Wednesday, January 30, 2008

The FBI and Suprime

Re that FBI announcement of a probe of 14 lenders -- a good start, maybe. Here's my take, in Portfolio.com.

© 2007 Gary Weiss. All rights reserved.

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No Questions on Overstock.com's Shady Accounting

To no great surprise, ex-felon fraudfighter Sam Antar was shut out of the quarterly conference call for Overstock.com (NASDQ: OSTK), after an exchange of correspondence I noted earlier.

A blog item by New York Times chief financial correspondent Floyd Norris makes clear why that was: Overstock blatantly inflated its EBITDA numbers, which were hyped to the hilt at the smugly self-congratulatory conference call by Overstock CEO Patrick Byrne.

It was a pretty blatant effort to manipulate the numbers. And effective, I might add, as the stock immediately shot up 9%.

Whoever bought those shares got rooked, if they did so on the basis of the EBITDA numbers. Note that the share price went up even though the overall earnings number was beneath analyst expectations.

Byrne said:
For the first time in our history, we were EBITDA positive for two consecutive quarters (Q3 and Q4 2007), generating positive $6.3 million of EBITDA during those six months.
Floyd observed that the Overstock EBITDA number -- earnings before interest, taxes, depreciations and amortization -- added back in the value of stock paid as compensation to employees. Floyd observed that "this is the first time I have noticed a company paying actual stock as compensation and figuring it is not worth considering in EBITDA."

The biggest reason the six-month Overstock EBITDA numbers are positive is all the depreciation expense, which reflects old inverstments the company made before it cut back on investments to conserve cash. But the EBITDA figure would have been $2.9 million lower for the six months if they had counted costs from stock and options as investments.

Why a company should show higher profits (even EBITDA profits) by handing out shares rather than cash to employees is beyond me.

This bombshell explains why Byrne refused to allow Antar on the conference call, except by submitting brief questions in advance. Had he been allowed to participate -- and Sam told me, while the call was underway, that he called in and was not being let through -- he would have asked about the EBITDA bombshell.

Sam had previously written about Overstock's EBITDA issues, including this foul and deceptive practice noted by Floyd. See this post and this one. He was the last person on earth Byrne and his crew would have wanted at the conference call. The "advance questions" ploy was designed to further shield Byrne from the possibility of Sam raising the latest EBITDA sliminess.

It also explains why Byrne dispatched his nauseating paid stalker, the hideous Judd Bagley, on an expedition to smear and discredit Sam.

As can be expected, none of the analysts on the call noticed or, if they noticed, had the guts to ask about it. They're supposed to be following the company. How is it that I noticed the Floyd blog item, which was posted and being sent out by Google while the call was underway, and they didn't?

Even if they didn't pick up the EBITDA stuff themselves, they should have known that Floyd did.

Byrne likes to talk about "lapdogs" in the media -- when reporters point out his chicanery -- but I bet he is happy that the media just rewrote Overstock's "loss narrowing" handout without noting the EBITDA inflation. That is typical of the shoddy journalism that accompanies quarterly earnings reports.

The SEC is investigating, among other things, Overstock.com's accounting. Gee, I wonder why?

© 2007 Gary Weiss. All rights reserved.

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Monday, January 28, 2008

A Commissar Will Monitor This Conference Call

Don't ask me why -- sounds to me like as much fun as getting two molars pulled -- but fraud-fighter Sam Antar has asked to participate in the Overstock.com (NASDQ: OSTK), quarterly analyst conference call, which takes place on Wednesday.

He got a response this evening from Overstock.com CEO Patrick Byrne that is truly a classic in the history of scummy CEOs :

Dear Sam,

Sure, you are welcome to participate: please send me your top three questions (in the interest of avoinding your endless "Do you pick your toes in Poughkeepsie" rants, please limit them to 25 words each, and know that I will treat compound questions as multiple questions).

You know my email (N.B. your email address for Clay is out-of-date).

Your friend,
Patrick
Too bad Byrne was born thirty years too late. He'd have made a fine functionary in any Eastern European regime at one time.

Stay tuned.

UPDATE: Sam's response, posted here, observes :
At your third quarter fiscal year 2007 earnings conference call, you had asked if I was on the line and said that you would accept questions from me if I was on the conference call. If that statement at the last conference call was not intended to intentionally mislead your shareholders, I would expect that you would welcome my participation at Wednesday's call on an equal footing with all other participants.

It is highly irregular for a participant in a conference call to be singled out and limited to three questions posed in advance, each consisting of 25 words or less. I believe that such a condition would be at variance with the principles of free and full disclosure required by the securities laws at conference calls.

You appear to be imposing conditions on me that are not imposed on other conference call participants. I will not accept special conditions that are not imposed on other participants in the conference call.

Accordingly, I again request that I be permitted to participate in this conference call on an equal footing with all other participants.
Byrne's alternatives are as follows:

1. Continue to insist that one person that he "welcomes" to his conference call, but is expected to ask difficult questions, accept unreasonable conditions not imposed on other, more pliable participants.

But the SEC (the "Ken Israel" copied on the email is SEC regional director for Salt Lake City) may not cotton to that. The SEC is investigating Overstock and Byrne, as we all know.

While I am no fan of the SEC, I do know that the agency believes in investors, analysts and the public being treated in an even-handed fashion, and really hates this kind of stuff. I remember how teed off the SEC was at the N.Y. Stock Exchange for playing games with release of Dick Grasso compensation info. But I disgress. . .

2. Open up the conference call to Antar on the same basis as other participants.

This would gain brownie points with the SEC. But then he'd have to take Sam's questions, which he wants about as much as being innoculated with an icepick. The famously unhinged Byrne has flown off the handle and rammed his Florsheims in his mouth with far less provocation.

That's a lose-lose proposition if ever there was one.

© 2007 Gary Weiss. All rights reserved.

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Altomare Losing High-Stakes Game of Monopoly


One of the worst things that happen when you play Monopoly is landing on the "Go to Jail" space. A reader brings to my attention that former Universal Express CEO Richard Altomare, a loudmouth leader of the anti-naked-shorting conspiracy cult, is on the verge of going to jail. Yup, no passing Go, no collecting $200.

An article in the South Florida Business Journal observes that a federal judge has threatened Altomare with a term in the slammer if this corporate turd doesn't fork over some of the money he owes for a judgment. That is what is known as "contempt of court."

The newspaper observed: "The thinly veiled reference to going to jail for contempt of court puts the former head of the now-closed Boca Raton luggage shipping company in a tight spot. Complying with the judge in the New York civil case with the SEC could expose him to criminal charges."

Oh dear me, how inconvenient that would be.

According to court filings, Altomare stole funds from the company.

"The court-appointed receiver for Universal Express asked him to return company funds used to purchase $558,900 in jewelry from Les Bijoux in Boca Raton, $30,000 in gambling markers at a Las Vegas casino and his $200,000 bonus. In October, federal authorities seized jewelry from a Boca Raton estate liquidator that paid Altomare $571,000 in cash," says the Journal.

I guess that's against the law. I wonder if lying to investors, or hiring a sleazeball to stalk your critics, is also against the law?

If it is, another stock market conspiracy theorist, Overstock CEO Patrick Byrne, had better start packing a toothbrush. Makes you wonder: has Altomare been keeping current on his campaign contributions, as Byrne has? He'd better pray for a Ron Paul presidency.

UPDATE: I see that someone has started a blog to track the continuing saga of this company, focusing on its continued touting on Internet message boars.

© 2007 Gary Weiss. All rights reserved.

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I Recommend the T-Shirt

I dearly love John Byrne, who is an old friend and comrade-in-arms at Business Week in the old days, but I must say -- John! What were you thinking?

In a letter to readers posted on the BW Online website today, John, who heads the site, says as follows:

One of the most overused phrases in the online world is "reader engagement." Everyone claims they have it. Few do. We at BusinessWeek aim to make it real.

That's why we're now beginning to surface the many conversations on the site. Last month alone, we published more than 15,500 responses from readers—an impressive 23 comments for every story or blog post. We think of that 23-to-1 ratio as our reader engagement index. In the future, we think a metric like this will be more meaningful than page views or time spent on a site. . . .

At year end the top 100 online contributors will receive a little thank-you: T-shirts that read, "I Got In Your Face at BusinessWeek.com." And the readers who made the most thoughtful comments throughout the year will be invited to a dinner with our senior editors in New York City. It's just one way to thank you for being deeply and passionately engaged in what we believe is the world's best site for business news and analysis.
I like the t-shirt idea but.... dinner with our senior editors?

© 2007 Gary Weiss. All rights reserved.

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Ben Stein on the Meshuganeh Market


What a punum!

I just got around to reading Ben Stein's provocative column in the New York Times yesterday, which suggests that the stock market is overreacting to the subprime mess, and doing so because traders are manipulating the market.

Stein has been pilloried for this column in unusually strong language. Too strong, really.

I say that because, if he's right, it would be good news. It would mean that the market is being temporarily manipulated and thus, if markets are reasonably efficient, will swiftly rebound and stay rebounded.

As one whose bucks are tied up in index funds and such, I'd like to believe that. It's a harmless hypothesis, so what's all the fuss?

Some years ago there used to be a theory that traders for the big houses used to game the market by something called "index frontrunning." That is, they would cause the indexes to move, and profits from prepositioned trades designed to take advantage of such a move.

I wrote about it for Business Week and..... nothing happened. Apparently it wasn't happening, or if it was happening it wasn't caught. It was still being "studied" as of 1991, and since then it has been conveniently forgotten.

So Stein is making a less-than-credible if conceivable assertion. We all do that from time to time. Let the man be.

© 2007 Gary Weiss. All rights reserved.

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Anatomy of an Overstock.com Smear

Apparently some bad news is en route for shareholders of Overstock.com (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, Overstock.com'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 Overstock.com 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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Friday, January 25, 2008

Cyberstalking, Pretexting: Doesn't Judd Bagley Have Anything Better to Do?


As busy, and amoral, as a bee

Overstock.com's nauseating house stalker, Judd Bagley, has been busy lately.

Not at Overstock.com, where the OMuse "Wikipedia wanna-be" that he was supposedly hired to run has languished --two new articles were commenced so far this year, and both consist of about five words each so far. It still remains in "beta" one year after being launched.

No, instead he's been working hard, doing what he is paid to do, which is to harass and stalk people on Internet message boards and Wikipedia.

He posted messages like this on a Yahoo message board that sent users to Overstock's stalker website, antisocialmedia.net, and then bounced them back to Yahoo, where a script was initiated to put on "ignore" messages posted by fraud-fighter Sam Antar and another Overstock critic. Here's a post from Internet sleuth Scipio Africanus explaining how it was done.

Lastly, Bagley engaged in a bit of crude pretexting, sending a forged Wikipedia page to a Wiki administrator from the email address garyweiss.mail at gmail.com. (I originally said "probably Bagley" but the genius later boasted on an anti-Wikipedia website (below) that the pretexting and forged email was his.)



My email address is garyweiss.email at gmail.com. The aim was to demonstrate that a Wiki user he doesn't like, "Samiharris," is me. To gild the lily, a spyware script was added to the email.

"garyweiss.mail@gmail.com" has never been my email address, and I did not send that email.

Bagley fed a similar forged email to a reporter for a British Internet tabloid who was working on an anti-Wikipedia hatchet job. British libel laws being as they are, the tabloid did not mention the forged email.

Bagley's skirting close to, if not exceeding, a violation the law with his crude pretexting gambit. I guess it would depend on how teed off the prosecutors would be, if they decide to go after him for his latest sliminess. Since he's clearly engaged in this activity on behalf of Overstock, thereby doing it for gain, I'd imagine what he's doing is more likely than not to be illegal.

What's he done is actually worse than what happened at Hewlett-Packard, since what he's doing here is not to gather information, but to plant disinformation.

But since when has the law ever stopped Judd Bagley from serving his masters at Overstock?

It's certainly not ethical, but then again the word "ethics" has been ripped out of the dictionary at Overstock.

Aside from the usual, nutty, self-destructive obsession with sabotaging message boards and Wikipedia -- which loom large in the fevered brain of Overstock CEO Patrick Byrne -- the aim, of course, is to divert attention from Overstock's stinky finances and its plummeting share price.

The Street consensus is a small profit in the fourth quarter, the first in memory -- though with Overstock's accounting being so shady it's hard to say if a "profit" would really be a profit. My question is: does Bagley crawling out from under a rock mean it will be worse than expected?

© 2007 Gary Weiss. All rights reserved.

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Wednesday, January 23, 2008

The Market Astounds



Stock market writers are going to have to figure out what happened today. I pity them, because I for one haven't the foggiest idea.

All I can say is that I've never seen anything like it.

But I do want to take this opportunity to clap myself on the back, because I made what is probably the only well-time trade in my life. Early this afternoon I bought fifty index Spiders (the S&P 500 index product) for my self-managed IRA at $127.69, and they closed at $133.79. Hey, if I repeat this 10,000 times I could make a living at this!

© 2007 Gary Weiss. All rights reserved.

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Overstock Directors Throw Wreckage on the Legal Tracks

A typically nutty press release gurgled forth today from the corporate basket case Overstock.com. It celebrated a month-old court ruling tossing out a challenge to its junk lawsuit against prime brokers. (This is the suit that was so screwy that it led to the resignation of two directors.)

"This decision clears wreckage off the legal tracks, and we are eager as ever to continue discovery," said Jonathan Johnson, Overstock senior vice president of corporate affairs and legal.

But what Johnson and Overstock CEO Patrick Byrne did not disclose is that, at the same time that they were celebrating clearage of this legal wreckage, they were simultaneously throwing up legal wreckage -- to stymie discovery against their board of directors.

As I mentioned previously, the director defendants have recently filed a "special motion to strike" the counterclaim filed against them in another of Overstock's junk lawsuit barrage, this one filed against a Copper River Management (formerly Rocker Partners) and Gradient Analytics.

The filing of that motion stays all discovery.

Odd that Overstock, in updating the public on the status of its litigation, failed to disclose that rather pertinent bit of information. After all, if the "removal of legal wreckage" in the prime broker suit is significant enough to warrant issuance of a press release, shouldn't the "placement of legal wreckage" in the other junk lawsuit also warrant a release? Well, it's not odd, this being Overstock, but you know what I mean.

I've always marveled at Overstock.com's professed yearning to be dragged into court and forced to actually tell the truth, for a change, in its junk lawsuits. To me, nothing has epitomized the delusional character of this company and its management. Do they really believe the stock market conspiracy crap they put in those suits? Do they really want to see their famously unhinged CEO subjected to a grueling deposition?

Do they really think that their conspiracy fantasies will rescue them from the destruction they've wrought upon their shareholders? Overstock has lost three-quarters of its market capitalization in just three months. The stock, trading at about 9.50, closed at 39.13 on Oct. 31.

Do they really want to have their accounting given the once-over by the other side's lawyers and forensic accountants -- at a time when their accounting is the subject of a formal SEC investigation?

Above all, why did they wait until now to hype up this routine, and not unexpected, court decision? Did Overstock grasp at this old news to juice up its lagging share price?

Personally I'm delighted to see the suits go forward. I don't know about Copper River and Gradient, but the prime brokers can certainly afford the legal fees, and I weep for them not. The Street firms that have been sued are hardly choir boys, and it's nice to see them turn their legal weaponry on this malignant little company and not investors.

© 2007 Gary Weiss. All rights reserved.

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Monday, January 21, 2008

Newsroom Courage in Los Angeles is Not Contagious

Word today that the editor of the Los Angeles Times, Jim O'Shea, was fired after refusing to go along with newsroom budget cuts. Here he explains his reasons for quitting in detail. This got me to thinking: why don't we ever hear about business magazine editors facing off against management quite so courageously?

I know, it's easy for me to suggest that other people, men with wives and families and negative-amortization mortgages, throw out their livelihoods as a matter of principle. But the biz magazines -- I spent 22 years of my life there so I feel strongly about them -- are suffering from a massive and sustained decline in advertising revenues.

The result has been layoffs, including a recent bloodletting at my alma mater, Business Week, that was shocking. I'm told by editors there that there have been layoffs just about each of every recent year. The number of line editors and writers has declined, with the bureaus being especially hard hit, even as the ranks of higher-level editors has swollen. The recent layoffs/buyouts resulted in the departure of major talent, including top writers like Tony Bianco and the two chief personal finance editors.

While it's not a strictly comparable situation, I think back to my experiences with a long-defunct news service that ran into hard times in the recession of the early eighties. After our joint venture partner UPI filed for bankruptcy, we were deprived of our No. 1 source of income.

We could have struggled along, and continued to stiff our freelancers as we had begun to do. But the head of our little operation, a distinguished former Harper's editor named Michael Macdonald Mooney, decided that the most honorable thing was to pull the plug.

In a way, Michael was resigning and taking us all with him. I didn't like it at the time, but in retrospect I think that his move was both gutsy and correct -- and, as he said, honorable.

Sure, it's not strictly comparable as I said. The biz magazines are still paying their bills, even if some are said to be losing money. But it would be nice to see some resignations, some gesture -- something -- in protest over the filleting of the staffs of these formerly proud and dominant magazines. But it ain't happening, and that's a shame.

© 2007 Gary Weiss. All rights reserved.

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Friday, January 18, 2008

Paid Research Pumps Biosolar Stock -- With Help

Zac Bissonnette has a great item today about how Bloomberg news service lamentably picked up on a report by a paid research firm to pump a company called BioSolar.

There'd have been no harm if Bloomberg had disclosed that the firm, Beacon Equity Research, was paid handsomely in shares and restricted stock for its services.

I've long argued that the SEC should take the resources it devotes to pandering to naked shorting nuts and use it to address paid research -- a problem area it has completely neglected. But since that is unlikely to happen, the media needs to be vigilant that it is careful in using "research" from rent-an-analyst firms.

Hat tip: Talking Biz News.

© 2007 Gary Weiss. All rights reserved.

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Citi Analyst Embraces Naked Shorting Conspiracy Theory

One of the recurring motifs of this blog is how inept and shady CEOs use naked short selling conspiracy theories to excuse their own inability to generate profits. Today another excuse-monger comes to the fore, a Citigroup analyst named Heather L. Hunt.

Hunt has been one of the most unabashed bulls on muni bond insurers MBIA and AMBAC. In mid-December, she called a selloff in MBIA stock (which had just fallen to about 20), a "buying opportunity."

Hunt was proven dead wrong. The stock since has fallen to below 9, and in a report released today, she backed off from her previous bullishness--a little bit. She cut Ambac and MBIA to "hold" from "buy," saying, Reuters notes, that "it was difficult to maintain her top rating amid worsening credit market conditions, despite extraordinarily low valuations. 'Valuations suggest financial distress but financials do not,' she said."

OK, so far so good. Just some typical self-serving blather from an analyst who was proven wrong. Hey, that is why erasers are on the end of pencils.

But in her report (not online), she continues as follows:
Short interest is quite high — We would note that both Ambac and MBIA shares have failed to meet threshold tests on the New York Stock Exchange. This suggests there may be “naked short selling,” whereby short sellers are unable to find shares to borrow in their short sale. This could be placing artificial downward pressure on the shares. In the article at the following link, the Houston Law review cites the example of Overstock.com. While more than 90% of the shares were held by insiders, massive volumes of stock were sold short, driving down the stock. Yet these owners had not lent their shares. We do not know if “naked short selling” is occurring with Ambac and MBIA shares, but if it were, it might help explain the significant volume and downward pressure.
She then goes on to link to an article by a lawyer who filed junk lawsuits on behalf of Overstock and other small, excuse-hungry companies. Not a single one of those and similar lawsuits have gone anywhere in the four years since they started to clog the court system.

Yes, it could be that naked shorting has hurt the bond insurers. Or it could be, and almost certainly is, that all the negative factors that Hunt has downplayed-- the ones that have cost money to anyone who took her advice -- explain why these stocks have plopped into the toilet.

Short interest is indeed high, but that has nothing to do with the "threshold test" to which she refers, or the phantom menace of "naked short selling." You would think that a Citigroup analyst would know the difference.

The "threshold test" refers to extensive "fails to deliver" shares in particular securities -- a major source of angst among naked shorting conspiracy theorists. Just today, the SEC succumbed to pressure from naked shorting activists by releasing still more data on that subject, resulting in an expression of joy from Overstock.com's loopy CEO Patrick Byrne.

In issuing the new data, however, the SEC said explicitly that the data is meaningless for the purpose for which it is usually used -- as evidence of naked shorting.
Please note that fails-to-deliver can occur for a number of reasons on both long and short sales. Therefore, fails-to-deliver are not necessarily the result of short selling, and are not evidence of abusive short selling or “naked” short selling. [emphasis added]
In other words, all the naked shorting conspiracy theories and scare-mongering, promulgated by Byrne and Richard Altomare and a motley assortment of Internet crackpots -- and now a Citigroup analyst -- are sheer hooey. All are based on grossly exaggerating the significance of fails-to-deliver data. Unfortunately, the SEC does not have the guts to come out and say that.

Still, that's about as blunt as the SEC ever gets. What I can't quite understand, then, is why the SEC is going to such trouble in the first place. There's nothing wrong with the feds releasing data, no matter how meaningless it may be, but if the data is meaningless, and it is releasing the data for political reasons, it should say in boldface and explicitly, "this data is meaningless."

Otherwise, one risks misleading hapless investors, and stupid or irresponsible Wall Street analysts.

UPDATE: Here's Herb Greenberg's take on this latest recruit to the Baloney Brigade. Floyd Norris points out that Hunt's employer is one of the targets of an anti-naked shorting junk lawsuit.

A hilarious message board post tonight ridicules Overstock's tenuous grasp on reality:

Let me understand the stupidity of this worthless company.

While the stock hits a new low......While investors show no confidence in the management of this company or it's ability to compete in its market....they issues a press realease commending the SEC???

They will soon be commending the quick action of the bankruptcy courts....

The stock has gone from 39.00 to 10.00 and they commend the SEC. THANK YOU overstock. My confidence in your business plan and shady accounting has been restored. WHAT AN EMBARRASSMENT peter and OSTK has become.


© 2007 Gary Weiss. All rights reserved.

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Thursday, January 17, 2008

Today's Market Commentary

At the bell....



© 2007 Gary Weiss. All rights reserved.

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Biz Magazine Blaahs

With a few exceptions (Barron's, Fast Company, The Economist), business magazines took in on the chin last year. Talking Biz News has the awful details.

My alma mater Business Week was close to the bottom position, with an 18.2% decline in ad pages. This is not good at all, particularly if the economy is as lousy as everyone seems to be expecting.

My narrow, parochial view is this: fewer ad pages means shorter stories, which means less space devoted to lengthy narrative and investigative pieces.

© 2007 Gary Weiss. All rights reserved.

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Pink is NovaStar's Favorite Color

Troubled subprime lender and naked shorting poster child NovaStar financial began trading on the pink sheets today, having been kicked off the New York Stock Exchange.

It now has the PK appellation so beloved of stocks that have fallen into the crapper.

So how will NovaStar celebrate this blessed event? I think another reverse split would do nicely, now that the company is a penny stock.

At last look, NovaStar shares had fallen 28% to 1.35, in celebration of the glad tidings.

© 2007 Gary Weiss. All rights reserved.

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Which Version of the Truth is True?

I've never said anything like this before, but I really envy the SEC. Its Salt Lake City office is investigating Overstock.com and its CEO, and imagine the fun they are having!

Take the latest wrinkle from the Overstock train wreck. I call it "Which Version of Jason Lindsey's Resignation is True?"

Here is Overstock's disclosure of its president's resignation, as filed with the SEC in an 8-K on Jan. 2. It says that he resigned on Dec. 31, effective immediately:



But in a sworn declaration dated Jan. 12, filed in connection with Overstock's junk lawsuit against Rocker Partners and Gradient Analytics, Lindsey swears, under oath, that he resigned on Jan. 2.



Sam Antar's blog has more observations on this. Sam believes, and I tend to agree, that this is proof that Lindsey backdated his resignation letter.

In a separate item, Sam discusses a recent motion by Overstock directors to strike a countersuit filed by Rocker (renamed Copper River Partners), in which they claim that Overstock's smear campaign against its critics is protected by the First Amendment, and that, besides, they didn't know anything about it. They also claim that they didn't even know about the lawsuit that they've been dragged into.

Gee, these guys just didn't know anything, did they? Hey, they're just a rubber stamp. An office implement cannot be expected to know much about a company, after all.

That's Overstock for you -- ignoramus directors and a president who can't get his story straight.

Clearly the documents I've quoted above can't both be true, and as I pointed out previously, there is additional evidence that Lindsey's resignation was backdated. Something else I presume the directors of the company know nothing about.

One thing perplexes me: why do such a blatantly stupid, reckless thing as lie in an SEC filing?

I really don't know, and given the sheer weight of the sliminess of this company, it's hard to figure out whether one lie is more important than another lie, or why liars lie. Perhaps just for the sake of lying? One thing I do know: those SEC investigators must be having a field day.

© 2007 Gary Weiss. All rights reserved.

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Tuesday, January 15, 2008

U.S. Supreme Court Screws Investors -- Again

If Harvey Pitt -- the worst SEC chairman in recent memory -- was the Bush Administration's welcome gift to American investors, the Supreme Court decision today, undermining the right of investors to sue crummy companies, was a further reminder of how much investor rights have been eroded in this administration.

The ruling is mind-boggling in its stupidity. MarketWatch observes:
The Supreme Court's majority opinion said Scientific-Atlanta's "deceptive acts were not communicated to the public." Therefore, the petitioner "cannot show reliance upon any of respondents' actions except in an indirect chain that we find too remote for liability."
In other words, a corporate management can engage in the most disgraceful acts involving third parties, but if it didn't put out a press release announcing its chicanery, it gets off the hook. This ruling is particularly toxic for Enron investors, who were victims of a wide swath of wrongdoing reaching far beyond the company.

In June, the high court gurgled forth with two similarly wrongheaded decisions, both of which similarly gave a helping hand to inept corporate management. Needless to say, none of the presidential candidates have mentioned this latest assault on shareholder rights.

© 2007 Gary Weiss. All rights reserved.

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Fran Coombs and the Washington Times

I hadn't been following the tumult at the Washington Times until I saw a familiar name in the news coverage. Seems that the managing editor, Fran Coombs, has quit, having been passed over for the job of editor.

I've seen Fran all of once in the past 23 years, but he and I were comrades-in-arms in Washington in the early 1980s. We both slaved away for a couple of obscure news services, States News Service and Network News Inc.

I must admit that I was blissfully ignorant of a torrent of rather grotesque publicity that surrounded Fran a year ago. An Oct. 2006 cover story in The Nation alleged that Coombs was a racist and anti-Semite, which Coombs denied.

The allegations of racism surprised me. I worked alongside Fran for three years, and I can attest that he was neither racist nor anti-Semitic.

I'm sure I'd have noticed, because Fran and I worked within three feet of each other for a few months at States, where we both covered Washington for the same midwestern newspapers. Later we were senior editors of something else called Network News Inc., which was a short-lived news service and syndicate.

I guess he may have turned into a raving loon since then, but that was not the Fran Coombs I knew. I also don't recognize the right-wing Neanderthal that has been portrayed in the media. Fran was a fan of Ronald Reagan, which I was not, but that was about it.

Just thought I'd get that on the record, albeit belatedly.

© 2007 Gary Weiss. All rights reserved.

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Overstock Appoints Mr. X to Its Board of Directors


Just when you thought that the corporate train wreck Overstock.com had ceased its ability to amaze and delight: The company just announced that it had appointed a gent named James V. Joyce to be a director of the company. He replaces Jason Lindsey, who skeedaddled on Dec. 31, 2007 (more or less).

Joyce is a perfect choice for director as he is totally beholden to Overstock's loopy CEO Patrick Byrne, having been paid $615,000 in 2007 -- far more than ex-president Lindsey's 2006 compensation of $367,000 (his 2007 pay has not yet been disclosed). Joyce got that money for providing what Byrne described in the press release as "organizational consulting services," whatever that means.

Joyce is something of a mystery man as far as Overstock is concerned. His name has never surfaced before in Overstock filings, according to Edgar. He is described as CEO of something called Icent LLC, which does not turn up in Google and is not recorded in Utah corporate records.

He attended Dartmouth and Oxford, as did Byrne, which leads me to believe that they are probably more than just passing acquaintances. Nothing like an old chum to fill out a captive board of directors.

Byrne describes him in the press release as an "organizational consultant." What does an "organizational consultant" do, anyway? Isn't that why companies have presidents and boards of directors -- in other words, people whose identities are disclosed to the public?

But anyway, this is a happy day. Byrne gets another yes man for his board of directors, and the long-suffering shareholders of Overstock.com learn the identity of an "organizational consultant" who was paid more than their own president.

© 2007 Gary Weiss. All rights reserved.

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Friday, January 11, 2008

The Fat Lady Gargles at NovaStar


Rehearsing the "Why Did I Listen to Phil Saunders Blues"

The proverbial fat lady gargled today, preparatory to singing at funeral services for NovaStar Financial, foundering subprime lender and naked shorting poster child.

The company, whose shares had been mercilessly pumped by naked shorting conspiracy theorists such as Phil Saunders of "thesanitycheck.com," was delisted from the New York Stock Exchange and announced dismissal of 85% of its employees. All this happened after the market close today, bless their hearts.

An 8-K filing says the company will be left with 30 employees after the layoffs. Most of them lawyers, I trust.

The stock is down 96% over the past year, and is down 45% in the aftermarket. (Another reverse split, perhaps?)

"Thesanitycheck" is the center of what crooked CEOs call the "market reform movement," but is known to the rest of the world as "the movement to give bad CEOs an excuse for their own incompetence." It clutched to its collective bosom stinky companies like NovaStar. This one managed to rip off pretty much everyone in sight, from its customers to its shareholders, and now has given a swift kick in the pants to its employees. All a source of great pride to naked shorting conspiracy theorists like Saunders because, after all, that is what their "movement" is all about -- to provide aid and comfort to companies like NovaStar.

The role of these charlatans in whipping up an investor frenzy for mediocre companies, ranging from third-rate Internet retailers like Overstock.com to penny stock scams like Universal Express, has been largely ignored by regulators.

The anti-naked-shorting nuts were particularly effective in pushing the shares of this crummy subprime lender.

Saunders established a website called "nfi-info" to push NovaStar in the context of stock market conspiracy theories, creating a mythology that has suckered naive investors to this very day. The site used to sucker investors with crap like "basher myhs," a section that rebutted the true stuff that critics of the company were saying.

The image above is from my personal files, as Saunders took the site down when Novastar plopped in the toilet a few months back. This message board post has a full list of the "myths and their debunking," which are hilarious when you consider that all the "myths" were right on the mark.

Saunders, a former used medical equipment salesman from Irvine, Calif., also posted swill of various kinds, including a shrill defense of naked shorting "victim" Overstock.com, under the pseudonym "Bob O'Brien" on internet message boards.

Saunders, posting anonymously as "Easter Bunny," "dirtydirtydeeds" and other monikers, monotonously pushed the line that NovaStar was a victim of short sellers and not its own business model. Anyone who believed him -- and he had quite a following for a time -- lost their shirts. Saunders hasn't pumped NovaStar lately, for obvious reasons, but his dirty work is pushed by others, even today.

NovaStar never supported nor repudiated Saunders' swill. That's in contrast to Overstock.com CEO Patrick Byrne, who promotes the Saunders website to this day, has openly funded astroturf websites, and has put on the payroll lowlifes who harass critics of the company. His support, however, has not been sufficient to boost thesanitycheck's readership, which has dropped off to nothing in recent months.

So for NovaStar the fat lady is not singing, but she is warming up for an appearance onstage. I think the song she will be singing is the "I Took Stock Tips from An Ex-Used Medical Equipment Salesman Named Phil Saunders Blues."

© 2007 Gary Weiss. All rights reserved.

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Tuesday, January 08, 2008

Ron Paul: Friend of Stock Scamsters

Republican presidential candidate Ron Paul has been making a lot of noise lately for being in the very uncommon position of being right. He was unfairly excluded from a Fox News debate Sunday night.

But before you shed too many tears for Paul, or even bother to read through his ultra-right position on the issues, there's a couple of things you may want to peruse. Seems that Paul has a long history of promoting bigotry and a more recent, equally creepy record of climbing in the sack with corporate cretins.

First read the devastating exploration of Ron Paul's bigoted past in the New Republic website today.

Then peruse Paul's ringing endorsement (see left side of page) of a book by a stock promoter named Anthony Wile. But be sure to read that slap on the back with the SEC press release charging Wile with stock manipulation.

No surprise there, given Paul's generally half-baked worldview, and neither is his endorsement of beefed-up SEC rules against the phantom menace of naked short selling. That is contrary to his smaller-government ethos, but in league with his sympathy for stock scamsters.

Another sleazeball to be embraced by Paul is Overstock.com's SEC-investigated CEO Patrick Byrne. The loopy Byrne, famed for his stock market conspiracy theories, recently used Overstock corporate resources to tout Paul's candidacy.

Byrne vigorously endorsed this friend of Wall Street as follows:

In October Dr. Paul came to Utah, and he and I visited for an hour in my office. After that meeting, I gave him the largest donation I could under federal law: it is rare to meet a politician who understands the Constitution, and rarer still to meet one who thinks it binds the government meaningfully (I would give Dr. Paul more were there not now a federal blackout on free speech known as “McCain-Feingold”). In a television interview last week I stated that, while for the first time in my life I felt there are several candidates qualified to be president, my #1 choice would be Dr. Paul.
No surprise here either, as the notoriously paranoid Byrne has found a kindred spirit: a candidate who thrives on paranoia.

The New Republic article today observed that "Paul's newsletters didn't just contain bigotry. They also contained paranoia--specifically, the brand of anti-government paranoia that festered among right-wing militia groups during the 1980s and '90s." Paul and his supporters continue to embrace conspiracy theories. So there's real synergy here with Byrne's famous "Sith Lord" conspiracy theory and the crackpot websites he supports.

Paul's history of racially tinged comments has raised eyebrows even before the New Republic article, such as this blog by black conservative Bob Parks.

I imagine that more than a few Overstock customers would not appreciate getting a political spam such as that email, particularly on behalf of a candidate with a record of extremist positions and, according to the New Republic article today, a "bigoted past." Even without knowing that, no doubt many Overstock customers are offended by Paul's position on the Iraq war, and his view that U.S. policies prompted the Sept. 11 attacks. Hardly the kind of person most companies would want to flaunt before their customers.

But what the hey, Byrne is not a perennial on "worst CEO" lists for nothing.

UPDATE: Paul's response to the New Republic article, quoted today in Bloggingstocks, can be found here. He says the views in the newsletter are not his and (classic P.R. spin here) that this is "old news." He says that “when I was out of Congress and practicing medicine full-time, a newsletter was published under my name that I did not edit. Several writers contributed to the product."

This is what is known as the "Sergeant Schultz defense," after the "I know nothing" character in Hogan's Heroes, and it is not convincing. Even if you believe him, as Zac Bissonnette points out: "If this guy can't run a newsletter without racist tirades showing up, can we seriously consider him for the role of leader of the free world. Delegating is a big part of being president -- Ron Paul appears to have delegated his newsletter to complete wackjobs."

An intriguing blog item, meanwhile, has further insights into the credibility of Paul's Sergeant Schultz defense.

© 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, January 07, 2008

Was Overstock President's Resignation Backdated?


Say, didn't that fellow quit the day before?

More weird tidings from my favorite corporate train wreck, the ever-slippery Overstock.com.

Seems that documents filed with the SEC raise a troubling question: Was the company president's resignation backdated? The company says he quit on Dec. 31, and produced a "resignation letter" with that date. But the company's own SEC filings provide evidence that he hadn't quit as of Jan. 1.

Indeed, I get the impression, from reading through all the documentation, that Lindsey didn't quit until the day of the announcement, Jan. 2.

Sam Antar's blog has all the details. Jason Lindsey showed up on a significant SEC filing--a revolving line of credit note -- that was signed by Overstock's CFO, David K. Chidester, that was date Jan. 1.

If Lindsey had left Dec. 31. Chidester (right) presumably would have known that, even in a joke of a company like Overstock. Remember that this is not some routine piece of paper, and that Lindsey was not mentioned in passing. He is listed as one of three executives authorized to request cash payments under that note. That is a crucial provision of that very important document.

Sam also notes that Overstock's SEC filings are inconsistent on when the amendment to the credit agreement was signed.

The the 8-K filing says it was Dec. 31, even though the amendment itself says Jan. 1.

Sam observes:
The key question is who lied: Jason C. Lindsey, Patrick Byrne, David K. Chidester, Overstock.com's disclosures, or the company's documents? For at least one of those persons, disclosures, or documents to be truthful, the others need to be lies.
Byrne's message board posting, at 8:41 p.m. Utah time on Dec. 31 -- a few hours after Lindsey supposedly resigned -- provides further evidence that Lindsey didn't quit on New Year's Eve. Not only does the post fail to disclose that the company's No. 2 had resigned -- with Byrne taking on his duties -- but talks about Byrne's "calender clearing up a bit."

That forward-looking statement (to use SEC jargon) is either false and misleading-- or Lindsey was still on the payroll.

Still more lies and inconsistencies for the SEC to sort out, in its continuing investigation of Overstock.com.

© 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, January 04, 2008

Spam King Indicted -- But What Took Them So Long?

I don't mean to splash cold water on the indictment yesterday of the "spam king," Alan Ralsky, and ten others on multiple stock fraud charges. Nor do I wish to cast aspersions on what the Justice Department describes as a massive, multiyear investigation.

The Justice Department announcement says that this was a heckuva effort:

The charges arose after a three-year investigation led by agents from the Federal Bureau of Investigation, with assistance from the U.S. Postal Inspection Service and the Internal Revenue Service revealed a sophisticated and extensive spamming operation that, as alleged in the indictment, largely focused on running a stock pump and dump scheme, whereby the defendants sent spam touting thinly traded Chinese penny stocks, drove up their stock price, and reaped profits by selling the stock at artificially inflated prices.
But what the Justice Department doesn't say is that Ralsky was hardly holed up in some cave in Afghanistan. He was operating out in the open, and was even the subject of an article in the New York Times, for Pete's sake. The Spamhaus Project has a file on this man a mile long, and notes that the FBI raided his house three years ago.

OK, it takes a while to build a criminal case. But what about the SEC? Why hasn't it ever taken action against Ralsky? After all, his spams went out to millions upon millions of people, and I presume that the SEC must have gotten wind of them at some point.

The whole thing seems fishy to me. Still, I am glad to see that a notorious spammer is getting his just desserts.

© 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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More BW Blues

More glum tidings from my alma mater, Business Week: assistant managing editor Paul M. Barrett, who joined the magazine with great fanfare to lead investigative projects, has left for the Wall Street Journal, from whence he came.

With this coming on the heels of a major bloodletting, in which non-undercompensated veteran staffers were purged to trim the payroll, it is bad news for the magazine and its (I hear) demoralized staff. Rumblings out of BW tell me that the staff is not crazy about its new redesign and showcasing of "celebrity" columnists, and that readers aren't charmed by the changes either. Nor advertisers, apparently.

Obviously Barrett is unfazed by the onset of Rupert Murdoch at the Journal. And why not? Despite the expressions of angst from many quarters, including this one, there's no indication that the Journal will jettison its franchise of investigative reporting and meaty narratives.

Business Week, on the other hand, has lost advertisers, and issues are substantially thinner than they were during the magazine's heyday in the 1990s. Less advertising means less editorial copy, and that is a toxic combination for text-heavy investigative reporting.

BW still does hard-hitting stuff, such as its "Prisoners of Debt" and "How Toxic is Your Mortgage?" cover stories. But with ads on the wane, even the most deserving articles aren't as long as comparable stories two or three redesigns ago.

© 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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The Overstock Acid Rain Shower Continues


Why is that man smiling (as if we didn't know)?

The Overstock.com corporate train wreck special pulled into the station yesterday, and off-loaded its usual cargo of shareholder misery. With its president Jason Lindsey having absconded, Overstock shares declined a stunning 12.4% in one day.

Forensic accountant Tracy Coenen observes:
Sell, and sell fast. We’ve been telling you all along that this is a sinking ship. The departure of Jason Lindsey, co-founder, president, COO, and member of the board of directors is a bad sign. They say he’s sticking around part-time, but that doesn’t hold water in light of his resignation from the board. How much more “part-time” can you be than to be on the board?
In his New York Times blog, chief markets writer Floyd Norris points to the contradiction between Overstock CEO Patrick Byrne's "I screwed up" comments and his statements in 2005 "that he had no doubt that the only reason the stock went down was those horrible naked short sellers."

Floyd continues: "Does this mean Mr. Byrne would now absolve the naked shorts, since another cause of the decline has been found? I don’t think so. It was just a few days ago that Overstock’s latest denunciation of them was published."

I'm still trying to figure out why the SEC, which is investigating Byrne and Overstock, has yet to take action.

Here we have public statements that are so demonstrably false that they are contradicted by Byrne himself. These statements misled significant numbers of shareholders of this thinly traded company, and a perusal of stock message boards will show that a sizable number of Overstock holders continue to swallow Byrne's lame excuses and lies.

What is the SEC waiting for?

© 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, January 02, 2008

Overstock.com President Gets Out While the Going is Bad

Apparently regulators are closing in on corporate train wreck Overstock.com. The chronically money-losing, SEC-investigated company announced after the market close today that its president and co-founder, Jason Lindsey, had resigned as president and chief operating officer and director as of Dec. 31.

Now, there are a couple of things that are interesting about this announcement.

The first is that it is obviously an abrupt decision that took Byrne by surprise, because no successor was in the wings. It's always better to say "so-and-so appointed as president, succeeding Jason Lindsey," rather than detonating a humiliating stink bomb like this after the market close.

The release says that Lindsey "wishes to return to our previous arrangement," which kinda implies -- without specifically saying so -- that he is taking over as president. The Associated Press, like most readers I suspect, missed this little sleight of hand and reported, "The company did not name a successor in a statement." You'd think that a point like this would have to be explicitly stated, and you'd be right.

The second interesting thing is that it contained something not usually found in an Overstock.com press release: a nugget of truth.

In the midst of the "Brownie, you've done a heckuva job" spin papering over this disastrous news, Overstock.com's telegenic, SEC-investigated CEO Patrick Byrne observed: "Jason co-founded the company and helped build it before retiring the first time. When I screwed it up a couple years ago, he came out of retirement and has played a decisive role getting it back on track." (A "classically weird comment," said Eric Savitz in a Barron's blog.)

Unusually, half of that statement is correct. The company is hardly "back on track" -- it has yet to register a profit in all but one quarter since inception -- and its share price is in the toilet. But not even Byrne's staunchest defenders would deny that Byrne has constantly screwed up this company. Too bad for Byrne that he has said quite the opposite in his junk lawsuit against Gradient Analytics and Rocker Partners.

Lindsey says he is leaving because he is "ready to take a less active role in order to spend time on some outside ventures." Baloney. Note that he is leaving as director -- a position that surely requires no major heavy lifting in a board as supine as this one.

Like all corporate boards, Overstock's has busy people on it, and all somehow manage to find a few spare minutes to devote every now and then to not overseeing Byrne's plaything. Being a negligent director on a rubber-stamp corporate board may be a dirty job, not to mention amoral, but no one ever called it hard work.

Of course, it is true that on a regular basis, Overstock directors (including former chairman John Byrne, the CEO's papa) find themselves suddenly "busy" with "outside ventures," when they are not frankly admitting the truth, which is that they are turned off by Byrne's antics. Lindsey is now the fourth board member to quit over the past couple of years, the third in 2007. (Dad left in 2006 and Ray Groves and John A. Fisher quit last year.)

I'm frankly surprised that any reputable person with even a third of a brain would serve on the board of a company with a CEO/Chairman like Byrne.

Some more questions that are worth pondering: if Lindsey quit "effective" Dec. 31, why was it disclosed Jan. 2? The wording of the 8-K says he resigned on that day "effective immediately."

From what I see, in both the public record and the emails from within the Starship Byrne that occasionally make their way to me, Overstock is more than just a laugh-a-minute corporate joke, with a loony CEO spouting conspiracy theories and generally making an ass of himself. It is in serious trouble. Lindsey's departure would seem to confirm that.

Obviously Lindsey knows when to bail out. I hope for his sake that the parachute opens.

UPDATE: The odds of that parachute opening seemed a bit lower after I read Sam Antar's blog. Sam observes that

at 8:41 PM (local Utah time) on New Years Eve of the same day that Jason C. Lindsey resigned, but before news of his resignation was released, Patrick Byrne under his alias Hannibal on the InvestorVillage message board, claimed that his "calender (sic) is clearing up a bit." Did Patrick Byrne know about Jason C. Lindsey's resignation at the time of his message board posting? Why would Byrne have more spare time if he knew that that Jason C. Lindsey was resigning? Perhaps it was as big a surprise to Byrne as it was to the rest of the market?
Looks like Byrne's big mouth has dug a hole, again, this time for his loyal copilot.

Sam also wonders aloud if the "SEC investigation of Overstock.com an undisclosed factor in Jason C. Lindsey's resignation?"

Bloomberg, meanwhile, quoted Byrne as saying that Lindsey will not be replaced and that he will assume his responsibilities. Interesting (and typical) that this was not explicitly stated in the SEC filing.

Sam notes too that Lindsey's resignation letter contradicts Byrne's message board blabbing. How could his "calendar" be clearing up if, a few hours before, he took on the job of president?

© 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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