Monday, January 28, 2008

Anatomy of an Smear

Apparently some bad news is en route for shareholders of (NASDQ: OSTK), judging from the depth and depravity of this miserable little company's smear campaign against its critics.

Just the other day I posted on an Overstock pretexting escapade, and now there is a new adventure for corporate crime aficonados.

Overstock's in-house stalker, its nauseating director of communications Judd Bagley, launched a vicious attack over the weekend on felon turned crime fighter Sam Antar. As usual, Bagley has started from an erroneous premise and built upon it.

Sam has posted a number of serious questions about this SEC-investigated company's accounting, so Bagley was eager to discredit him. But since he can't counter the accounting allegations -- he hasn't even attempted to do that -- Bagley has resorted to personal attacks. Since there is no dirt to dish up, Bagley just did what he always does -- dished up some baldfaced lies.

Bagley's latest ASM effort deals with a company called Usana Health Sciences. It was the subject of a negative report by another fraud fighter and reformed felon, Barry Minkow. Bagley zeroed in on Sam's funding of Minkow's research into Usana, and says that Sam was serving as a conduit for class action lawyer Howard Sirota. He wraps them all up in a conspiracy to drive down Usana share prices.

His premise is that Sam hasn't got two nickels to rub together, so where does the money come from? The respected class action lawyer Sirota, that's who.

Bagley has been particularly proud of his latest achievement, and has appeared on stock message boards for Usana and Overstock to promote his latest smear.

Bagley's case hangs on the following:

I conducted a deeper search and discovered that unpaid taxes are nothing new to Sam Antar. Indeed, between 1987 and 2007, Antar amassed over $333,000 in tax liens, warrants and judgments on the city, state and federal levels, in addition to just under $60,000 in judgments and liens by private creditors in 1992 and 1993.

None of these debts was discharged by Antar’s Chapter 7 bankruptcy filing in 1998. . . And yet, from Minkow’s deposition, we’re supposed to believe that someone who can’t pay a $500 tax bill is in a position to give Minkow gifts totaling at least $250,000 – motivated by nothing more than the spirit of fraud fighting?
His entire smear is based upon this. He then proceeds on to drag in Sirota -- who has been critical of Bagley, natch --- saying:
The money Antar gave Minkow wasn’t Antar’s at all. I suspect it belonged to Howard Sirota, who used Antar as an intermediary.
Bagley's boss,'s loony CEO Patrick Byrne, likes to refer to Bagley as an "investigative reporter" whenever he smears one of his critics. I'm not joking -- he's serious. But Bagley did not even do the elementary research that one would have expected of even a semi-competent corporate shill.

Had Bagley done even elementary digging, he'd have learned that Sam runs a prosperous real estate business. It would have required even less digging, just a click on Sam's website or reading a recent Fortune article on him, to learn that he flies around the country at his own expense, lecturing law enforcement agencies. Obviously this is no pauper.

He could have simply called Sam -- just like they do in the movies! -- and been told that all of that the "$393,000" in tax bills, liens and judgments (actually $345,000) were either discharged in bankruptcy or paid off.

OK, so maybe he'd think Sam was lying. Fine. Sam has documents to prove all the lien releases and every penny he has paid, stuff that looks like this one, which concerned the release of $80,000 in tax liens:

But even the laziest corporate smear-meister could have just stuck the word "income tax bankruptcy" in Google, revealing this bankruptcy lawyer's website as the top link. There it points out that all tax bills over three years old--most of Sam's tax debts back then--are discharged in bankruptcy.

This is more than just the usual mud-slinging that Antar and Minkow have come to expect. It is also a pretty serious -- not to mention false, malicious, and grossly irresponsible -- slander of a highly reputable class action lawyer who also is no pauper.

I wonder how new board member Joseph J. Tabacco, also a class action lawyer, feels about the pig pen to which he has given his name.

I wonder if he has given any thought to Overstock's liability for the actions of Judd Bagley.

I wonder if he has given any thought to the Overstock board of director's liability for the actions of Judd Bagley. Personal liability.

So after all the effort Bagley has invested in his latest smear, all this corporate lapdog has proven is that Overstock has something to hide in its accounting -- probably its inventory accounting. The post was obviously timed to mesh with the company's disclosure of fourth quarter earnings on Wednesday.

Sam's numerous blog posts have dealt mainly with Overstock's accounting for inventories -- something about which Sam has unparalled expertise, as former CFO of the Crazy Eddie stock fraud. All those issues are being investigated by the SEC, in its ongoing investigation of Overstock and Bagley.

Does Patrick Byrne really think that SEC investigators will be diverted by this kind of garbage?

Does he think his board of directors is happy with this garbage, or does he have a good supply of pliable, well-paid consultants to put on the board if Tabacco et al leave?

Forensic accounting expert Tracy Coenen opines:

Judd’s primary duty at seems to be stalking and smearing those who ask questions about the company and those who point out “unusual” things in the company’s financial statements. Never mind that the company is a total POS: always losing money and burning through cash faster than Patrick Byrne can say “burn those kids.”
I see that Sam has asked to be allowed on Byrne's conference call on Wednesday. At his last conference call, Byrne expressed disappointment that Sam was not present. Well, now he gets his chance to field a Sam Antar question, officially, with the analyst community and journalists and the SEC paying attention to every word.

© 2007 Gary Weiss. All rights reserved.

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