Thursday, December 31, 2009

An All-Bloomberg BusinessWeek Cover


I haven't actually seen the new issue of BusinessWeek out today, but the online version indicates something of a historical moment: for the first time since Bloomberg L.P. took over the magazine, the cover story and its sidebars were all written by staffers from the wire, not the magazine.

What they produced was provocative and needed to be told, describing how the Street has defeated Wall Street reforms. Certainly the cover (left) is as hard-hitting as anything the magazine might have produced in its heyday.

I particularly liked the sidebar describing (a bit too briefly) how the SEC has watered down reforms.

A longer version of the same story appeared on the wire, and was not linked from the far briefer BW account. That's a reversal of the usual wire service equation, with magazines providing full accounts and the wires providing summaries. Obviously there's more space on the wire, thanks to the falloff in advertising under the former regime, and I wonder if BW going to morph into some kind of "Bloomberg Digest." If so, the online edition of the magazine should link to fuller versions appearing on the wire.

Another change has to do with the writing style. Like most newsmagazines, BW has traditionally brought to the table a strong point of view. Sometimes that point of view is wrong ("Death of Equities") but the magazine always, or most of the time, or ideally, took a stance.

In this cover package there is less analysis than would have been common in the past. The cover language carves out a position that is not explicitly stated in the articles. The final paragraph of the cover story, which ordinarily states the magazine's view, is largely a quote representing the viewpoint of others:

A failure wouldn't surprise frustrated lawmakers disappointed by the turn in Washington. "My greatest fear for the last year has been an economic collapse," says Representative Brad Miller (D-N.C), who sits on Frank's House Financial Services Committee. "My second greatest fear was that the economy would stabilize and the financial industry would have the clout to defeat the fundamental reforms that our nation desperately needs. My greatest fear seems less likely...but my second greatest fear seems more likely every day."
The magazine takes no position. Now that's objective, but magazines aren't objective. It's a different kind of journalism. It was not uncommon in the past for the same writers of the main stories to weigh in with an opinion piece or "commentary," which stated the view of the magazine as well as the writer. There was also an editorial page, though that was eliminated a while back as a cost savings.

Compare the latest cover story to this one by Peter Coy, which I chose at random from back in August, "The Case for Optimism." The title itself presents a viewpoint. The concluding paragraph reads:

The case for optimism is really a case for being open-minded—giving due weight to the possibility that things will get better than you think. Of course, no one really knows. But rational optimism, along with a pinch of Mary Pruitt-style enthusiasm, just might go a long way.

You may agree or disagree, but you knew where BW stood.

Apart from the writing style, this all-Bloomberg-wire effort further substantiates that the BW acquisition is fulfilling a major editorial function for Bloomberg, by giving its reporters a forum for their best work.

© 2009 Gary Weiss. All rights reserved.

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Return of Sewer Service


Lots of lawsuit papers are "served" here

Some years ago, a friend of mine got his annual credit report--the free one, not the one you get through bogus "freecreditreport" websites or the outfit Ben Stein shills for. Something odd stood out on the report. It seems that he was being sued! This was the first time he'd heard about it.

My friend was the victim of a foul practice known as "sewer service," based on the ancient practice of sheriffs tossing lawsuit papers in the sewer rather than serving them on the defendants, and filing false affidavits that they have been served.

My friend wasn't served in the suit at all by an unscrupulous process server, and the debt he was claimed to have owed was entirely bogus. He showed up in court and the suit was dismissed.

Sewer service is a great scam, and a very old one. The courts accept affidavits of service at face value, and enter judgments against people who often do not owe the money at at all, are victims of identity theft, or have a valid defense. Even if they don't, they are entitled to their day in court.

The New York Times today reports that a class action suit has been filed in federal court against alleged perpetrators of sewer service. I'm glad that something is being done about this, but a suit is not enough. People who perpetrate sewer service should be put in jail. It is fraud and also perjury, as it involves process servers

New York attorney general Andrew Cuomo has started taking criminal action against sewer-service scam artists, and that's great. These people belong in jail, not just back in the civil courts that they have abused.

The court system, judges and clerks, need to be proactive about this abuse. Judges and clerks are public officials, and they should blow the whistle on sewer service when they see it happening.

One thing I wonder is whether the sewer-servers alone are culpable, and whether the companies for which they work -- the big banks, utilities, and their slimy collection agencies -- aren't perfectly aware that sewer service is being utilized. As has become evident in suits involving defaulted mortgages, often collection agencies and factors who buy debts do not have sufficient paperwork to prove their case.

I'll bet that the collection agencies know that these outfits carry out sewer service, thereby letting them get an easy victory without proving their case against people who owe them money -- and those who don't.

© 2009 Gary Weiss. All rights reserved.

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Wednesday, December 30, 2009

Joe Weber: Is Journalism School Immoral?

BusinessWeek ex-chief of correndents Joe Weber raises a provocative question on his blog: is journalism school immoral?

Joe now teaches journalism at the University of Nebraska, says that

with jobs in media disappearing by the thousands, the arguments against J-School are taking on a new force. Some critics even say it's immoral that we teach students journalism when the field is shriveling. There will be no jobs for our grads, they say. A lawyer friend argues that J-School teachers ought to be sued for their perfidy (of course, as a lawyer he would say that).
Joe concludes by saying that "J-School is every bit as worthwhile as any other academic pursuit and more useful than many."

I agree. It's true that jobs in the old media are vanishing, but they've been replaced by jobs in the new media. The problem is that pay scales are much, much less.

That's a real scandal that nobody has covered: how journalism has become a poverty-row profession for beginners, sort of like actors and opera singers. My first job was at the Hartford Courant, and I was paid a decent if not lavish wage, and received full health benefits. Such jobs are becoming rare for new grads. Perhaps one required course in j-school should be "how to apply for food stamps."

What makes this bad is that journalism is going to have a harder time retaining people. That's bad for the profession and terrible for society as a whole.

© 2009 Gary Weiss. All rights reserved.

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Overstock.com Goes Opinion Shopping


The holiday season is upon us, and the always-predictable Overstock.com has gone shopping -- for an auditor.

Although it did not surprise readers if the Going Concern blog, I was a bit startled to read that Overstock,com's ever-wacky CEO Patrick Byrne would have the gall to auditor-shop as he did, hiring KPMG, after firing his last auditor, for daring to tell Wacky Patty that he has to restate his financials.

White collar crime-fighter Sam Antar observes that Byrne reneged on previous assurances that he would not not hire new auditors until after the SEC Division of Corporation Finance completed its review of the firm's accounting practices.

In this exchange at the company's recent conference call, Wacky Patty himself admitted that hiring an auditor before the SEC does its work would be opinion shopping:

Q. Since you've dismissed your auditor for a very specific accounting choice, when you go to select a new auditor, how do you prevent yourself from being accused of opinion shopping?

Jonathan Johnson (Overstock.com President): That's a great question, Louis, and that's part of the reason that we've decided not to select a new auditor until this -- until we resolve this issue with the SEC.

We do not want to be accused of opinion shopping. We'd like the SEC to help us figure out -- we'd like them to say we've done it the right way or we've done it the wrong way. Once they say one of those two, we don't need to opinion shop.

Byrne: But, so, I would even say to the point that when people have contacted us, we have discouraged any communication on the grounds that we got -- for just that reason -- well, I have the -- no matter who we talk to now, then whoever we ultimately pick, people are going to say, well, you did this because you opinion shop.

So we're really not having discussions with anybody. It's nice to get phone calls, but we're not talking to anybody until we get through this just to prevent -- just as a prophylactic measure.
So Byrne is, by his own definition of opinion shopping, engaged in precisely that practice.

Going Concern notes:

Sorry, dear reader but apparently the high profile cat fight between the company and Grant Thornton wasn’t enough to scare KPMG off. Not even the very public revelation of Patsy’s creepy-ass stalking of Overstock critics in the financial media and blogosphere caused the KPMG partners in SLC to turn this client down.

Oh, and not to mention a management team who thought that filing unreviewed 10-Q was the best course of action.

Hey, somebody had to get the job eventually. Bernie Madoff's auditor is unavailable, so Byrne chose the next best hing -- the auditors who, as Sam points out, let Crazy Eddie's get away with murder.

Another accounting blogger notes: "KPMG just sold its own ass up the river."

It wouldn't be the first time. Let's not forget New Century Financial.

Over the holiday season, while it was opinion-shopping, Overstock did something almost equally amazing: announcing a "line of credit" with U.S. Bank that is the kind given to welfare mothers in Brownsville. The company has to keep an equivalent sum on deposit.

That's hardly noteworthy, but this is: Overstock president Johnson had the audacity to tell the Salt Lake Tribune that "the terms of the new financing agreement with U.S. Bank are better than the terms of the Wells Fargo financing that it replaces."

Less money? A deposit requirement? File that under "baldfaced lie."

© 2009 Gary Weiss. All rights reserved.

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Thursday, December 24, 2009

Bernie Madoff Gets a Christmas Gift: A Beating

I'm not in favor of inmates smacking the guy around, but I'm not losing any sleep over word that Bernie Madoff is in the hospital after getting a severe beating in prison.

Yeah, I know, the official account says that he "fell out of bed." Right. A local media outlet says, "According to the sources, Madoff came to Duke with facial fractures, broken ribs and a collapsed lung."

You don't get that from "falling out of the bunk" or from "high blood pressure," as his lawyer says.

© 2009 Gary Weiss. All rights reserved.

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Reuters' Gutsy Blogger

I wasn't planning on doing much blogging over the next few days, but I had to put in a word on an uncommon act of guts that you don't see often, if ever: a newsperson taking on his own organization.

I'm talking about Chris Clair, who blogs on hedge funds for Reuters, and who produced this item on Reuters spiking a story by Matt Goldstein on hedge fund fat cat Steven A. Cohen.

That nasty little story was broken by Chris Roush at the blog Talking Biz News, who's been all over it like a cheap suit.

Says Clair:
I cannot reconcile these principles and what they represent with a decision to kill a story that, by all accounts I’ve read, was factually correct, relevant and timely. Worse, the decision at the very least appears to be connected to a complaint from the subject of the story to the highest levels of Reuters management. What to make of this?

Nothing good.

Reuters denies the story was spiked by pressure from Cohen, but the whole thing is troublesome.

This reminds me of an incident that took place in 2001 at BusinessWeek. I was on book leave so I didn't personally witness it, but I was told by staffers later that BW killed a negative article on Enron. Instead it produced a favorable, and in hindsight embarrassing, cover story on crook-in-chief Jeff Skilling (left).

Skilling is now in prison. By the way, I've been tough on BW's recent editor-in-chief Steve Adler, so I should point out that the skeptical Enron story was deep-sixed, and this cover was run, on the watch of the former editor in chief Steve Shepard. (Adler now is working for Reuters, just by coincidence.)

Not a word of any of this leaked out until I wrote about it in Wall Street Versus America a few years ago.

The difference is that this time the bad news is coming out, thanks to Chris Roush breaking this story, with a gutsy Reuters columnist taking on his own employer.

Oh, and here's the irony: by blogging on this issue, and presumably surviving his doing so, Clair has actually done a smashing job of correcting (to some extent) whatever damage was done to Reuters' reputation by this incident.

We newspeople, no matter how ferocious we may be to outsiders, have a tendency to be timid lambs in dealing with our own organizations. I think that's one of the reasons labor unions tend to be weakest at news organizations, when they exist at all -- an absence that contributed to the pain experienced during the cutbacks that we've seen this year.

Not sure why that is, but that's the way it is, as Uncle Walter used to say. So it's nice to see an exception to the rule.

© 2009 Gary Weiss. All rights reserved.

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Tuesday, December 22, 2009

Let's Keep Things in Perspective

Let's keep things in proportion friends. Today I have a column in Portfolio.com expounding on the ten seminal business news stories of the past decade. But reading through Gawker today, I stumbled upon a story that I should have included.

The coffee at Goldman Sachs is not up to snuff! The shocking facts can be found here.


According to a mole, Goldman apparently stocks the cheapest, worst generic coffee imaginable in its staff kitchens - despite protests from the caffeine-deficient. "It's beyond horrible," explained our source. "You work a lot of hours so you have to go down to the cafeteria and spend money on Starbucks or Dunkin' Donuts." There is talk within the ranks that this is a ploy to boost cafeteria takings, as any imprecations to improve the standard of free coffee fall on deaf ears.

I honestly don't know how the poor darlings survive under such abysmal working conditions. Can you imagine? Some of them actually have to go to Dunkin Donuts to get a decent brew!

Goldman is set to pay $16.7 billion in bonuses to these coffee-deprived, caffeine-starved crybabies. They would not be drinking their bad coffee on the way to the bank if it wasn't for a poorly conceived taxpayer bailout.

Most Americans drink bad coffee, made from cheap beans, and the unemployed ones are having trouble buying even that.

Oh, and it gets worse. Someone commented:

"This is the same firm that (at least at one point) refused to buy colored file folders, only plain manila. "We don't do color."
I don't know if I can sleep tonight after reading this. Please, someone send the suffering masses at Goldman Sachs some colored file folders and fresh, hot coffee made with Arabica beans!

© 2009 Gary Weiss. All rights reserved.

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Monday, December 21, 2009

Patrick Byrne Celebrates Pretexting Debacle


Byrne takes joy in being a scumbag

In the furor over the Overstock.com pretexting scandal, I missed this gem: Overstock's wacky CEO, Patrick Byrne, staggered onto the corporate p.r. blog, Deep Capture, long enough to celebrate his being whacked upside the head by his infuriated victims.

Here's a quote from Byrne that was published on a Salt Lake Tribune blog (so as to obviate the need to duck malware and tracking bugs at Byrne's website):
We can always tell when we are getting to them by the whine of the Spin-Blender’s motor in the blogosphere and financial media. Right now, they’ve punched the button marked, “Purée”.
Getting to whom, is what I would like to know:

Facebook, which just banned his cyberstalker Judd Bagley from the premises and issued a statement condemning the pretexting scheme?

The SEC, which now has something else to investigate, in addition to the "cookie jar reserve" he used to manipulate earnings?

His board of directors, which has given silent assent to his misconduct, thereby changing their status from "bird brains" into "accomplices"?

Investors, who sent the share price spiraling down in the wake of the scandal, who have a new reason to stay away?

Oh, I know what he means. He means his victims--the dozens of previously uninvolved journalists and bloggers whose privacy was violated, and would like to see Overstock boycotted Byrne and his henchman Judd Bagley tossed in jail.

He has definitely "gotten" to all those people.

© 2009 Gary Weiss. All rights reserved.

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Friday, December 18, 2009

Teed-Off Facebook Dumps Patrick Byrne Accounts, Issues Stern Warning


Facebook expelled stalker Judd Bagley--even deleting his personal account

UPDATE: Judd Bagley copped a plea to eight drug felonies in April 2013. See "Closing the File on a Criminal and Junkie Named Judd Bagley," March 30, 2015.

As I've described in various blog posts since 2006, Overstock.com CEO Patrick Byrne has been waging a war on the Internet -- sending paid stalkers to websites throughout the web, harassing and smearing critics. But he's been treated less like a menace than as a nut, and hasn't received much pushback -- until now.

A clearly teed-off Facebook today issued a strongly worded statement condemning Byrne's Facebook pretexting scheme, in which Byrne's hood Judd Bagley set up at least one phony account to stalk critics and smear them on an Overstock corporate p.r. website.

In a previous blog post I noted that Bagley's own Facebook account had been deleted as well as the phony one that he created on Byrne's behalf, "Larry Bergman." It wasn't clear by whom -- I once incorrectly posted that the accounts were deleted by Byrne.

The Facebook statement makes it abundantly clear that the accounts were deleted by Facebook, after what was described as a "thorough investigative review."

Facebook spokesman Simon Axten, responding to my request for comment on the Overstock pretexting, emailed to me the following statement:
We take the privacy and safety of our users very seriously. Using a fake name or operating under a false identity is a violation of Facebook’s policies, and we encourage users to report anyone they think is doing this, either through the report links we provide on the site or through the contact forms in our Help Center. In this case, we conducted a thorough investigative review, discovered accounts linked to the reported misconduct, and promptly removed them.
Axten wouldn't elaborate on the accounts removed, citing policy, but "accounts linked to the reported misconduct" obviously refers to Bagley's now-deleted personal account and "Bergman." If there are other pretexting accounts controlled by Byrne, Axten isn't saying.

Facebook has been criticized a lot for its own approach to privacy, and today was the target of complaints to the FTC, so clearly the last thing it needs is criminal activity on its own website. The timing of using Facebook, of all things, for pretexting and invasion of privacy was about as moronic as I've ever encountered. Bagley must surely go down in history as the most inept p.r. practitioner since Baghdad Bob.

Bagley, meanwhile, is continuing to insist that pretexting -- establishing phony accounts and seeking to gain people's confidence -- is... well it's honest, that's what it is, and is such a routine practice among p.r. practitioners that it's as second nature as writing a press release.

He said in one blog comment that "Larry was just a tool for determining whether or not certain people accept every Facebook friend request.' That's like saying he threw a rock through someone's window to see if it was shatterproof.

The guy is a psycho. Seriously. No p.r. person that I know of would ever tell embarrassing whoppers like that, no matter how desperate for employment (or terrified of criminal prosecution) he or she may be. It's also flat-out dumb. If there ever is a criminal prosecution, this kind of defiance would be evidence of criminal intent.

Though some friend lists were not kept private, most Facebook pages contain private, personal information that only can be accessed by "friends." Bagley was compiling that information, under false pretenses and using a stolen photograph, for clearly hostile purposes, in the course of his employment by Byrne.

Copyright violation and identity theft are a violation of federal law. Indeed, Facebook nuked the stolen photo of "Bergman" -- actually the photo of an Italian art critic -- before it deleted the account.

Pretexting in pursuit of a corporate agenda has been prosecuted. Just ask Hewlett-Packard. Overstock is already under SEC investigation for cooking the books.

Byrne and his cronies are endlessly entertaining, but they're remorseless criminals. They belong in prison. Until Byrne, Bagley and their accomplices are locked up, no critic of Overstock.com, real or imaginary, or their families, will be safe from harassment and invasion of privacy.

© 2009 Gary Weiss. All rights reserved.

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Wednesday, December 16, 2009

How Horrid is the News Business?

Here's how horrid: the Miami Herald is soliciting alms.

Steve Outing reports that the Herald has begun to ask for donations to support its news operations.

I really don't know what to say excepts that the news business sucks and is getting worse with every passing day.

Outing thinks it's a good idea. I think it's a terrible idea. I'm not opposed to hard-up news operations (and which ones aren't hard up?) seeking assistance from public foundations, but soliciting donations in this way is just plain humiliating.

If our industry is going to die, and it looks that way, let's go out on our feet and not our knees.

© 2009 Gary Weiss. All rights reserved.

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Patrick Byrne's Facebook Pretexting Lasted Seven Months


Byrne hard at work at his day job: stalking his critics and their families

(Updated with length of scheme corrected. See this update on Facebook expelling Overstock's pretexting guru Judd Bagley.)

I've been perusing the wreckage left behind from "Larry Bergman," the phony Facebook account used by Overstock.com CEO Patrick Byrne in his pretexting and identity theft scheme to stalk critics.

What I've found was that this pretexting scheme was the full time occupation of his creepy cyberstalker, the nauseating Judd Bagley, for the past seven months. Bagley went to elaborate lengths to establish an alternate identity, doing everything from creating a fake Twitter ID to using the stolen, copyrighted picture of a well-known Italian art critic to establish his identity.

Among the tidbits I've found:

1. "Bergman" was fabricated seven months ago to stalk whistleblower Sam Antar and his family.

As best as I can tell -- if anyone knows differently, please let me know -- Sam was his first target back in May, seven months before Byrne's pretexting chief Bagley loused up so badly that a little checking revealed that "Bergman" was a phony.

Sam is the former CFO of the Crazy Eddie stock swindle, a convicted felon who has devoted his life to fighting white collar crime. He has exposed on his blog systematic financial fraud at Overstock.com, in particular how Byrne created a "cookie jar reserve" that he used to create earnings where there should have been a loss. Sam single-handedly prompted an SEC investigation into those very issues.

Byrne's henchman Bagley (right), a glassy-eyed p.r. hack and ex-Florida Republican dirty-trickster, began stalking Sam through "Bergman" in May 2009.

At that time, Byrne knew that Sam had been sending emails to the SEC ripping apart the company's phony financial statements. Overstock board member Joseph Tabacco was cc’d on those emails.

Tabacco is on Overstock's audit committee, and he fulfilled his role handsomely: he forwarded the emails to Byrne, and went right back to sleep. This was immediately before the SEC opened its investigation.

Therefore, Byrne was attempting, through pretexting and identity theft, to spy on an independent whistleblower that he knew was communicating with the SEC.

After he succeeded in "infiltrating" (to use Byrne's words), the Facebook "network" of "miscreants" headed by Sam, Byrne then had Bagley target Sam's son, a kid in his twenties.

From: Facebook

Sent: Monday, June 08, 2009 11:36 PM

To: xxxxx Antar

Subject: Larry Bergman added you as a friend on Facebook...

Larry added you as a friend on Facebook. We need to confirm that you know Larry in order for you to be friends on Facebook.

Larry says, "Hi xxxxx I'm a friend of Sam's.".

To confirm this friend request, follow the link below:

http://www.facebook.com/n/?reqs.php&mid=97xxxxxxxxxxxxxxx

Thanks,

The Facebook Team
When Sam raised the issue with Bagley on a message board after the scheme fizzled, Bagley responded in his typically big-hearted way: "Time to cut the apron strings, don't you think?"

Bagley continued to work the"Bergman" charade through the summer and into the fall and winter. He tried to gain Sam's confidence on Nov. 4 by posting a sympathetic question concerning this blog post, which described how Byrne refused to take questions from Sam at a quarterly conference call.:
Sam, did you email your questions to Overstock IR guy Kevin Moon beforehand? If so you have good reason to be bothered.
What's ironic is that this is the first time I've ever seen this psychopath utter anything that wasn't a lie or dishonest spin. And he did it posing as a "friend" of Sam's, trying to work his way into the "Facebook conspiracy."

2. The Facebook pretexting scheme targeted Marc Cohodes -- a hedge fund manager who was being sued by Overstock -- and (of course) his family.


Bagley has long claimed to have severed his connections with Overstock. He had been corporate spokesman before joining the ostensibly independent website "Deep Capture" in 2007. But that was actually an astroturf site, financed by Byrne, owned by him through corporate shells, with its content aimed almost exclusively at smearing critics of Overstock and Byrne. By targeting Cohodes, who was involved with a dispute with Overstock, any pretense of independence went out the window.

"Bergman" stalked Cohodes on Facebook in mid-November, and when that failed he went after Cohodes' wife and daughter, an 18-year-old college student, all of this while the litigation was still pending. It was settled earlier this month. (Bagley did the same thing with me, "friending" my wife in early December shortly after she posted on her page that I was her husband. Bagley was watching me that minutely.)

It takes a special kind of douchebag to stalk the wives and kids of your critics and adversaries. Bagley and Byrne are that kind of douchebag.

I think you can imagine the shit storm that would have developed if some hireling of Cohodes had stalked Byrne, his family members, or Bagley's wife and kids. You'd have the entire Utah congressional delegation up in arms. They'd have quit sabotaging the Obama health plan long enough to get the SEC and FBI to put Cohodes on the hot seat.

Bagley, again functioning in a p.r. capacity for Overstock, yesterday posted an elaborate presentation on his "antisocialmedia" website (another Overstock astroturfing outfit) trying to spin the settlement of the Cohodes litigation.

There is now no daylight whatsoever between Bagley, Byrne's two astroturf websites and Overstock.com. Astroturfing is not only the lowest form of life in the p.r. industry, it is fraudulent conduct because it presents corporate p.r. as "independent" coverage. Doesn't the SEC have rules against fraudulent conduct?

3. Byrne had my Facebook account under tight surveillance.

My Facebook account was inactive until Dec. 4, when I activated it in order to connect with some friends who recently moved abroad. There was a flurry of activity from Dec. 7-12, as I added several dozen Facebook friends, and then, bingo! Byrne's thug Bagley tried to get me to friend the phony "Bergman" account on Dec. 10.

What this means is that Bagley -- he is paid to do this full time by Byrne, remember -- was closely watching my Facebook account, noticed the sudden spurt of activity and then pounced, hoping that I would accept him as a "friend" without noticing:




This friend request came to me a few hours after I wrote a post on the outrage that had greeted posting of Byrne's enemies list on the corporate p.r. site. The timing of the invitation to me was typical of the narcissistic Bagley. He's smarter than anyone else, you see.

True. He's so smart that he has singlehandedly destroyed what was left of his and his boss's reputation.

In the past few days we've seen the most ridicule I have ever seen directed toward Wacky Patty, including a serious effort to boycott the company and criminally prosecute Byrne, spearheaded by financial blogger Barry Ritholtz.

Ritholtz, and other targets like Felix Salmon of Reuters, had barely uttered a word about Byrne or Overstock. Thanks to the pretexting scheme and the clumsiness of his thugs, Byrne has a whole new tranche of people who would like to see him and Bagley put in jail.

Byrne has been desperately scrambling since his pretexting scheme was exposed. He backpeddled furiously, reducing the size of the "conspiracy list" he published on the corporate website, and he and Bagley claimed that the intent was to show that ties between journalists and hedge fund managers were too close.

But if that were the case, Byrne would have pursued media people and bloggers who cover hedge funds. He didn't. That flimsy lie is contradicted by the fact that he only stalked media people and bloggers (and the family members thereof) who had been critical of Overstock.com. Some had nothing to do with hedge funds, such as Eric Savitz of Barron's, who covers the tech beat, which includes Overstock, and occasionally has made mildly critical references to the company.

Byrne omitted from his hit list all of the hedge fund beat reporters for the New York Times, Wall Street Journal, Bloomberg, Forbes, Fortune and BusinessWeek. Hey, it's good he didn't: a half dozen fewer reporters stalked. But he included an obscure but talented newsletter writer and blogger named Chris Faille, who has occasionally written critically of Overstock. What all this proves is the true purpose of his pretexting scheme -- to stalk media critics of Overstock.com.

In fact, he went after media people who are critical of hedge funds: myself, John Carney and Felix Salmon, to name a few. I've been critical of the hedge fund industry for years, and devoted much of Wall Street Versus America to excoriating the hedgies. Sam Antar, of course, is not a media or hedge fund guy. He's a whistleblower who has nailed Overstock's accounting, pure and simple.

Journalists and bloggers who stayed away from Overstock, and the few deemed friendly of course, were left alone. Byrne never bothered throwing in people like that for balance, because he never expected his scheme to be discovered.

(Bagley later said that "Larry was just a tool for determining whether or not certain people accept every Facebook friend request." I'm serious. That's like the old joke about the burglar who said he was breaking into someone's house to test their alarm system.)

Bagley, meanwhile, has deleted his former Facebook page. The poor dear is worried about his privacy, you see.

Not to worry. He can put that page right back up. Nobody gives a damn who Bagley "friends" on Facebook (under his real name, that is). Nobody is stalking him, his wife or his kids. Normal people don't do that. Criminals like Bagley and his sicko boss do that.

That's a charitable interpretation of his account vanishing, by the way. The uncharitable interpretation is that Facebook kicked him off for his cyberstalking.

Bad as this is getting for Byrne and his crew, it's going to get a lot worse before it doesn't get better.

I expect Byrne to make more mistakes, to give vent to more anti-Semitic jibes, to engage in more pretexting, more cyberstalking and accounting fraud, to tell more and more lies. That's how he's wired. It will be fascinating to watch.

UPDATE: Based on other corroborative details brought to my attention, I'm now fairly certain that Bagley was kicked off Facebook.

What that means is that Facebook is not pleased. I wonder if this is the end of it.

© 2009 Gary Weiss. All rights reserved.

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Tuesday, December 15, 2009

AAA Promises to Probe Road Service Scam

Recently I wrote an item about how an AAA road service operator I encountered was pushing a particularly grimy little scam, deliberately flubbing the jump-start that I needed and trying to sell me a starter that I did not.

Today I got a call from an AAA member services representative, who told me that the tow operator will be contacted about this. According to this gent, Jeff Hottensen, AAA takes such things seriously, and recently ousted two Suffolk County tow operators for the same reason. He said that the amount of payments tow operators receive is decreased, based on the complaints received.

But there are very few tow operators in Manhattan, and I doubt very much that AAA is going to sever its connection with the one that tried to scam me. So forwarned is forearmed: The name of the tow operator is Tows R Us, on West 39th Street in Manhattan.

If AAA says, "We're sending a truck from Tows 'R Us," tell 'em, "No, you're not."

Tows R Us is a big outfit--I just happened to see one of its tow trucks today. Its website is here. Note the prominent AAA logo.

Moral of the story: do not ever let an AAA tow operator tow you back to his shop for repairs.

© 2009 Gary Weiss. All rights reserved.

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Barry Ritholtz: Boycott Overstock.com

Overstock.com's unhinged CEO, Patrick Byrne, has won a new pal from his recent foray into pretexting and cyberstalking: respected economics blogger Barry Ritholtz, who last night called for a boycott of Overstock.com.

Barry turned up on Wacky Patty's enemies list because of some mildly skeptical posts on this nutty CEO. He was completely fed up when this blog revealed that Byrne had been garnered names for his enemies list through a fraudulent pretexting and identity theft scheme dreamed up by his full-time cyberstalker, Judd Bagley.

Bagley and Byrne really need to see the inside of a jail cell over this, and Barry has set the wheels in motion:

I am totally out of patience with Patrick Byrne, his firm Overstock.com, and the punks at DeepCapture.com. Here is what I propose to do:

1) Request the FBI investigate and prosecute the identity theft, online cyber-stalking, and fraud of Judd Bagley of Overstock.com

2) Request the SEC investigate Patrick Byrne, Judd Bagley, and Overstock.com for their part in this scam. If they find it to be a fraudulent scheme, then they should prosecute.

3) Call for a boycott of Overstock.com.

Lastly, some free advice to the Overstock Board of Directors: You have a fiduciary duty. It does not appear to me that you are fulfilling it. At a certain point, you will be called out for how you handled your obligations. Wise up . . .

While I agree in principle, I would point out that Byrne would not have hand-picked the cronies and dimwits who serve on that board if they weren't going to say "how high?" when he says "jump!"

There's only one problem with a boycott, raised by a commenter on Barry's blog:

Given Patrick Byrne’s rather obvious issues, and given that the Americans with Disabilities Act of 1990 covers “mental impairment”, are you risking litigation by calling for a boycott?
The same point was not lost on a Motley Fool writer expounding on retailing stocks yesterday:

Writers take potshots at Patrick Byrne at their own risk -- but recent reports that the Overstock CEO is compiling an electronic "hit-list" of journalists deemed unfriendly to the company are truly frightening (and some have suggested, legally questionable). While the company has done a reasonable job of maintaining sales and generating free cash flow in the middle of the Great Recession, investors would be foolish (small "f") to discount the risks of investing in a company ... run by a madman.
You see, at bottom, that's the issue at Overstock: not the jihad against naked shorting, not the Sith Lord fantasy, not cyberstalking, not even Overstock's cooking the books, so that its "sales and cash flow" are actually not maintained, but manipulated. The fundamental problem with the company, the one from which all its problems flow, is that its CEO is stark, raving nuts.

I don't mean that in a bad way. Seeing a nut run a company is fascinating, sort of like watching Marley tear up a garage.

As for that boycott: great idea, except that with Byrne manipulating the financials, how would you know if it is having any impact?

UPDATE: Caleb Newquist suggests that the boycott bid may hurt Overstock's search for an auditor.

Now personally I don't have such faith in the accounting profession that I believe nobody would be dumb enough to work for these pigs. I'm sure they'll find an accounting firm dishonest or dumb enough to take the job because, believe me, Wacky Patty isn't getting anyone for the job who won't say "How high?"

© 2009 Gary Weiss. All rights reserved.

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Monday, December 14, 2009

Patrick Byrne Disables Phony Facebook Account


"Larry Bergman," R.I.P.

UPDATE: Facebook later confirmed that it deleted the phony account. See this blog post.

Overstock.com's wacky CEO, Patrick Byrne, has disabled the phony "Larry Bergman" Facebook account that he used to track, stalk and harass media people deemed unfriendly. I've gotten a number of emails from Byrne's stalking victims, asking me why "Bergman" is not on their friends list, and that's the reason.

There's growing outrage among the affected people that they were targets of this tawdry pretexting scheme. Byrne and Bagley seem taken aback by the rage directed toward them over this. I've been writing about these slimeballs for three years, but to newcomers they seem shockingly wretched, sort of like creatures from outer space. I'd say the repercussions of this are far from over.

Byrne pulled the plug on "Bergmann" at about 7 p.m. Saturday night, in the middle of a frantic damage-control frenzy orchestrated by his in-house computer hacker, full-time cyberstalker and pretexting specialist Judd Bagley.

It's possible that Facebook killed the account, but I doubt that they'd do this on a weekend. Bagley has claimed that Bergman was a "composite" used by several Byrne employees -- something contradicted by Byrne himself, who posted on the corporate blog that "Bagley used an assumed name to infiltrate their Facebook network."

Note the use of the expression "Facebook network" (singular). It's all a conspiracy, you see, a "network." "Infiltrate" is also a precise use of the term, and it also contradicts Bagley's spin. Byrne and Bagley really have to get their stories straight. Note also the haziness over whether there are other phony Facebook accounts that haven't yet been exposed. Given the size of Byrne's enemies list, that seems likely.

The enemies list can be found here on Overstock's "Deep Capture" corporate p.r. website, an astroturf operation that Byrne has hidden behind corporate shells, but until recently was clumsily hosted on Overstock servers.

It doesn't really matter whether the "Bergman" account was one person or several, because it was an identity theft and pretexting scheme orchestrated by Byrne. The identity theft element comes from the fact that Bagley used a photograph of a person who did not give his consent, as I described in my last item. Keep in mind that this was not some hobby photo; it was the work of a professional. Yet it was obscure, not some famous photo in the public domain. The identity theft victim and the photographer, whose picture was used for nefarious purposes without his consent, in violation of the Lanham Act, have been notified. It will be up to them whether they want to press charges.

Chances are they won't bother, but you never know. Just another "contingent liability" for Overstock's ever-lengthening list of risk factors. If I were Byrne, I'd dip into the trust fund and settle with these people fast. Oh, and don't forget getting them to sign a gag order.

Bagley has been trying frantically, like the loyal subordinate that he is, to divert attention to himself (while carefully sidestepping legal responsibility for "Bergman"). I've never seen him in such a frenzy. His latest gambit was to ask an intermediary to set up a "debate" with me not about naked shorting, but the "personal stuff." That's like Bruno Richard Hauptmann asking to debate Lindbergh. I want Bagley prosecuted and jailed, not given a forum to spew his lies and hate or to attack my wife, as he has done in the past, and aid his effort to divert attention from his boss.

Bagley's frenzied effort to take a bullet for Byrne isn't working. He and his accomplices were acting on behalf of Byrne. All of the media and blog attention to this wretched episode (such as this post by Seth Jayson and this one by Felix Salmon) have recognized that.

The irony is that he's turned a bunch of people who otherwise would be indifferent to Overstock into outraged, personally offended, teed-off people. You might say that in compiling his enemies list, Byrne created enemies where none previously existed. Nice going! And hey, he had the world's most incompetent p.r. man, Judd Bagley, to carry out this task.

Sam Antar posted on his blog this morning his issuer-retaliation complaint against Byrne with the SEC, and I think it bears careful reading. Note the nauseating exchange with Bagley over his targeting Sam's kids. I hear that Bagley has been obsessed with tracking the kiddies, probably feeling that they're plotting against his nutty boss in their dorm rooms.

Byrne couldn't have chosen a worse time to pull this stunt. Facebook has been under increasing scrutiny for its abysmal security, and in fact, Overstock was already sued for participating in the controversial, now defunct Facebook Beacon service. Its latest 10Q -- you know, the one that isn't certified by an auditor, putting Overstock on the fast track to be delisted by Nasdaq -- discloses:

On August 12, 2008, the Company along with seven other defendants, was sued in the United States District Court for the Northern District of California, by Sean Lane, and seventeen other individuals, on their own behalf and for others similarly in a class action suit, alleging violations of the Electronic Communications Privacy Act, Computer Fraud and Abuse Act, Video Privacy Protection Act, and California’s Consumer legal Remedies Act and Computer Crime Law. The complaint relates to the Company’s use of a product known as Facebook Beacon, created and provided to the Company by Facebook, Inc. Facebook Beacon provided the means for Facebook users to share purchasing data among their Facebook friends. Plaintiffs and Defendants, including the Company, have stipulated to an extension in the time for answering the complaint, while the parties engage in a mediation of the dispute. The Company has not responded to the Complaint.

...The nature of the loss contingencies relating to claims that have been asserted against us are described above. However no estimate of the loss or range of loss can be made. If the case is not settled, the Company intends to vigorously defend this action and pursue with Facebook its indemnification rights under the Facebook Beacon agreement.
Note the solicitude directed toward Internet privacy by Overstock spokesman Judd Bagley.

According to TechCrunch, the suit alleges:

The Beacon program sent information regarding specific user transactions on Facebook Beacon Activated Affiliates’ websites to Facebook regardless of whether the user was a Facebook member or not. Thus, no consent was sought, nor was any consent obtained from persons who utilize the Facebook Beacon Activated Affiiliate’s website who were not Facebook members. . .

It was deceptive because, in almost every instance, the information sharing was contrary to the stated privacy policies of the Facebook website and every other Facebook Beacon Activated Affiliate that had signed up for the program.
Not to worry. "Invasion of privacy" is Patrick Byrne's middle name! He'll think of something. Surely Byrne can sic Bagley on the plaintiff's and their lawyers, their Facebook friends, their kids, their friends' kids, their friends' kids' friends.

The suit was settled a couple of weeks ago, so Byrne won't have to deploy Bagley and his phony accounts in that battle. Or at least Facebook settled. I don't know if Overstock did. No matter. Now he has a nice, big fat, Facebook scandal, one for which he has only himself to blame.

Meanwhile, Byrne can get back to work on defending himself from an SEC investigation into his cooking the books, manufacturing profits and reducing losses over a period of years by creating a "cookie jar reserve." That's the main event. All the rest is distraction -- deliberate distraction, if you ask me.

UPDATE:An amusing item in Going Concern today was titled,"Is Patrick Byrne’s Facebook Friends List Motivated by a Farmville Obsession?"
We haven’t really touched on the Patrick Byrne’s ill-fated attempt to stalk his critics (and all their friends, acquaintances, and complete strangers) mostly because we weren’t on the list and those that were (including Gary Weiss, Sam Antar, Joe Wiesenthal, and Barry Ritholtz) are doing a fine job of pointing out how desperate, shady, and just plain fucking bad this makes Patsy, his head minion at DeepCapture Judd Bagley, and Overstock look. . .

. . . This agonizing torture method will eventually wear down the haters to the point to where no one will be able to take the man, his doomed-to-fail quest to locate an auditor, and his company seriously and will thus give up their quest of destroying him.
You just can't buy publicity like this. It also shows that Bagley's stop-the-bullet p.r. strategy is not working. Bagley is personally responsible for some of the most denigrating ridicule I have ever seen directed at his very amoral, very sick employer. I wonder whether Byrne, beneath the haze of whatever intoxicants he may be on, is lucid enough to comprehend that.

If he doesn't, others may remind him of the consequences of playing the fool once too often. The New York Times observed in an editorial on Saturday that "The government is increasingly monitoring Facebook, Twitter and other social networking sites for tax delinquents, copyright infringers and political protesters."

I'm fairly sure that Overstock is not being overlooked in this scrutiny. In fact, I'm certain it isn't.

© 2009 Gary Weiss. All rights reserved.

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Sunday, December 13, 2009

Beware of AAA Road Service Scams

I write about corporate fraud a lot, and it's sort of refreshing to write occasionally about small-time fraud, though not in this instance.

It's been pretty cold in New York, and recently I had to call AAA road service to get a jump start for my car.

So the guy arrives and hooks up my car to the jumper cables. Lets it charge for a while, or so it appears. I try cranking it up. Nothing happens. No cranking. "It's your starter," he says. OK, I say, tow me to my mechanic. No, he says, I'll tow it back to my garage and give you a new starter with a guarantee! No, I say, I"ll have it towed to my mechanic, and it so happens I have "gold" AAA so I can be towed anywhere within 75 miles for free.

He then calls somebody and grumbles, OK, I'll tap on your starter. So he hooks up the cables again, and while I'm cranking he's under the hood tapping something. Car starts.

I should point out that while he's doing this, the guy is cursing. "I appreciate it," I say. "Screw your appreciation" or words to that effect, he says. He tells me that if the car stalls I'm going to be stuck. Bad starter.

I drove straight to my mechanic, praying it wouldn't stall. He checked out the battery. Weak. The starter: fine. What about him having to "tap" my starter to get it going? My mechanic points out that the starter is buried under the car adjacent to the manifold, whatever that is, and totally inaccessible from under the hood. The tow guy would have to have had to crawl under the car to "tap" it. He was probably "tapping" the side of the engine while giving me a real jump start.

So here's what I surmised happened: The AAA tow operator could see that, well, this is not the newest car in the world, so it is not under warranty. He immediately saw me as a mark, so he didn't hook up my car my battery properly and didn't actually give it a jump start at all.

When I insisted on a tow to my mechanic, which for some reason another tow operator would have to do, he figured the new tow operator would have tried to give me a jump before hooking up the car, and it would have started right up, proving that the starter was OK.

The car did need a new battery, but the starter was, and is, fine. In fact, it was starting up my car with a weak battery, which proved it was in good shape. Had I fallen for this scam, I probably would have been sold a piece of junk that really would have failed at some point.

I've gotten in touch with AAA, and I'll be curious to see how they handle this situation. I've withheld the tow operator's name because AAA may want to investigate. I'd wager all of the people he serviced on that day were sold starters they didn't need. If they really do care about ridding themselves of a crook, they'll try a "sting" operation to prove it to their own satisfaction. Frankly, I have my doubts that they do, but we shall see.

The reason I have my doubts is that this is not some tiny, fly-by-night outfit. It is a big auto body shop on west side of Manhattan that has a website and includes AAA in its corporate logo, and says it is "endorsed" by AAA. This outfit pays AAA big bucks, I am sure. I doubt very much that something as minor as their members being ripped off will cause AAA to sever its connections with these mutts, but perhaps I am being too cynical.

Meanwhile I'd urge my fellow motorists to be careful, and watch out for this particular scam, which is really a pretty smart one, I have to admit -- taking advantage of cold, frightened, stranded motorists.

Don't let yourself be talked into repairs by tow operators. They're notorious for scams, and having AAA affiliation doesn't matter one bit.

And speaking of AAA -- insurance companies offer towing coverage that is much cheaper. I've belonged to AAA for years out of habit. I think the time may have arrived to break this habit.

© 2009 Gary Weiss. All rights reserved.

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Friday, December 11, 2009

How Patrick Byrne Stalked Critics and the Media on Facebook


A Byrne minion used this stolen photo in an elaborate ruse

(See this update: Overstock was already being sued over Facebook privacy breaches, and this update on Facebook expelling Overstock's Judd Bagley.)

So I only just recently got an account at Facebook up and running, just a few days before word broke that Overstock.com's wacky CEO, Patrick Byrne, was hacking into Facebook accounts of his critics -- violating their privacy and stalking their friends, acquaintances, business contacts and family members, including little kids.

One of the people who tried to "friend" me on Facebook was the person with the above picture, who gave his name as "Larry Bergman."

But that's not his name, and that's not his picture. (See update. That's a copyrighted, stolen photo.) His name is Judd Bagley, and he is Byrne's pretexting specialist.

Bagley created "Bergman" and an unknown number of phony Facebook accounts to con people into "friending" him. That way he could circumvent Facebook security, violating their rules and, well, Lord knows how many laws he broke in this pretexting scheme.

The aim was to get their friends' lists in order to publish them on Byrne's "Deep Capture" corporate p.r. website. That, in turn, is then used to concoct elaborate conspiracy theories. ("Deep Capture" is what is known as an "astroturfing" website, claiming to be independent but owned by Byrne via corporate shells, and used to attack his critics.)

I presume that Bergman is just one of a number of phony accounts Bagley set up to carry out this scheme, because he targeted Felix Salmon and others not among the 56 persons on the Bergman friend list.

Byrne succeeded with my wife (family members are prime targets of Byrne's thugs), as well as media people and short-sellers, as well as innocuous folks tossed in to make it all look legit. Sam Antar, who mistakenly accepted his invitation to be "friends," says he tried to friend his kids too.

Among the people who were targeted by "Bergman" were journalists like Joe Nocera of the New York Times, Big Money editor James Ledbetter, teen blogger (and insightful Overstock critic) Zac Bissonnette, Barron's writers Bill Alpert and Eric Savitz, Columbia Journalism Review Audit columnist Dean Starkman -- whose predecessor, Mark Mitchell, went to work for Byrne after he was canned from that job -- blogger Barry Ritholtz, hedge fund managers like Daniel Loeb and David Einhorn, and a sprinkling of people (some real, others probably fellow phonies) to make it all look legit.

The only anomaly is Starkman, who has not written critically about Overstock. I imagine this was just payback by Mitchell.

Oh, and one of the people he conned was Michael Milken, a target of occasional Bagley salvos, no doubt to establish if any of the awful people he targeted were tied in with that person.

I don't think Bagley is cut out for pretexting work, because he was incredibly sloppy.

"Bergman" claimed to work for Goldman Sachs, which was dumb. Maybe he figured it was such a common name there had to be a few "Larry Bergmans" working there. But a GS spokesman told me earlier on Friday that there is no record of any employee by the name of Larry or Lawrence Bergman, and hadn't been except for a part-timer some years ago.

"Bergman" claimed to be a UCLA graduate, class of '96. The alumni association had never heard of him, and a database failed to turn up anybody with that name living in southern California in the 90s.

Another slip-up: Bagley gave "Bergman" my birthday.

"Bergman" also has a Twitter account, following Overstock critics Sam Antar, Tracy Coenen, Herb Greenberg, and with a request to follow me.

Here's an exchange I had with "Larry" earlier today:



After I asked him another question, asking if he worked for Goldman Sachs, he proved he was Bagley by excising most of the information from his profile, including access to his friends list.

Here's how the phony profile looked before my query (I've redacted the birth date):



Note the "sellrshort@gmail.com" email address, in keeping with Bagley's comic-book image of a typical Goldman Sachs-ite.

Here's how it looked later in the day, after my questions:



Now that was really dumb. I was not 100% sure he was Bagley until he tried to cover it up. In fact, I posted an item earlier today and thought better of it, deleting it immediately afterwards.

(Shortly after this item came out, I got a sneering Facebook message from "Bergman" confirming that he was indeed Judd Bagley.)

Oh, and one thing I almost forgot to mention: before I got the friend request from "Bergman," I found that somebody -- gee, I wonder who? -- hacked into my Facebook account and uploaded photographs of "guilt-by-association" presentations Bagley has drawn up over the years, one of which was made the picture associated with my account. Now that ain't legal either, obviously. And yes, I will prosecute.

That indicates that Byrne may have harvested some of these friends lists by hacking into accounts as well as by creating phonies like this.

The objective of this crude scheme is the same one that Joe Nocera described in his February 2006 column, "Overstock's Campaign of Menace":
This is what Mr. Bryne does: along with [Bagley predecessor Phil "Bob O'Brien" Saunders]. . . he bullies and taunts and goads the small handful of reporters who dare to write about Overstock, making it clear that there will be a price to be paid for tackling the company or its chief executive. And as a result, financial reporters have become very chary of taking him on.
I wonder why anyone would shop at an Internet retailer that makes invasion of privacy part of its business model. I also wonder what Facebook thinks of its members being harassed in this fashion by a corporate functionary of Overstock.com, a publicly traded company.

(See this update on Facebook shutting down the "Bergman" account, expelling Bagley from the site, and issuing a sternly worded statement on this pretexting scam.)

I also wonder if the SEC is investigating Byrne's Facebook pretexting scheme and if not, why not.

Even if Bagley hadn't tried this crude stunt, it was already obvious he infiltrated Facebook, one way or the other, for the purpose of harassing Overstock critics, intimidating members of the media, and all with the intent of boosting Overstock's share price by discouraging negative coverage and criticism.

Bagley seemed a bit pissed off in his email to me from the "Bergman" account after the jig was up, so I assume that we'll be seeing a lot of anti-Semitic diatribes on Byrne's Deep Capture website, and perhaps some new lies a-fomenting.

The thing that matters is not that Byrne engages in pretexting and has a staff of people stalking his critics, but that he cooks the books and is facing delisting by Nasdaq.

And I hear that's just an appetizer.

UPDATE: A reader, using a website called "IDThis," ascertained that the picture is an award winning portrait of Matthias Dusini by Heribert Corn . I'm sure they both appreciate their work being stolen and used in a pretexting scheme by corporate scam artists.

They have ample reason to be more than just annoyed. Byrne may learn the true meaning of "copyright" and "identity theft" before too much more time has passed. It's OK for hobby bloggers to use photos like that to illustrate articles, but not for paid corporate p.r. people to do so, and to misrepresent the identity of the person in the photo.

I'm told "Larry's" friends list is still available via this link.

Tracy Coenen opines:

But here’s the best thing about this whole pretexting project of Bagley and Byrne: It completely disproves exactly what they were trying to prove with the project. Their theory was that anyone on their enemies list who was “friends” with one another on Facebook must be part of a conspiracy. After all, Facebook is the perfect tool for co-conspirators to show love for one another, Bagley would have you believe.

Except the fact that people were accepting the friend request of a fake person named Larry Bergman, shows that people on their friends lists don’t even have to exist to get there. They may have “friends” on their lists that they’ve never met and don’t even know. Which completely disproves the theory that “friends’ on Facebook are automatically part of a conspiracy.

What idiots. Who in their right mind wants to shop at Overstock.com when this is the kind of nonsense that CEO Patrick Bryne promotes and pays for? Do you really think any of your private information is safe with them? Do you want even one cent of your hard earned money to go to sleazeballs like this?

UPDATE: As expected, the following day Bagley posted in various forums, under his name and others, wearing his fingers ragged attacking me, deflecting and evading. This exchange is typical. First Bagley suggests he didn't need to create phony identities to create an enemies list for his boss, which raises the question: why did he?

The reason is immaterial, but what is significant is this exchange:

John Carney: Is Gary correct in saying you are behind the Larry Bergman profile? Why friend us with a fake profile? Why has Deep Capture put together a list of our Facebook friends?

Bagley:

No response. The reason is that Bagley blundered. He stole someone's identity. In addition to his usual tactics of lies, lies, and more lies (I trust he was not born "Larry Bergman" and dropped off at the Bagley doorstep), he used someone else's picture to establish a false identity for the purpose of causing harm to third parties, and for the benefit of his employer.

Say, isn't identity theft a criminal offense?

Bagley later tried to diffuse and deflect responsibility for this debacle, saying that "Bergman" was a "composite" (translation: it was Bagley) and that
"The reason for creating him was to simplify the process of finding links, since gathering the data was a pain in the ass." Translation: "Bergman" was created by Bagley to stalk critics of Patrick Byrne.

Separately, Bagley heatedly denied that he uploaded the pictures to my Facebook account, and then described how it was done before demanding an apology from me for accusing him of doing that.

Er, I didn't accuse him of doing that. Methinks the man doth protest too much. But one thing he ain't protesting at all is the fact that he stole the identity of an innocent man and put it on his phony Facebook page.

Byrne himself, however, had no such compunction, freely admitting on Deep Capture his employee's illegal activities:

DeepCapture investigative reporter Judd Bagley used an assumed name to infiltrate their Facebook network and discovered that, yes, the hedge fund managers are in fact Facebook Friends with each other and precisely the financial journalists and bloggers about whom we have been writing, and that (while no one would claim that Facebook Friendship = “co-conspirators”), this fact is interesting.

Gee, that's convincing. Sure does explain why Bagley friended my wife, who doesn't know hedge funds from Adam, or tried to friend Antar's young kids, or Zac.

Byrne and his loyal toady may want to read this New York Times article about how someone was arrested in Manhattan for using someone else's identity on the Internet.

The "Larry Bergman" account was deactivated at about 7 p.m. on Dec. 12. It's unclear whether Bagley removed the account or if it was done by Facebook, since I understand that there were complaints. A bit late for that, wouldn't you say? And note the ambiguity in Byrne's comment, which leaves open the question about whether there are other phony accounts, and other stolen identities, out there.

As Felix Salmon points out, "You really can’t make this stuff up, but the problem is that public ridicule has no effect on these people."

© 2009 Gary Weiss. All rights reserved.

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Thursday, December 10, 2009

The SEC Nails Investools

One of the subjects I dealt with in Wall Street Versus America was how investors had been preyed upon by phony investment seminars, which were little more than schemes that parted investors from their money. One of the grimier efforts was "Investools," which put on seminars using tie-ins, now severed, with CNBC and BusinessWeek.

After an investigation that dragged on for over a year and a half, today the SEC announced that it settled securities fraud charges against Investools for "misrepresentations at investor workshops." The fine is the usual SEC wrist slap, with Investools pledging to stop doing stuff that it didn't admit to doing in the first place.
The Commission's complaint alleges that from 2004 to approximately June 2007 at Investools how-to-trade-securities workshops former Investools employees Drew and Miller misleadingly portrayed themselves as expert investors who made their living trading securities. They did so to mislead investors into believing that they too would make extraordinary profits trading securities if they purchased expensive Investools instructional courses and other products and followed Investools' securities trading strategies. The complaint further alleges that in reality, neither Drew nor Miller made the trading profits they claimed. For example, in 2005 and 2006, while Drew was portraying himself as a successful investor, he had hundreds of thousands of dollars in net trading losses. In 2006 and 2007, while Miller was portraying himself as a successful investor, he had tens of thousands of dollars in net trading losses.
What made Investools especially interesting was its murky corporate history, as successor to a company called Ziasun that used to intimidate critics through lawsuits against critics on message boards.

That was one hell of a red flag, and the SEC got right on the case. How long did it take since Ziasun was on the warpath.... ten years?

© 2009 Gary Weiss. All rights reserved.

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Patrick Byrne Update: Hacking into Facebook to Compile an Enemies List

UPDATE: Judd Bagley copped a plea to eight drug felonies in April 2013. See "Closing the File on a Criminal and Junkie Named Judd Bagley," March 30, 2015.

I was debating what image I should use to illustrate today's item on my Marley, Overstock.com's wack-a-doo CEO Patrick Byrne: our beloved 37th president or Dale Carnegie?

Byrne is being whacked upside the head today by word of his latest gambit: an enemies list, which he got by glomming private information off the Facebook pages of people who had written critically about him.

Is this guy a p.r. genius or what? The man really ought to write a book, "How to Win Enemies and Alienate People."

Seems that Byrne's paid thug, the eternally nauseating cyberstalker Judd Bagley, posted a list of critics of Overstock and Byrne, along with a spreadsheet of their Facebook friends. The list contains 7,483 names, mostly people in the media and friends thereof, their relatives and friends -- all to be tracked, stalked and lied-about by Bagley and Byrne's other pigs, down to the last babe in arms. Still more issuer retaliation and critic-harassment from my favorite corporate crime petri dish.

Evidently it was first noticed by Reuters columnist Felix Salmon on his Twitter feed, and then spread like wildfire among people who don't ordinarily follow Byrne and his nutters.

We're talking invasion of privacy and computer hacking, folks. Some of these people, such as white collar crime-fighter and Byrne nemesis Sam Antar, have high privacy settings, protecting the privacy of their Facebook contacts, which in Sam's case includes little kids. See the update to Sam's item here.

Byrne's enemies list is bigger than Nixon's, though obviously there's a difference between an enemies list compiled by a sitting president and one compiled by a guy who (despite his fathers billions and, I've heard, presidential ambitions), couldn't buy himself election to dog catcher of Provo.

So here's the great publicity Byrne received, even before it became apparent his thugs had been on a hacking spree:

Barry Rithholz:
Here is something weird, and a little creepy:

The freakshow that is DeepCapture.com seems to have grabbed all of the Facebook friends of anyone who has ever: a) written anything positive about short selling or 2) said anything negative about Overstock.com.
Business Insider:
This is amazing and disturbing though not at all surprising.

Patrick Byrne, the CEO of Overstock.com (OSTK), has always had it out for journalists who don't buy into his theories about the naked short-selling cabal.

But, Barry Ritholtz has discovered the most ridiculous thing yet. His site DeepCapture.com -- which is ground zero for the naked short selling fringe -- has a public database of all the journalists he despises AND THEIR FACEBOOK friends. . . .

. . . John Carney, Henry Blodget, and many, many others are on there as well. So if you're friends with any of them, you're now officially being watched by Patrick Byrne and crew. Sorry!
The latter has an update on Byrne's cockroaches glomming private friends lists. The first comment theorizes on how Bagley hacked into the Facebook accounts.

Felix Salmon:
The sleazy anti-shorting crowd at Deep Capture has published a list of my facebook friends, along with those of other critics of the site. . . .
I’m a semi-public figure, and although I might not be happy with this kind of cyberstalking, I know I’ve put myself out there and that there will be consequences of that. But that decision of mine shouldn’t have some kind of transitive property which feeds through to my personal friends, and I don’t want the list of their names to be publicly available to everyone.

I tell ya folks, Dale Carnegie is chortling out there in the great beyond. I mean, how many CEOs do you know who can make enemies like this? Particularly among financial bloggers like Felix with such a wide readership?

William Wolfrum says:
When the business you run can’t make a profit, you fire auditors at a whim and the SEC just won’t get off your ass, you might make some enemies. Such is the case of Overstock.com (OSTK) CEO Patrick Byrne. Byrne, however, is proactive about these types of things.
White collar crime-fighter Sam Antar points out that "Obviously, Patrick Byrne is in a deep panic" because of the ongoing threat of an SEC investigation and Nasdaq delisting, the struggle to obtain an auditor to attest to his phony financial statements, and the accumulated stress that comes from cooking the books for years and knowing that the jig is up.

That, of course, assumes that the man is rational enough to understand the kind of hot water that he is in. I wonder if he is so nuts that he believes his own lies.

UPDATE: A Barron's blog picks up on it, and Chief Cyberstalker Bagley does some frantic backpeddling.

Why haven't these mutts been prosecuted?

© 2009 Gary Weiss. All rights reserved.

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Monday, December 07, 2009

Mark Cuban, Being Mark Cuban, Throws Away Moral High Ground

Ever since the SEC filed some very very weak insider trading charges against Mark Cuban, the latter has struggled for the moral low ground, trying his case on his blog and coming across as sleazy as hell. He should have just shut his mouth and let the SEC's weak case speak for itself.

I'm no fan of Cuban since he announced his odious "trading before publication" Sharesleuth stock tip sheet, but the insider trading charges were so shaky that I felt a bit sorry for the guy. That lasted for a few hours, until he opened his big mouth.

Most defendants in such situations would seek to demonstrate how classy they are, but nosireee, not Cuban. Having won the case, which the SEC is appealing, Cuban could have emerged smelling like a rose. Instead, he is reaching harder than ever for that elusive moral low ground by pushing a vindictive motion for discovery, which he won today, and seeking attorneys fees. He's now waging a jihad against the SEC a la Patrick Byrne, pursuing discovery to determine if the SEC acted in bad faith.

Baloney. Its case was weak, but these were just bureaucrats being bureaucrats, wasting the public's money. That's the message you'd think Cuban would be trying to promote in this situation. Not this guy.
“To the extent that he views it as the agency having tweaked him, he wants to tweak back,” Jacob Frenkel, a former SEC lawyer now in private practice, said of Cuban’s fee quest. “Is this likely to meet with success? No. Is that likely to stop him? No. Many who are accused by the SEC are pleased to take a dismissal and ride off into the sunset.”
I think the SEC was wrong to appeal the ruling. I still feel that way. But if he loses, I will definitely have no trouble sleeping at night.

© 2009 Gary Weiss. All rights reserved.

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