Wednesday, January 27, 2010

Are the Salt Lake City Papers Asleep?

Seth Jayson of the Motley Fool expresses bewilderment at the lack of media coverage of the departure of a key financial officer at the corporate crime petri dish,, coming as it did immediately after a devastating article in the Big Money.

He was focusing on the big wire services, and he's right, but what I wonder about is the bewildering (or maybe not so bewildering) silence of Overstock's hometown newspapers, the Salt Lake Tribune and the Deseret News. Not one word in those two newspapers about the departure of David Chidester, head of internal financial controls.

Are they too terrified of the Nastiest CEO in America, Patrick Byrne, to do their jobs? Are they worried about personal attacks by Byrne? Are they afraid of their families being terrorized by the child-stalker, Byrne's nauseating go-fer Judd Bagley?

They have good reason to be afraid. Bagley has engaged in pretexting and cyberstalking of the wives, kids and grandparents of media people. He has boasted about personally stalking my apartment in New York, and has targeted my wife in his Overstock-financed smear campaign. He tracked down the estranged wife of one Overstock critic, in unsuccessful effort to get dirt on that critic. He once targeted a teenage blogger. As author and financial blogger Barry Ritholtz correctly put it, he is a "career douche bag."

These newspapers' silence seems to substantiate one of the points in the Big Money article, which is that Byrne uses crude tactics to discourage coverage.

Said Roddy:

I am one of only two reporters—the other is my former Fortune magazine colleague Bethany McLean—apparently evil enough in his eyes to warrant a reference to oral sex and ejaculation in his assessment of our ethics and reporting skills.

. . . consider that investigating the likes of Overstock is to be propelled back into a parallel world of eighth-grade recess writ large, replete with smears, tricks, and dirty language. And just like eighth grade, Byrne has learned that many people simply don’t like to fight back.
Apparently these tactics work, and they certainly do close to home.

Keep in mind that Chidester's resignation is not a rumor. Overstock filed an SEC Form 8-K announcing his departure, five days after the event.

The resignation came one day after the Big Money story, citing internal company documents, pointed to Overstock engaging in a sales tax avoidance scheme and suffering from a total lack of internal financial controls. Blogger Sam Antar, a prime target of Overstock's hoods, perceptive blog post on the troubles facing David Chidester.

In his post today, Seth Jayson pointed out:

The guy [Chidester] who knows where the bodies are buried (or doesn't, which would be more interesting) at a firm that's under SEC investigation, the day after a story breaks about a tax-evasion scheme, and no one bothers to report on it?

That's what happens when clowns like Patty and Judd, the unacomplished Facebook Granny and Child stalker behave so insanely for so long. The media starts to ignore the simpler evidence of skankiness that's too boring and too obvious.

That, or as Roddy Boyd discussed in this article, the writers and editors out there are too afraid to risk the wrath of con.

The Salt Lake papers don't always ignore the loony activities of, with the Salt Lake Tribune (not the Deseret News) belatedly mentioning, after it was reported elsewhere, that the the company has fired its auditor, filed an unaudited financial statement, and engaged in a public row with the fired auditor.

But as far back as I can recall, neither paper has broken news about Overstock -- and no, occasional puff pieces and reprinted press releases and wire stories don't count as "breaking news."

The heavy lifting, and the exposure to attack, is left to out-of-town reporters like Joe Nocera of the New York Times, Carol Remond of Dow Jones, Bethany McLean, now with Vanity Fair, Herb Greenberg and Roddy Boyd, formerly of the New York Post and Fortune. All have been viciously attacked by Byrne and his employees.

With the Salt Lake papers shirking their responsibility, Utahns are left with out-of-town reporters like Roddy and bloggers like Sam Antar, who today described in detail how Overstock has violated accounting rules by failing to disclose related party transactions with its Deep Capture astroturf website. Byrne uses Deep Capture to intimidate his critics and the media. It is run by Byrne's employee Bagley, who has focused so obsessively on stalking kids that he is described by blogger Barry Ritholtz as a "possible pederast."

Just to put Barry's terminology in context:

. . . The reality turned out to be far more insidious than that: A career douche bag (and possible pedarast) named Judd Bagley decided to engage in some fraudulent pretexting. He assumed a false persona on Facebook, using someone else’s name and photo (perhaps committing a Felony in NYS). He then began cyber-stalking the children, friends and family of numerous journalists, bloggers and fund mangers. After friending all the kiddies, Bagley posted their names, friends, etc. at the Deep Capture site.
Sam describes in his blog how Overstock has systematically violated accounting standards that require disclosure of related party transactions. The transactions were with the Deep Capture site. Yep, that's the kind of company we're talking about. Yet not a word on any of this in the newspapers that purport to cover prim, proper Salt Lake City.

William Wolfrum, meanwhile, takes a satirical approach, as he did previously.

I don't expect the Salt Lake City papers to consider it news that a CEO in their midst is a laughingstock, reflecting on Utah companies generally, but an executive departure of such importance should not be ignored.

Once Overstock collapses under the weight of its own self-generated scandals, you can be sure of one thing: you won't be reading about it in Salt Lake City, unless Overstock issues a press release.

UPDATE: Talking Biz News asked both papers for reaction. Nada. Sam's work, meanwhile, received an enthusiastic endorsement from a leading academic authority on corporate accounting, Prof. David Albrecht: "As only Sam can, the fraud situation is dissected. Sliced and diced. This is a must read for any honest person who is curious about just how fraudsters go about their business."

© 2010 Gary Weiss. All rights reserved.

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