A Wolf in the Chicken Coop Named Brent Baker?

President Obama has made some truly bad appointments, of which one that definitely seems to be in that category is his naming a Wall Street exec named William Daley to be his chief of staff. I muse on that and similar topics today in my Street.com column.

There are rumors floating out of Utah today that Obama may be making an even worse decision. A Salt Lake City weekly says that a character named Brent Baker is on the "short list" for U.S. Attorney in Utah. Now, just to be clear, I don't think this is a highly credible report. The source of such items tends to be the people supposedly on the "short list," so that they might actually materialize on same. I'm sure that's the case here. But let's just s'pose for a while that such a dreadful decision is in the works.

Baker is probably the worst example I can imagine of the revolving door in action. He was a lawyer for the SEC, and then immediately became deputy general counsel of an SEC investigation target, Overstock.com. I've written frequently about Overstock in this blog and elsewhere. He also has represented Universal Express and CMKM Group, both of which are stock frauds that have made, as has Overstock, naked shorting conspiracy claims.

Nothing wrong with any of that. What bothers me is that Baker seems to actually believe that rubbish. He is a card-carrying naked shorting conspiracy theorist.

As I pointed out in this blog item, Baker engaged in a creepy rant in a blog that he used to run called sectales.com. He was responding to a post of mine talking about his role at Overstock and issuer retaliation:

Guess what? Patrick and the DeepCapture folks are all correct. I saw it from within the belly of the beast and I can honestly tell you that "bent journalists" are more of a problem for our capital markets than "retailating issuers." Give me a break.

He signed this post "Fraudstopper." "SECTales" went offline right after that.

Do the feds really intend to bring in to a sensitive post somebody who talks about "bent journalists," i.e., journalists who turn the heat on crooked CEOs? That's the kind of rhetoric that's found in penny stock bulletin boards, usually used by stock promoters. Or praising Byrne and the astroturf site he created to harass critics of the company?

He also says that Bear Stearns was a victim of naked shorting and not its own sliminess. He was quoted by Matt Taibbi as follows:

Asked to rate how obvious a case of naked short-selling Bear is, on a scale of one to 10, former SEC counsel Brent Baker doesn't hesitate. "Easily a 10," he says.

Really? Precisely zero of the histories of the financial crisis, including Taibbi's Griftopia, say anything of the kind, and studies have shown that trading data shows the opposite.

In December 2007, Baker pushed the naked shorting conspiracy hoax in something called Utah CEO Magazine, co-authored with Patrick Byrne, the famously wacky CEO of Overstock.com.

I'd go on, but what's the point? This is probably a plant by the "reliable source," who I assume is very close to Brent Baker (such as the guy who looks at him in the mirror). In short, it is probably fiction. But Obama has made some terrible appointments, so not even obvious tripe like this can be easily discounted.

UPDATE: Not to worry, it was all a big publicity stunt. Baker "said he was withdrawing after the White House failed to nominate him." Good reason.

© 20101Gary Weiss. All rights reserved.

Did the SEC Give Overstock.com the 'Allied Capital Treatment'?

The Washington Post had a great article yesterday describing a recently released -- if heavily redacted -- report by the SEC Inspector General David Kotz, describing how the SEC flubbed an investigation of a company called Allied Capital, instead turning its guns on short-seller David Einhorn, who had blown the whistle.

Allied filed for bankruptcy in October 2008, but not before Einhorn was the subject of a smear campaign by Overstock.com CEO Patrick Byrne's "Deep Capture" website. Byrne claimed that Allied was among the terrific companies (including Overstock, natch, but also including innocent companies like Bear Stearns and Lehman Brothers) that were "attacked" by horrid people like Einhorn.

The parallels between Allied and Overstock are startling:

• Both were probed for accounting irregularities at the instigation of short-sellers.

• Both managed instead to get critics investigated--Einhorn in the case of Allied, Gradient Analytics in the case of Overstock.
  

• Both were the subject of favorable treatment by the SEC, Allied getting a no-penalty wrist slap and the Overstock probe dropped entirely by Chris Cox's SEC, only to be renewed after the change in administration. Allied also got a pass for unlawfully gaining access to Einhorn's phone records, and probably doing the same thing to Herb Greenberg.
  

• Both engaged in issuer retaliation, including a campaign against Einhorn by Allied and Byrne's smear campaign against whistleblower Sam Antar, conducted by Byrne's employee Judd Bagley (right), a possible pederast noted recently for stalking the kids and spouses of Byrne's critics.
  

• Both were guilty as hell. Allied eventually succumbed to its own sliminess, and Overstock, under renewed SEC investigation, has recently admitted that its financial statements were completely fatuous. Antar's analysis of Overstock's accounting was completely vindicated.
  

The Post article focused on the SEC's malfeasance, including the excessive deference the SEC granted former SEC lawyers in the employ of Allied. The Post article notes that "Among other things, Kotz questions how SEC officials decide to open investigations and whether they are unduly influenced by outside lawyers -- particularly former SEC officials -- in conducting the probes."

It's not entirely clear if that's another commonality, though Overstock had on its payroll at least one ex-SEC lawyer, a proud lawyer for stock market thieves named Brent Baker. He worked for Overstock from 2004 until joining a Salt Lake City law firm in August 2006, and was at Overstock at the same time the SEC was probing critics of Overstock and subpoenaing reporters Herb Greenberg (also targeted by Allied) and Carol Remond, who had written critically of the company. The subpoeanas were later withdrawn.

As Joe Nocera observed in the New York Times at about the time those subpoenas were issued, Byrne sent Greenberg a gloating email three days before the subpoenas were issued. That stinks to high heaven. How did Byrne find out about the subpoenas?

Baker once belched forth the following creepy sentiments in his now-deleted blog "sectales.com," responding to a comment I once had made about issuer retaliation:

Guess what? Patrick and the DeepCapture folks are all correct. I saw it from within the belly of the beast and I can honestly tell you that "bent journalists" are more of a problem for our capital markets than "retailating issuers." Give me a break.

The SEC inspector general needs to explore the role that this character had in the whole Overstock mess.

David Einhorn wants the full, unredacted Inspector General report issued, but that's just a small part of what the SEC needs to do. In addition to finally taking action against Overstock for its in-your-face accounting violations, Kotz needs to thoroughly explore the SEC's conduct toward Overstock, and the dynamics that led to the abortive subpoenas being issued and the Overstock probe dropped.

The SEC needs to shut the revolving door that puts ex-SEC lawyers on the payroll of SEC targets as soon as they leave the employment of the agency. That makes the SEC less of an enforcement agency as it is a kind of training camp for the likes of Brent Baker, who make a fortune after they leave the SEC by working for the people they used to probe.

Byrne has withdrawn himself and his cronies from their usual cyberstalking duties for the past few weeks, because of what I presume are intense negotiations with the SEC over the firm's fate.

It will be interesting to see if the SEC takes a dive--again.

© 2010 Gary Weiss. All rights reserved.

Want the Hairs on the Back of Your Neck to Crawl?

Brent Baker, proud lawyer for slime

If so, read about how ex-Overstock.com legal brain Brent Baker crowed to the Salt Lake Tribune about his poor, downtrodden, misunderstood client, Stanford Financial's CFO Laura Pendergest-Holt.

Hold on to your barf bags, folks. The woman is innocent. Yessir. A victim of overzealous regulators. And that's not all. Innocent people like Pendergest-Holt and Overstock's fabulously inept CEO Patrick Byrne know that they can get great representation at popular prices!

"We took on the representation knowing the assets were frozen but it goes to the reason why I get a lot of national cases," said Baker. "It's because we can take the risk because I don't have outrageously high overhead. I don't have to have to get millions and millions of dollars up front. If I believe in a client, I'll take a chance."

Baker goes on to wax rhapsodic about his former client Byrne, who waxes rhapsodic right back.

I had been wondering why the stock market conspiracy websites, which ordinarily tie in every Wall Street crime into a grand naked shorting conspiracy, failed to lasso in the Stanford defendants. Now I know why. Pendergest-Holt is good people, as are other ex-clients Baker believes in like Byrne and the Universal Express ripoff crew.

Baker learned to "believe in" these nightcrawlers while working for the SEC. Your tax dollars at work, folks, providing training for lawyers of white collar defendants in years to come.

Baker is a real piece of work. He once had a blog called sectales.com in which he said the following in response to a post of mine talking about his role at Overstock and issuer retaliation:

Guess what? Patrick and the DeepCapture folks are all correct. I saw it from within the belly of the beast and I can honestly tell you that "bent journalists" are more of a problem for our capital markets than "retailating issuers." Give me a break.

He signed this post "Fraudstopper." Seriously. This guy views himself as a "fraudstopper" by mouthing crap like this and by charging popular prices to represent the likes of Stanford's CFO, Patrick Byrne and the Universal Express bunch.

Baker (or his law partners) decided to be the ones to give him a break, by nuking these brilliant comments and what would have been a very interesting blog.

P.S. Baker's ex-colleagues feel that Pendergest-Holt is a "flight risk" who should continue to wear an electronic monitoring device, Reuters reports. I'm sure that in a few years they'll be finding a lot to "believe in" when it comes to the creeps and hoods of Wall Street and Corporate America.

© 2009 Gary Weiss. All rights reserved.