Did a Reporter Kill a Newspaper?

An article in the Arizona Republic, picked up by Romenesko, suggests that the work of a single "muckraking reporter" named "John Biancini" led to the death -- yup, the death -- of a weekly newspaper called the Winslow Mail.

This report intrigued me because I can sympathize a bit with "Biancini," as I started out in a small town bureau of a newspaper and can understand the urge to be "muckraking" even when some readers just want happy-talk news. (The dumber readers, usually, because the bad news can affect their health and their property values.)

So I went to Google, using the "Winslow Mail" and "Biancini" as key words, and discovered a couple of things.

First, the reporter's name is Bianchini not "Biancini." (That's why I put his name in quotes.)

Second, I couldn't find any "muckraking." Maybe it's out there, but here is what I found in my Google search:

An article on drug-sniffing dogs visiting a school.

A bridge burned by an arsonist.

Something about a river's watershed.

Winslow's mayor is running for something.

State attorney general reaches out to Winslow.

The Republic article quotes someone as saying that he wrote only "bad stuff" which the Republic reporter could see, if he bothered to check, was just plain wrong.

I then ran the reporter's name (his real name) in the Winslow paper's internal search engine, and I got much the same output: routine small town news. Oh, no, sorry, I noticed this horrific bit of "acerbic" journalism: on how Winslow is in need of a business leadership to improve the local economy.

Terrible!

And then there is this article that, I guess, doesn't read like a press release from the city government. Judging from the editor's note on top, apparently it resulted in some action. Which is what journalism is all about.

What strikes me is this: why was the Republic reporter, working for a paper which has a glorious history of investigative reporting itself, so quick to assume the worst about another journalist?

Seems to me that if there is any shoddy journalism here, it is the Republic story and, as best as I can tell, not the work of this Bianchini fellow.

There's an old saying that goes something to the effect that communities get the newspapers that they deserve. Winslow has no newspaper, and according to the poorly researched article in the Republic is now relying largely on the bush telegraph for local news.

If indeed the paper died because Bianchini "alienated readers and advertisers" (and I have no idea if that, or anything in the article, is true) then Winslow deserves to have no newspaper at all. In fact, it's those kind of attitudes that turned thriving western communities into ghost towns, with tumbleweeds blowing down the street.

UPDATE: John Bianchini responds to the above in the comments section of this blog. I'm taking the liberty of printing it in full below:

Help! I've fallen in Winslow and can't get up.

I found this blog's comments while googling the AZ Republic story about how I allegedly destroyed a community institution - the newspaper. I guess when being paraded into the street and beated before a statewide audience, it is natural to wonder what the crowd is thinking.

Wagner's article failed to mention some things I told him such as:

1.I bought a house in Winslow when I started the job two years before it closed.

2.I did so knowing Winslow was poor, but truly believed in its potential,

3.and advocated constantly for the community to seriously look at economic development, arts, improving relations with our neighboring Native American communities, increasing local agriculture, respecting water resources, and to clean up the town thrid world appeal.

My experience in Winslow was a real lesson in democracy and journalism.

John Bianchini

Amen to that, brother.

© 2008 Gary Weiss. All rights reserved.

Supreme Court Passes the Johnny Friendly Relief Act

There's a scene in On the Waterfront, late in the movie, where waterfront gangsters lovingly pull out their revolvers, and mob boss Johnny Friendly takes them away. "Did you ever hear of the Sullivan Law?" he says.

That's what immediately came to mind when I heard of the Supreme Court's decision recognizing the right of the Johnny Friendlys of this world to own handguns. Now a host of gun control laws around the country are subject to challenge, including New York's tough Sullivan Act.

This law wasn't enacted in the sixties by gun-hating bleeding-heart liberals, but was put on the law books way back in 1911 by gun-weary New York pols. At the time, New York City was plagued by armed street gangs. At one point in 1903 there was a Wild West-style shooting under the El tracks on Allen Street between the "Bowery Boys" and "Eastmans."

While the pedigree of the law is not the greatest (Tim Sullivan was no choir boy, as you can see from the article hyperlinked), there was a genuine need for this law. Now it is in danger, thanks to the Supreme Court and its Johnny Friendly Relief Act.

By the way, there's a great line in the screenplay that didn't make it into the movie. The hoodlum "Truck" says, after his gun is taken away, "How are we gonna protect ourselves?" Sounds like he belonged to the NRA.

Here's another great line: "You take them heaters away from you and you're nothing, you know that?" Tell that to Scalia.

© 2008 Gary Weiss. All rights reserved.

Not So Crazy

Someone sent me a book with a provocative title, "Crazyman's Economics," by T.E. Scott as told to Stephen Edds. A photo of the former, in overalls, is on the cover. Not a typical investment book, to be sure.

Having read through it -- not always agreeing, mind you -- I have to say that it is not crazy at all, but actually applies good, solid horse sense to the financial markets.

The basic premise of the book, as in Wall Street Versus America (which is liberally cited in publicity for this book, but not the book itself), is that Wall Street is a loser's game in which what are described here as the "Masters" have an edge. That point is illustrated with a liberal use of charts and illustrations.

I don't agree with what is recommended in this book (elimination of margin and limitation on trading) but I guess my main beef is that it lacks much of a "next step" for investors. Since buying individual stocks (and of course, commodity contracts) is a bad idea, what does one do with one's money?

It's a mistake to just avoid the stock market, and in fact this may well be a good time to invest. The solution I described in WSVA, index funds and index products, is the answer I think and I'd like to have seen that addressed in this book.

© 2008 Gary Weiss. All rights reserved.

For Sale: Ten Tons of Baloney

The court-appointed receiver for Universal Express, the fraud-infested company that is a poster child for the naked short-selling conspiracy nuts, has come up with a novel way of dealing with the issue: she has put the baloney for sale.

That's right. In her most recent progress report, thoughtfully posted here, Miami attorney Jane Moscowitz -- picked to head the company in lieu of the now-jailed ex-CEO Richard Altomare -- announced that she is putting up for sale the cause of action that the company is a victim of naked short selling. She has done the same with a default judgment the company won against some brokerages it accused of naked shorting.

I think that this is an excellent idea. I am sure that Overstock.com's delusional CEO Patrick Byrne, who freely spends his trust fund inheritance to promote market conspiracy theories and other nutty causes, will be delighted to buy this litigation for what it is worth to the shareholders of Universal Express.

Byrne has spoken out in the past in defense of Universal Express, saying "mine is just one battle in a larger war, and that others are fighting their own equally worthy ones." So this is an opportunity for him to put that belief into action.

Indeed, since the naked shorting conspiracy types claim that damages run into the billions if not trillions, it is logical to assume that Byrne could spend every penny that his daddy has given him on this worthy cause, and still make a neat profit.

If Byrne shies away from this challenge, I am sure that many others can step up to the plate. It will be interesting to see if the naked shorting nutcases are as crazy as they appear to be, and will plunk down some hard cash on their delusions.

True, Moscowitz cautions that "the Receiver has no ability to judge the value of this potential cause of action or whether it exists at all, but will assign it to the highest bidder if the Court so allows."

Let the bidding commence! Or, to put it another way, "put up or shut up."

UPDATE: Floyd Norris adds:

Before anyone sends in a bid, they might ponder the evidence regarding how Mr. Altomare ran the company, and the fact that despite his pleas of relative poverty, he seems to have told people he had taken over a shell company in Europe and was hoping to make acquisitions. . . .

The Altomares brought money into Universal Express by illegally issuing billions of shares, and then spent it on themselves while stiffing company creditors and even employees, who were persuaded to put company expenses on their personal credit cards. It amazes me that people who lost money in the stock still defend the Altomares.

It is amazing, isn't it? People act strangely after they've been ripped off. I was told by an FBI man once that doors would slam in his face when he approached victims of charlatans.

© 2008 Gary Weiss. All rights reserved.

You Can Fool One Regulator All of the Time

The SEC today proudly announced that it had charged Scottrade, the giant Internet brokerage, with fraud. Way to go, SEC! Yes indeedy, quite a feat of securities watchdoggery -- or so it seems until you read the actual press release, which indicates that the SEC had hauled out its favorite weapon, the limp soba noodle.

Any reader of Wall Street Versus America will be familiar with my "wet soba noodle" metaphor, which described how the SEC treats securities transgressors with kid gloves (when it is not ignoring their depredations entirely). So it is with Scottrade, which misrepresented the way it handles certain Nasdaq trades.

Scottrade was slapped, in the most limp-wristed sense of the word, with a $950,000 civil penalty and an agreement never to do again what it just has not admitted doing.

For another example of your SEC in inaction, check out Sam Antar's recent blog post describing how Overstock.com hoodwinked the SEC:"What Overstock.com Did Not Tell the Securities and Exchange Commission."

It's a detailed analysis and compelling reading. But for a real enjoyment, get a load of the SEC patting itself on the back after slapping Scottrade with a ridiculously ineffectual penalty.

I think it was Chris Byron who called the press the "SEC's seeing-eye dog." But that is not fair to the blind. A better metaphor would involve not visual acuity, but intestinal fortitude.

© 2008 Gary Weiss. All rights reserved.

Patrick Byrne Covers Up Ownership of 'Deep Capture' Smear Site

A couple of months ago I described how Overstock.com's terminally wacky CEO Patrick Byrne has thrown caution (and any lingering sanity) to the winds and was openly sponsoring attacks on journalists and other critics, on a smear site that he owned and was operated on Overstock servers, "Deep Capture."

This was a change from Byrne's previous tactic of claiming that smears and attacks were by people who just coincidentally happened to be his employees. The word for this is "astroturfing," and it is a particularly sleazy method of concealing corporate (and sometimes government) involvement in dirty tricks campaigns.

Well, it seems that Byrne is back to astroturfing. For some unknown reason he has been frantically trying to distance himself from Deep Capture's ownership, while at the same time boasting about his and Overstock's involvement in the site.

An eagle-eyed reader points out that Byrne has changed the ownership of the site, as recorded in the records of the Utah Department of Commerce. Here are Deep Capture's registered principals, duly recorded with the Utah Dept. of Commerce, as of April 20:



As I pointed out in my earlier post, High Plains Investments=Patrick Byrne, according to Overstock's SEC filings.

Here's Deep Capture's registered principals as of today:



"Judson Bagley" is, of course, Overstock's nauseating house stalker Judd Bagley, the former low-level Republican dirty tricks specialist who Byrne put on Overstock's payroll to run his "antisocialmedia.net" corporate smear site and to attack his critics on the Internet generally. "Deep Capture," the ironic term Byrne uses for his website, is the successor to antisocialmedia. I say "ironic" because Byrne is quite arrogant about using his trust fund income to capture not only regulators but also ex-journalists such as Mark Mitchell, the ex-journalism review editor now on Byrne's personal payroll.

Evren Karpak is not an ex-journalist, but just some creep who won Byrne's heart by attacking his enemies. Karpak was put on the Overstock payroll after a distinguished career silencing critics of Overstock on the Investor Village message board. I've always found the hypocrisy of all this amazing, by the way. Byrne screams about "paid bashers" criticizing his company, always without evidence, while he very openly puts people on the payroll to smear his critics.

In addition to changing the registered principals of the company that owns the smear site, Byrne has changed the registration of the website, which used to be in his name.

Here's the registration of the Deep Capture website as it was on April 20:



. . . and here is the website registration today:



Apparently he anonymized the registration on May 2. Note that he hasn't yet taken Deep Capture off Overstock's servers. I guess that will come later.

It's not clear to me why Byrne is trying to hide his and Overstock's ownership and operation of Deep Capture. Just the other day he boasted that Overstock.com had financed an advertising truck at the SABEW convention. Deep Capture is linked from Overstock's "community" tab, and openly benefits from a share of Overstock revenues.

I can't figure out a rational reason for any of this. To shield himself from liability? A court would strip away that corporate veil in five seconds. But, then again, rationality has never been Byrne's strong suit.

UPDATE: Forensic accounting guru Tracy Coenen has a cogent follow-up.

© 2008 Gary Weiss. All rights reserved.

Return of the Phantom Menace

Byrne: still pushing the '1,000 companies' fairy tale

Yep, the "imaginary thousands" are back.

In an interview with the Wall Street Transcript, America's premier blame-shifting CEO, Overstock.com's self-confessed crook Patrick Byrne, trotted out the old line that you could fill a good-sized auditorium with the CEOs of companies destroyed by the nefarious forces of naked short selling.

There are hundreds, maybe 1,000 or more companies that have been destroyed by hedge funds using an illegal technique. It's a perfect crime because nobody even sees there is a crime. A typical citizen just sees that her stock portfolio goes down, and she doesn't understand that behind the scenes the game has been rigged.

Texas lawyer John O'Quinn said pretty much the same thing on Dateline NBC three years ago. As I recounted in Wall Street Versus America, I called him to ask for the names of some specific companies, and am still waiting, hand on phone, for a callback. More of O'Quinn's baloney here. Notice that in five years not a single "victim" has been named, and the poor dear has been unable to squeeze a single nickel out of the junk lawsuits he has filed on this non-issue.

One even loonier estimate that circulated a few years ago, pushed by a stock promoter named "Bud" Burrell, was that "7,500 companies have been bankrupted since November, 2000, by illegal naked shortselling and conspiratorial manipulations, resulting in a loss of $17 trillion in market cap, 'greater than all the losses in the 1929 market crash.'"

The word for this, coined by Fortune three years ago, is "phantom menace."

"Phantom" as in "not happening."

The interviewer for Wall Street Transcript, no doubt mindful of Byrne's habit of personally attacking journalists who ask annoying questions, didn't trouble him by asking for specifics.

Still, I'd have expected that the comments section of the Seeking Alpha excerpt of the interview would have contained some specific names of companies destroyed by naked shorting, along with proof that naked shorting was the cause.

Not a one. (Though there was an interesting comment from an apparent Overstock insider, describing Byrne's mismanagement of the company.)

Ditto for Tracy Coenen's item on the subject. Tracy asked, "Can any of the NSS crusaders name even one and support their allegations with real proof?"

Tracy said:

There is supposedly this vast conspiracy of hedge funds to carry out this Naked Short Selling, yet no one can come up with any real proof of it? No one can prove that even one company was destroyed because of NSS?

Sorry kiddos, you’ve done nothing to convince me. All you’ve done is stalk and terrorize people. You’ve smeared journalists. You’ve raved about conspiracies and Sith Lords and secret fax machines. You’ve come forward with no actual proof.

The Baloney Brigade, always swift to yammer away on their conspiracy theories, greeted this post with silence.

Byrne himself appeared on the Investor Village message board last night, posting under his favorite pseudonym "Hannibal," and ducked the question. Compare his sneering evasion with this cogent post by a rare message board skeptic. (He posted again some hours later. Still can't name a single one. Surprise surprise.)

It's funny how the deluded knuckleheads of the stock market conspiracy campaign -- mostly stock promoters, paid corporate shills and assorted nutcases -- are struck with laryngitis when asked for the names of companies actually destroyed by naked shorting. They bombard the SEC with reams of statistics on "fails to deliver," but can't seem to cough up the name of a single company actually destroyed by naked short selling.

Cause there ain't any. The SEC and other regulators have occasionally found that naked shorting takes place, but has never found that it has "destroyed" any companies. Except, of course, for Enron -- a victim of naked shorting according to a glassy-eyed corporate shill named Dave Patch (right).

The shame is that our market regulators, knowing this, continue to appease these creeps -- knowing that it is easier to placate crackpots than to face them down. Particularly when the leader of the crackpots is a major donor to Republican causes, and is the top political contributor in the state of Utah.

The word for this is "cowardice."

© 2008 Gary Weiss. All rights reserved.

The SEC Makes It Unanimous: It's Useless

A few days ago, discussing how Overstock.com CEO Patrick Byrne had called CEOs who use EBITDA -- that is, CEOs like himself -- "crooks," I suggested that the SEC make the judgment unanimous by concluding its protracted investigation of the company and its accounting.

Well, the SEC did conclude its investigation, but instead made the judgment unanimous about itself -- which is that it is utterly useless at protecting investor interests. The investor watchdogs have, for the umpteenth time, proved themselves useless by officially deciding to turn a blind eye toward Byrne's serial lies and deceptions.

Byrne, issuing a typically gloating press release, can now be expected to redouble his efforts to deceive investors and lie and stalk his critics, thanks to the SEC. As Tracy Coenen observed on Friday, "Does it mean the company’s troubles are over? Of course not. It is still a horribly run company that can’t turn a profit, and one which provides misleading and inaccurate financial disclosures to Wall Street. Eventually, something’s got to give."

Sam Antar adds that "SEC no-action letters do not close the book on Overstock.com’s misdeeds as Patrick Byrne has would like investors to believe."

It's hard to see how anyone can be surprised at the SEC's latest nonfeasance. This is, after all, not just any old office of the SEC that gave Overstock a pass but rather the Salt Lake City office, which sits in a cesspool of stock fraud and rarely takes action. Just a few months ago it decided to take no action against another Utah company, Usana Health Sciences, despite equally strong evidence of wrongdoing.

And as far at Utah's attorney general is concerned: fuhgetaboutit. Utah is a free-fire zone for fraudsters, and the Utah AG can be thanked for that state of affairs. Note this damning article in the Salt Lake Tribune today, in which a crucial player on behalf of stock fraud was Mark Griffin, now general counsel of Overstock.

I'd say that Overstock has hired just the right guy to head its legal team. Lawyers like Griffin, who have no qualms about switching from government service to representing fraudsters, are a crucial part of the process in which regulated entities like Overstock are captured by the government agencies that are supposed to watch over them.

Regulatory capture is one reason is why market forces -- short selling in the case of corporate creeps like this -- are required to keep the markets honest. Lamentably the SEC, at the urging of not just Byrne-inspired loons but the Washington Legal Foundation and U.S. Chamber of Commerce, has worked with crooked stock issuers to make short selling as hard as possible.

Interestingly, even supporters of Byrne have long argued that the SEC is useless and should be investigated. I've said that for some time, and the latest evidence of SEC uselessness makes it unanimous.

SEC nonfeasance is a running theme of Wall Street Versus America and about half the articles I wrote for Business Week. As a matter of fact, if I had a nickel for every time the SEC messed up on the job, in everything from 1980s boiler rooms to 1990s chop stocks to Enron to Worldcom, I'd have quite a fortune.

What makes things like this even more stinky is the whiff of political favoritism -- which in Byrne's case is more than just speculation. Byrne has gone to great lengths to throw his weight around in Washington, hiring lobbyists and ex-SEC lawyers. While he burned his bridges in Utah in pushing some nutty legislation that had to be dropped (a widely publicized tantrum didn't help), he clearly has friends in Washington. All that ancestral wealth has to be spent somewhere, after all. He is the biggest political contributor in Utah, and takes great joy at fiddling in political projects, mostly of the fringiest right-wing variety.

Gary Aguirre, the ex-SEC whistleblower, captured the situation well in an interview with The Guardian newspaper:

"What you have at the SEC is people rotating from jobs where you make $180,000 a year into jobs where you make over a million," Aguirre tells the Guardian in an interview, on what he sees as a mutually back-scratching relationship between the regulator and Wall Street. "It's very friendly - it's a club. I'm here, I'm inside, now I'm outside, now I'm inside again.

"When the SEC starts playing favourites and they decide not to go after Wall Street elite and focus on small fry, then they're not focusing on the players that really impact the capital markets. It's not the penny stock dealers that could trigger a credit crisis in this country."

Aguirre was talking about hedge funds -- a world in which Byrne himself is enmeshed -- but that same view applies, in spades, to its approach to corporate wrongdoing.

So all I can say to some of my friends who expected that the SEC was actually going to do something about Overstock and its wacky CEO: "I told you so."

© 2008 Gary Weiss. All rights reserved.

Time for Hillary Clinton to Come Clean About Those Cattle

I hate to be a stick in the mud about this, but something has been sticking in my craw about the talk of Hillary Clinton possibly becoming (if she joins the Obama ticket and if they win) vice-president of the United States. It has to do with cattle.

Not cattle per se, but cattle futures.

Back in 1994, Mrs. Clinton benefited from some mighty suspicious looking trading in cattle futures. Here's a Washington Post article that appeared at the time, luckily still on the web.

I examined those trades for Business Week at the time. The trades stunk then and they stink today. Here's an excerpt from the WaPo story:

Hillary Rodham Clinton was allowed to order 10 cattle futures contracts, normally a $12,000 investment, in her first commodity trade in 1978 although she had only $1,000 in her account at the time, according to trade records the White House released yesterday.

The computerized records of her trades, which the White House obtained from the Chicago Mercantile Exchange, show for the first time how she was able to turn her initial investment into $6,300 overnight. In about 10 months of trading, she made nearly $100,000, relying heavily on advice from her friend James B. Blair, an experienced futures trader.

The new records also raise the possibility that some of her profits -- as much as $40,000 – came from larger trades ordered by someone else and then shifted to her account, Leo Melamed, a former chairman of the Merc who reviewed the records for the White House, said in an interview. He said the discrepancies in Clinton's records also could have been caused by human error.

Why does this stink to high heaven? Not so much because of the trades, but because it shows an extraordinary degree of luck on the part of Mrs. Clinton! Too much luck, if you ask me. Most people lose their shirts in commodities trading. Did somebody use these trades to slip Mrs. Clinton a few bucks? I guess if you were cynical you could say that it looked that way.

No evidence that happened. Just a smell. More from the Post story:

A close examination of her individual trades underscores Blair's pivotal role. It also shows that Robert L. "Red" Bone, who ran the Springdale, Ark., office of Ray E. Friedman and Co. (Refco), allowed Clinton to initiate and maintain many trading positions – besides the first – when she did not have enough money in her account to cover them.

I'm surprised that nobody in the media has dredged this up. (Maybe they forgot about it. I sure did.) By the way, I do mean "dredge." It is old, it is tawdry, and it is petty. Maybe it should be forgotten. One can argue that, perhaps correctly.

But it still stinks to high heaven.

© 2008 Gary Weiss. All rights reserved.

The Baloney Martyr Ends First Month of Captivity

Altomare in happier days

The jailed leader of the Baloney Brigade stock market conspiracy loons, former Universal Express CEO Richard Altomare, today concludes his first month of confinement in Metropolitan Correctional Center in New York City.

He was sent there by a federal court judge for contempt of court, because he had failed to turn over some of the money he stole from his company. Instead, Altomare has been rotting in jail, just as he deserves.

By all accounts, Altomare views himself as a true martyr to his cause -- the cause of CEOs everywhere who blame naked short selling for their companies' stock price declines, even as they loot the coffers.

A letter supposedly from Altomare is making the rounds of stock market message boards. I have no idea if it is genuine. In fact, it reads like one of the hilarious parodies that have been published on a spoof website.

Altomare ends his supposed missive as follows:

Please assure our shareholders, on my behalf, that we shall prevail.
Also, please assure them that I will not be broken.

I certainly hope not. The sight of this buffoon behind bars is surely an enjoyable spectacle.

© 2008 Gary Weiss. All rights reserved.

Patrick Byrne Pulls a 'Reverse Dick Nixon'

Patrick Byrne admits the obvious

Forensic accountant Tracy Coenen observes today that Overstock.com CEO Patrick Byrne has admitted what has been obvious for ages: that he is a crook.

This is a refreshing gust of honesty from the famously dissembling Byrne, who has made a second career out of hounding analysts and members of the media who call him to account for his serial lies. Unlike Dick Nixon, who famously said "I am not a crook," Byrne is forthright in admitting his crookedness.

Bravo!

She notes that Byrne said as follows in a CNBC telecast in 2004:

Well, first of all, I’m all about gap. [sic] I have been so critical of the companies that do–I don’t believe in one-time charges; I don’t believe in EBITDA. If somebody talks EBITDA, put your hand on your wallet; they’re a crook.

The "gap" in the transcript is supposed to be "GAAP" -- generally accepted accounting principles -- which Byrne has disregarded when it suits him. Tracy and Sam Antar have been hammering away at that point for some months now.

Sam Antar adds:

The double talking Patrick Byrne not only likes EBITDA, he also likes to violate Securities and Exchange Commission Regulation G and materially overstate EBITDA in Overstock.com's financial reports. My blog and Tracy Coenen’s blog have detailed Overstock.com’s SEC Regulation G violations and resulting material overstatements of EBITDA in its financial reports starting from Q2 2007 and continuing to Q1 2008.

Indeed, Byrne's latest stock-pumping conference calls have been EBITDA-love-fests. Tracy's blog has a good analysis here on how Byrne has not only "talked EBITDA" but overstated it.

Tracy concludes, "I agree with Patrick: He is a crook." I agree with him too on that point. Whenever he talks about EBITDA (or stamp collecting, or ornithology, or if it is raining outside), put your hand on your wallet. A crook is talking.

I guess it's time for the SEC to wake up from its slumber, conclude a nearly two-year-old investigation and make it unanimous.

© 2008 Gary Weiss. All rights reserved.