Sunday, September 30, 2007

The Darjeeling Limited



I have no comment on the artistic merits of The Darjeeeling Limited (neither did the New York Times reviewer, I see), but I do think that it absolutely nailed the experience of traveling through India.

One tiny point of annoyance is that the final scenes of the film, set in the Eastern Himalayas, were filmed at a hunting lodge in Rajasthan. That's like filming a New England scene in southern Arizona.

This is a shame, as the film -- which is a travelogue as much as anything -- lost a chance to show the amazing diversity of India. It appears in the film to be one big Rajasthan.

© 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, September 28, 2007

Novastar Sends Out SOS



Naked shorting poster child Novastar Financial has sent out a distress signal, Herb Greenberg reports, in the form of an 8-K.

Says Herb: "Hard to decipher through the thickest of thick leagalese, but if I read NovaStar's (nfi) latest NovaStar 8-K correctly, it's hangin' on by a thread and Wachovia, it's big lender, is pulling out all (and perhaps, it's last) stops to keep the thing afloat."

I'd say it's time to put women and children in the lifeboats, and lower away. Or have another reverse split.

I wonder if Phil Saunders a/k/a "Bob O'Brien," the ex-used medical equipment salesman who has pimped this piece of junk, has any other hot stock picks up his sleeve?


© 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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Thursday, September 27, 2007

Should the Justice Department Investigate Sharesleuth?

A detailed article on Mark Cuban's Sharesleuth insider trading project, appearing in Wired magazine, has prompted an interesting item in a Reason Magazine blog. The title is "A New Business Model for Financial Journalism; Should the Justice Department Investigate?"

I had always assumed that Sharesleuth was merely unethical but not illegal, and that it falls under some kind of loophole in the insider trading laws. Blogger Brian Doherty suggests otherwise:

After all, he's making money using knowledge he received through connections (with Carey, his employee) that the typical trader couldn't easily know. And it's just possible that some of Carey's information may have come from some Samuel Waksal-like company insider, directly or indirectly, saying something to someone he isn't legally allowed to say about his company. So I do wonder if insider-trading law mavens think a Justice Department investigation of Cuban is in order, and why or why not.
This is a valid concern and needs to be explored, I think. The Reason item points up, once again, why it is a bad idea for would-be publishers to trade in advance of things they publish. Sharesleuth has only gone after two public companies, and if it continues to push against the envelope I suspect that it is going to fall under regulatory scrutiny.

One thing I find objectionable about Sharesleuth is the canard that what this outfit does in any way benefits investors. It does not. It is purely a money-making operation, and it is not clear to me if it is effective even as that.

© 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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Reforming the Stock Loan Quagmire

New York Times chief markets correspondent Floyd Norris has a particularly savvy and thought-provoking column today on reforming the grimy, scandal-wracked stock loan business. The approach outlined in the column toward the much-exaggerated "naked short selling" issue, a subject of much wasting of resources by the SEC, is particularly interesting.

All short-selling depends on stock loans, and that is a disreputable business. Last week, federal criminal charges were brought against stock loan officials at major brokerages, essentially for preying on short sellers. What's bad about that is that shorts add liquidity to the market, and are a major counter-force against stock market hype and corporate sleaze.

Quoting a prof named James Angel -- who interestingly is a darling of the anti-naked shorting conspiracy types -- Norris makes the following observation:

If the stock-loan market were transparent, then it would be clear how much money a trader who failed to borrow shares was saving, argues James Angel, an associate finance professor at Georgetown.

"The problem won't go away," he said this week, "until the economic incentives are fixed."

Angel has suggested that the SEC drop its complicated regulations on the subject, known as Regulation SHO, and simply tell stock markets to levy fines for violations that would be higher than the costs the traders avoided. That would, he thinks, end the problem of naked short selling.

There would still be some failures to deliver, caused by paperwork problems, but they would be relatively rare.

It is not that simple, as he concedes.

Moving to such a rule could lead to short squeezes in the form of sky-high borrowing costs, which could amount to stock manipulation on the upside, and he says it might be a good idea to put a cap on the fee.

He would also like the SEC to take steps to make more shares available for lending, by allowing brokerage firms to lend out shares held in all customer accounts, not just margin accounts.

Of course, no approach would stop the constant conspiracymongering about naked shorting. Since this is a nonexistent problem, there is, by definition, no solution. But opening up shorting to non-margin accounts would make it harder to engage in manipulative short squeezes, while also dealing with naked shorting. I think it is worth a closer look.

© 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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Wednesday, September 26, 2007

Going to Work for Captain Queeg


Since I began tracking the activities of corporate train wreck Overstock.com, I've gotten a lot of hate mail from the general direction of Overstock.com, and also a lot of really fascinating stuff. Former associates of the company have been in touch. And the stories they tell are amazing.

These people are terrified of the reaction from the vindictive and unhinged CEO Patrick Byrne. I don't blame them. The Overstock.com they describe reminds me less of an Internet company than it does the U.S.S. Caine under Captain Queeg.

For instance, one former well-placed Overstock official wrote me after an item on Byrne's posturing over school vouchers. I was being unfair, evidently.

This issue, I'm told, "has been Patrick's passion for quite some time and goes back to his roots in economics… before he went nuts. . . He started his campaign for school vouchers years before his jihad against Wall Street and the downward spiral into which it has sent him."

This person stated that "I agree that the way he runs the company is awful . . However, I urge you to think twice about sullying the one good thing he’s trying to do."

Well, I stand corrected on that. Thanks for the vote of support in favor of the ex-boss. More excerpts from the ex-Overstock refugee camp can be found in the update here.

Evidently these ex-employees think too dang much. They must remember that sheer, blind sycophancy is the order of the day on the corporate Caine.

Paranoia too. "He keeps very close tabs on anything on the Internet that says something negative about him and has his people scour to find their identity," says one ex-Overstocker.


Still, ya got to eat. And for those who are not particular about their choice of employer, there is always Overstock.com. But, as can be seen from the above, a special breed of employee is required. Thus I see that a creepy character named Evren Karpak has just joined the team. Byrne's new "Jihadist" in the war against the Sith Lord (right) announced his hiring by Overstock in this post on a stock message board yesterday.

What's remarkable about Karpak are his qualifications: he doesn't appear to have any, except for an ability to kiss Byrne's butt on Internet message boards and attack Byrne's critics. He's a kind of junior varsity Judd Bagley, who also was hired after attracting Byrne's attention by smearing Byrne's critics. Karpak's sliminess is chronicled here.

Karpak's duties were not disclosed, but I assume he'll be working for Bagley as a kind of aide de stalker.

This probably explains why Byrne went out of his way to distance himself from Karpak, at the tail end of a post on Sept. 20--just five days before Karpak announced his hiring by Byrne. In an odd addendum to the post, he said:

PS For the record:
1) Evren has no relation to Overstock. I believe I have never even spoken to him, but I recall a handful of emails from some time ago. I think these blackguards hate him because, though English be a second language to him, he writes better than they do, and also, because he is a Turk and they are bigots.
Never spoken to him? And five days he is hired? That strains belief, to say the least.

Given his penchant for serial fibbing, I assume this can be translated to mean that Karpak had a relationship with Overstock. In fact, I would not be surprised if he had been hired when those words were written. The SEC, which is investigating Byrne and Overstock.com, may want to explore just when Karpak began his job talks with Overstock.com.

Karpak was notorious for posting hate-filled messages on stock message boards and serving as a volunteer stalker and toady for Bagley, who operates the antisocialmedia.net corporate smear site. Karpak has aimed most of his venom at Sam Antar, the reformed felon who is working with regulators to bring bad companies like Overstock to justice.

When he wasn't bashing Byrne's critics Karpak has been a shameless shill for the company, and has been steadily posting his swill pretty much every day. This bit of syrupy cheerleading, for instance, was posted just five days before his announcement yesterday. Seems to me that any relationship with Overstock -- such as a pending job offer or talks related to employment -- should have been disclosed on the post. The SEC should explore whether Karpak received compensation of any kind for his aggressive shilling of the company and vicious attacks on Byrne's critics. And I would suggest that giving a cushy job to a message board shill is compensation, in and of itself.




Putting aside the significant ethical and legal aspects, Overstock is, of course, heading into a red-ink typhoon of the kind that almost foundered the Caine. So this is a really remarkable -- if unsurprising -- squandering of corporate resources. Such hirings do wonders for a company's morale, so I am sure there will be more ex-employees even if the company remains in business, which seems doubtful.

You have to admit that Karpak has shown the immorality and obsequiousness required to work for a nauseating company like this. Still, he'd better keep watch on the strawberries in the pantry, if I were him.

UPDATE: A grimy little company called BioTech Medics today pledged its fealty to Byrne and his baloney crusade. As long as he is flushing his shareholders' money down the toilet, why not buy this company as a gesture of gratitude?

© 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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A Blast From the Past

The SEC took action the other day-- a link to it is here -- against a company called Solv-Ex. It's a typical SEC close-the-barn-door-after-the-cows-have-left action, and then some.

As you can see from perusing the link and the other SEC actions concerning Solv-Ex, this crummy little company declared bankruptcy years ago and has not been a viable business for most of the past decade.

In its day, Solv-Ex was a kind of proto-Overstock.com, constantly bellowing about being targeted by short-sellers. (This was the pre-baloney era, so "naked short selling" was not hauled out as a phony excuse as it is today.)

In fact, as is usually the case in such situations, the shorts were right and the company sank. My reporting found at the time that its stock was being manipulated by organized crime.

Here is a Motley Fool article from 1996 that summed up the issues. The article turned out to be correct, but the SEC did not get around to throwing the book at Solv-Ex until two years later. And as you can see, the litigation is continuing to this day, long after the company is kaput.

The wheels of justice turn slowly, but this is ridiculous. The SEC's intervention is needed when a fraud is underway, not long after it has happened. The agency was set up in the New Deal era to protect investors, and not to give people like me a reason to chuckle a decade later and say "I told you so."

© 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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Tuesday, September 25, 2007

Patrick Byrne and His Three Stooges


Overstock's star witnesses

One of my favorite movies when I was a kid was The Three Stooges Go Around the World in a Daze. I was thinking of that movie today as I read an item in Sam Antar's blog entitled "Patrick Byrne and his Three Stooges."

Instead of Moe, Larry and Curly, we have Demetrios Anifantis, Robert Ballash, and Darryl Smith, former employees of Gradient Analytics who figure in Overstock's junk lawsuit against Gradient and Rocker Partners.

In his blog item, Sam analyzes -- as in "rips to shreds" -- their "conflicting, inconsistent, and contradictory allegations." Note that Overstock's wack-a-doo CEO, Patrick Byrne, co-stars as straight man (and script writer, it would seem).

After reading Sam's item, you will wonder, as I have, why Byrne is "celebrating" a lawsuit in which his principal witness are these three characters. Is he taht detached from reality?

While it is a shame that Gradient and Rocker have to spend thousands of dollars defending themselves from Byrne's schlock claims, there is no question that civil discovery proceedings will be in the public interest. They will aid the SEC's investigation into the company as well (and vice versa, of course).

Junk lawsuits are bad, but this one is going to be interesting.

© 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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Sunday, September 23, 2007

A Death in Baloneyland


The new look at NCANS

The astroturfing website that promoted "naked short-selling" conspiracy theories -- a phony issue pushed by CEOs of crappy companies to divert regulators from real investor concerns -- is no more.

Visitors to the "National Coalition Against Naked Shortselling" site -- and there sure as hell haven't been many lately -- are now greeted with the dread Internet error message that means that a website has given up the ghost.

The site pushed the interests of corporate excuse-mongers everywhere, and was especially shrill at promoting the disastrous Novastar Financial subprime lender and the SEC-investigated monstrosity Overstock.com. The group was fronted by a coot named Mary Helburn, who once famously called Enron a victim of naked shorting.

This "organization" was so brimming with baloney that it didn't even know what its name was. It was variously known as the "National Coalition Against Naked Shortselling" on its site and the "National Coalition Against Naked Shorting" in its incoherent SEC comment letters.

A note on the "sanitycheck" stock market conspiracy website says that "NCANS is going to be incorporated into this site over the next few weeks, as this site is the de facto hub now for issues NCANS is grappling with." Translation: NCANS is kaput. The ostensible reason it was a "duplication of effort" to keep the site active.

Since that is a lame lie by even Baloney Brigade standards, I assume the site's funding source -- Patrick Byrne of Overstock.com, I would imagine -- has closed his checkbook for legal reasons.

Since the NCANS did not exist except for the little-viewed website and a similarly moribund Yahoo discussion group, this means that a minor but annoying source of investor misinformation has, thankfully, bitten the dust.

The NCANS site promoted kooky conspiracy theories, smears against media critics, and served as a sounding board for "Dr." Patrick Byrne, the wack-a-doo CEO of Overstock.com. Since it was created a couple of years ago, the anti-shorting movement has lost whatever credibiltiy that it may have had, thanks to Byrne's antics and the stench of his creepy house stalker, Judd Bagley.

Though barely alive, the "sanitycheck" website, run by a former used medical equipment salesman named Phil Saunders (a/k/a "Bob O'Brien), seems ready to give up the ghost as well. At one time it was interesting to see what clearly insane people had to say, but the shock value of that is also getting a bit old.


Though Alexa numbers are notoriously unreliable, they do give a rough gauge of readership, and indicate that Sanitycheck's following has flocked elsewhere. (To 9-11 conspiracy sites I would reckon.) As you can see from the three-year Alexa chart above, the site received a spurt of readership when promoted by Byrne, in a famously wacky CNBC appearance (below), and was sustained by links on every single Overstock page under the misleading title "Market Reform."


The page links have now dwindled from thousands to a mere one, as Byrne -- doubtless acting under legal advice and/or SEC pressure -- has taken down the links to Saunders's site. Byrne now has taken the important job of smearing his critics in-house, with screwball posts on an Overstock message board and the antisocialmedia.net corporate smear site.

Withdrawal of Overstock support has meant that "sanitycheck's" Alexa chart now has an uncanny resemblance to the price chart of Saunders favorite stock Novastar, which he shamelessly hyped on the web. It still amazes me that people would buy, or not sell, stock on the basis of the ravings of an unhinged anonymous idiot like Saunders. But it really happened.

To be sure, Byrne and other corporate blame-deflectors have not given up. Byrne's checkbook is still open, and is pouring Overstock's scarce cash into lobbying the SEC over this nonexistent problem. But any pretense of the anti-shorting movement being anything other than a corporate-financed astroturf operation is now, officially, kaput.

© 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, September 21, 2007

Fortune Moves Into India While BW Moves Into .... Chicago?

I was delighted, and intrigued, to read this morning that Fortune is planning to commence an India edition (hat tip: Talking Biz News). I think this is interesting for two reasons.

First it meets a huge unmet need in India, which desperately needs more intelligent and in-depth coverage of its business scene. It also is a smart move because Indians are fascinated with global business, and the U.S. and European business magazines, while available, are prohibitively expensive and scarce.

Second is the inside-baseball perspective, and how it contrasts dramatically with the retrenchments and deglobalization at my alma mater, Business Week.

Late in 2005, BW announced it would shut down its international editions. (Here's the BW spin on this retrenchment.) In so doing, BW threw out the basic tenet under the former regime of Steve Shepard that it was a "global magazine." It also laid off a bunch of talented people.

I remember well how Shepard used to make "We are a global magazine" the first of the "ten commandments" of BW's operations, which he used to trot out at conferences and such. BW has done some good stories on India, including a 2004 cover story on the country that garnered some of the magazine's last major awards. But it has basically given up on Asia as a market.

In keeping with this U.S.-focused strategy, BW recently announced that it was commencing a Chicago edition. This may be the beginning of still more locally focused editions, BW says.

It's interesting to contrast the two strategies. BW's is vaguely reminiscent of how newspapers moved toward suburban and regional editions in the 1960s and 1970s. But there is a difference. Big-city newspapers had an obligation to follow their subscribers as they moved out to the exurbs. BW's has no such demographic imperative. On the contrary, this strikes me more as an admission of defeat in the battle for ad dollars, a kind of conscious narrowing of its mission.

It also is questionable as a circulation-building strategy. Will this really induce Chicagoans to buy Business Week? The local market already has the Chicago Tribune and Crain's Chicago Business. BW simply doesn't need to cover Chicago in the same way that, for instance, the Hartford Courant needed to cover the town of Vernon when it established a bureau there four decades ago.

People in Chicago read BW because of stuff like this, a nice piece on a ratings downgrade --cutting close to home because of Standard & Poor's -- and not for local biz news.

I'm reminded of what an old colleague, one of the best financial journalists in the business, told me when he left BW, without another job, back in 2004. The financial magazine business is undergoing a secular change, he said, and it is going to get uglier.

His prediction has proven correct. Still, Fortune's move into India shows that some magazines are willing to take risks and still have a global vision.

UPDATE: BW Chicago died after eight issues.

© 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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Thursday, September 20, 2007

More Bad News For Overstock.com

More bad news for the sleazy corporate train wreck Overstock.com. The California Supreme Court threw out a motion to dismiss the company's junk lawsuit against Gradient Analytics and Rocker Partners.

This means that Overstock's wack-a-doo CEO Patrick Byrne will now be subjected to the hot light of civil discovery proceedings for the first time in his life. It means that Gradient and Rocker's legal team, headed by superlawyer David Boies, will now subject Overstock to subpoeanas for documents, and that Byrne & Co. will be grilled in lengthy, detailed, excruciating depositions.

If Byrne is aware of the Pandora's box he has opened, it would surprise me. The man is so deluded and detached from reality that I doubt that he has the wits to contemplate the consequences of anything he does.

Such as, for instance, being hacked to pieces by David Boies under penalty of perjury.

Such as beginning a process in which every single thing that Overstock.com, Patrick Byrne, and his minions have done will be exposed to public airing. The fruits of this inquisition will be available for everyone -- you, me, the media, regulators, the SEC, prosecutors -- to feast upon.

Lies and spin can only count against him, as will the company's long list of misdeeds -- ranging from questionable accounting to hiring a paid stalker named Judd Bagley. The latter took time out from dressing up as a woman to stalk Wikipedia editors, and crafted a creepy press release "celebrating" this awful news.

The last bad news Overstock "celebrated" was an SEC subpoena last year. That signaled the commencement of an SEC investigation that continues, while a parallel SEC investigation of Overstock's charges resulted in Gradient et al being cleared.

So it is fair to assume that this lawsuit is not going to go Overstock's way, and that this putrid company is about to undergo a welcome airing of its dirty laundry.

UPDATE: This post seemed to draw blood from Team Byrne, which posted an anti-Semitic slur against me on the sewer called the Investor Village message board -- always a sign that I've hit home. Byrne, who had previously never met an anti-Semitic supporter he didn't like, had to weigh in to calm things down.

Meanwhile, Tracy Coenen updates the Bagley-related bad news in a three-part series in her blog (here's part one). O-Smear, meanwhile, posts some examples of Bagley's best "strategic messaging" on behalf of his employer.

© 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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Wednesday, September 19, 2007

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.

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Wall Street Versus America was published by Penguin USA on April 6.
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Monday, September 17, 2007

Sayonara, Universal Express

A naked shorting poster child is no more.

The South Florida Business Journal reports that court-appointed receiver Jane Moscowitz has sent home the employees of Universal Express and shut the doors. So ends what had been a prime example of bad companies using naked shorting to excuse their own failures. According to court rulings, this company was little more than a vehicle for issuing unregistered stock and false public disclosures.

It will be interesting to see what Moscowitz finds when she unpeels the layers of this onion.

One of her first steps should be to wrest control of the Universal Express website, which had served as a platform for the company's blowhard CEO Richard Altomare, and perform a delousing operation. I must say, though, that I will miss Altomare's press releases.

All this poses a dilemma for the U.S. Chamber of Commerce, which appointed Altomare to three committees. What do you call a CEO who just got booted out by a trustee? I know what you call an organization that appoints such a CEO: just plain dumb.

The judge who appointed Moscowitze, at the behest of the SEC, is considering contempt penalties against Altomare and the company's general counsel. Stay tuned.

© 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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Alice in Bagleyland



The O-Smear blog has an extraordinary post that is must-reading for anyone following the Overstock.com slo-mo train wreck. It describes how Judd Bagley dolled himself up and posed as a woman to harass a Wikipedia administrator.

It is the series of twenty -- yes, twenty -- harassing, threatening emails that Bagley, hired as Overstock.com's paid stalker a month later, sent a Wikipedia administratorm late in July 2006. The most menacing one was sent after Bagley came on the Overstock payroll.


It appears that this "transvestite harassment campaign" was crucial in landing a key to the Overstock executive washroom for Bagley. (It is a unisex facility, I hope.) The harassment obviously charmed the pants off Overstock's creepy CEO, Patrick Byrne. He clearly was fully aware of it, as indicated by a public post just a few days later. O-Smear observes:

To gain trust (and add creepiness), Bagley posed as a woman named "Becky Beckett". Such tactics impressed Overstock CEO Patrick Byrne so much, he hired Bagley about a month later. He was seemingly well aware of Bagley's activities as indicated in this August 7, 2006 post:
Amazingly enough, they are tied into a cabal on a certain public knowledge-sharing site as well. I know a fellow who spent a lot of time briefing an investigative journalist about it all recently. It will make a heck of a sub-plot in the movie someday."
Please click on the link and read the O-Smear post. It is a fascinating look at the fantasy lives of two very strange and dangerous characters.

Note the reference to Bagley in the italicized quote. The "journalist" is a chap who was being fed a line of swill by Bagley at the time. He interviewed myself and other people, and no article ever resulted.

One can only imagine how the Wikipedia administrator felt when exposed to this "female" stalker's sustained nuttiness. I only hope that she lives in Canada, as rumored, for it takes a particularly dim view of such harassment and has a strong cyberstalking law.

© 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, gary-weiss.com.

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Friday, September 14, 2007

Today's Depressing News

Well, not really news, or new -- just depressing. Charles Lewis writing in Columbia Journalism Review:

In the past couple of years alone, everything but a piano has fallen on the head of the serious press: Rupert Murdoch bought Dow Jones and The Wall Street Journal; Knight Ridder, the nation’s most Pulitzer-honored newspaper chain, was dismantled; the McClatchy Company sold the Minneapolis Star Tribune to a private equity firm for less than half of its purchase price eight years earlier; and hundreds of reporters and editors accepted buyout offers at The Atlanta Journal-Constitution, The Boston Globe, the Cleveland Plain Dealer, The Dallas Morning News, the Los Angeles Times, The Washington Post, and many other newspapers.

Four dailies that have produced inspiring international coverage in the past—The Philadelphia Inquirer, The Boston Globe, Newsday, and the Baltimore Sun—closed their remaining overseas bureaus. In TV, as veteran correspondent Tom Fenton has observed, a quarter century ago CBS News had twenty-four foreign bureaus and stringers in forty-four countries; today, there are six bureaus, none of them in Africa or Latin America. Time Inc., owner of the largest circulation newsweekly magazine, Time, eliminated 650 jobs in early 2006, including those of Don Barlett and Jim Steele, two of the nation’s preeminent investigative journalists, in May. The following week, it was reported that Time Inc. had just paid $4 million for exclusive photographs of Shiloh, the newborn baby of Angelina Jolie and Brad Pitt.

It's even worse at the local level. Not long ago I was in Connecticut, back in Middlesex County where I first worked in journalism. The Hartford Courant was still strong, as was the New London Day. But the main newspaper of the county, the Middletown Press, was a horror.

What had formerly been a dull but reliable locally owned newspaper, with extensive coverage of regional news, has become a cheaply produced tabloid with ads on the front page. It is now owned by a New Haven newspaper company, so a large article on New Haven -- which nobody cares about in Middletown, believe me -- was splattered on the third page.

Newspapers are worse than ever, and the reason for that is not Rupert Murdoch or Bin Laden but the greedy publishers who turn good newspapers into mediocrities and mediocre newspapers into dreck.

© 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, gary-weiss.com.

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Thursday, September 13, 2007

Lost in the Translation

Biovail press release concerning its junk lawsuit against hedge funds and analysts, entitled "Biovail Says Settlement With Maris, BAS Expected to Be Helpful in Suit Against Hedge Funds and Others":

Biovail said that in fact, today's settlement agreement with Banc of America Securities and one of its former analysts David Maris, is expected to be extremely helpful in Biovail's pursuit of its lawsuit. The company said that the settlement provides, among other things, an agreement by Mr. Maris to provide substantial sworn testimony, voluntary production of material documents from BAS and Mr. Maris and the right to demand additional discovery of BAS and Mr. Maris which would include all relevant materials, such as e-mails, correspondence, tape recordings and trading records.

David Maris press release:

"I am pleased that Biovail has dropped the baseless lawsuit it concocted against me and given me a complete release of claims," Mr. Maris said.

"However, contrary to the suggestion in a press release issued by Biovail on September 10, I am not cooperating with Biovail," he added.

"Under my Settlement Agreement with Biovail and the company's former chairman and CEO Eugene Melnyk, I have no obligation to cooperate with Biovail or to answer any questions unless Biovail seeks to depose me," Mr. Maris continued.

If Biovail does seek to depose him, Mr. Maris said he will respond truthfully to questions asked by all parties, including Biovail.

"Although Biovail is free to depose me, I don't believe my answers will assist the company in its cause. To the contrary, I am unaware of any conspiracy against Biovail and do not believe any such conspiracy ever existed," Mr. Maris's statement concluded.

Oh my. One of them is lying.

Here's an American Lawyer article on the whole Biovail mess.

© 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, gary-weiss.com.

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Wednesday, September 12, 2007

The Overstock.com Sleaze Watch: Omuse Padding Covered Up

Yup, a third blog item in a row on sliminess at Overstock.com. They don't call it the "gift that keeps on giving" for nothing.

Remember all those company-written articles Overstock.com planted in "Omuse"-- you know, the make-work project that was created for its house stalker, Judd Bagley? Well, they're gone, folks -- each and every one of them.

Take a look at the list of new Omuse pages today, and compare with the one that I listed on Aug. 29. Forty new articles were listed through the August back then. Today, the number of new articles for that same period has shrunk to seven.

What happened to the other thirty-three? Well, all of them were created by a screen name called "polyhymnia." That accounts for the big gap between the first of the month and the 19th. This person, obviously an Overstock employee, would take material from elsewhere at the Overstock.com website and plunk it down in Omuse.

Pretty good way of fraudulently fleshing out a failing project, wouldn't you say? Unless you get caught, which is what happened.

But don't bother looking at polyhymnia's contributions list to see what was taken out. They've been nuked as well. All the phony Overst0ck-plagiarized articles have vanished without a trace.

If you click on one of the links in the original item, such as this one for a "pearls buying guide" copied from elsewhere on the Overstock site, you come up with zilch. The article has been wiped off the face of the earth.

Well, not entirely. It is there for the pickings for investigators at the SEC, who are probing Overstock and its wack-a-doo CEO, Patrick Byrne. Still, this makes you wonder: why the crude coverup? I have a general idea as to the answer, but I can only say that a "sudden attack of ethics" isn't the reason.

Speaking of ethics, is it bad when the CEO of a company provides a comment letter to the SEC containing a paper from the "Haverford Group" -- without disclosing that he owns the Haverford Group?

UPDATE: The O-Smear blog discusses the latest tidings in Judd Bagley's day job, which is running Overstock.com's antisocialmedia.net corporate smear site. It's interesting to compare the zeal and energy Bagley employs in his day job of stalking Byrne's enemies, versus his half-hearted effort to make his Omuse cover story work.

© 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, gary-weiss.com.

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Tuesday, September 11, 2007

Technical Boner Snares Overstock.com in a Lie


Overstock computers linked to "antisocialmedia"

Of all the mammoth lies that have spouted forth from Corporate America's Lie Machine, Overstock.com, and its CEO Patrick Byrne, none has received as much well-deserved ridicule as his claim that his antisocialmedia.net corporate smear site is unconnected to the company.

Well, this lie was laid to rest this afternoon by the O-Smear blog.

Seems that Byrne's paid stalker, Judd Bagley, made something of a boo-boo when he set up a "wiki" on the astroturfing site. As O-Smear points out, it doesn't take much technical expertise to see that edits to the site were clearly made from Overstock.com and by Bagley, and during normal business hours.

Aw gee. That will never do. The purpose of astroturfing is to hide the sponsor's involvement, not to advertise it -- particularly when the head of a public company has been saying that there's no involvement.

Golly. Is there something wrong with a CEO lying like that? I wonder if the SEC, which is investigating Byrne and Overstock.com, have any thoughts on the subject? Here are Sam Antar's thoughts on the subject.

As I noted recently, O-Smear has found that Bagley uses the term "black ops" to describe what he does. The term refers specifically to operations of questionable legality and ethics. Lawyers will have a field day with that sooner rather than later, I reckon. Today's item ties a bow on the whole thing by landing the "black ops" right on the door of Overstock.com.

UPDATE: Some insights from a person familiar with Overstock from the inside:
  • Prior to being caught using spyware, Bagley had been spending most of his time surfing the web and working on Byrnes Jihad. Now he "apparently" just surfs the web from 9-5. (And his fingers just happen to slip onto the keyboard by accident from time to time.)
  • Byrne is trying to distance himself figuratively and literally from Bagley, and has moved Bagley from the executive suites down to a small cubical in the marketing department.
  • This person believes that Byrne is only to glad to have his misdeeds "deflected to the more visible Bagley."
  • This person has heard, but cannot prove, that Yahoo banned Overstock IPs for 24 hours because of the spyware revelations, most of which were from O-Smear.
Interesting stuff. If I were Bagley, I'd read Sam Antar's post today -- the one about how prosecutors use the little fish to snare the big fish in federal prosecutions.

I have a funny feeling that some of the smaller fish may already be chatting. Call it intuition.



© 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, gary-weiss.com.

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Saturday, September 08, 2007

Inside the Comic Book Mind of Judd Bagley



UPDATE: Judd Bagley copped a plea to eight drug felonies in April 2013. See "Closing the File on a Criminal and Junkie Named Judd Bagley," March 30, 2015, describing his arrest and conviction for repeatedly forging a doctor's name on prescriptions.

I'm sure a lot of us have wondered, "how does Judd Bagley live with himself?" Sure he's stalking critics of Overstock.com for money, but what really goes on inside his head when he is behaving in such a publicly nauseating way? What is he thinking?

Well, we now have a window into the mind of Overstock.com's "director of communications." The O-Smear blog has found that Bagley views what he is doing as a form of "Black Ops." You know, sort of like Sergeant Fury and his Howling Commandos or any of the other great comic books we read when we were kids. Except that we've grown up. Most of us.

There have been clues to this weirdness in the past. In posting under the pseudonym "ipfrehlee" on a Yahoo stock board a year ago. he referred to himself as "gathering intel." The O-Smear blog now finds that he has a folder on his computer called "Black Ops," and that he used a related IP address to vandalize Wikipedia.

Bagley reacted by solemnly pledging to attack Wikipedia even more . I quote:
I just got an iPhone and am going to edit like mad with it, until every iPhone user in the USA is blocked. That will be quite an army!
An Overstock-paid iPhone I'd bet.

A veritable Howling Commando, our Bagley. He may not be mature, but he is consistent. As Sergeant Fury used to say, "Wahoooooo!"

© 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, gary-weiss.com.

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Friday, September 07, 2007

Does it Matter When Ms. Moscowitz Takes Over Your Company?

Yes, friends, that is today's philosophical question. Does Moscowitz matter? I learned from an Internet rumor today that a receiver had been appointed to take over naked shorting poster child Universal Express, that her name was Moscowitz and that she's now running the show.

Then I turned to the company's website. Nothing. Edgar: nothing, no SEC filings. No Moscowitz.

So then I checked the electronic filings of the U.S. District Court in lower Manhattan, and there she be: Moscowitz!

I found an order by Judge Gerald E. Lynch, dated Aug. 31 and filed on Sept. 4, that said as follows:
For the reasons stated in the order of August 30, 2007, and upon due consideration of potential candidates, it is hereby ordered that Jane W. Moscowitz of Miami, Florida be appointed receiver for Universal Express Inc. to determine Universal Express's actual financial state, to collect and conserve what assets the company has, and to report its findings to the court.
Just so you don't think I'm making this up, here is a screen shot of the decision:



What this means is that Universal Express's loudmouth CEO Richard Altomare, the sergeant-at-arms of the naked shorting conspiracy loons, is out out OUT! (As Ralph Kramden would have said.) Moscowitz is in.

Now, back to my question. Is this important? I mean, when the court names a lady to come in to your offices and "collect and preserve" your assets -- isn't that worth disclosing to your shareholders?

As a matter of fact, as I pointed out the other day, when the judge issued his initial decision on August 30, Altomare issued a press release not mentioning that a receiver was going to be appointed. So I guess the company wouldn't want to mention that the receiver has been named, that her name is Moscowitz, and that the loudmouth is out out OUT.

Which leads me to another question that I have raised before: Where is the Justice Department? Is there any particular reason why Universal Express isn't the subject of more than an SEC lawsuit?

UPDATE: It will be interesting to see what kind of slugs Ms. Moscowitz can find under the rug. One just outed himself yesterday -- C. Austin "Bud" Burrell, who operates a pink sheet outfit called Private Trading Systems when he isn't yammering nonsense about naked shorting. Here's a pretty good take on that company and its interesting ownership.

Burrell, a shrill defender of Universal Express, and now a leading defender of that other naked shorting "victim" Overstock.com, disclosed yesterday on Phil Saunders' "thesanitycheck.com" website that he had been on the Universal Express payroll up till about two years ago. He also said that he is a "very significant unsecured creditor."

He later said, " I provided litigation support to the in house General Counsel for over 4 years. What they owe me is privileged."

Note to Ms. Moscowitz.

It will be interesting to see how much money this naked shorting poster child -- and Universal Express's brethren like Overstock.com and Novastar Financial -- has been flushing down the toilet with characters like this.

© 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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Mary Schapiro's 'Fantastic' Reading List


I practically fainted when I opened up my mail today. No, not a bill or a threatening letter, but a copy of something called "Equities" magazine with the smiling face on the cover of Mary Schapiro, head of the Financial Industry Regulatory Authority (the merged regulatory branches of NASD and the New York Stock Exchange).

What amazed me was not just that Schapiro would give credence to a magazine with a history of featuring shameless penny stock hucksters, but that she gave a ringing endorsement to the magazine.

A lengthy Q&A with Schapiro begins as follows:

Equities: Mary, thank you for taking the time to speak to the reasdrs of EQUITIES. Do you read the magazine?

Schapiro: Absolutely. It's fantastic! You can quote me.
I wonder what Schapiro finds so fantastic about the magazine. It regularly pushes some of the cruddiest stocks known the mankind, and is noted for giving publicity to stock promoters like Ray Dirks.

In fact, right next to Mary Schapiro on the cover is a promo of a softball article on Dian Griesel of Investor Relations Group, which specializes in promoting OTC Bulletin Board and other flyspeck companies. In Wall Street Versus America I describe how Griesel issued a press release proclaiming a lawsuit against citizen activist Floyd Schneider, without actually filing suit.

Perhaps Schapiro thought the article on Griesel was "fantastic"? Or the microcap promotion articles peppered through the rest of the magazine?

I'd say that Mary Schapiro needs to think a bit more carefully before she gives a ringing endorsement to an investment tome.

UPDATE, 12/08: Mary Schapiro is, amazingly and disappointingly, Barack Obama's choice for SEC chairman.

© 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, gary-weiss.com.

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Why I Don't Trust Alexa

Alexa today rammed me in (comparatively speaking) the stratosphere of the Internet, the all important "top 100,000). My page rank for Sept. 5 was a exospheric 73,926!

This is why I don't trust Alexa.

Sure my page hits have been high for the past few days, because of widespread pickup of my blog item on Overstock.com being banned by Wikipedia. But I've had higher days that did not register on the Alexa scale.

I thnk that is because I was picked up by blog aggregators serving techies, such as techmeme.com and mashable.com, and apparently their users are more apt than others to have the Alexa toolbar.

Alexa ratings are of little value for a blog, as little hobby bloggies like this one don't use 'em to sell advertising. Still, this sort of thing makes me wonder just how valuable Alexa rankings are. Personally I think that Technorati, which measures blogs by their links, is probably more reliable as an external indicator of readership.

© 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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Wednesday, September 05, 2007

A Receiver For Universal Express

To no great surprise, a federal court has ordered that a receiver be appointed to oversee Universal Express, the creepy little company that is a longtime leader of the anti-naked-shorting conspiracy cult.

I wonder if the U.S. Chamber of Commerce is still happy that it appointed CEO Richard Altomare to three Chamber committees.

Altomare promptly spat out a press release saying that he will appeal the ruling. Characteristically, the release does not say what the ruling says -- or that it means that Altomare gets kicked out of his office.

The SEC has been pushing this case as a civil action. Has to make you wonder: where is the U.S. Attorney? Gone fishing?

© 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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Tuesday, September 04, 2007

A Naked Shorting Poster Child Sucks Wind

More bad news today -- and I mean really bad news -- from the naked shorting poster child Novastar Financial. Seems that it may not be long for this world.

This subprime mortgage lender is a favorite of the anti-naked-shorting loons, and was hyped up the wazoo by Phil Saunders, who runs a now-moribund stock conspiracy website called "thesanitycheck.com" under the alias "Bob O'Brien."

Unfortunately, a lot of brainless people listened to this former used medical equipment peddler-- who started a website called "nfi-info.net" to push the company -- and bought shares of this dreadful company.

It's down 17% this afternoon, on a whole passel of bad news. Stock is now trading at a bit over 7, so it is a good thing it initiated a reverse stock split! Otherwise the company would be under three bucks. The stock was trading at a split-adjusted $30 before the reverse split.

$30 and change to $7 and change. Nice stock pick, Saunders!

Seems the company has canceled a rights offering, is cutting back on its business, and--oh my, look at this:

The company said its independent auditor, Deloitte & Touche LLP, wouldn't consent to the rights offering unless NovaStar reissued its 2006 financial statements. The auditor wanted to add footnotes disclosing how problems in the subprime market adversely affected NovaStar's operations, liquidity and financial condition.

Further, NovaStar said that its auditor wanted reissued financial statements to include language related to "the uncertainty of NovaStar's ability to continue as a 'going concern.'" (emphasis added)

That "going concern" stuff means that Novastar may be about to kick the bucket. Aw shucks.

Say, I wonder if Phil Saunders has any more hot stock picks? I hear they'd be great shorts.

© 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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Wikipedia Bans Overstock.com

This appears to be a two-items-on-Overstock.com day. Well, it's not for nothing that they call this sleazy Internet retailer "the gift that keeps on giving."

It seems that one of Judd Bagley's "black ops" targets, Wikipedia, is getting sick and tired of being abused and spammed by this company. Wikipedia today banned editing from every Overstock.com IP address.

I guess Bagley & Co. will have to run out to Internet cafes when they want to intimidate Wikipedia administrators, stalk teenage boys or turn Wikipedia articles into advertisements for Overstock.com.

A Wikipedia honcho observed, under the subject header "Overstock.com/WordBomb/Judd Bagley":

I've just blocked 65.116.112.0/21, which is an IP range (a) owned by Overstock.com (b) widely used by them for spamming, COI editing and attempted intimidation of administrators dealing with them. I strongly suggest against unblocking this range under any circumstances; requested unblocks should probably be run past the ArbCom, who are very aware of Bagley/Overstock's odious work, before acting.
It's fairly unusual, though not unprecedented (see comments), for an entire company to be declared persona non grata by Wikipedia. That requires an unusual degree of sleaziness, which is of course Overstock.com's primary export to the civilized world.

Apparently the online encyclopedia was annoyed by this kind of crap being inserted in the Overstock article by one of Bagley's umpteen sockpuppets. Thanks to Wikipedia, we now know for sure what was obvious for some time -- that a particularly odious message board poster named "Lenofus" is Judd Bagley.

Wikipedia took some harsh action here. A Wikipedia editor familiar with such things tells me that Overstock was first "soft-blocked," which means that no one can edit without logging in, but can edit if he or she or it has an account.

The administrator, a Mr. Gerard, then changed his mind, undid the soft block, and "hard-blocked" that IP range instead, with the block summary: "etwork [sic] owned by commercial spammers overstock.com; please refer unblock reqs to the arbcom."

Hard-blocking means no one can edit Wikipedia from those IPs, and also can't create accounts with them or edit from them with accounts already created.

The courageous individual who took this action will, no doubt, now be added to Patrick Byrne's Omnibus Conspiracy Theory Explaining Why Overstock Can't Make Money.

I find it interesting that volunteer editors of a website are showing more cojones in dealing with the miscreants at Overstock than the lapdog "independent directors" of the company's board of directors.

UPDATE: A few days later, Wikipedia created an article on Judd Bagley, which was promptly vandalized into mush by Bagley sockpuppets. The article was later, lamentably, truncated to one sentence out of a view that it failed to meet Wikipedia policies. Interesting to see if Byrne incorporates this thoughtful action into his Omnibus Conspiracy Theory.

Remarkably, the Wiki editors also debated whether to include the name of Bagley's antisocialmedia.net corporate smear site in the article. That's a bit like debating whether to include the name of the SS in an article about Heinrich Himmler. It's a disgusting site I know, but sunlight is the best disinfectant. I hear it even dries out vomit!

Speaking of the above ... hmmmm..... does this person remind you of anyone?

© 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, gary-weiss.com.

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A Man Hard at Work

The O-Smear Blog has a detailed analysis describing how Overstock.com's full-time stalker, Judd Bagley, has been busily working at one of the key aspects of his job -- posting on stock message boards.

As you can see, Bagley has spent hours puttering around the Investor Village message board, using various sockpuppets, on behalf of his dipsy-doodle boss Patrick Byrne.

The O-Smear post should be read in conjunction with my item a few days ago, in which I described how the "OMuse" wiki -- Bagley's supposed job at Overstock.com -- has been an abject failure.

No company other than Hewlett Packard has devoted itself to obsessively stalking its critics. Yet the SEC, which is investigating Overstock and Byrne, has so far done nothing about it.

© 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, gary-weiss.com.

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