Monday, March 31, 2008

More Monkey Business at BIDZ

Crime-fighter Sam Antar has all the details, in a post today.

As with another shady-accounting online outfit, Overstock.com, inventory accounting is the culprit. Gee, you'd think these guys all had the same accountant, or something.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: ,

An Occupational Hazard

Lee Distad is justifiably proud of his good work on Best Buy, and justifiably steamed that the media has latched on to the story without giving him proper credit.

Says Lee: "We all know that traditional news people all read blogs, and often are bloggers themselves, yet somehow many still act as if the blogosphere is either fluff or doesn't actually exist."

More on the blogger-media interaction in the Best Buy story can be found here.

I have been a victim of the same thing -- maybe -- on occasion. I say "maybe" because it isn't always possible to know if someone has actually seen one's blog.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: ,

Thursday, March 27, 2008

CJR Daily on 60 Minutes and Biovail

Mark Mitchell

Great piece in CJR Daily's Audit last night on Biovail and the disgraceful 60 Minutes segment that I've discussed a bunch of times in the past, most recently here.

Audit editor Dean Starkman observed:
The SEC charges against Biovail effectively torpedo the Stahl piece, which was devoted to airing the drug maker’s allegations that the stock-research firm, a predecessor of Gradient Analytics, concocted phony research to please SAC, a client.
In fact, the danger to investors was Biovail. So, 60 Minutes had it exactly wrong. But it’s worse than that: Biovail had been under SEC investigation since 2003. So it was clear at the time that Biovail was probably not a good example of a public company victimized by shorts. In fact, it was more likely that the Biovail example would prove the value of shorts, as it has.
The Audit piece is a refreshing contrast to the attitude of the former Audit editor, Mark Mitchell. An article such as this would have been impossible under the old regime, you see, because Mitchell swallowed whole the line peddled by Biovail and Overstock.com that they were swell and that the media and analysts were the real villains.

Mitchell spent a year working on a hatchet job pursuing Biovail and Overstock's conspiracy guff, mainly focusing on Herb Greenberg. It was ultimately rejected by Columbia Journalism Review, and Mitchell quit under a sustained barrage of criticism.

Mitchell has since become a kind of de facto p.r. man for Byrne, appearing with him at a college lecture in Utah -- resulting in this strange article in the Deseret News -- and pursuing once again his Byrne-inspired "article," though he is a biz hazy as to who would run such rubbish. He telephoned me for his "article" a few weeks ago and told me initially that the publication was "secret," but then admitted that he had none.

More on Mitchell's latest, strange antics here. Mitchell, incidentally, never returned my call and email in which I wanted to discuss with him the initial coverage in a college newspaper, since removed after a complaint by Byrne, saying that he was a "business associate" of Byrne's.

(Note: Mitchell later admitted that he is on Byrne's payroll. See this subsequent item.)

It's certainly good to see that The Audit is actually functioning as a journalism review, not as a vehicle for corporate shills.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: , ,

Spitzer and the Hookers -- When Did He Start?

A New York Post story today says that Eliot Spitzer was being serviced by high-priced call girls as far back as 2003 -- when he was Attorney General.

This is deeply troublesome, because it raises serious questions in my mind as to whether his work as AG might have been compromised by his (apparent) "hooker habit."

There's no hint of that yet, but I think that it needs to be thoroughly examined by investigators. By patronizing prostitutes, Spitzer was leaving himself open to blackmail. It was not only reckless and self-destructive, but potentially damaging to the people of New York. As I've pointed out before, it's no secret that prostitution rings are often tied in with the Russian mob.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels:

Wednesday, March 26, 2008

A Naked Shorting Poster Child's Merry Ex-CEO

Floyd Norris today recounts the rich lifestyle of former Universal Express CEO Richard A. Altomare, best known for his distinguished leadership of the Baloney Brigade naked shorting conspiracy cult.

Seems that Altomare, who has since been replaced as Baloney Brigade Field Marshall by Overstock.com CEO Patrick Byrne, is living on the lap of luxury -- despite having been kicked out as CEO of his company by the SEC.

Floyd recounts:

Meanwhile, despite having no sources of income, and two homes that are cash drains and worth less than their mortgages, Mr. and Mrs. Altomare manage to keep their three cars. There is a 2007 Mercedes ML350 and a 2007 Mercedes S550V. And when the two Mercedes are not good enough — one must keep up appearances, after all — they can drive the 2006 Bentley. Over the year after the judgment was issued, lease and insurance payments on the cars came to $100,326. Mr. Altomare also managed to keep current on his $4,600 monthly life insurance premiums.
The SEC wants to put him in jail for contempt, which would of course spoil all the fun. What strikes me as odd is the lack of interest in this creep from the Justice Department, despite past rumblings of an FBI investigation.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: ,

Richard Widmark, 1914-2008

Saddened to read today about the death of Richard Widmark, a great actor who never received the honors that were his due.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels:

Tuesday, March 25, 2008

Deja Vu at Biovail

If the fraud charges against Biovail lodged by the SEC yesterday seem familiar, there's good reason. Gradient Analytics, the victim of a junk lawsuit by Biovail, noted in a statement today that the SEC's charges against the crummy Canadian drug maker track closely with what Gradient said about the company quite some time ago.

Gradient says in its release, not online at the moment, that "its research into Biovail from 2002 to 2003 identified the same issues that are now the centerpiece of the accounting-fraud charges supporting the U.S. Securities and Exchange Commission complaint against the pharmaceutical company."

Gradient noted that Mark Schonfeld, head of the SEC's New York office, gave credit to analysts who raised questions about Biovail, saying on CNBC that “Part of the credit does go to people who were asking a lot of questions and were rightfully skeptical when the company was making representations that just didn’t quite make sense.”

That's lovely. But it leaves open a question that continues to linger: why hasn't the SEC acted against Overstock.com, which also is the subject of accurate reasearch by Gradient, and which also has lashed out against the firm with a lawsuit?

The SEC should punish Biovail and other corporate slimeballs for their retaliation against analysts and short-sellers, and force them to terminate their blame-shifting lawsuits. It's lamentable that a Spitzer-like state regulator is not leading the charge on this -- which might explain the venom that Overstock.com CEO Patrick Byrne expressed toward Spitzer recently.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: , , ,

Monday, March 24, 2008

The SEC Nails Biovail: Will 60 Minutes Issue a Retraction?


In the past I've discussed a creepy little Canadian drug company called Biovail, focusing on its No. 1 talent -- which is not making drugs, but rather casting blame on short-sellers, and gulling naive members of the press. Biovail was notably successful in that regard, gaining an atrocious 60 Minutes segment that was subsequently excoriated for its sheer stupidity.

Just about every single bit of news that has come out on Biovail has indicated that the short-sellers have been on the money, and that Biovail was a piece of dreck. Its CEO, Eugene Melnyk, skeedaddled, and word emerged last month that Biovail was the subject of a federal grand jury probe.

Today, the SEC weighed in with a fresh set of charges against Biovail, proving again that the shorts have been right and that the 60 Minutes piece was bunk.

Here's what the SEC says:

The Commission's complaint alleges that present and former senior Biovail executives, obsessed with meeting quarterly and annual earnings guidance, repeatedly overstated earnings and hid losses in order to deceive investors and create the appearance of achieving earnings goals. When it ultimately became impossible to continue concealing the company's inability to meet its own earnings guidance, Biovail actively misled investors and analysts about the reasons for the company's poor performance.

Biovail settled the Commission's charges and will pay a $10 million penalty. Four current or former Biovail senior executives still face SEC charges: former chairman and chief executive officer Eugene Melnyk; former chief financial officer Brian Crombie; current controller John Miszuk; and current chief financial officer Kenneth G. Howling.

"This is another case involving the tone at the top of a public company. It demonstrates the Commission's commitment to holding individuals accountable when they create a corporate culture of fraud and deceit," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement.

"We allege that Biovail and senior executives engaged in a pattern of systemic, chronic fraud that impacted its public filings of quarterly and annual reports over the course of four years," added Mark K. Schonfeld, Director of the SEC's New York Regional Office. "In an effort to conceal the fraud, Biovail's senior officers intentionally misled the company's auditors and the investing public, showing their complete disregard for their responsibilities to shareholders."
Of course, if the SEC is interested in holding individuals accountable for fraud and deceit, it remains to be explained why its two-year-old investigation of the fraud-ridden Overstock.com has yet to bear fruit.

The SEC complaint, while lurid, actually leaves out a lot of stuff, such as the fact that a junk lawsuit filed by Biovail persuaded Banc of America Securities, which had been issuing negative reports on Biovail, to stop following the company. Despite all the post-Enron rhetoric about the sanctity of independent analysts, the SEC has done woefully little against companies like Biovail and Overstock that want analysts to be obedient little puppies.

As for this particular piece of dreck: Will 60 Minutes issue a retraction for lending itself to the Biovail blame-shifting campaign -- or even have the decency of updating the idiotic "battle of the titans" article on its website? Don't bet on it.

UPDATE: The Ontario Securities Commission piles on.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: ,

Saturday, March 22, 2008

Patrick Byrne Spams Customers With Wikipedia Obsession


Overstock mass email posted on The Consumerist

I've been ignoring Overstock.com CEO Patrick Byrne's increasingly bizarre antics lately, even as they have become sicker and sicker. After all, his nuttiness is designed to divert attention from his ailing company's financial woes, and besides: how much creepiness can one blog endure? But this post in The Consumerist website piqued my curiosity.

Seems that Byrne has sent a spam email to his unwary customers on his latest paranoid fantasy, that Wikipedia is "an instrument of mass mind control." One can only imagine the number of customers who have been driven away after reading that.

One Consumerist reader commented: "So if I buy from Overstock, I get a bargain on a cosy down comforter *AND* my money helps support crazy people so they keep entertaining me for years to come? Bonus."

An ordinary (as opposed to completely comatose) board of directors might not see it that way.

Anyway, Overstock's corporate governance is a lost cause. I'm posting this not out of a desire to make fun of the man (he accomplishes that all by himself), but in the hope that some friend or close relative of Byrne might wander by and read this. The word "intervention" comes to mind. Please! This man needs help.

UPDATE: I see that the Consumerist item, since picked up by Valleywag and other websites, has drawn over 23,000 views since first posted on the popular consumer site. Another Overstock P.R. triumph! Meanwhile, the outrage continues on Digg.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: , ,

Tuesday, March 18, 2008

A Major Blow to Business Week

I almost thought I was hallucinating when I read this column in Portfolio.com: my alma mater Business Week has lost not one, but two of its top editors in one fell swoop. They are Frank Comes and Mary Kuntz, both assistant managing editors and both migrating to McKinsey & Co.

These names may not mean much to most people, but these were veteran editors and both very highly regarded. They provided the kind of institutional continuity that this magazine sorely needs, in the wake of massive staff turnover and morale-crunching layoffs.

Frank headed the magazine's international staff for many years, and more recently was in charge of financial coverage. Mary ran the magazine's corporate coverage. I never worked with either of them directly, but they were surely among the best editors there. The loss of these editors is a severe blow to the magazine, and comes after a year-end bloodletting that was particularly savage.

Portfolio.com's Jeff Bercovici reports:

The rumor inside is that Comes and Kuntz took buyouts -- unlike the 12 staffers who were laid off as part of a reorganization in December. Year to date, BusinessWeek's ad pages are down 26 percent, according to Mediaweek.
Yecch. That last number is especially startling. It makes me wonder if BW is going to survive over the long haul. As I pointed out in a recent blog item, the magazine has been losing $20 million a year, and staffers were told at a December staff meeting that the magazine will be sold if the situation does not improve in four years.

The departure of two top editors is hardly a vote of confidence, either in the future of the magazine or the management of its new editor in chief, Steve Adler.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels:

Lest We Forget: How Bear Stearns Regularly Flouted the Law

I chatted with the Canadian Broadcasting Corp. this morning about something we must never forget: how Bear Stearns regularly flouted the law.

That got me to thinking: gee, wouldn't it be nice to see a compendium of the kind of trouble Bear is in right now? Well, it so happens that there is a nice, up-to-date repository of such information, Item 3 of Bear Stearns's 10-K for 2007, entitled "Legal Proceedings."

I have taken the liberty or replicating it, in its entirety, below.

Yes, it's long. But Bear Stearns' history of sliminess is long too, ain't it?
In re McKesson HBOC, Inc. Securities Litigation: This matter arises out of a merger between McKesson Corporation ("McKesson") and HBO & Company ("HBOC") resulting in an entity called McKesson HBOC, Inc. ("McKesson HBOC").

Beginning on June 29, 1999, 53 purported class actions were commenced in the U.S. District Court for the Northern District of California. These actions were subsequently consolidated, and the plaintiffs proceeded to file a series of amended complaints. On February 15, 2002, the plaintiffs filed a third amended consolidated complaint, which alleges that Bear Stearns violated Sections 10(b) and 14(a) of the Exchange Act in connection with allegedly false and misleading disclosures contained in a joint proxy statement/prospectus that was issued with respect to the McKesson/HBOC merger.

Plaintiffs purport to represent a class consisting of all persons who either (i) acquired publicly traded securities of HBOC between January 20, 1997 and January 12, 1999, or (ii) acquired publicly traded securities of McKesson or McKesson HBOC between October 18, 1998 and April 27, 1999, and who held McKesson securities on November 27, 1998 and January 22, 1999. Named defendants include McKesson HBOC, certain present and former directors and/or officers of McKesson HBOC, McKesson and/or HBOC, Bear Stearns and Arthur Andersen LLP. Compensatory damages in an unspecified amount are sought.

On January 6, 2003, the court granted Bear Stearns' motion to dismiss the Section 10(b) claim asserted in the third amended complaint, and denied Bear Stearns' motion to dismiss the Section 14(a) claim. On March 7, 2003, Bear Stearns filed an answer to the third amended complaint denying all allegations of wrongdoing and asserting affirmative defenses to the claims in the complaint. On January 12, 2005, McKesson HBOC announced that it had reached a settlement with the plaintiff class, which settlement required court approval. Bear Stearns' engagement letter with McKesson in connection with the merger of McKesson and HBOC provides that McKesson cannot settle any litigation without Bear Stearns' written consent unless McKesson
obtains an unconditional written release for Bear Stearns and, under certain circumstances, is required to provide indemnification to Bear Stearns.

By Order dated May 23, 2005, the Court denied preliminary approval of the proposed settlement between McKesson HBOC and the plaintiff class. On July 12, 2005, the plaintiff and McKesson HBOC submitted a revised proposed settlement, purporting to address the issues identified by the Court in its order denying preliminary approval, to which Bear Stearns objected. The revised proposed settlement provides, among other things, that Bear Stearns' rights under its engagement letter are preserved for future resolution. McKesson HBOC's claims in connection with the letter are also preserved.

On February 24, 2006, the Court granted final approval of the revised proposed settlement. Bear Stearns appealed the final approval order to the U.S. Circuit Court of Appeals for the Ninth Circuit, seeking to reverse the final approval of the settlement on the ground that consummation of the settlement may deprive Bear Stearns of certain rights and remedies provided for in its
engagement letter.

On December 8, 2005, Bear Stearns commenced a separate action in New York State Supreme Court, New York County, Bear Stearns v. McKesson Corp. (the "New York Action"), asserting breach of contracts and other claims against McKesson based on the engagement letter and seeking, among other things, declaratory relief and damages. On April 24, 2006, McKesson moved to dismiss certain causes of action asserted in the complaint. On October 25, 2006, the Court issued an opinion denying McKesson's motion to dismiss in part and allowing Bear Stearns
to proceed with certain of its claims.

On September 24, 2007, the parties in the Federal Class Action entered into a stipulation of settlement. The stipulation of settlement provides that, subject to final approval by the District Court, the claims asserted on behalf of the settlement class against Bear Stearns will be dismissed with prejudice and that Bear Stearns denies any wrongdoing in connection with the claims
asserted against it in the Federal Class Action. Under the stipulation of settlement, promptly following preliminary approval of the settlement by the District Court, Bear Stearns will withdraw its appeal of the District Court's approval of McKesson's settlement of the Federal Class Action. The District Court granted preliminary approval on September 28, 2007. Pursuant to the
stipulation of settlement, on October 9, 2007, Bear Stearns withdrew its appeal in the U.S. Circuit Court of Appeals for the Ninth Circuit. On January 18, 2008, the District Court gave final approval to the settlement of the Federal Class Action and entered a judgment for dismissal. Bear Stearns has agreed to dismiss its claims against McKesson in the New York Action and Bear Stearns and McKesson have agreed to exchange mutual releases. Bear Stearns will make no payment in connection with the settlement.

Helen Gredd, Chapter 11 Trustee for Manhattan Investment Fund Ltd. v. Bear, Stearns Securities Corp.: On April 24, 2001, an action was commenced against BSSC in the U.S. Bankruptcy Court for the Southern District of New York by the Chapter 11 Trustee for Manhattan Investment Fund Limited ("MIFL"). BSSC provided prime brokerage services to MIFL prior to its bankruptcy. BSSC is the sole defendant in this action. The complaint alleges, among other things, that certain transfers of cash and securities to BSSC in connection with short sales of securities by MIFL in 1999 were "fraudulent transfers" made in violation of Sections 548 and 550 of the U.S. Bankruptcy Code and are recoverable by the Trustee. The Trustee also alleges that any claim that may be asserted by BSSC against MIFL should be equitably subordinated to the claims of other creditors pursuant to Sections 105 and 510 of the Bankruptcy Code. The Trustee seeks to recover in excess of $1.9 billion in connection with the allegedly fraudulent transfers to BSSC.

On March 21, 2002, the District Court dismissed the trustee's claims seeking to recover allegedly fraudulent transfers in amounts exceeding $1.9 billion. The District Court also remanded to the Bankruptcy Court the Trustee's remaining claims, which seek to recover allegedly fraudulent transfers in the amount of $141.4 million plus pre-judgment interest and to equitably subordinate any claim that may be asserted by BSSC against MIFL to the claims of other
creditors.

On October 17, 2002, BSSC filed an answer to the complaint in which it denied all allegations of wrongdoing and asserted affirmative defenses.

By Order and Decision dated January 9, 2007, the Bankruptcy Court ruled on the parties' cross motions for summary judgment. The Court denied BSSC's motion for summary judgment seeking dismissal of the Trustee's complaint in its entirety and granted the Trustee's motion for summary judgment on the fraudulent transfer claims against BSSC. BSSC believes it has substantial defenses to the Trustee's claims and appealed the Bankruptcy Court's decision to the U.S.
District for the Southern District of New York.

On appeal, the District Court affirmed the Bankruptcy Court's findings in part, but also reversed in part, the Bankruptcy's Court's grant of summary judgment to the Trustee, finding that a trial is necessary to make a factual finding as to whether BSSC acted in good faith with respect to its receipt of the alleged fraudulent transfers.

Enron Corp., et ano. v. Bear, Stearns International Ltd., et ano.: On November 25, 2003, BSIL and BSSC were named as defendants in an adversary proceeding commenced by Enron and Enron North America Corp. in the U.S. Bankruptcy Court for the Southern District of New York. Plaintiffs seek, interalia, to recover payments, totaling approximately $26 million that were allegedly made to BSIL and BSSC during August 2001 in connection with an equity derivative contract between BSIL and Enron. According to the complaint, Enron's payments constituted (a) fraudulent transfers, under Section 548(a) of the U.S. Bankruptcy Code and under applicable state law and (b) an unlawful redemption of Enron common stock in violation of Oregon law. Enron seeks judgment (a) avoiding and setting aside Enron's August 2001 payments to BSIL and BSSC, (b) directing BSIL and BSSC to pay Enron approximately $26 million, plus prejudgment interest, (c) declaring that Enron's August 2001 payments violated Oregon law, (d) disallowing any claims by BSIL and BSSC in connection with Enron's bankruptcy proceedings until they have returned the August 2001 payments to Enron and (e) awarding Enron its reasonable attorneys' fees and costs incurred in connection with the action.

By Order dated June 3, 2005, the Bankruptcy Court had denied the motion to dismiss filed by BSIL and BSSC. Defendants filed a motion with the U.S. District Court for the Southern District of New York for leave to take an interlocutory appeal from the Bankruptcy Court's decision. By Order dated May 2, 2006, the District Court denied defendants' motion for leave to take an interlocutory appeal from the Bankruptcy Court's decision.

The parties reached a mutual agreement to settle this proceeding. By Order dated December 3, 2007, the Bankruptcy Court approved the terms of the parties' settlement.

IPO Allocation Securities and Antitrust Litigations

The Company and Bear Stearns (the "Bear Stearns defendants"), along with many other financial services firms, have been named as defendants in many putative class actions filed during 2001 and 2002 in the U.S. District Court for the Southern District of New York involving the allocation of securities in certain initial public offerings ("IPOs"). The complaints in these purported class actions generally allege, among other things, that between 1998 and 2000: (i) the underwriters of certain "hot" IPOs of technology and internet-related companies obtained excessive compensation by allocating shares in these IPOs to preferred customers who, in return, purportedly agreed to pay additional compensation to the underwriters, and the underwriters failed to disclose this additional compensation and/or (ii) the underwriters' customers, in return for a favorable allocation of these securities, agreed to purchase additional shares in the aftermarket at pre-arranged prices or to pay additional compensation in connection with other transactions.

Beginning on April 19, 2002, the plaintiffs in these litigations filed amended complaints by virtue of which the public offerings of each of the 309 issuers are now the subjects of separate complaints. The Bear Stearns defendants are defendants in 95 of these amended complaints. As amended, the complaints allege, among other things, that the underwriters, including Bear Stearns, violated Section 11 of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, based on the wrongdoing alleged in the original complaints and by causing their securities analysts to issue unwarranted positive reports regarding the issuers. Compensatory damages in unspecified amounts are sought.

By order dated October 13, 2004, the Court granted in part and denied in part class certification for each of the six cases selected to be the focus cases for these proceedings.

By opinion and order dated February 15, 2005, the Court preliminarily approved the proposed settlement among plaintiffs and a substantial number of the non-bankrupt issuer defendants and their officers and directors. The settlement generally provided that (1) the insurers of these issuers will guarantee an ultimate recovery by plaintiffs, in this and related litigations, of $1 billion; (2) these issuers will assign to plaintiffs so-called "excess compensation" claims against the underwriter defendants, including the Bear Stearns defendants, that these issuers allegedly possess; and (3) plaintiffs will, upon final approval of the settlement, dismiss all claims against these issuers and the individual director and officer defendants. That preliminary approval, however, was conditioned upon certain changes being made to the terms of the settlement.

On December 5, 2006, the Second Circuit vacated the lower court's class certification of the six selected focus cases. The Second Circuit concluded that class certification of these cases was improper and remanded the cases to the lower court for further proceedings.

In January 2002, Bear Stearns was named as a defendant, along with nine other financial services firms, in an antitrust complaint filed in the same court on behalf of a putative class of purchasers who, either in IPOs or in the aftermarket, purchased technology-related securities during the period March 1997 to December 2000. The Plaintiffs allege that the defendants conspired to require that customers, in return for an allocation in the IPOs, (i) pay charges in addition to the IPO price, such as non-competitively determined commissions on the purchase or sale of other securities and/or (ii) agree to purchase the IPO securities in the aftermarket at prices above the IPO price. Plaintiffs claim that these alleged practices violated Section 1 of the Sherman Act and
state antitrust laws and seek compensatory and treble damages. On November 6, 2003, the District Court granted the defendants' (including Bear Stearns') motion to dismiss all claims asserted against them by these antitrust plaintiffs. The plaintiffs appealed that decision to the Second Circuit Court of Appeals and on September 28, 2005, the Court of Appeals vacated the dismissal and remanded this matter to the lower court for further proceedings.

On December 7, 2006, the U.S. Supreme Court granted defendants' petition for certiorari to appeal the decision issued by the Second Circuit Court of Appeals. On June 18, 2007, the U.S. Supreme Court reversed the Second Circuit Court of Appeals' decision.

The Company denies all allegations of wrongdoing asserted against it in these litigations and believes that it has substantial defenses to these claims.

IPO Underwriting Fee Antitrust Litigation: Bear Stearns, along with numerous other financial services firms, is a defendant in several consolidated class actions currently pending in the U.S. District Court for the Southern District of New York. The first consolidated action, filed on March 15, 2001, purports to be brought on behalf of a putative class of purchasers of stock in initial public offerings (the "Purchaser Action"). The second consolidated action, filed on July 6, 2001, purports to be brought on behalf of a putative class of issuers of stock in initial public offerings (the "Issuer Action"). Each suit alleges that Bear Stearns violated federal antitrust laws by fixing
underwriting fees at 7% for initial public offerings with an aggregate issuance value of $20-$80 million for the time period 1994 to the present. The plaintiff in each action seeks injunctive relief and treble damages.

On February 24, 2004, the District Court granted defendants' motion to dismiss the complaint in the Purchaser Action in part, dismissing plaintiffs' claim for treble damages under Section 4 of the Clayton Act. However, the Court denied defendants' motion to dismiss the plaintiffs' claim for injunctive relief.

On September 16, 2004, plaintiffs in the Purchaser Action and the Issuer Action moved for class certification. On October 25, 2005, plaintiffs in both actions moved for partial summary judgment against defendants on liability.

By Order dated April 18, 2006, the District Court denied the Issuer plaintiffs' motion for class certification. The Issuer plaintiffs appealed the District Court's ruling to the U.S. Court of Appeals for the Second Circuit. By Order dated September 11, 2007, the Second Circuit reversed the District Court's denial of class certification and remanded the matter back to the District Court for
further consideration of certain questions specified in the Second Circuit's Order.

Bear Stearns has denied all allegations of wrongdoing asserted against it in these litigations and believes that it has substantial defenses to these claims.

Mutual Fund Litigation

On November 7, 2003, BSSC, the Company and Bear Stearns (the "Bear Stearns defendants"), together with 18 other entities and individuals, were named as defendants in a purported class action lawsuit in the U.S. District Court for the Southern District of New York by a mutual fund investor on behalf of persons who purchased and/or sold ownership units of mutual funds in the Janus or Putnam families of mutual funds between November 1, 1998 and July 3, 2003. On January 26, 2004, plaintiff filed a first amended complaint, again on behalf of persons
who traded in the Janus or Putnam families of mutual funds, against the same Bear Stearns defendants and 16 other entities and individuals, including mutual funds and other financial institutions. On October 22, 2003, another purported class action was filed on behalf of the general public of the State of California against multiple defendants, and subsequently included the Company as a defendant, with respect to various mutual funds. Both of these actions allege
that the defendants violated federal and/or state laws by allowing certain investors to market time and/or late trade mutual fund shares and seek various forms of relief including damages of an indeterminate amount. On March 19, 2004, these actions were transferred to the District of Maryland for coordinated and/or consolidated pre-trial proceedings as part of MDL 1586-In re: Mutual Funds Investment Litigation.

On or subsequent to September 29, 2004, fifteen new and/or amended class action or derivative complaints were filed in MDL-1586 naming as defendants the Bear Stearns defendants, various mutual fund companies, certain broker-dealers, and others (collectively the "defendants"). Plaintiffs who have brought actions, either directly or derivatively, against one or more of the Bear Stearns defendants are shareholders in the following families of mutual funds: AIM, Invesco, PIMCO/Allianz Dresdner, Excelsior, Alliance, Franklin Templeton, One Group, Strong, Columbia, Pilgrim Baxter, Alger, Janus, RS and MFS. Among other things, the actions allege that the defendants violated federal and/or state laws by allowing certain investors to market time and/or late trade mutual fund shares and seek various forms of relief including damages of an indeterminate amount.

The Bear Stearns defendants, along with certain other defendants, filed an omnibus motion to dismiss the consolidated class action and derivative claims against them. On November 3, 2005, the derivative claims against the Bear Stearns defendants were dismissed. As of December 31, 2005, the Bear Stearns defendants' motion to dismiss was otherwise granted in part and denied in part as to direct investor claims in the following families of mutual funds: Janus, AIM/Invesco, RS, One Group, MFS, Columbia, PIMCO/Allianz Dresdner, Alger, Excelsior and Strong.

The Bear Stearns defendants believe that they have substantial defenses to the remaining claims.

Bear Wagner Specialists LLC: Bear Wagner Specialists LLC, a subsidiary of the Company, is among numerous defendants named in purported class actions brought on behalf of investors beginning in October 2003 in the U.S. District Court for the Southern District of New York alleging violations of the federal securities laws in connection with NYSE floor specialist activities. The actions seek unspecified compensatory damages, restitution, and disgorgement on behalf of purchasers and sellers of unspecified securities between October 17, 1998 and October 15, 2003. Bear Wagner Specialists LLC and the Company are also among the defendants in a purported class action filed in December 2003 in California Superior Court, Los Angeles County alleging violation of California law in connection with the same conduct. This case was transferred to the U.S. District Court for the Southern District of New York. The district court consolidated these purported class actions under the caption In re NYSE Specialists Securities Litigation, No. 03 Civ. 8264 (RWS). On September 15, 2004, a consolidated amended complaint was filed in this action.

Bear Wagner and the Company deny all allegations of wrongdoing in the class action specialist litigations and believe they have substantial defenses to the claims.

In re Prime Hospitality, Inc. Shareholders Litigation: On July 15, 2005, plaintiff shareholders of Prime Hospitality Corporation ("Prime") filed a consolidated amended class action complaint in the Delaware Chancery Court against the directors of Prime, the Blackstone Group ("Blackstone") and certain affiliates of Blackstone, and Bear Stearns. As amended, the complaint alleges that Bear Stearns acted as financial advisor to Prime in connection with the sale of Prime to Blackstone, and that Bear Stearns aided and abetted a breach of fiduciary duty by the directors of Prime in connection with that transaction.

The amended complaint seeks from defendants compensatory damages in an unspecified amount, as well as various forms of equitable relief, including, but not limited to, rescissory damages, the imposition of a constructive trust and an accounting. On October 3, 2005, Bear Stearns filed its answer to the consolidated amended class action complaint denying all allegations of wrongdoing and asserted affirmative defenses.

The parties reached an agreement in principle to settle the action against all defendants, including Bear Stearns. On September 19, 2007, the Court approved the settlement and the case was dismissed with prejudice. Pursuant to the settlement, Bear Stearns was not required to make any payments, and obtained a full release of all claims that were asserted against it.

Short Selling Litigation

The Company, along with numerous other financial services firms, was named as a defendant in a purported class action filed in the U.S. District Court for the Southern District of New York by customers who engaged in short-selling transactions in equity securities since April 12, 2000. The complaint generally alleged that the customers were charged fees in connection with the short sales but that the applicable securities were not necessarily borrowed to effect delivery, which resulted in failed deliveries of the securities and/or excess charges to the customers. The complaint alleged that this conduct constituted a conspiracy in violation of the federal antitrust laws, and also asserts New York state-law claims.

Defendants moved to dismiss the complaint on March 15, 2007. On December 20, 2007, the District Court dismissed the complaint in its entirety, dismissing the federal antitrust claims with prejudice, and the state-law claims without prejudice, as to all defendants, and directing that the case be closed.

BSSC, along with numerous other financial securities firms and other unnamed persons, has been named as a defendant in two separate actions in California state court. The complaints generally allege that since late 2004, the defendants have engaged in a market-manipulation scheme in their role as prime brokers, involving the alleged intentional failure to deliver securities
to cover short sales. The complaints further allege that such failures to deliver distorted the market for, and artificially depressed the share price of, the securities identified in the respective complaints. The complaints allege causes of action under California statutory and common law.

BSSC believes it has substantial defenses to the claims brought in these actions.

Mortgage-Related Matters

The Company has received requests for information from various regulatory and governmental entities relating to subprime mortgages, mortgage securitizations, collateralized debt obligations, and synthetic products related to subprime mortgages. The Company is cooperating with the requests.

BSAM-Managed Hedge Fund Matters

The Company, Bear Stearns, BSAM, BSSC and/or certain individual current or former employees have been named as defendants in two purported class action complaints relating to the Bear Stearns High Grade Structured Credit Strategies Master Fund, Ltd. (the "High Grade Fund") and the Bear Stearns High Grade Structured Credit Strategies Enhanced Leverage Master Fund, Ltd. (the "Enhanced Leverage Fund"). BSAM served as investment manager for both of these funds.

The first action, titled Navigator Capital Partners, L.P. v. BSAM, et al., was filed on August 6, 2007 in New York State Supreme Court. The action is styled as both a purported class action on behalf of purchasers of partnership interests in Bear Stearns High Grade Structured Credit Strategies Fund, L.P. (the "HG Partnership"), also known as a "feeder fund," which invested
substantially all of its assets in the High Grade Fund, as well as a derivative action on behalf of the HG Partnership as a nominal defendant. The Complaint asserts claims for breaches of fiduciary duty against BSAM and the individual defendants. The remaining defendants are alleged to have aided and abetted in the breaches of fiduciary duty. The named plaintiff in this action alleges that
it purchased in excess of $700,000 of Partnership interests. The relief being sought by the plaintiff is unspecified damages, costs and fees.

The second action, titled FIC, L.P. v. BSAM, et al., was filed on December 21, 2007 in the U.S. District Court for the Southern District of New York. The action was brought by a purchaser of partnership interests in the Bear Stearns High Grade Structured Credit Strategies Enhanced Leverage Fund, L.P., also known as a "feeder fund," which invested substantially all its assets synthetically through a leverage instrument to conduct activities indirectly through an investment in the Enhanced Leverage Fund. The Complaint asserts claims for breach of contract and breaches of fiduciary duty against BSAM and the individual defendants. The remaining defendants are charged with having aided and abetted in the breaches of fiduciary duty. The relief being sought by the plaintiff is unspecified damages, costs and fees.

Also, the Company, Bear Stearns, BSAM, and certain individual employees have been named as defendants in an action filed by Barclays Bank PLC ("Barclays") on December 20, 2007 in the U.S. District Court for the Southern District of New York. The complaint asserts claims for, among other things, fraud, breach of fiduciary duty, and negligent misrepresentation for the conduct
of defendants relating to the Enhanced Leverage Fund, and transactions Barclays entered into with the feeder funds of the Enhanced Leverage Fund. The relief being sought by Barclays is unspecified compensatory and punitive damages, costs, and fees.

In addition, one or more of Bear Stearns, BSAM, BSSC, and/or certain individual current or former employees have been named as respondents in multiple FINRA arbitrations related to investments in feeder funds of the High Grade Fund and/or the Enhanced Leverage Fund. The relief being sought by the claimants in these arbitrations is compensatory damages, unspecified punitive damages, costs and expenses.

The Company believes it has substantial defenses to claims asserted against it in these proceedings.

The Company has also been contacted by and received requests for information and documents from various federal and state regulatory and law enforcement authorities regarding the High Grade Fund and the Enhanced Leverage Fund, including the Securities and Exchange Commission, the U.S. Attorney's Office for the Eastern District of New York and the Securities Division of the Commonwealth of Massachusetts (the "Securities Division"). On November 14, 2007, the Securities Division filed an administrative complaint against BSAM alleging
that BSAM violated multiple provisions of the Massachusetts Securities Act by
failing to adequately disclose and/or manage conflicts of interest related to procedures for related party transactions.

Derivative Actions

Samuel T. Cohen v. Board of Directors and certain of the Company's present and former executive officers: On or about December 19, 2007, a shareholder of the Company commenced a purported shareholder derivative suit in the U.S. District Court for the Southern District of New York against the Company's Board of Directors and certain of its present and former executive officers. The
Company is named as a nominal defendant. The Complaint asserts claims for breaches of fiduciary duty, corporate mismanagement, waste and violations of the federal securities laws in connection with losses sustained by the Company as a result of its purchases of residential sub-prime loans. Plaintiff seeks compensatory damages in an unspecified amount and an order directing the Company to improve its corporate governance procedures.

Jerome Birn v. Board of Directors and certain of the Company's present and former executive officers: On or about January 23, 2008, a shareholder of the Company commenced a purported shareholder derivative suit in the U.S. District Court for the Southern District of New York against the Company's Board of Directors and certain of its present and former executive officers. The Company is named as a nominal defendant. The Complaint asserts claims for breaches of
fiduciary duty, waste of corporate assets, unjust enrichment and violations of the federal securities laws in connection with losses sustained by the Company as a result of its purchases of residential sub-prime loans and certain repurchases of its own common shares. Plaintiff seeks compensatory damages in an unspecified amount and an order directing the Company to improve its corporate governance procedures.
Long, isn't it?

While there may be some junk lawsuits buried in there -- I spotted a "fail to deliver" piece of trash filed by Overstock.com -- you really have to marvel at the degree to which Bear Stearns managed to get itself into a whole passel of litigation.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels:

Patrick Byrne Caught in (Surprise Surprise) Another Lie

Stop the presses--not. The clown prince of corporate America, Overstock.com CEO Patrick Byrne, has been caught in another lie. White collar crime-fighter Sam Antar points out in his blog that Overstock's latest 10-K contradicts a statement he made on a stock message board.

As I said, don't stop the presses. It is not news by now that, as Sam states in his blog "Patrick Byrne is a bottomless pit of lies." He has even lied about his own lies, misrepresenting (see also here) his dishonest "stock counterfeiting" jihad as a warning against the subprime mess and illiquidity in the system. In fact, he and other conspiracy theorists touted a subprime lender, Novastar Financial (NFI), claiming it was a victim of "naked short-selling."

Nor is it news for him to lie about Overstock's accounting practices , even as the SEC engages in an ongoing investigation that focuses on just that.

Byrne clearly believes that his real or perceived political clout guards him against SEC sanctions stemming from his lies. It will be interesting to see if, indeed, the SEC is the "captured regulator" that he says it is.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: , , ,

Sunday, March 16, 2008

The Wrongheaded Bear Stearns Bailout

Gretchen Morgenson has an acerbic commentary on the Fed-guaranteed bailout of Bear Stearns today. She writes:

. . . why save Bear Stearns? The beneficiary of this bailout, remember, has often operated in the gray areas of Wall Street and with an aggressive, brass-knuckles approach. Until regulators came along in 1996, Bear Stearns was happy to provide its balance sheet and imprimatur to bucket-shop brokerages like Stratton Oakmont and A. R. Baron, clearing dubious stock trades.
Gretchen actually understates the case. Bear was full partners with Baron in its ripoff of customers, and never paid the price.

Here's a New York Times story, also by Gretchen, on the SEC's settlement with Bear and Richard Harriton, head of its trade clearing operations in the 1990s. (My own Business Week stories on this wretched affair are, alas, unavailable on the Internet.)

In a separate civil suit, the S.E.C. accused Bear Stearns of helping A. R. Baron commit securities fraud by financing its operations even in the face of overwhelming evidence that the smaller firm was defrauding its customers. Bear Stearns settled the suit without admitting or denying the accusations and paid $38.5 million in fines and restitution.

In yesterday's settlement order, the S.E.C. said that Mr. Harriton's actions had caused certain A. R. Baron customers to be defrauded and substantially assisted the overall fraud conducted by the smaller firm by allowing it to stay in business when it lacked the necessary capital to operate.

Also worth reading is this report on the role of clearing firms in microcap fraud by the pre-Spitzer New York State Attorney General's office. Note that Bear Stearns plays a starring role:

The most frequent and inexplicable complaint is the refusal by clearing firms to halt unauthorized trades in customer accounts. These investors usually only receive a "Dear John" letter referring the investor back to the introducing, micro-cap broker (who, most likely has already been unresponsive to the investor) and to the boiler plate contained in their new account form that purports to set forth that the clearing firm is not responsible for anything and need not take instructions from the owner of the account.

Some investors even believe, mistakenly, that the clearing firm itself is, in actuality, their brokerage firm. This misapprehension is often planted by the brokers of the introducing firm who, in their scripted "spiel," emphasize their relationship to the clearing firm while omitting their own less-prestigious firm. For example, a Stratton broker stated, "You may not know the name of my firm, but we're backed up by some of the best firms on Wall Street -- like Bear Stearns."

Similarly, in the Bear Stearns approved welcome letter that was sent to customers of A.R. Baron & Co., Inc. ("Baron") in July, 1995, the public was told that Bear Stearns has $5.8 billion in capital, has been in business since 1923, and provides clearing clients with "$25 million insurance protection" for their accounts and that Baron was "confident that this relationship will provide you with a deep feeling of security."

It's outrageous that the Fed would bail out a company such as this. Bear finally was snared by its own greed and recklessness, and, if it was destined to die, it should have been allowed to die.

UPDATE: Bear Stearns has gotten a comeuppance of sorts. It is now a penny stock, having cut a deal to sell itself to JP Morgan at $2 a share.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels:

Friday, March 14, 2008

More Inventory Mishegas (BIDZ Edition)

White collar crime fighter Sam Antar has a fascinating blog item on possible accounting mishegas, this time at BIDZ.com.

Eric Savitz picks up on the story at the Barron's website. Savitz had previously reported that the company had previously raised a ruckus about "naked short selling," the all-purpose excuse of scuzzy companies, with or without accounting mishegas.

Speaking of mishegas (defined here), the clown prince of public companies, Patrick Byrne, is expected to belch forth a Form 10-K for Overstock.com on Monday. What merriment awaits? Stay tuned.

I note that Byrne, consistent with his policy of doing everything but strip naked in public to divert attention from his ineptness, appeared on Fox News yesterday to say that Eliot Spitzer. . . . arghh, too bad. Having technical difficulties. Guess this diversion will have to go unrecorded.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: , , ,

Spitzer and the Media


Slate's Jack Shafer is justifiably upset with Kimberly Strassel's Wall Street Journal op-ed, "Spitzer's Media Enablers."

Strassel said:

. . . from the start, the press corps acted as an adjunct of Spitzer power, rather than a skeptic of it. Many journalists get into this business because they want to see wrongs righted. Mr. Spitzer portrayed himself as the moral avenger. He was the slayer of the big guy, the fat cat, the Wall Street titan -- all allegedly on behalf of the little guy. The press ate it up, and came back for more.

There's some truth to this, but Shafer's points outs that the articles on Eliot Spitzer cited by Strassel weren't as puffy as she implies in her piece. (Actually I think that Spitzer's reputation as a dragon-slayer was way overblown, as I pointed out in Wall Street Versus America, and I have pointed out many times that his pursuit of Dick Grasso was a waste of his office's resources, but that is another story.)

The Strassel column struck me as odd for another reason. The "enablers" she cites were actually situated in her own newspaper. The Journal was a beneficiary of many Spitzer leaks.

I think David Weidner's article in Marketwatch, also operated by Dow Jones, does a better job of laying out the issues and of noting the Journal's role as a beneficiary of Spitzer leaks (though Weidner may have gone a bit too far in his depiction of an ex-Journal reporter, as this response points out).

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: ,

Monday, March 10, 2008

Eliot Spitzer and the 'B Word'

How long has Eliot Spitzer been patronizing prostitutes?

To me that's the only question worth exploring in the Eliot Spitzer sex scandal. Reading the New York Times article, you have to wonder if he's been "No. 9" or some other number with other hookers for a long time. While he was attorney general, for instance?

That's because the key word here is not "hypocrisy" or "morality," it's "blackmail." If Spitzer has been patronizing prostitutes, he'd be leaving himself open to being shaken down, perhaps by the mob. The Russian mob is heavily involved in prostitution.

While I doubt that Spitzer would have succumbed to blackmail, had it been attempted, it was a risk he should not have allowed the citizens of the state to take. If, that is, this was not an isolated incident. If it was, then this is a big, fat nothing. (Unless the accusations about his committing a felony in the structuring of his payments to the prostitutes turn out to be true. That ain't nuthin'.)

UPDATE: Congressman Peter King made the same point in National Review Online:

"Spitzer himself was very severe going after prostitution rings that had to do with white collar crimes. He was very hard-nosed with his tactics. To leave himself open to blackmail — putting himself and the state in a compromised position like that — it's just awful."

So did Dealbreaker:

That a man so versed in the blackmail style of prosecution would so readily open himself up to that dark art is, at the very least, extraordinary. One would think that a man who deployed his aides to whisper about a corporate executive allegedly “banging” his assistant, would be wise enough to the ways of the world to avoid putting himself in a position where he could be blackmailed. That he lacked such wisdom—or ignored it—shows a reckless disregard for the responsibilities of the high office to which the people of New York elected him.
© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels:

Stop Picking on Ralph Nader

You may not agree with everything he has to say, but his campaign can provide a platform on issues of excess corporate power. More on that today in my Forbes.com Muckraker column.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels:

Saturday, March 08, 2008

A Stone Rolls in India

I'm cheered to learn this morning that Rolling Stone is starting an edition in India. The BBC website reports:

The first issue hit the news stands last week with a quirky marketing spin - five different covers featuring Led Zeppelin, Bruce Springsteen, Amy Winehouse, Jay-Z and Anoushka Shankar were put out together with a mix of local and original content.

I haven't seen this issue, but I think that the "local and original content" will be the deciding factor in whether this publication is a success.

India has a multitude of English-language newspapers, some published nationally, but a paucity of top-quality magazines serving the growing middle class. A p.r. fellow I know complains that the problem does not end there, and that he has trouble finding competent English-speaking p.r. firms in India.

I'd say that both ends of the equation, journalism and p.r., are ripe areas for growth in the country, for entrepreneurs who can navigate the local bureaucracy. Fortune is commencing an Indian edition, and it will be interesting to see if other publishers follow. There is definitely an unfulfilled need in the market, as a browse through any Indian big city newsstand would show. Two-day-old copies of the International Herald Tribune just don't do the trick for news junkies.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: ,

Wednesday, March 05, 2008

Is a Former CJR Editor a Patrick Byrne 'Business Partner'?

Mark Mitchell

Overstock.com CEO Patrick Byrne has done everything but strip nude in public to attract attention lately, in order to deflect attention from his company's chronic inability to make money and the ongoing SEC investigation. He is so out of control that he recently made common cause with the Universal Express fraud, according to Zac Bissonnette of Bloggingstocks.com.

I've been ignoring his infantile antics, and I was not surprised to see this article in a Utah college newspaper, containing the usual fantasies and smears. What I did find interesting was his reference (later deleted--see update) to a fellow named Mark Mitchell as his "business partner." That name may not mean much to you, but Mitchell is the former editor of CJR Daily's "Audit" feature on the financial press.

While there, Mitchell worked for many months on a CJR feature concerning Byrne's nutty allegations against journalists, including Herb Greenberg of Marketwatch.com and others who have written critically on Overstock. He interviewed myself and others extensively, and his open pro-Byrne bias was obvious. (He viewed Enron as a victim of short-selling, which I thought curious enough to mention in a Salon article.)

The CJR article never ran, and Mitchell departed as the Audit's editor. His tenure at the Audit had been, to put it delicately, controversial. See also this and this.

So, guess who emails and calls me two days ago? Yup, Mark Mitchell. His email said as follows:

Gary,
To refresh your memory: I was working on a story about short-sellers and the media while at the Columbia Journalism Review.
I took a break for awhile, but I'm working on the story again.
May I call you to ask a few questions?
If so, please let me know your phone number.
Thanks very much.

Mark Mitchell

I wrote back as follows: "For what publication are you writing?" and expected a prompt answer to this routine question. As any journalist (and any journalism review editor, surely) can attest, it is S.O.P. to tell one the publication one is writing for, or, if the piece has not been sold, to say so.

I got no response to the email but I did get a call from Mitchell a few hours later. "I'm working on the same article I was working on two years ago, taking that up again." said Mitchell. For what publication? "Can't tell you what publication right now."

Now, as I said earlier, that is not S.O.P. In fact, it is not terribly ethical. Remember that this is the former operator of a journalism review website.

It's a secret publication? "Something like that, yeah." Has this article been sold to a publication? "It has not."

At last, the truth. Or is it? Has the article indeed been "paid for" by Overstock's media-obsessed CEO? I don't know the answer to that. However, if Byrne is to be believed -- and he is as lacking in credibility as one can find in a CEO -- it would appear that Mitchell is not actually functioning as a journalist at all, but as a "business partner" of the subject of the article.

If so, and if he is working to add to Overstock's pantheon of smears, the word for what he did is called "pretexting." At the very least, it would be a grave violation of journalism ethics for him to write an article about a "business partner."

However, let's not jump to conclusions. Knowing Byrne, my tendency is to believe that Mitchell is not his "business partner," that he just wants to revive the hatchet job on Greenberg that CJR refused to publish, and that he was less than forthcoming with me about the fact that he hasn't sold it just yet.

I've asked Mitchell for his side of the story, so we'll see what he has to say about that. Stay tuned.

UPDATE: Still no word from Mitchell. Meanwhile I see that the article in the Utah paper has been dramatically altered to remove the reference to Mitchell as his "business partner," along with all references to myself. (And no, I did not ask for that.) A correction is promised.

Even as corrected, what's in this article is just plain weird:
Additionally, Byrne remarked on how writer Mark Mitchell was threatened in New York and told to stay away from "the Irish guy," which Byrne believes was himself
I hope that Mitchell returns my call as I'd like to ask him about this anecdote, which is similar to a fairy tale in the article from Byrne. He talks about a "visit to a greasy spoon" that also has "crock" written all over it.

I'm also interested to know if he is the source of this fish story, which contends that Mitchell's departure from CJR was connected to some hedge fund money arriving at Columbia, that the life of his child was threatened, and that evil forces conspired to keep the article from being published. Goodness! I think Mitchell needs to tell the full story of that.

(It later was revealed that appearances were not deceiving. As he later admitted, Mitchell was working as a PR factotum for Byrne when he appeared with him in Utah. See this subsequent item.)

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: , , , ,

Usana Junk Lawsuit SLAPPed Down

Seems that we have a rare victory against corporations seeking to silence their critics. Tracy Coenen describes how most of a suit in Utah against ex-con fraudbuster Barry Minkow by Usana Health Sciences has been thrown out of court. All but one of Usana's claims was tossed out.

What makes this interesting is that the court cited the anti-SLAPP statutes, which are rarely enforced laws prohibiting suits just like this.

The SLAPP statutes allow the defendants to claim legal fees. It's not clear if that is going to be applicable here, but I certainly hope so.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: , ,

Enter your email address:

Delivered by FeedBurner