Friday, November 30, 2007

Utah Attorney General Caught in a Lie

In a blog item a few days ago, I described how Utah Attorney General Mark Shurtleff participated in a PR stunt for the Utah-based, SEC-investigated corporate train wreck Overstock.com.

No big surprise. He has done that before, after all, for another sleazy Utah company, Usana Health Sciences.

What is startling, if not surprising, is that it appears that Shurtleff's entire P.R. stunt was predicated on a lie. See Sam Antar's blog today.

This is now the second time that the Utah attorney general has acted on behalf of a disreputable Utah company, and the facts in this one are even more damaging than his "endorsement" of Usana. I'd say that the people of Utah deserve an explanation.

Their tax dollars pay this man's salary. If he is wants to work for bad companies, and not the people of his state, he should quit his job and go into corporate flackery. I know one third-rate internet retailer that would be only too happy to put him on the payroll.

© 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, November 27, 2007

Wall Street's Wall of Email Secrecy Eroded

Susan Antilla has a fascinating column, just out this evening on the Bloomberg wire, describing how Wall Street firms such as Morgan Stanley have been forced to cough up emails they thought had been nuked.

Note the pitfully small, $3 million fine that was imposed on Morgan for willfully withholding emails. Note too that Morgan was able to get away with neither admitting nor denying wrongdoing. Such "we don't admit to doing anything and will never do it again" settlements are a travesty, and need to be abolished.

© 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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Monday, November 26, 2007

More From 'the SEC's Alarm Clock'

Chris Byron once referred to the financial press as the "seeing eye dogs" of the SEC. That description was and is apt, but I think another title is equally apt -- the "SEC's alarm clock," which I hereby bestow on reformed felon Sam Antar, who has been doggedly pursuing possible accounting irregularities at my favorite corporate train wreck, Overstock.com.

Sam's latest post, which can be found here, explores possible violations of SEC Regulation G.

There is really only one intended reader of that post -- the SEC -- as I trust that most people who buy Overstock shares aren't doing so because of the majesty of its financial statements. The question is whether the SEC will wake up, now that the alarm clock has sounded, or once again push the "snooze" button.

© 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, November 21, 2007

Utah Attorney General Kowtows to Overstock.com

It's pretty clear that Patrick Byrne's name is mud in Utah.

Utah voters rejected overwhelmingly a school voucher proposal that had been heavily promoted by Overstock.com's wack-a-doo CEO -- who reacted with a series of condescending and insulting public remarks. Byrne has been excoriated in the blogs and newspaper letter pages of Utah.

Byrne's antics, combined with his previous history of making nutty stock market conspiracy allegations, has destroyed what was left of his company's, and his own, reputation.

Still, the SEC-investigated Byrne and his SEC-investigated company have one big fan left in the state: Utah Attorney General Mark Shurtleff.

The whole tawdry tale can be found on Sam Antar's blog.

Seems that Shurtleff let himself be used in a PR stunt by Overstock in its ceaseless campaign to smear and defame Sam, who has been raising serious questions about Overstock's accounting practices.

I'd say that Mark Shurtleff has some explaining to do.

© 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, November 16, 2007

More on the 'Amazing Fraud'

Floyd Norris of the New York Times has a scintillating account in his blog of the in-your-face greed -- and chutzpah -- of Universal Express CEO Richard Altomare. This story is getting more outrageous with each passing day.

Seems that even as the company was being nailed by the SEC, and defiantly issuing a stream of press releases blaming its share price decline on "counterfeit shares," Altomare was living high on the hog at company expense. Floyd reports, inter alia:

From April 2006 to May 2007 — the latter date after the judge had ordered him to stop running the company — Mr. Altomare had the company spend $558,900 at a retail jewelry store in Boca Raton, Fla. In October, he pawned the jewelry for
$500,000.


In July — after my column, and after the Securities and Exchange Commission asked a judge to hold him in contempt for failing to obey the earlier order — Universal Express paid $30,000 “to cover Altomare’s marker at the Wynn Las Vegas,” a casino.


Wasn't that nice of Universal Express? It will be interesting to see what else the SEC-appointed receiver uncovers.

© 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, November 15, 2007

Novastar Enjoys a 'Saunders Rally'

In the past I've recounted the sad story of Novastar Financial, a subprime lender that was hyped by an anonymous Internet guru called "Bob O'Brien," who runs a stock market conspiracy website called "thesanitycheck.com."

"O'Brien" was identified by the New York Post some months ago as Phil Saunders, a former used medical equipment salesman in Irvine, California. It always struck me as weird why anyone with half a brain would take the advice of a former used medical equipment salesman on any subject unrelated to used medical equipment, if that.

Confirmation of that point came in abundance today, as Novastar fell through the floor -- declining 55% -- on word that a bankruptcy filing was possible.

The stock began the year at just over $106, adjusted for a reverse split, and ended the day at $2.08.

In future years this will be known as a "Saunders rally."

In addition to mercilessly hyping this doggie stock on Internet message boards, and personally attacking critics of the company, Saunders founded a website devoted entirely to advancing the cause of Novastar. That site, and "thesanitycheck.com," pushed nutty "stock counterfeiting" conspiracy theories. Supposedly Novastar was a victim of nepharious market forces, and not its own lack of merit.

It's hard to feel much sympathy for people who buy swill pushed by stock promoters, particualrly anonymous ones, on the Internet.

© 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, November 08, 2007

More Troubling Questions For Overstock.com

White collar crime expert Sam Antar has a sizzling post today, based on a close reading of Overstock.com's Form 10-Q.

Two words: Read it!

Four more words: Where is the SEC?

Byrne is well advised to stick to his knitting -- not running his company -- as his nascent career as a political thinking is not doing all so well. He continues to spread sweetness and light in Utah, where his ancestral wealth failed to persuade voters to adopt a program of school vouchers.

Having previously made racist remarks concerning the expendable character of non-graduating high school students, Byrne has now made some pretty nasty comments concerning Utah voters -- saying they just weren't smart enough to realize the wisdom of school vouchers. That drew this justifably angry response in the Salt Lake Tribune from a Utah academician:


I am sure the vast majority of Utah voters are as deeply offended by the
arrogant comments of Overstock.com CEO Patrick Byrne as I am.

Byrne accused Utah voters of failing a statewide IQ test because they voted down Referendum 1. I believe just the opposite occurred in the election. Voters examined the issue thoughtfully and simply said no.

Over the past few months I have been very impressed with the high level of interest and the even higher level of discussion over this referendum by the people of my own community, the Uintah Basin.

Questions were asked by concerned citizens on each side of the issue, and I heard many insightful answers. Even though I am a member of the education community I approached this issue with an open mind, as did most people I encountered. We all want the system of public education to work better.

Utah voters were not "brainwashed" by any teachers' union. We made an informed decision. Obviously, it was not the one Mr. Byrne wanted us to make, but that is no excuse to insult the intelligence of Utahns. My experience was that Utahns cared deeply about this issue and studied it intensely, and that is why Referendum 1 was defeated.

I assume that at least some of those "stupid" Utah voters are -- that is to say, were -- Overstock.com customers.

UPDATE: Sam Antar delves into the devastating accusations of the Gradient Analytics-Copper River countersuit.

© 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, November 07, 2007

Utah to Patrick Byrne: No Sale

Early returns show that Utah voters have resoundingly defeated the school voucher initiative pushed by the ancestral wealth of Overstock.com CEO Patrick Byrne.

Byrne, meanwhile, is behaving .... well, the way Patrick Byrne always reports when he doesn't get his way. He throws a tantrum. A Utah blogger reports:

On Channel 2, Patrick Byrne (aka Parents For Choice in Education) just said that, although he does not concede the voucher result yet, the preliminary results show that "Utahns just don't care about kids." This guy is certifiable.

No, not at all. A childless, lifelong bachelor who is a product of private schools, and has never worked a day in his life, knows more about the public school system than the collective wisdom of the people of Utah. Everybody knows that!

The Utah polling results show that, to paraphrase Abraham Lincoln, you can fool some of the people some of the time -- and that, if you are Patrick Byrne, you can't even do that.


© 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, November 02, 2007

Byrne a No-Show at the SEC

As I reported a few days ago, white collar crime fighter Sam Antar challenged Overstock.com CEO Patrick Byrne to meet with him on Wednesday at the Salt Lake City office of the SEC.

The aim was to get Byrne to answer, on the record, the dozens of questions that have arisen in recent months about Overstock's slippery accounting and ethical lapses. The venue made sense because the SEC is conducting a formal investigation of both Overstock and Byrne.

Well, guess what? Sam was there-- he had just given a talk to the Utah Attorney General's office -- but Byrne was a no-show. Sam Antar's blog has all the details.

My suspicion is that Byrne was too busy using corporate resources to defend his dumb remarks on race and school vouchers, as AOL blogger Zac Bissonnette has noted in his blog. Or maybe he just doesn't have the guts to face Sam without a retinue of lawyers present.

Of the many dozens of questions that Byrne is dodging, here's one that I'd like to have heard answered: at a recent conference call with analysts, Byrne pretended to invite questions from Sam, knowing full well that he was not participating in the conference call.

Is that a legitimate thing to do during a publicly broadcast conference call, or does it fall afoul of the securities laws? Byrne surely knew that Sam was not participating in the call. A list of participants is known to Overstock's investor relations people at the beginning of a conference call.

This is just one of many deceptive and deceitful tactics Byrne has employed over the years, as Sam has chronicled. However, he won't be able to duck these issues for very long. In addition to the SEC probes, Rocker Partners and Gradient Analytics have are preparing a counterclaim against Overstock's junk libel suit, according to Dow Jones news service.
People familiar with the matter said Rocker will allege in its counterclaim that Overstock and its CEO orchestrated a short squeeze to boost the company's stock in violation of a California securities statute. The fund is likely to claim that Byrne made false statements, perhaps through the use of Internet bloggers, in order to inflate the price of his company's stock in violation of California Corporations Code.

The "bloggers" mentioned in this article probably include thesanitycheck.com, which the New York Post has revealed is operated by a former used medical equipment salesman named Phil Saunders. Cringing behind the pseudonym "Bob O'Brien," Saunders used the blog and Internet postings to spread nutty conspiracy theories, sling mud at Byrne's critics, and to give Byrne a kind of de facto investor relations mechanism. Saunders also was active in touting a dreadful subprime lender called Novastar.

Thesanitycheck was at one point promoted on every Overstock website page, under the misleading link title "Market Reform." Since that ceased. the site's readership has dropped to practically nothing, according to Alexa.

The discovery proceedings in this suit are going to be interesting.

© 2007 Gary Weiss. All rights reserved.

Digg my article

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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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