Useless Auditors and a Persecuted Blogger

Today in TheStreet.com I have a column describing the utter uselessness of auditors--and how bloggers (specifically Sam Antar) can sometimes do a better job rooting out questionable accounting and wrongdoing at companies.

As if to prove that general point, forensic accountant Tracy Coenen today has a hilarious blog item today describing the latest developments in a junk lawsuit brought against her and others by a company called Medifast.

It's not often that you see parties describing depositions while they're in the midst of litigation, and this one makes for fascinating reading. What isn't funny is that this suit hasn't been thrown out already.

© 2010 Gary Weiss. All rights reserved.

Invitation to a Puff Piece, Overstock.com Edition

The financial media has been so beaten down lately that critical reporting has been largely a thing of the past. So the question arises, "Where is the next generation of puff pieces coming from?"

The answer appears to be, "email spams."

My favorite corporate crime petri dish, Overstock.com, is slamming into the email boxes of the media a spam email offering up the company's wack-a-doo CEO, Patrick Byrne, for interviews -- about his favorite subject, which is what a wonderful, generous guy he is.

The email was directed to my mailbox by the geniuses at this company's p.r. department. Any journalist wanting to fill some stress-free, news-free, reader-unenlightening space, is invited to write about Overstock's "Worldstock" p.r. gimmick. The "hook," as they say in the p.r. game, is a "humanitarian" trip to Malawi, of all places, being offered in a sweepstakes. Sort of a p.r. gimmick to promote a p.r. gimmick, a "p.r. gimmick-squared."

Here's the email:

From: Roger Johnson
Date: Mon, Sep 13, 2010 at 4:30 PM
Subject: Humanitarian Trip to Malawi, Africa to be awarded by Worldstock for 9th Anniversary
To: Roger Johnson

For interviews with Worldstock Founder Patrick Byrne about how this program has changed the lives of artisans all over the world please contact Roger Johnson at rojohnson@overstock.com or 801-947-4430

Social Media Release: http://pitch.pe/85377

Worldstock to Celebrate 9th Anniversary by Awarding a 10-Day Trip to Malawi, Africa

SALT LAKE CITY — Overstock.com, Inc. (NASDAQ: OSTK) announced a grand prize trip to Malawi Africa will be awarded as part of Worldstock’s Nine Year Anniversary Giveaway. The 10-day, all-expenses-paid trip for two will be awarded on September 17, 2010, by a random drawing from all giveaway entries. To enter visit www.overstock.com/worldstock-anniversary

“Worldstock is a department within Overstock.com devoted to fair trade with artisans in over 50 countries,” said Overstock.com chairman and CEO Patrick Byrne. “Worldstock’s mission is to create sustainable livelihoods for [blah blah blah]

It will be interesting to see if the spineless journalists of Utah, who have ignored every accounting gimmick and whitewashed every restatement made by this company, snap up the opportunity to write some spoon-fed pap.

The two Salt Lake City papers, the Deseret News and Salt Lake Tribune, have even ignored the company's recent quarterly earnings travails and share price slaughter. Investigative reporting? Fugetaboutit.

I assume that the papers out there have plenty of opportunity to write about the dark side of Overstock, judging from the kind of insider emails that I get (which I usually refer to the SEC). But the people out there are either wise to the uselessness of the papers and don't bother. Or they bother and are ignored.

No worries. Why should the Utah papers bother with actual news, when they've got a sweepstakes to write about?

© 2010 Gary Weiss. All rights reserved.

Inside an Issuer Retaliation Scheme

Roddy Boyd's Financial Investigator blog today has a riveting inside account of the dirty-tricks campaign against hedgie David Einhorn from an interesting perspective -- from a journalist courted by a p.r. guy for Einhorn's nemesis, Allied Capital.

Roddy was working for Fortune when he was approached by Sitrick & Co. Seems that Einhorn's fund had hit some rough spots.

...once the hoped-for story touched upon Einhorn’s losses, [Sitrick flack Jeffrey] Lloyd had ready any number of other facts and figures designed to illustrate rather convincingly a very important premise to Lloyd’s client: that David Einhorn was a really, really over-rated fellow. In fact, if I had gone farther and implied that Einhorn was a pretty bad guy, well, Jeff and his clients would have been fine with that too.

All Sitrick’s Lloyd needed was a reporter to bite.

So he called a reporter at Fortune who he thought would be a lapdog, and was unpleasantly surprised to find himself referred to Roddy.

The rest of this fascinating account can be found here.

© 2010 Gary Weiss. All rights reserved.