Overstock will find this blog a comprehensive source of information on this third-rate retailer's disgraceful, unethical, and possibly illegal conduct. It is a rich source of information for anyone interested in antisocialmedia.net, its nauseating proprietor, and his "bellowing" (to quote Bloomberg) overlord.

The URL is http://o-smear.blogspot.com.

© 2007 Gary Weiss. All rights reserved.

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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.

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Wednesday, February 21, 2007

Overstock's Creepy Strategy

Susan Antilla of Bloomberg has a great column on Overstock.com's smear site, antisocialmedia.net, and its intimidation campaign against critics. The title says it all: "Overstock Bellows, Blames With Creepy Strategy."

Before the article appeared, a clearly terrified Patrick Byrne tried to intimidate Antilla by posting her questions online, along with his own long-winded, evasive responses. He also used an ancient, bush league PR trick by demanding that his quotes be used in full or not at all. Antilla picked the "not at all" option: "I would happily map out Byrne's exact words, but he wouldn't agree to an interview unless I only quoted full sentences from his e-mails. Brevity isn't his style."

Byrne employed the same creepy-crawly tactics, with more apparent success, when a Business Week reporter named Tim Mullaney was planning a story on Overstock last year.

Byrne posted Mullaney's questions, and his slippery answers, on Overstock's de facto investor relations portal, the sanitycheck.com crackpot anti-naked-shorting website. (Though keep in mind that Bryne's account, as usual, is laced with fiction -- see this response from Mullaney.) His goon Phil Saunders, the ex-used medical equipment peddler and ace stock-picker who runs Sanitycheck, then obediently commenced a smear campaign against Mullaney.

The Business Week article never ran. While the reason may have been unrelated to Byrne's tactics, they had the appearance of working and, I am sure, emboldened Byrne.

They also deprived readers of an article that would have charted Overstock's impending financial disaster, judging from Mullaney's perceptive questions.

This time, all Byrne did was to make himself look like a fool. But that won't stop Byrne, the nauseating Bagley, and the handful of tinfoil hats who carry water for these night crawlers. I am sure that the smear campaign against Susan Antilla and Bloomberg will now commence, as this corporate train wreck digs itself deeper into the muck.

© 2007 Gary Weiss. All rights reserved.

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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.

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Tuesday, February 20, 2007

Sam Antar Gagged Again

As I observed in a recent post, reformed scamster Sam Antar has been a thorn in the side of Overstock.com CEO Patrick Byrne and resident stalker Judd Bagley.

Antar has posted numerous polite but probing questions on the Investor Village message board, and in the process has elicited answers (and evasions) that are of real value to investigators and others probing the company.

Well, Investor Village's crackerjack management team -- which has done nothing to prevent IV from being used as a cyberstalking vehicle by Byrne and Bagley -- has restricted Sam to three posts a day. By way of comparison, IV took no such action against Bagley, even after he planted spyware in IV posts. Nor did it take action against members of the Byrne fan club who have used IV to threaten, stalk and libel Sam, myself and others.

IV has used shabby pretexts to gag Sam and another Byrne critic twice before (see this post and this one), both times in reaction to a campaign egged on by Byrne. Both times IV meekly backed down, but this time they seem to mean business.

The excuse given by IV's boss Ralph "Yellow" Kidd -- oh sorry, wrong color. Make that Ralph "Blue" Kidd -- was "clogging our forum to conduct an informal and unofficial campaign of 'deposition-style' messages targeting other members of InvestorVillage."

The "other members" were the CEO of the company and Bagley, operator of the corporate smear site and an officer of the company. The piercing and detailed character of the questions, and the unintentionally revealing answers, are what made Sam's contributions so valuable -- in contrast to the vast mishmash of noise, ravings and ad hominems that comprise IV's Overstock message board.

In effect, Kidd has turned IV into a stock-pumping mechanism for this doggy company -- something that deprives the board of any value for investors, and in fact can do real harm by misleading people seeking information on the company. As Sam observed, "They call it an Overstock.com message board. It seems more like an Overstock.com propaganda board where anyone who questions the actions of Patrick Byrne and Judd Bagley can be attacked with impunity."

To rub salt in the wound, Kidd et al don't even have the guts to talk with Sam about their turning the board into a closed-loop of tinfoil hat rants and stock-pumping. They actually had their lawyer draft the private message that was sent to Sam telling him that he was being gagged, and said Sam should speak to this lawyer if he had any questions.

Got to hand it to Kidd and the other geniuses at IV -- they sure do love paying lawyers. Too bad a lawyer is no substitute for common sense, or a conscience.

UPDATE: Later that night, IV decided to officially make its Overstock board the Patrick Byrne Fan Club, deleting a post from Sam and apparently booting Sam entirely, without explanation.

You really have to wonder why a message board would ally itself so firmly with the management of a foundering company.

Given the litigation that is likely once the Overstock/antisocialmedia dust settles, perhaps hiring the lawyer wasn't such a bad move. When Overstock meets its maker, which I suspect will be in the not-too-distant future, IV is going to have some 'splaining to do. The legal implications of message board postings, and the possible liability of service providers, is explored here.

Byrne celebrated Sam's gagging in a typically nutty post in the now dissent-rein IV: "Let us show our support to Investor Village by spreading the word about what a fair place it is, one that keeps corruption at bay." "Corruption" is, as we all know, Byrnespeak for "criticism."

The New York Post later described how IV's NovaStar message board has become a forum for unrestrained stock touting, helping untold numbers of gullible small investors lose their shirts when the stock collapsed this week.

© 2007 Gary Weiss. All rights reserved.

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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.

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Another Naked Shorting Poster Child Succumbs

Another anti-naked-shorting poster child flamed out today.

It's called NovaStar Financial, and it's a doggy subprime lender that is a favorite stock of an ex-used-medical-equipment peddler named Phil Saunders. The stock is down 29% in aftermarket trading, after word of a disastrous fourth quarter. (It opened the following day down 41% in massive trading.) NovaStar said it expects to "recognize little if any taxable income" through the year 2011.

Gee, that's not what Phil Saunders had been saying! He was saying that this was a great company and that its shares had been hurt not by bad financials, but "stock counterfeiting."

Now, you may ask, "Why would anyone in his right mind care what some crackpot named Saunders thinks about a stock?" Well, believe it or not, lots of dimwitted small investors actually listened to this goofball -- because they think he is the "Easter Bunny."

Yup. According to the New York Post, Saunders is "Bob O'Brien," a/k/a "the Easter Bunny," the anonymous creep who is the leading propagandist of the anti-naked-shorting movement. Saunders runs the "sanitycheck.com" anti-naked shorting website, and also calls himself "manager" of the National Coaltion Against Naked Shortselling astroturf group.

Another Saunders favorite and naked shorting fantasy "victim," Overstock.com, has collapsed since Saunders starting talking up the company and serving as de facto investor relations man for its wack-a-doo CEO, Patrick Byrne.The site is linked on the Overstock.com website under the Orwellian "market reform" label.


Saunders pumped NovaStar mercilessly on message boards (spewing incoherent drivel like this), and operates a stock-pumping website called nfi-info.net, filled with the usual "stock counterfeiting" baloney alongside brainless touting of NovaStar and childish attacks on NovaStar critics (above). Some typical nfi-net misinformation can be found here. Saunders registers nfi-net through a shell company in an offshore domain server under his phony name. A lot of effort to thwart scrutiny, wouldn't you say?

Like its NFI-pumping sister site, Sanitycheck is a collection of incoherent rants and smears of NovaStar/Overstock critics, interspersed with the expertise of "experts" such as a dentist who babbles about "fails to deliver" when not filling cavities, and Mary Helburn, "executive director" of NCANS. She's the one who says that naked shorting, not crooked management, was the real problem at Enron. She's also a militant NovaStar- and Overstock-cheeerleader. (A typical pumper post from two weeks ago.)

Saunders was Overstock's primary smear-disseminator (one of many examples posted here) until that function was taken in-house by Judd Bagley, who runs Overstock's antisocialmedia.net corporate smear site. But Saunders has sat with Byrne in at least one meeting with the media, and his links to Byrne, Overstock and NovaStar need to be probed by regulators.

His smear-and-stalk tactics also deserve scrutiny. As Herb Greenberg recounts, in 2005 Saunders "went so far as to post the address and names of the wife and son of one prominent short-seller of NovaStar in a message board post, with the tag line, 'This is coming up on game over-time. Figure it out. Your playbook is known.' In another post he wrote, 'Anyone know Herb's wife's name, and his middle initial?'" He used similar tactics against Byrne's critics and members of the media, myself included.

Don't make the mistake of dismissing Saunders as just another Internet crackpot. The Motley Fool's Seth Jayson recently observed:

Senators have always been easily duped by people of his ilk regarding short selling. It's happened over and over again throughout our market's history. There are even examples of so-called short "victims" who've testified in front of this august body, who've then been implicated in the very frauds they were trying to cover up by whining about short sellers to their congressmen.

Still, nothing changes, when dangerous blowhards like Bobo get backing from certain multi-millionaires, and gather enough ears, our elected officials drop the steak knives and wine glasses, venture out of the Capital Grill for a few minutes, and blow smoke about how lousy the SEC is.
It's hard to feel sorry for people who lose money after listening to idiots like Saunders, Helburn and their ilk. Any non-institutionalized adult who would stuff his retirement account with this crap -- as per one sob story on a message board -- causing his retirement savings to decline 50%, is deserving of contempt, not sympathy.

The anti-naked shorting whack jobs, reacting to the decimation of their stock picks, are now telling the faithful that they should pull out of the "corrupt" U.S. markets. Again, anyone who follows the advice of these con men and psychos deserves every penny of losses that result.

I guess the good news is that hits on sanitycheck's whack-site have dribbled off to nothing in recent weeks, according to Alexa. The other good news is that Saunders has a ton of money invested in this ca-ca.

Perhaps he can redeploy his life savings into baloney futures?

UPDATE: Several days later, the New York Post had a great piece by Roddy Boyd describing how countless small investors were suckered into this stock via Saunders and other touts on the Investor Village message board.

© 2007 Gary Weiss. All rights reserved.

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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.

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More Big Boxes for India

There's an old saying about India, one that Indians sometimes recite in talking with furungis: "Big country, big problems." True enough. But I've never understood is why India sometimes compounds its own problems, such as by, for example, allowing Wal-Mart of all things into the country.

Today the Wall Street Journal reports that Wal-Mart's plans to blitz India are moving ahead, despite its potentially devastating impact on the millions of small, mostly poor shopkeepers in that country. I explained in a previous item what a really dreadful idea this is. In a country with no social safety net, big-box retailers could mean starvation for small store owners driven out of business.

Wal-Mart's Indian partner addresses this obvious concern as follows, according to the Journal:
Rajan Bharti Mittal, joint managing director of Bharti Enterprises, which owns Bharti Retail, emphasized at a news conference that the Indian company would own the new stores and would seek to help small farmers link into its new supply chain.
Isn't that just ducky? Indian farmers, who are driven to suicide by economic pressures, would now enjoy the fruits of Wal-Mart's notoriously cut-throat buying practices!

In the U.S., Wal-Mart pays lip service to lessening its devastating impact on local economies, such as by engaging in PR initiatives. With the exception of nonsense like Bharti's "farmers will love this" statement above, the Indian enterprise makes no effort to mask the havoc it will wreak.

It will be interesting to see if the Indian people are able to stop the Wal-Mart steamroller.

© 2007 Gary Weiss. All rights reserved.

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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.

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Sunday, February 18, 2007

Who Are the Real Watchdogs?

The New York Times today discusses academic studies that prove what some of us have been saying for a long time: that whistleblowers of all kinds and the media -- and not regulators -- are the most prolific fraud-fighters in Corporate America.
Three academic researchers recently analyzed 230 cases of alleged corporate fraud at large companies. Their conclusion is that revelations of corporate fraud are dependent on a wide range of sometimes unlikely players, and that the way these people interact can play a major role.

The chart illustrating this story (left) is revealing. Note that the SEC is right at the bottom. Now, I should point out that this is not really a knock on the SEC, as the agency's resources are limited as corporate misconduct has spiraled out of control. It is, however, a statement of reality, and illustrates the need for citizen vigilance, as I pointed out in Wall Street Versus America.

Citizen volunteers, which fall under the "other" category in this chart, are emerging as a major source of information for the SEC and for other conventional watchdogs, such as the media. The Overstock train wreck, which one can track in real time by reading this blog, is an excellent example of how a few citizen activists are leading the charge against corporate malfeasance.

The patient, doggest investigative work of Internet sleuth "ScipioAfricanus" was instrumental in forcing Overstock's Judd Bagley to confess that he was running Overstock.com's antisocialmedia.net smear site for his boss Patrick Byrne.

Scipio also has tracked Byrne's and Bagley's contradiction-rife public statements (see, for example, the update to this post), and patiently recorded material from the public record (such as this timeline) that will be of great value to regulators as they probe this company. Or as Overstock puts it, the SEC's "investigation on Overstock.com." (You have to wonder: if this company can't even honestly disclose to its shareholders that the SEC is conducting an investigation of Overstock, what is it hiding from those investigators?)

Ex-scamster Sam Antar has also spent many hours working on Overstock's accounting techniques and bullying of critics. He has peppered Bagley and Byrne with sharp questions that, when not ignored, result in a hodgepodge of obfuscations, abuse, lies and evasions. Byrne and his lapdogs have tried hard to silence and intimidate these guys, but they keep hammering.

Other citizen activists are working behind the scenes to see to it that the SEC is up to speed on Byrne's and Bagley's outrageous conduct. Byrne has flailed out against his critics, through his usual gutter-level rhetoric and by siccing Bagley on message board posters, but all his desperate bullying does is attract still more scrutiny and bad press.

When the final story of Overstock is told, I expect that citizen activists will be getting the lion's share of credit, right alongside whichever regulators have stepped up to the plate.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
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Friday, February 16, 2007

The Klebnikov Charade Continues

The two accused trigger men in the Paul Klebnikov murder did not show up for their trial yesterday. The two were released after their acquittal, and not re-arrested when prosecutors successfully appealed for a new trial.

So they hit the road. Surprise surprise.

This charade has gone on long enough. As I pointed out in a Forbes.com column last month, the time for an American investigation has arrived.

© 2007 Gary Weiss. All rights reserved.

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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.

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Bulletin: Maria Bartiromo Not Fired

It's typical of the hysteria surrounding Maria Bartiromo that her not being fired is actually legitimate news. Keith Kelly points out in the New York Post today that Maria has not been canned by Business Week.

This is legit news, as I said, and in fact I had been wondering if Steve Adler would knuckle under to the headlines and kick her column out of Business Week. I'm not a big fan of her column, to say the least, but getting rid of her because of the "scandal" that has developed would have been a bad move.

There still hasn't been any convincing evidence, at least none that I've seen, that Maria actually did something wrong. Tasteless, yes. But unless she influenced CNBC's coverage of Citigroup (and there have been some titterings to that effect, but no hard evidence), I'd say it is time to leave the lady alone.

Or as they say on 13th Avenue, "leave her the f--- alone"!

© 2007 Gary Weiss. All rights reserved.

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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.

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A Cover-Up at the Cover Story

The other day I described Overstock.com's laughable "Omuse" user-edited wiki, which was designed to provide a cover story for Patrick Byrne's resident stalker Judd Bagley. Its purpose is to give Bagley a no-show job to cover his real job of running Overstock.com's antisocialmedia.net smear site.

I provided a link that showed that Omuse had been a miserable failure: No edits for days at a time. Well, guess what, folks? The link (it used to be http://omuse.overstock.com/wiki/Special:Recentchanges) has been taken down. As the old saying goes, "Stuff a cold, feed a fever, cover-up a failure."

And I do mean failure. The Internet sleuth "Scipio" who brought this to my attention pointed out that as of last night, just before "recent changes" was taken down, there were a grand total of two non-management edits over the past week.

Guess he wasn't the only one to notice.

For comparison purposes, here's what you would see in the "recent changes" link of a non-sham wiki, this one called Wikihow. Incidentally, Wikihow seems alarmingly similar to Omuse (with its "how-to" orientation) wouldn't you say? Except that Wikihow has folks actually editing it, and wasn't created as a make-work excuse for the CEO's crony.

Now, I wonder how Byrne and Bagley will react to this item. Will they proclaim that a "technical glitch" occurred and reinstate the "recent changes" feature? Doing that, of course, would bring back a feature that showed in real time what a failure Omuse has been.

Quite a dilemma for the crackerjack Overstock management team.

Barry Ritholz wonders aloud in his blog today:

Now, with the SEC dropping their investigation of the "Sith Lords," and the company again issuing disappointing sales and earnings, I have one simple question: Who owns this stock, and why?

Overstock shareholders must be 1st rate fools happy to own a 2nd rate internet retailer managed by a 3rd rate CEO whose 4th quarter numbers were awful (400-bps gross margin miss and a 100% negative variance on EPS?), and for the 5th consecutive Q missed the prior sunny forecasts we can expect to be missed for a 6th time in May.

Enough already!

There are 9,000 publicly traded companies out there; Why does anyone even bother with this POS?

Mr. Ritholtz's point is well taken. I can't explain the mentality of people who own bad stocks run by bad people. But I do know this: as a journalist, watching a miserable company thrash itself to death is a fascinating thing to behold.

UPDATE: With the exception of a few of mild posts on message boards, Byrne and Bagley were uncharacteristically quiet over the President's Day Weekend. This is a shame from the standpoint of regulators, class action lawyers and other Overstock watchers, because every time they open their big mouths they dig the hole even deeper.

For instance, Internet sleuth "Scipio" has found this blog post from Aug. 24 which contradicts Byrne's claim that Bagley started work "at the very end of August." It was actually sometime before Aug. 24.

I'm sure that SEC investigators are having a field day combing through these guys' public statements, which are rife with forward-looking stock-hyping and jaw-dropping contradictions. So all I can say is, keep talking, fellas!

Scipio has a timeline that will, I'm sure, be of great value to our erstwhile watchdogs.

© 2007 Gary Weiss. All rights reserved.

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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.

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Wednesday, February 14, 2007

A Wild Goose Chase Ends

This morning comes word that the Securities and Exchange Commission has ended the Overstock.com-inspired investigation of short-side research firm Gradient Analytics. It was surely one of the most overblown wild goose chases in SEC history.

No surprise here. Overstock and its loathsome CEO Patrick Byrne are the latest in a long line of cruddy companies and inept CEOs that have blamed short-sellers for their own shoddy performance.

This is the first major defeat that this corporate bully has received since he began his "campaign of menace," to use Joe Nocera's words. Trust me: It won't be the last.

Thus ends what had become a huge embarrassment for the SEC, which should have known better. At one low point a year ago, the SEC subpoenaed several journalists who had been critical of Byrne. I remember back then it was reported that this was a "serious" investigation. I am sure it was, which is pretty scary.

The SEC swiftly backtracked. Byrne denied that he had prompted the subpoenas or the investigation, but his greasy pawprints were all over it.

The demise of the Gradient investigation shows what a dumb idea those subpoenas were in the first place.

You really have to wonder how this whole thing started, why it was allowed to drag on for so long, which genius dreamed up those subpoenas, and above all what real problems were neglected while the SEC chased those geese at Byrne's behest.

You have to wonder what this says about the credibility of the two ex-Gradient employees whose allegations were the basis of the SEC investigation, and who were paraded all over the media. Herb Greenberg observes that the SEC was under no obligation to send the "no action" letter that it provided Gradient, and says: "You can't help but wonder whether an embarrassed agency is trying to send someone a message." That "someone" being a certain wack-a-doo CEO.

This lamentable waste of SEC resources should be investigated by Congress and the SEC inspector general.

One of those real problems that hopefully has not been neglected by the SEC in this wild goose chase is Overstock.com itself, which is the subject of an informal SEC investigation.

When the SEC subpoena of Overstock was disclosed in May, Byrne issued a famous press release saying that he "celebrated" receipt of the subpoena. Is he still celebrating? Does he celebrate dropping of the investigation? Did he celebrate his father leaving as chairman or his Niagara Falls of red ink or his latest bout of indigestion?

I am sure the Overstock spin machine is about to go into high gear, turning this smack across the kisser into a "victory."

Now that the SEC has stopped wasting time pursuing Byrne's fantasies, it's high time to see some SEC action on this disgraceful corporate train wreck.

Floyd Norris points out in his blog today, after reciting the immense list of things covered by the "celebrated" subpoena:

"That list includes just about everything Gradient complained about. Could this be a case where a company complains about a short seller and ends up facing S.E.C. charges itself? We’ll see."

Wall Street Versus America delves into the sorry history of short seller scapegoating. Earlier blog items:

The SEC's Keystone Kops in Action.
The SEC: Chasing After Good Guys or Bad Guys?

UPDATE: Herb Greenberg's blog reprints a memorably whacky email from Byrne which he received on Feb. 10 -- Feb. 10 of last year, "three days after the SEC sent out its request to subpoena records of the press in connection with the investigation -- but weeks before I ever made my subpoenas public." The email says that "the last two days in particular will likely prove to have been life-ruining events for certain people."

How did Byrne learn about the subpoena? The answer to that question, I suspect, will be a "life ruining event" for certain people. (But not for Byrne, who is in far deeper trouble, I suspect, than simply being tipped off to an SEC subpoena.)

© 2007 Gary Weiss. All rights reserved.

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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.

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Saturday, February 10, 2007

More Hedge Fund Regulation?

Dealbook reports that Connecticut is considering some pretty drastic regulation of hedge funds. Well, not drastic by a layperson's standards, but by the standards of the loosely regulated hedge fund biz.

The Dealbook item, quoting a Connecticut newspaper, is here.

I'm not a big fan of hedge fund regulation, but the various ideas being floated in Connecticut don't seem all that terrible.

One would require hedge funds to disclose their investments from pension funds. The second, more sweeping bill would beef up disclosure and create rules to "eliminate conflicts of interest between investors and fund managers," says the Times. Interestingly, there seems to be bipartisan support for some kind of regulation.

It's hard to think of any convincing argument against such fairly mild and cosmetic regulations, but I am sure the hedge fund industry will come up with some. (Arguments, that is. Not necessarily convincing ones.)

© 2007 Gary Weiss. All rights reserved.

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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.

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Thursday, February 08, 2007

Bagley's Cover Story Falls Apart

Overstock.com's CEO Patrick Byrne has had a serious problem since it was revealed that he had put on the payroll a full-time resident stalker, Judd Bagley, to smear his critics and divert attention from the lousy job he has been doing as CEO. Byrne needed a cover story, the more convincing the better.

That cover story -- the "secret project" that supposedly has been preoccupying Bagley since August -- has just been announced. And it is such a joke, such an obvious smokescreen, that it eliminates any doubt that Bagley was hired as "director of social media" strictly for the purpose of running Overstock's antisocialmedia.net smear site.

Antisocialmedia.net was created to intimidate and harass Overstock's critics, in a desperate effort to divert attention from the company's horror-show finances and failing share price. As Joe Nocera pointed out in the New York Times almost a year ago, in his article "Overstock's Campaign of Menace," Byrne has made it very clear that there is a "price to be paid" for criticizing this crummy company and its creepy CEO. Bagley is the chief enforcer of that strategy of intimidation.

Bagley has supposedly been toiling for half a year on something called "Omuse." It's supposed to be a user-edited "wiki" portion of Overstock, presumably for people who can't find their way to the real Wikipedia. Byrne thinks so little of it that he "announced" it on the limited-readership Investor Village message board and on an Overstock auctions forum -- in yet another nose-thumbing at Regulation FD.

Omuse also is a weak nose-thumbing at the real Wikipedia, where Bagley was kicked off after pushing Byrne's vendettas via phony IDs that harassed and stalked Wiki administrators. (Here's one of two official Wikipedia lists of Bagley's phony IDs.) Bagley is not ashamed of making an ass of himself on Wikipedia, and has bragged about it several times.

Note (before it is deleted) the amazed initial reaction to Omuse from a hapless Overstock merchant:

Will you please explain what all this has to do with AUCTIONS........I, as most sellers, came over to Overstock to sell our wares at auction........instead of valuable time being spent to get the up-grades, or to get working things done that should have been done before the auctions were started, along comes another program that has nothing to help the AUCTION SELLER.....it looks like another grasping for straws.....
The answer, of course, is that Omuse doesn't even pretend to have any value for Overstock. Its sole purpose is to provide a fig leaf for Bagley's actual responsibility at Overstock, which is the maintenance of Overstock's antisocialmedia.net smear site and similar "strategic messaging" responsibilities for Byrne. (Such as flaunting Reg. FD by putting a spin on Byrne's recent wack-a-doo lawsuit, or flushing any semblance of corporate ethics down the drain by planting spyware to stalk Overstock critics on message boards.)

Take a look at this crudely executed wiki
and ask yourself: Does Byrne seriously expect anyone to believe that it took six months to develop this garbage? By all appearances (see this astute analysis) it seems to have been slapped together by a techie in the last few weeks, using freeware that anyone can download off the Internet. Since Bagley is not a web designer, and since it has no "content" to speak of, it obviously didn't take up much of his time.

Of course. His job is antisocialmedia.net, his cyberstalking-and-libel site, designed to carry out the mission Joe Nocera described a year ago. Compare the crude Omuse with the slick, well-designed, content-filled "antisocialmedia"smear site and Bagley's real job becomes apparent.

Meanwhile, Bagley has continued in his real job of lying about his boss's critics, with a post that -- in classic Bagley fashion -- projects onto others his own sliminess. Since he is a paid shill for Byrne, and was obviously hired as payback for running blogs ridiculing Byrne's critics, he feels that everyone is as corrupt as he is. The "paid basher" line is, of course, a classic Byrne intimidation technique as well -- one of the things that has made even Jim Cramer reluctant to criticize Overstock, as he recently pointed out.

This time Bagley is claiming that I have "consulted" for the DTCC (Depository Trust Clearing Corp.), a major whipping boy of Byrne and other anti-naked-shorting nuts. Byrne's "investigative reporter" made no effort to contact me about this absolute crap, and a flat-out denial by DTCC's general counsel was, of course, disregarded. (He said "no" and Bagley responded, "what dat mean?")

Bagley didn't even pretend to have contacted me, not that previous denials and refutations of his lies have prevented him from publishing his smears.

Now, on this consulting thing: I hope I am not misunderstood by my friends in the regulatory community and in law enforcement. If you want to talk with me, or "consult" with me shall say, on the subject of Overstock.com or Patrick Byrne or Judd Bagley or the anti-naked-shorting nuts -- I am at your disposal. In May I gave a presentation, free of charge, to regulatory attorneys of the New York Stock Exchange on that subject, as I pointed out in a post at the time.

So let's go, guys! You have my number. Give me a call.

UPDATE: Omuse has gotten off to a fast start. There were a grand total of zero user edits during the weekend following its announcement. Even if Omuse wasn't created to provide a nonprofit smokscreen for Bagley, it would be a pretty good example of the inept management of this company. As Herb Greenberg pointed out today, at any company with a non-captive board of directors, a CEO with a proven record of failure like Patrick Byrne would have been fired a long time ago.

(The link under "zero user edits" went to Omuse's "recent edits" link. That feature is now gone.)

© 2007 Gary Weiss. All rights reserved.

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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.

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Monday, February 05, 2007

Bulletin: Overstock Lawsuit Successful!

Break out the bubbly, folks! Forget about the quarterly conference call excuse-a-thon that just concluded. All that stuff about inventory and sales and such is just a lot of bunk -- and not because of the contradictions, dissembling and doubletalk uncharitably enumerated by Long and Short Capital and Herb Greenberg.

Overstock.com must be worth over a hundred bucks a share! That's because -- according to an officer of the the company -- its lawsuit against Wall Street firms is definitely going to succeed, and all that needs to be done now is tote up the damages.

This suit is for $3.5 billion, so that is one heck of an optimistic forward-looking statement, wouldn't you say?

The source of this very valuable market-sensitive insight is none other than Overstock's stalker-in-residence, "director of social media" Judd Bagley, in a post on the Investor Village message board over the weekend.

Some miscreant, you see, had dared to suggest that, well, the lawsuit might not be on the firmest legal ground (as Prof. John Coffee of Columbia University told Bloomberg on Friday) and also might prove to be expensive for Overstock. He/she made an analogy to litigation expenses incurred by the SCO Group.

Bagley, posting as "De Daumier-Smith," the handle he uses on IV, responded as follows:

The SCO and the OSTK litigation have nothing in common: SCO sued based on the expectation that infractions would be found, while OSTK is suing based on the undeniable fact that someone is breaking the law.

At this point, the only thing reasonable people can dispute is how much damage has been done. [emphasis added]
You know, I think it is really terrific that an officer of a public company, unencumbered by legal restraints, comes on a limited circulation message board to predict -- indeed, declare! -- the outcome of a lawsuit just filed by his company.

Of course, if there was some kind of regulation about "fair disclosure" or rules about "materially misleading statements" I guess there might be a problem. A serious one.

Gee, maybe there are. Reg. FD and all that. Oh my.

Is this bad?

© 2007 Gary Weiss. All rights reserved.

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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.

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Sunday, February 04, 2007

The Best Take on 'Mariagate' So Far

It's from Yvette Kantrow, writing in TheDeal.com.

After briefly summing up the overblown and sometimes "incoherent" media coverage, she goes on to conclude:
What remains unanswered is: Did Bartiromo urge viewers to buy Citi's stock? To use its financial services? Was she noticeably easier on Citi than she was on similar firms? Did she, Henry Blodget-like, say one thing about Citi in private but something else about it in public? Maybe she did. Honestly, we don't know. Call us lazy, but we haven't watched all of the tapes or read all of the transcripts of her Citi reporting. But until someone does, we suggest calling off the dogs.
This needs to be read in conjunction with Pam Martens' Counterpunch articles, which give further needed perspective on the real issues in this ongoing media orgy.

© 2007 Gary Weiss. All rights reserved.

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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.

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Saturday, February 03, 2007

Fight Over 'Astroturf Lobbying' is Looming

A little-noticed but very important piece of legislation is winding its way through Congress -- a measure that would shed light on the pernicious practice known as "astroturf lobbying."

I've touched on astroturf groups in the past, in the context of the phony "grassroots" anti-naked-shorting coalition -- the National Coalition Against Naked Shorting -- which is a front for foundering companies like Overstock.com, and even slimier penny stock operations. NCANS 's "executive director" has claimed that naked shorting was the "real problem" at Enron.

Last month, a provision of the Senate lobbying reform bill that would have required full disclosure of the backers of astroturf groups went down to defeat. Here is an NPR article on the subject, and an editorial in the Los Angeles Times that sets forth the issues succinctly.

The NCANS is a classic astroturf group -- an organization that gives the appearance of being a "grassroots" organization, while in fact representing narrow corporate interests. NCANS is so anxious to hide its backers that it won't even publish its address, and the fools who send it money do so via a lawyer.

Such sham organizations would wilt under the hot light of disclosure. Corporate interests ranging from Microsoft to oil and health care and insurance companies have used astroturf groups effectively. The naked shorting nutcases are the only Wall Street-related groups that I'm aware of that that have used astroturfing, and they have done so effectively.

An early provision of the Senate bill would have detailed reports from groups spending at least $25,000 on astroturfing. This was rejected on phony "free speech" grounds, and even a watered-down provision is running into opposition.

As the LA Times put it, "members of Congress have a right to know whether a campaign is the result not of a spontaneous sea change in public opinion but a professional operation. Such truth-in-packaging doesn't mean that lawmakers will disregard the outpouring of opinion on a given subject, only that they will put it in proper perspective."

Yes, members of Congress have a right to know. But so do regulatory agencies, which are at least as prone to campaigns by astroturf groups -- and the SEC's ongoing waste of resources over naked shorting is a good example of that.

Astroturfing disclosure will come up before the House of Representatives in the coming months. The House should show some guts on this issue and require full disclosure by corporate con men.

© 2007 Gary Weiss. All rights reserved.

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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.

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A Valuable Perspective on the Bartiromo Saga

Pam Martens, ex-Smith Barney broker famed as the whistleblower in the "boom boom room" sexual harassment case, has a very intriguing two-part article in Counterpunch on the Maria Bartiromo controversy. Part one ran last weekend, part two yesterday.

Rather than deal with this as an ethical issue -- a non-starter in my view -- she digs a bit deeper and, instead, views Bartiromo as a "poster child for crony capitalism."

I don't agree with everything in these articles, but I think that Pam Martens has dug closer to the heart of the issue than anything I've read so far. The problem is not that anything "unethical" happened, but that the coziness of the media to big business has gone too far.

Ms. Martens observes as follows:

The real story, in my view, is that Ms. Bartiromo, a journalist, should not have been riding around on Citigroup's private jet on speaking tours with Citigroup clients. She should not have been considering a $5 million TV show sponsorship by Citigroup while masquerading as an impartial business journalist on CNBC. (She has conducted at least 11 Citigroup interviews over a two year period.)

The real story, in my view, is that as far back as 2002, when Sandy Weill controlled Citigroup with an iron fist and Chuck Prince was his top lieutenant, Ms. Bartiromo was not sounding very much like an impartial journalist on the back jacket of "King Of Capital: Sandy Weill and the Making of Citigroup." Here's what she said about a man who was about to explode in the news as the kingpin of one of the most corrupt businesses on Wall Street: "Sandy Weill is probably the best deal maker on the planet. He is truly one of the leading business titans of our times."

The real story is that Ms. Bartiromo is the new face of crony capitalism and the living embodiment of a corporate media that has lost its way so thoroughly that CNBC justifies Ms. Bartiromo's actions by brushing away the conflicts as simply "source development."


I think the last paragraph is a bit of an overstatement. But I do think that what she is saying here is important.

© 2007 Gary Weiss. All rights reserved.

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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.

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