Thursday, May 29, 2008

Biovail Redux

Here's a piece from last week that I missed: a CJR Daily Audit column on how 60 Minutes flubbed a story on Biovail, which recently pleaded guilty to criminal charges.

When 60 Minutes decided to do a business piece, it went after two of the few market participants—shorts and independent researchers—that actually have an incentive to counter the Wall Street sales machine.

Then to pick a company already under SEC investigation as a purported victim is to ask for trouble. The SEC’s suit blew apart the 60 Minutes piece. This criminal plea is just the cherry on top.

This item also demonstrates anew the Audit's evolution from dreck, under its eccentric former editor Mark Mitchell, into a must-read column. Note the hat tip to Carol Remond, who is now a target of Mitchell in his new role as a flack for Overstock.com.

I'd say it's high time that 60 Minutes followed up on the Biovail story--and, this time, told the whole truth and not just corporate spin.

© 2008 Gary Weiss. All rights reserved.

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Scott McLellan and PR Ethics

I'm a wee bit surprised that the voluminous media coverage of Scott McClellan, such as this New York Times editorial, hasn't raised an obvious point: how McClellan violated the fundamental principles of public relations ethics.

Yes, it's not widely known there is a formal code of ethics for PR practitioners, promulgated by the Public Relations Society of America. It bears some studying, in light of the McClellan contretemps.

Most PR people, in my experience, actually do a reasonably good job of adhering to ethical standards. I've even seen PR people turn into whistleblowers against their employers.

In this blog I've mostly focused on the dregs of the PR business, mostly in the employ of Overstock.com's "campaign of menace" against analysts and the media -- such as house stalker Judd Bagley, whose nauseating activities in the realm of pretexting and astroturfing are so much off the charts that CEO Patrick Byrne has taken him off the corporate payroll and now pays his salary directly. Byrne's latest PR operative is the loony former CJR Online editor Mark Mitchell. These are more street thugs than PR people, however, so I'm not sure it's even fair (to the PR industry) to call them PR people.

Which brings me back to McClellan, who had a fairly good reputation in the business, and was popular with the media. He was also a bald-faced liar. The Times observes:

Mr. McClellan also knew that the White House’s handling of Hurricane Katrina was a disaster. No doubt he misspoke when he sneeringly accused those who questioned the administration’s serial failures of playing a partisan “blame game.”

The president’s retired mouthpiece now admits that it wasn’t true when he said that Karl Rove and I. Lewis Libby Jr. were not involved in leaking the identity of a C.I.A. operative, Valerie Wilson. But he blames Mr. Rove, Mr. Libby and “possibly” Vice President Dick Cheney for deceiving him. He says they also lied to the president.

The PR code of ethics includes the following:

HONESTY

We adhere to the highest standards of accuracy and truth in advancing the interests of those we represent and in communicating with the public.

I realize that violating the PR ethics code is spitting on the sidewalk compared to the felonies of lying to the American people about Iraq and Katrina. But it seems to me that the PR profession, if it wants to take this code of ethics seriously, needs to take a stand in a high-visibility case like this.

© 2008 Gary Weiss. All rights reserved.

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Wednesday, May 28, 2008

Taser Shareholders Blame the Boogeyman


The real villain

UPDATE: See correction update at bottom.

Word comes cascading over the wires today that shareholders in yet another company whose stock is in the doldrums, Taser International, has filed a junk lawsuit against that all-purpose villain, the phantom menace known as naked short selling. Forty Taser shareholders are suing a bunch of Wall Street firms, which are responsible for the company's shares decreasing. Not Taser!

The suit was filed by the Texas law firm of John O'Quinn, who has filed a bunch of other junk lawsuits on the same subject and has yet to get a nickel from anybody. This is the same O'Quinn who told Dateline NBC that naked shorting has "put as many as a thousand companies into bankruptcy" resulting in "market losses of more than four hundred billion dollars."

O'Quinn said that back in 2005 (when I was writing Wall Street Versus America) and, since NBC didn't bother to do so, I called him to ask if he could name some of those companies. I'm still waiting patiently, hand on the phone, but he hasn't called back. Gee, you'd think that if there was even one such company, maybe he would say what it is. (Another lawyer in the O'Quinn anti-shorting legal consortium, Wes Christian, turned out to be a big seller of his clients' stocks.)

Taser has been a regular on the naked shorting conspiracy circuit for such a long time that I'm surprised we had to wait so long for this junk lawsuit. It is not an Overstock-style train wreck by any means, but its shares are down 50% year to date.

Correction: Taser is not a party to the suit, as I erroneously said in an earlier version of this item! My apologies to Taser management for identifying them with the Baloney Brigade, which in my book is one of the worst things one can say about a company.

UPDATE: Taser joined the lawsuit in June 2008 (see p. 44 of its 10-K).

© 2008 Gary Weiss. All rights reserved.

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Overstock Execs Display Stock-Trading Acumen

Managerial skill is in short supply at the corporate train wreck Overstock.com, so I was cheered to read in Sam Antar's blog today about the jim dandy trade that was made by Overstock chief financial officer David Chidester.

Seems that Chidester skillfully managed his personal stock portfolio, with a degree of finesse matched only by his management of the company's red-ink gusher. He exercised some options and, rather than hold on to the stock -- heaven forbid! -- dumped it like the trash that it is, raking in proceeds of $77,000. Senior VP Jonathan Johnson had similarly cashed in a month ago.

Golly, could it be that the recent run-up in Overstock shares could be the "pump" part of the expression "pump and dump"? These two gents are certainly dumping.

Perhaps their lack of enthusiasm for their own company has something to do with the thrust of Sam's blog item today, which is that the company is continuing to cook its books. Or as Sam puts it, "continues to violate Regulation G and materially overstate EBITDA in the first quarter of this year."

The shares dumped by Chidester and Johnson were no doubt bought by hapless investors who believe the excuses of the company's wack-a-doo CEO, Patrick Byrne, and swallow the flim-flamming financial statements.

What I'm wondering is why the SEC let's 'em get away with it.

© 2008 Gary Weiss. All rights reserved.

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Thursday, May 22, 2008

Washington's Premiere Corporate Lobby Embraces Naked Short Selling Cause

In previous posts I've described how the U.S. Chamber of Commerce, the premiere lobbyist for the interests of Corporate America and against the public, has embraced the cause of money losing CEOs blaming their misfortunes on "naked short selling."

The Chamber sent an impassioned comment letter to the SEC and even put the former chief mouthpiece of the naked shorting clowns, the now-imprisoned Universal Express CEO Richard Altomare (right), on three Chamber committees.

Now comes word that another major Washington lobbyist that aggressively fights against the public interest, the Washington Legal Foundation, has aligned itself with the anti-shorting forces in a comment letter to the SEC.

As you can see from reading the letter, the WLF takes an extremist view against all short-selling, not just the much-exaggerated scourge of naked shorting, even suggesting that shorting be ended for penny stocks -- something that would make stock fraud even easier than it now is.

As I described in Wall Street Versus America, short selling is the only market force that can impede the inflated pricing of hyped stocks. Countless studies of short selling have proven that shorting improves the liquidity of the market, and is the only means by which negative information is incorporated in stock prices.

That obviously is not something that would please the WLF. The group supposedly supports "free markets," but not, I guess, when the markets work against the interests of bad companies.

Note, by the way, that the WLF is supporting the anti-naked shorting nonsense as part of its "investor protection program." That's not surprising, given that anti-naked shorting campaigners frequently cloak their anti-investor initiatives in such language. But in the case of WLF this is particularly hypocritical, as the WLF fights against a wide range of investor interests, such as by arguing against the very existence of the Public Company Accounting Oversight Board on flimsy technical grounds.

It's not just the fight against investor interests that spur the WLF to action. Look at the WLF website. Wherever there is a fight of Corporate America vs. the public, the WLF wades in, fists flying, fighting for corporate interests.

In fact, the WLF's "investor protection" record consists mainly of screwing investors by making it harder for them to sue bad companies. So obviously, making it easier for companies to screw investors by pumping share prices, and promoting phony "counterfeit stock" conspiracies, is right up WLF's alley.

As can be seen from this Sourcewatch article, the WLF has taken up the cudgels of Big Tobacco in the past, and is fighting doggedly against lawyer trust accounts. So this latest cause, in favor of corporate crooks and inept CEOs, is very much consistent with the WLF's record of fighting for the sleaziest elements of Corporate America.

The naked shorting nuts, and the cynical corporate benefactors who manipulate them, have clearly found a suitable champion.

© 2008 Gary Weiss. All rights reserved.

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Tuesday, May 20, 2008

Another Publicity Coup for Overstock.com CEO Patrick Byrne


Visiting hours at Overstock.com corporate headquarters

I see that some of my friends at CNBC reflected this morning on one of the more embarrassing blatherings of Overstock.com CEO Patrick Byrne: that there's a "fax machine" at CNBC where reporters take instructions from "hedge funds" (presumably not the hedge fund that his brother operates, or the one through which Byrne owns Overstock shares).

"Did you see that total whack job at Overstock says there's a fax here or something?" asked an amazed Joe Kernan. "We now know he is not above blatant lying."

We now know? Mr. Kernan, with all due respect, where have you been?

Still, I think it's pleasing to see Byrne described accurately for a change, and not with weasel words like "eccentric." The media, I think, has a hard time coming to grips with the possibility that a CEO could be, as one blogger artfully put it the other day, "nucking futs."

True, the "crazy act" could be just that. But I have to admit, it works. Byrne has certainly managed to divert attention from his company's financial woes by behaving like a clown. But is the price that he is paying -- the demolition of his credibility, the damage to his company's reputation, and the humiliation of being an object of fun on national TV -- worth that laudable objective?

© 2008 Gary Weiss. All rights reserved.

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Biovail Pleads Guilty: World of Baloney Mourns

The Baloney Brigade stock market conspiracy theorists lost yet another team leader today. The Canadian drug company Biovail, which has bravely fought against the truth about the company for many years, pleaded guilty today to federal kickback and conspiracy charges.

This is terribly upsetting for CEO blame-shifters such as Overstock.com CEO Patrick Byrne (see separate item on his latest publicity coup), who have dedicated their lives to concealing their incompetence behind "naked short selling" and other market conspiracy theories. This is also a bad day for the cause of bad journalism, such as the awful 60 Minutes segment that naively took up the causes of this sleazy company.

I'm still waiting for the CBS News program to tell viewers what an awful job it did in reporting on this company.

Biovail was already nailed recently with SEC fraud charges that are similar to what a few brave analysts, such as Gradient Analytics, have been saying about the company for years. I believe that a junk lawsuit Biovail filed against Gradient is still pending.

Fortune's Roddy Boyd points out that
Biovail's plea bargain doesn't just close an ugly chapter in the Toronto-based company's history. It also pulls the rug out from under a multiyear quest by the company's former management, led by onetime CEO Eugene Melnyk, to blame an alleged conspiracy of hedge funds and research analysts for Biovail's financial and legal woes. . . . Unfortunately for Biovail, federal prosecutors from Massachusetts didn't agree that the [analysts'] assertions were unfounded.
Actually I'm kind of sorry that the feds let Biovail cut a plea bargain. I think the Richard Altomare Wing of the Metropolitan Correctional Center would have been a more fitting new corporate GHQ for this company.

Zac Bissonnette comments: "Moral of story: when a company starts suing people and lashing out at its critics, sell the stock. That philosophy would have saved people a ton of money on Biovail."

© 2008 Gary Weiss. All rights reserved.

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Monday, May 19, 2008

PricewaterhouseCoopers Abets Overstock.com Deceptions

The latest Sam Antar blog item item today is a shocker. While it's scarcely news that the slo-mo train wreck Overstock.com is a serial deceiver, both in its public statements and in its SEC filings, it now appears that the accounting firm PricewaterhouseCoopers had a hand in the chicanery, by failing to catch egregious errors.

The firm was paid $611,000 in 2006 and $761,000 in 2007 to help Overstock grapple with SEC inquiries.

Sam points out:
PricewaterhouseCoopers LLP either missed Overstock.com's deliberate noncompliance with GAAP in reporting revenues or colluded with the company to report non-GAAP revenues. In addition, PricewaterhouseCoopers LLP helped Overstock.com provide erroneous responses to information requested by the SEC Division of Corporation Finance. What's worse is that despite Overstock.com's deliberate noncompliance with GAAP in revenue reporting and errors in responses to the SEC, under PricewaterhouseCoopers LLP's supposedly watchful eye, Allison H. Abraham claims that "The Audit Committee has had substantial opportunity to evaluate the work of PricewaterhouseCoopers and has found it to be consistent and of high quality."
The only question is whether Overstock's deceptions, as detailed by Sam, are going to be swallowed by the SEC.


© 2008 Gary Weiss. All rights reserved.

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Thursday, May 15, 2008

A Cure for the Bad-CEO Blues: Sue Your Shareholders

Stephen Taub has an intriguing brief article in CFO.com on the latest hot new trend among blame-shifting CEOs: Suing unruly shareholders.

Vaalco Energy is trying an unsual tactic to stave off a proxy fight: suing its shareholders.

The independent oil producer filed an action against New York City-based hedge fund Nanes Delorme Partners I L.P., and Pilatus Energy SA, of Zug, Switzerland, in federal court, alleging they violated securities laws by sending misleading information to shareholders in an effort to install three of their nominees on Vaalco's board, according to the Associated Press.

One of the targets of this imbecilic junk lawsuit responded as follows:

Julien Balkany, a Managing Member of Nanes Balkany Partners LLC, the General Partner of Nanes Delorme Partners, stated: "We believe that VAALCO has great potential, but that the company will continue to materially underperform without new independent representatives on the Board. In addition, rather than provide a clear strategic plan to rebuild stockholder value, the company has chosen to evade the critical issues facing Vaalco by filing a desperate and baseless lawsuit aimed at disenfranchising stockholders and 'chilling' the democratic process and to defend its failures by launching a campaign rooted in misleading facts and unnecessary scare tactics designed to distract stockholders from the company's poor performance."

Just goes to show you how far we've come from Enron. Nowadays, bad companies add insult to the injury they inflict on shareholders by lashing out at analysts, the media, and now investors. The SEC and other regulators, meanwhile, are snoring loudly in the background.

As perfected by Overstock.com's wack-a-doo CEO Patrick Byrne, the name for this kind of toxic blame-shifting is known as "issuer retaliation." That was also the theme in David Einhorn's great new book Fooling Some of the People All of the Time.

Einhorn chronicled his battle royale with a scuzzy company called Allied Capital. Here's a cogent review by Jesse Eisinger in Portfolio.

UPDATE: A rep for Vaalco wrote to say that this item gives this company a bum rap. I asked for a reply that I could post verbatim, and was sent the following:

VAALCO’s Board and management team are active, engaged and successfully executing on the Company’s strategy. Nanes Delorme Partners’ claim to the contrary simply ignores the facts:

· VAALCO has delivered superior stock price performance. VAALCO has outperformed its peer group and the broader market as a whole over the last six month, one, three and five year periods. Indeed, our stock performance has exceeded our peers[1] by 25%, 20%, 23%, and 167% in each of those periods, respectively[2].

· VAALCO’s operating performance is among the best in the industry. Since 2000, 80% of the exploration and appraisal wells drilled by the Company have been successful. We also have a 100% success rate with our development wells on the Etame Block, our principal producing asset. These are exceptional drilling success rates in our industry.

· VAALCO’s financial performance is strong. Revenues, cash flows and earnings per share have consistently increased in nearly every year. VAALCO’s average return on invested capital (ROIC) over the last five years is 30.7% and in the top 5% of our industry.

We are confident in our ability to build on this strong operating and financial track record. We believe 2008 will be a break-out year for your company and for the value of your VAALCO shares.

· VAALCO’s exploration program, which includes seven planned exploration wells, will expose the Company to in excess of 50 million net barrels compared to VAALCO’s current 6.2 million barrels of proved reserves. This represents an eight-fold potential increase. We have rigs arranged to commence drilling this summer.

· We expect continued significant increases in stockholder value in the near-term. VAALCO’s stock price historically surges when the Company moves from the property acquisition and seismic phase to the drilling phase – and this is precisely where we believe we are now.


THE PUBLIC RECORDS OF nanes delorme partners and Pilatus energy ARE
RIFE WITH CONFLICTS AND SCANDAL

Nanes Delorme Partners and Pilatus Energy appear to be concealing what the public record makes clear – Nanes Delorme Partners and Pilatus Energy are conflicted and their ethics tainted by a scandal involving corruption, kickbacks, fraud and embezzlement. You deserve to know the following:


The Public Record on Nanes Delorme Partners*

The Public Record on Pilatus Energy*

Nanes Delorme Partners only recently purchased its VAALCO shares and more than half of its shares were transferred from Pilatus Energy on 02/14/2008.

Source: Nanes Delorme Partners definitive proxy statement filed with the Securities and Exchange Commission on 05/07/2008

Pilatus Energy is a limited partner of Nanes Delorme Partners. It recently purchased 2,700,000 shares of VAALCO between 11/28/2007 and 01/30/2008.

Source: Nanes Delorme Partners revised preliminary proxy statement filed with the Securities and Exchange Commission on 05/05/2008.

(Notably, Nanes Delorme Partners’ prior preliminary proxy statement filed on 04/25/2008 did not mention Pilatus Energy by name, but only referred to an unnamed “limited partner.”)

Nanes Delorme Partners I LP is a New York based hedge fund that invests primarily in the oil and gas exploration and production sector.

Source: Nanes Delorme Partners press release, 04/24/2008

Pilatus is comprised of Pilatus Energy and Pilatus Ressources (sic) which are two companies based in Zug, Switzerland. Pilatus has positions in the majority of the African and Middle East countries.

Source: Pilatus Energy press release, 01/31/2008

Julien Balkany, a 27-year old French citizen, paid Nanes Delorme Partners employee, and nominee to your board is leading Nanes Delorme Partners’ proxy campaign.

Source: Nanes Delorme Partners revised preliminary proxy statement filed with the Securities and Exchange Commission on 05/05/2008; Nanes Delorme Partners press release, 05/08/2008

“…Pilatus Energy and Pilatus Resources, two companies run from behind the scenes by France's Loik Le Floch-Prigent…”

Source: Africa Energy Intelligence, “Abbas I. Yousef Al Yousef,” 12/19/2007

“The name of the former Elf CEO doesn't appear on their list of executives but it is he who makes all of their investment decisions.”

Source: Africa Energy Intelligence, “Le Floch-Prigent's New Incarnation,” 12/05/2007

Nanes Delorme Partners is paying its two other nominees $25,000 simply to stand for election and additional monies if they fail.

Source: Nanes Delorme Partners definitive proxy statement filed with the Securities and Exchange Commission on 05/07/2008

(While Nanes Delorme Partners’ nominees may have no affiliation with your company, these payments show that they are by no means independent from Nanes Delorme Partners.)

“France's mammoth Elf corruption case, probably the biggest political and corporate sleaze scandal to hit a western democracy since the second world war.”

Source: The Guardian, “Gigantic Sleaze Scandal Winds Up as Former Elf Oil Chiefs Are Jailed,” 11/13/2003

“Le Floch-Prigent, 60, and a former Elf director, Alfred Sirven, 76, are both already serving time after losing appeals earlier this year against separate convictions over corruption at Elf, since absorbed into the Franco-Belgian oil company Total. Both have admitted some of the charges against them during the four-month trial.”

Source: Associated Press, “Verdicts Expected in France's Biggest-Ever Graft Scandal,” 11/12/2003

Nanes Delorme is a broker for the sale of oil and gas assets, including those of VAALCO’s competitors. “In recent years, Nanes Delorme advised Afren on buying up the stake of Gulf Energy Resources in Angola’s Cabinda Central concession and on acquiring Heritage’s interests in Congo-Brazzaville.”

Source: Africa Energy Intelligence, “The New African Oil Trail Blazers,” 02/20/2008

“In a matter of months, the small Swiss group Pilatus Energy has built up an African portfolio with the help of a few middlemen who can knock on presidential doors…In September, it was awarded the Ngoki concession in the Mossaka region thanks to the advice of the former chief executive of Elf, Loik Le Floch-Prigent, who negotiated with the Congolese officials on Pilatus’ behalf.”

Source: Africa Energy Intelligence, “Pilatus Has Right Connections,” 11/29/2006

(These activities are competitive with VAALCO’s core operations.)

Ask yourself: If this information is available simply from the public record, what else about Nanes Delorme Partners and Pilatus Energy has yet to be revealed?



[1] VAALCO peer group as defined by the independent governance and proxy advisory firm RiskMetrics (ISS)

[2] Based on closing stock prices on May 13, 2008

* Permission to use quotations neither sought nor obtained.


So there! The formating of the chart ain't so good, but I can't seem to fix it.

Incidentally, it's nice to get a dignified response to an item, one that takes issue with the facts and does not engage in mudslinging. A refreshing change, even while I disagree with their actions here.

© 2008 Gary Weiss. All rights reserved.

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Tuesday, May 13, 2008

Tim Geithner and the Bear Stearns Bailout

My Condé Nast Portfolio profile of New York Fed chief Timothy Geithner is online today. Twill be appearing in the June issue, which is on the stands any day now.

© 2008 Gary Weiss. All rights reserved.

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Monday, May 12, 2008

More on the Overstock.com Con Game

White collar fraud-fighter Sam Antar has a lengthy and prodigiously detailed post today on Overstock.com CEO Patrick Byrne's latest effort to pump his failing company's stock.

Byrne told Reuters in a story that moved late Thursday that
. . . he expected Overstock to lose 2 cents per dollar in sales in the first three quarters of 2008, but hoped to make it up in the fourth quarter to realize a profit for the year, and then continue profitably in 2009. "It is very realistic. I think we can," he added.
The stock climbed 2.6% on Friday, probably as a result of this shameless pumping.

As Sam describes, such an outcome is unlikely to say the least. Indeed, from reading Sam's detailed analysis , it seems to me that Byrne conjured up these numbers out of thin air. CEOs can't just decide that an earnings number sounds good and call up Reuters. They can't throw around numbers and projections that have no basis in reality.

Which means that if he doesn't get the profit that he projects, saying "my bad" and slinging more mud at critics won't do. The SEC-investigated clown prince of corporate miscreants will be in even more hot water than he is in now.

© 2008 Gary Weiss. All rights reserved.

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Friday, May 09, 2008

Richard Altomare Jailhouse Vigil: Day Seven

So it's now a full week in jail for Richard Altomare, ex-CEO of Universal Express and an inspirational figure to corporate thieves and stock market conspiracy theorists everywhere. He'll be in New York's Metropolitan Correctional Center, by order of U.S. District Court Judge Gerald E. Lynch, until he coughs up $1.7 million he stole from investors,

The silence from Baloney Brigade activists, especially Overstock.com CEO Patrick Byrne, has been deafening. A good man like this should not be forsaken. After all, Altomare has stood foresquare with Byrne in the past:

Universal Express Supports Overstock.com's "Naked Shorting" Suit Against 10 Major U.S. Brokerages
Business Wire, Feb. 5, 2007

NEW YORK -- Universal Express Inc. (OTCBB: USXP), today announced its support, and congratulates Overstock.com and its Chairman, Dr. Patrick Byrne on the filing of its $3.5 billion lawsuit in California against 10 major U.S. Brokerages.

"Universal Express would like to extend its congratulations to Overstock.com and Chairman Dr. Patrick Byrne on its 'Naked Shorting' suit. Universal has received judgments in Florida courts of over $700 million against Naked Shorters, and is also contemplating further lawsuits," said Richard A. Altomare, Chairman and CEO of Universal Express, Inc.
So where is the gratitude?

© 2008 Gary Weiss. All rights reserved.

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Thursday, May 08, 2008

Another Patrick Byrne Public Relations Triumph


Boozer: The Overstock public relations genius strikes again

The flailing Internet retailer Overstock.com, reeling from a string of public relations triumphs mostly inflicted by CEO Patrick Byrne's big mouth, has really bitten the big one this time: the SEC-investigated company has signed controversial NBA player Carlos Boozer as a spokesperson, promptly resulting in new calls for a boycott of the company.

A popular Cleveland website, the Cleveland Leader, describes the real mensch Overstock has signed up:

What do you get when you fool a blind man? Well, Overstock.com likes to reward the most despised NBA player in Cleveland, signing him today to a 4 year contract to help hawk their goods and services. If you are new to the Cleveland sports scene you may have no idea what I am talking about. If you follow Cavaliers basketball there is little doubt that you know that I am speaking about Carlos Boozer, who betrayed Cleveland and the team's then-owner Gordon Gund, who is legally blind, by shaking on a contract.
Hey, come on. Fooling a blind man is kid's play for a despicable company like this, whose CEO shocks what little conscience Corporate America has with his cowardly campaign of menace against critical analysts and the media.

The item goes on to say, quoting the AP:

Among the intriguing pieces of fallout was the decision by SFX, the company that represents Boozer, to disassociate itself from the player, a rare move that spoke to the bad public relations it must have received in the wake of the contract. The agent who worked out the deal, Rob Pelinka, resigned from the company, as well.
What a guy! The Overstock press release heralding the hiring of this nincompoop said "Carlos and Cindy share the same values and ideals as Overstock.com." That's for sure. In fact, I think Boozer may have to adjust his "values" downward to fit in with the cretins who run this company.

Byrne has a full-time stalker on the payroll, the nauseating Judd Bagley, and to make matters more atrocious he has taken in-house an astroturf site operated by Bagley. Byrne just sinks lower with every passing day, to disguise the fact that he is just no good as a CEO and is running his company into the ground.

I assume that the slug-like Bagley was put in charge of vetting Boozer, judging from the terrific reception it's getting. The Cleveland item concludes by saying, after quoting the "values" prattle:

So what is Overstock.com saying, that they share in fooling blind people? Obviously Overstock.com doesn't know who they are messing with. Rabid Cleveland sports fans are known to hold a grudge. Ask Art Modell, Albert Belle, or Papa John's pizza company. They have all felt Cleveland sports fans ire and probably regret it.
There's plenty of reason to boycott this train wreck of a company, and Byrne's hiring of Boozer -- at a prodigious sum, no doubt, for this chronically cash-byrne-ing company -- is just icing on the cake.

One interesting aspect of the Boozer contract is that its duration is four years. In the view of some observers, it is doubtful that this red-ink-gushing company is going to last that long. Hopefully Boozer had his lawyers review the contract thoroughly and had a strong "in the event of bankruptcy" clause written in.

© 2008 Gary Weiss. All rights reserved.

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Wednesday, May 07, 2008

Usana Gets SLAPPed Down

Usana Health Sciences is a -- forgive the redundancy -- sleazy Utah company in the nutritional supplement business. As sleazy Utah companies are wont to do, it reacted to criticism by suing the criticizer, Barry Minkow of the Fraud Discovery Institute.

Minkow had prepared an extensive report describing the company's frailities. Well, that certainly would not do. Usana sued, and that great defender of corporate sleaze, Judd Bagley of corporate sleaze palace Overstock.com, chimed in with a typically nauseating mud-sling attack.

So I am delighted to report that today Usana was ordered to pay $142,510 in attorney fees to Minkow under the SLAPP statutes, which punish suers who use the legal system to silence critics.

Congratulations, Barry, and keep up the good work.

© 2008 Gary Weiss. All rights reserved.

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Richard Altomare Jailhouse Vigil: Day Five


Fresh news today in the continuing saga of Richard A. Altomare, imprisoned ex-CEO of Universal Express and leader emeritus of the Baloney Brigade naked shorting nutcases.

There is an appeal! It was filed yesterday and entered in the court record today. Lawyers for Altomare filed their appeal with the Second Circuit Court of Appeals. Altomare is now in his fifth day of confinement in Metropolitan Correctional Center, where he was put for civil contempt for not paying back $1.7 million of the money he looted from the company.

Nothing especially interesting in the brief court filing today, except that they are appealing the contempt order because... well, because, that's why. No reason stated. That will come later. Maybe it's because the order is just plain mean. Here is an excerpt of the order, as it emerged from the word processor of U.S. District Court Judge Gerald Lynch:



Wasn't it mean of him to say that? Blame-shifting CEOs hate to be talked to that way. It isn't right. I'm surprised that Patrick Byrne, SEC-investigated CEO of Overstock.com and Altomare's successor as leader of the Baloney Brigade, hasn't spoken out publicly against the confinement of this upstanding citizen and comrade-in-baloney.

According to posts on message boards, Altomare is being kept in solitary confinement to keep him away from the other inmates who are, unlike Altomare, convicted and accused felons. An FBI investigation is underway, so hopefully that discrepancy can be corrected reasonably soon.

At one point Altomare was appointed to three committees of the U.S. Chamber of Commerce, which has a soft spot in its stone-cold heart for CEOs who blame market conspiracies for their own crookedness. I wonder if Altomare, confined as he is, has considered opening a branch of the CofC at Metropolitan Correctional? Worth a try.

© 2008 Gary Weiss. All rights reserved.

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Tuesday, May 06, 2008

Richard Altomare Jailhouse Vigil: Day Four


Nothing new to report. The ex-CEO of Universal Express remains in Metropolitan Correctional Center on civil contempt charges, having failed to pay back $1.7 million he looted from the company.

I'm still trying to figure out why he hasn't been indicted for doing that. It's been previously reported that he is under FBI investigation. What's the, pardon the expression, holdup?

Seems to be a waiting game here. Who will blink first: the vocal sergeant-at-arms of the stock market conspiracy nutcases of the Baloney Brigade (above), or the non-nonsense Judge Gerald Lynch (right)? I am sure hizzoner is really sweating this one. As you can see from the photo, he is clearly traumatized by the whole thing.

Actually that picture was taken to accompany a New York Times article on how Lynch allowed a suit to proceed against another naked short poster child, Global Crossing. So he obviously has a lot of experience with this genre of corporate wrongdoing, as evidenced by a recent court filing in which he referred to Universal Express shareholders as "deluded."

Meanwhile, I have some recipes on the uses that Altomare can put to his favorite smoked meat. Not sure if inmates have cooking facilities, but you never know.

I'm surprised that Altomare's successor as Baloney Brigade commander, Overstock.com's SEC-investigated CEO Patrick Byrne, hasn't spoken out against his fellow excusemongering CEO's incarceration. Surely he has the time, as indicated by his prodigious efforts as a full-time Wikipedia editor. Is there no loyalty among corporate miscreants?

Here's an amusing hilarious parody blog, "Big Dick's Prison Chronicles."

© 2008 Gary Weiss. All rights reserved.

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Monday, May 05, 2008

Richard Altomare Jailhouse Vigil: Day Three

This is now the third day of Richard Altomare's incarceration in Metropolitan Correctional Center. The former CEO of Universal Express remains under lock and key until he coughs up $1.7 million of the plunder he stole from shareholders -- and the response of the Baloney Brigade stock market conspiracy nutcases has been surprisingly muted.

There has been, for example, none of the demonstrations that microcap fraud aficionados held in 2005 before the offices of the Depository Trust & Clearing Corp. in Manhattan (above). As I recounted in Wall Street Versus America, this motley assortment of stock promoters and idiots pranced in front of DTCC for several days, making fools of themselves.

Their "cause" was a fraudulent penny stock called CMKM Diamonds, which also blamed its woes on nekkid shorting. These fools were dumb enough to believe them.

I think a demonstration in front of MCC is clearly in order. Meanwhile, Altomare himself can help tremendously by engaging in that age-old pastime of wrongly incarcerated martyrs since time immemorial: I modestly propose that Altomare commence a fast unto death.

IRA prisoners in Northern Ireland have done it, and so did Mahatma Gandhi. So why not Altomare? Think of the worldwide publicity. It would be even better if Altomare's supporters and fellow naked-shorting-myth promoters follow suit. I think they need to get cracking on that right away.

© 2008 Gary Weiss. All rights reserved.

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Sunday, May 04, 2008

Richard Altomare Enjoys First Sunday in Prison


The imprisoned CEO in happier days

Richard A. Altomare, ex-CEO of Universal Express, is celebrating the conclusion of his first weekend in Metropolitan Correctional Center, where he is being kept until he coughs up $1.7 million of the money he stole from shareholders.

The federal Bureau of Prisons database confirms that he is still there, and has not been freed or has sawed his way out with a file concealed in a cake, like in the movies.

The MCC website does not provide information on the kind of weekend facilities that are available for imprisoned inmates, even CEOs. It is a lovely day today in New York, but picnicking is not permitted. Hopefully he is enjoying the cuisine in the mess hall, and not coming down with indigestion like the unfortunate gent pictured at right.

Since imprisonment of crooked CEOs is such a rare event nowadays, I think that a jail house vigil of sorts is in order.

© 2008 Gary Weiss. All rights reserved.

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Saturday, May 03, 2008

Baloney Brigade Commander Reports for Duty


Mr. Altomare's new residence

Richard A. Altomare, ex-CEO of Universal Express and sergeant-at-arms of the Baloney Brigade stock market conspiracy nutcases, has found a new and very appropriate home.

A U.S. Bureau of Prisons database confirms various message board posts indicating that Altomare, who was found in civil contempt by a federal court judge some time ago, has been incarcerated at the Metropolitan Correctional Center in New York.



Altomare, whose exploits I chronicled in Wall Street vs. America, blithely looted his company while screaming about a non-existent naked short-selling conspiracy. He was since booted from his position by the SEC and replaced at the helm of the naked shorting conspiracy juggernaut by Patrick Byrne, the equally delusional CEO of Overstock.com.

Altomare's last-ditch effort to avoid incarceration failed on Thursday, and now he must enjoy the federal facilities until he coughs up $1.7 million in ill-gotten gains. His incarceration commenced yesterday and will continue until he purges himself of contempt.

I get a sense from reading the judge's order that he has lost patience with Altomare's antics, so he had better cough up the dough. Meanwhile I trust he is getting accustomed to his new prison cell. In the photo at left he is shown describing its general dimensions, which are slightly larger than a honeydew melon.

Like Byrne, Altomare liked to swath the fraudulent naked shorting campaign in a patina of respectability, in Altomare's case by conning the U.S. Chamber of Commerce to appoint him to head three committees. Floyd Norris later reported that the Chamber was stiffed by Altomare, along with a bunch of other people and companies that were dumb enough to do business with him.

To borrow an expression from David Einhorn's recent book, Altomare and Byrne have found that you can con some of the people (the Chamber, certain congressmen, and the dumber shareholders of their companies) all of the time. Amazingly, some Universal Express shareholders still believe Altomare's swill.

Altomare is not going to enjoy the spartan conditions at the MCC, I assure you. Security is ultra-tight, the routine rigid. But I must admit that the accommodations are very much what he deserves.

© 2008 Gary Weiss. All rights reserved.

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Friday, May 02, 2008

Today is 'Go to Jail' Day for Richard Altomare



Today is "go to jail" day for former Universal Express CEO Richard A. Altomare, who looted his company while crying about a nonexistent "naked shorting" conspiracy. A last-minute motion by Altomare to avoid federal hospitality was thrown out yesterday by Judge Gerald Lynch.

What's interesting, apart from the ridiculous amount of time it took for the SEC to throw this louse in jail, is Altomare's contemptuous stance toward the entire judicial process -- a Patrick Byrne-ish attitude that the usual standards of civilized behavior do not apply to him.

In denying Altomare's last-ditch motion, Lynch said:

Altomare appears to assume that the Court's order does not mean what it says. He begins by expressing "appreciat[ion]" for the Court's "apparently providing for an additional opportunity to produce documentation to show 'categorically and in detail' that any further payment is impossible." . . . That is not what the order provides. Rather, the Court expressly and unequivocally ordered that Altomare "surrender to the United States Marshal for the Southern District of New York on May 2,2008, to be incarcerated until such time as he purges himself of the contempt, unless he has paid the disgorgement amount in full by that date.". . . There is no mention of a further hearing. Rather, the passage quoted by Altomare provides, equally clearly, that Altomare is found to be in contempt, and that in order to compel his compliance with the Court's orders, he "will be incarcerated until he pays the disgorgement and prejudgment interest in full, or produces documentation to show categorically and in detail that any further payment is impossible."


So that was that, at least as far as the judicial record is concerned. Here is the bottom line:



© 2008 Gary Weiss. All rights reserved.

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The SEC Hones in on Investools

In Wall Street Vs. America I describe how two leading business news outlets -- CNBC and BusinessWeek -- loaned their name to an operator of useless investment workshops called Investools. What made this relationship even scuzzier was that Investools has a murky corporate history, and its corporate predecessor, a penny stock outfit called ZiaSun, engaged in a protracted legal campaign against critics.

The CNBC and BW connections are a thing of the past, and today Investools disclosed that it is the subject of an informal inquiry by the SEC. The securities watchdogs are examining "representations by certain presenters in certain portions of their presentations at some of the company's seminars."

Evidently the SEC finally got around to reading Wall Street Versus America or this FINRA investor alert. There are plenty more seminar operators out there worthy of scrutiny, needless to say.

Investools says that it is changing its name to Thinkorswim Group Inc. I think "Sinkorswin" might be a better name. Emphasis on "Sink."

© 2008 Gary Weiss. All rights reserved.

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