Wednesday, March 31, 2010

California to Overstock.com: You Owe Us $8.5 million (or is it $7.5 million?)


Byrne: Still hasn't learned to count

My favorite corporate crime petri dish, Overstock.com, just released its delayed and re-re-re-restated financial statements for 2009 and 2008 (which it has previously loused up), and a quick skim reveals some interesting tidbits.

I'm sure that the white collar crime-fighter Sam Antar will be providing an expert accountant's analysis of this latest spate of Overstock filings, but a skim shows a few interesting things:

First--stop the presses! Overstock's auditors at KPMG says that Overstock has insufficient internal controls.

Second, the Marin County District Attorney and four other DAs in northern California want the company to fork over $8.5 million to settle consumer ripoffs by Overstock. The company disagrees and is fighting it, so .... No, wait a moment, make that read "$7.5 million." It uses the smaller number on page F-37 and the bigger number on page 33.

Really. Here it is. Page 33:
In January 2010 attorneys for the Company received correspondence from the Office of the District Attorney of County of Santa Clara in which the respective offices of the various district attorneys have made a collective proposal to resolve the dispute by the Company's payment of $8,500,000 in penalties and reimbursement.
Page F-37:
The Company received correspondence from the Office of the District Attorney of the County of Monterey in which the respective offices of the various district attorneys have made a collective proposal to resolve the dispute by the Company's payment of $7,500,000 in penalties and reimbursement.
Hey what's a million here or there when your numbers are already fabricated, right? Anyway, I'm sure glad they asked for that delay to get their numbers straight.

By the way, California made this demand back in January. Isn't it charming how Overstock didn't bother filing an 8-K saying that people who can put you in jail want $8.5 million/$7.5 million? As I've said before, Overstock's not big on niceties of the securities laws, particularly the ones concerning "fraud," "ethics" and "disclosure."

There's a lot more, I'm sure -- such, as I suspect, these numbers--stated, restated or parboiled--not be worth the powder to blow them away. Just an educated guess.

Oh, except for that $7.5 million/$8.5 million number. I'm sure one of those numbers is correct. Maybe.

There was a restrained press release on the latest attempt at financial reporting from Overstock's loony, cyberstalking CEO Patrick Byrne.

Said Byrne, "I thank you for being patient with us as we worked through the questions raised by the SEC, the transition to the KPMG team, and the extra time it took to ensure that our financial statements are accurate." Yes indeed.

Since there was a press release, I imagine that Salt Lake City's tongue-tied newspapers now will have something to rewrite. I'll be majorly shocked if they mention that little problem in California. After all, that would require doing something other than rewriting the press release or running the wire story.

Anyway, I'm sure there will be more on this always entertaining company. Stay tuned.

© 2010 Gary Weiss. All rights reserved.

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