Anatomy of an Overstock.com Smear

Apparently some bad news is en route for shareholders of Overstock.com (NASDQ: OSTK), judging from the depth and depravity of this miserable little company's smear campaign against its critics.

Just the other day I posted on an Overstock pretexting escapade, and now there is a new adventure for corporate crime aficonados.

Overstock's in-house stalker, its nauseating director of communications Judd Bagley, launched a vicious attack over the weekend on felon turned crime fighter Sam Antar. As usual, Bagley has started from an erroneous premise and built upon it.

Sam has posted a number of serious questions about this SEC-investigated company's accounting, so Bagley was eager to discredit him. But since he can't counter the accounting allegations -- he hasn't even attempted to do that -- Bagley has resorted to personal attacks. Since there is no dirt to dish up, Bagley just did what he always does -- dished up some baldfaced lies.

Bagley's latest ASM effort deals with a company called Usana Health Sciences. It was the subject of a negative report by another fraud fighter and reformed felon, Barry Minkow. Bagley zeroed in on Sam's funding of Minkow's research into Usana, and says that Sam was serving as a conduit for class action lawyer Howard Sirota. He wraps them all up in a conspiracy to drive down Usana share prices.

His premise is that Sam hasn't got two nickels to rub together, so where does the money come from? The respected class action lawyer Sirota, that's who.

Bagley has been particularly proud of his latest achievement, and has appeared on stock message boards for Usana and Overstock to promote his latest smear.

Bagley's case hangs on the following:

I conducted a deeper search and discovered that unpaid taxes are nothing new to Sam Antar. Indeed, between 1987 and 2007, Antar amassed over $333,000 in tax liens, warrants and judgments on the city, state and federal levels, in addition to just under $60,000 in judgments and liens by private creditors in 1992 and 1993.

None of these debts was discharged by Antar’s Chapter 7 bankruptcy filing in 1998. . . And yet, from Minkow’s deposition, we’re supposed to believe that someone who can’t pay a $500 tax bill is in a position to give Minkow gifts totaling at least $250,000 – motivated by nothing more than the spirit of fraud fighting?

His entire smear is based upon this. He then proceeds on to drag in Sirota -- who has been critical of Bagley, natch --- saying:

The money Antar gave Minkow wasn’t Antar’s at all. I suspect it belonged to Howard Sirota, who used Antar as an intermediary.

Bagley's boss, Overstock.com's loony CEO Patrick Byrne, likes to refer to Bagley as an "investigative reporter" whenever he smears one of his critics. I'm not joking -- he's serious. But Bagley did not even do the elementary research that one would have expected of even a semi-competent corporate shill.

Had Bagley done even elementary digging, he'd have learned that Sam runs a prosperous real estate business. It would have required even less digging, just a click on Sam's website or reading a recent Fortune article on him, to learn that he flies around the country at his own expense, lecturing law enforcement agencies. Obviously this is no pauper.

He could have simply called Sam -- just like they do in the movies! -- and been told that all of that the "$393,000" in tax bills, liens and judgments (actually $345,000) were either discharged in bankruptcy or paid off.

OK, so maybe he'd think Sam was lying. Fine. Sam has documents to prove all the lien releases and every penny he has paid, stuff that looks like this one, which concerned the release of $80,000 in tax liens:



But even the laziest corporate smear-meister could have just stuck the word "income tax bankruptcy" in Google, revealing this bankruptcy lawyer's website as the top link. There it points out that all tax bills over three years old--most of Sam's tax debts back then--are discharged in bankruptcy.

This is more than just the usual mud-slinging that Antar and Minkow have come to expect. It is also a pretty serious -- not to mention false, malicious, and grossly irresponsible -- slander of a highly reputable class action lawyer who also is no pauper.

I wonder how new board member Joseph J. Tabacco, also a class action lawyer, feels about the pig pen to which he has given his name.

I wonder if he has given any thought to Overstock's liability for the actions of Judd Bagley.

I wonder if he has given any thought to the Overstock board of director's liability for the actions of Judd Bagley. Personal liability.

So after all the effort Bagley has invested in his latest smear, all this corporate lapdog has proven is that Overstock has something to hide in its accounting -- probably its inventory accounting. The post was obviously timed to mesh with the company's disclosure of fourth quarter earnings on Wednesday.

Sam's numerous blog posts have dealt mainly with Overstock's accounting for inventories -- something about which Sam has unparalled expertise, as former CFO of the Crazy Eddie stock fraud. All those issues are being investigated by the SEC, in its ongoing investigation of Overstock and Bagley.

Does Patrick Byrne really think that SEC investigators will be diverted by this kind of garbage?

Does he think his board of directors is happy with this garbage, or does he have a good supply of pliable, well-paid consultants to put on the board if Tabacco et al leave?

Forensic accounting expert Tracy Coenen opines:

Judd’s primary duty at Overstock.com seems to be stalking and smearing those who ask questions about the company and those who point out “unusual” things in the company’s financial statements. Never mind that the company is a total POS: always losing money and burning through cash faster than Patrick Byrne can say “burn those kids.”

I see that Sam has asked to be allowed on Byrne's conference call on Wednesday. At his last conference call, Byrne expressed disappointment that Sam was not present. Well, now he gets his chance to field a Sam Antar question, officially, with the analyst community and journalists and the SEC paying attention to every word.

© 2007 Gary Weiss. All rights reserved.

Boycott Overstock.com?

Prominent securities attorney Howard Sirota is calling for a boycott of Overstock.com. He's doing so in reaction to an attack on him in Overstock's antisocialmedia.net corporate smear site, which attacked him (and me too, natch) in response to his concerns about anti-Semitic posts on the Yahoo board and the smear site. 

I certainly agree that this corporate chamber pot deserves a customer boycott because of the vile behavior of its CEO Patrick Byrne and his paid cyberstalker, the nauseating Judd Bagley. 

And Sirota has a point. In one December 2005 Motley Fool post, Byrne made bizarre comments on Israel and Jews that led blogger Jeff Matthews to doubt their authenticity because of what he gently described as "their apparent anti-Semitism." Any such doubts have since been laid to rest -- Byrne has acknowledgd that he is the author of this and other Motley Fool posts under the pseudonym "Hannibal100." 

Referring to odd references to Israel and New York Times columnist Tom Friedman, Matthews noted:

I can think of no clear reason for making the analogy to Friedman and Israel except one: the enemies cited in the post (Herb Greenberg, David Rocker and Jim Cramer) are all Jewish.

Even for the CEO of Overstock.com, hints of a Jewish conspiracy would represent a rather disturbing twist in the ongoing saga.

The Stalwart commented that "it's not a stretch to read an anti-Semitic tone into the letter. Not only does he finger all Jews in his conspiracy, but he, out of nowhere, throws in a jab at Thomas Friedman's unevenhandedness in covering Middle-East affairs." 

However warranted Sirota's call for a boycott may be -- and I believe that it is warranted -- I would argue that a wide-ranging, nationwide boycott of this company is already underway. 

As you can see from the chart below, customers have been avoiding the Overstock.com website since the end of 2005 -- which happens to be approximately when Byrne made his company name synonymous with "nuts" in his paranoid "Sith Lord" anti-short selling crusade.

   

Notice the particularly sharp dropoff this year, which coincides with the revelation in the media that antisocialmedia.net, which had previously engaged in illegal, anonymous cyberstalking, was secretly operated by the nauseating Bagley. 

Then you have the dollars-and-cents aspect of this customer boycott of the company, as seen from this spectacularly unspectacular income statement, below.

   

Note that the number is parenthesis is getting bigger. That is no good. Got to take off the parenthesis before bigger numbers are better. 

Last but not least we have the stock price, which is less than half of what it was at the end of '05:

   

As you can see, Overstock.com is already being boycotted by customers and investors of every race, color and creed. And mind you, for the most part, they're not avoiding Overstock.com because they don't like Byrne's behavior. They're boycotting the company because there are, quite simply, better places to buy stuff. 

That's the party to Overstock's downfall that Byrne has yet to insult -- the American people. Oops, wait a second. He has. 

UPDATE: Forensic accountant Tracy Coenen observes:

What really is the purpose of making anti-semitic remarks on a message board designed to discuss the stock of a public company? My guess is intimidation.

Howard refers to Judd Bagley and his Anti-Social Media website. Judd is an “executive” at Overstock.com, and he’s a little ruffled that people like Howard and Gary Weiss and Sam Antar are exposing the shenanigans going on there. Quite simply put, something is not right at Overstock, the shareholders are suffering because it, but Judd wants everyone to shut up already.

Judd’s really a nobody. He’s the mouthpiece for Patrick Byrne, the CEO of Overstock who is quite often referred to as “Wacky Patty” because of his delusional rantings and Sith Lord conspiracy theories.

So the executives at Overstock want to intimidate people to stop discussing all the unusual items on the financial statements, the discrepancies in the disclosures, the fact that the company waited nearly a year to write down inventory it knew was junk, and the fact that executives of the company pump the stock on a variety of message boards using pseudonyms not known to the average investor. (Rules? What rules?)

© 2007 Gary Weiss. All rights reserved. 

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Wall Street Versus America was published by Penguin USA on April 6. Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

Should Message Boards Stomp Out Anti-Semitism?

 

There's an interesting exchange of messages on the Yahoo Overstock message board initiated by Howard Sirota, a prominent attorney. The subject is a disturbing one -- the tendency of the Baloney Brigade anti-short-selling lunatics to use anti-Semitic stereotypes and imagery. Sam Antar's blog has a post on the same subject. 

Sirota wrote a post, entitled "No More Anti-Semitism on this Board!," in which he noted, among other things, that he did a search for "Jew" on the Overstock message board and found "428 posts containing the word 'Jew.'" 

Sirota expressed disgust concerning that and anti-Semitism on Overstock.com's antisocialmedia.net corporate smear site:

This is supposed to be a forum to discuss Overstock.com I strongly suggest you stick to Overstock.com and make no further anti-semitic remarks. It's easy to trace your IP address to a physical location, see it on Google, and get directions from Mapquest, and turn it all over to the feds and the B'Nai Brith Anti-Defamation League.

Interestingly, the reaction was one of hostility from both fans of Overstock and detractors, who apparently cling to the notion that anti-Semites should be given free reign to express their swill -- if for no other reason than to demonstrate the bankruptcy of their cause. (They were also off-put by the threatening tone of Sirota's message.) 

Sam's blog focuses on the threats and bigotry in Overstock.com's antisocialmedia corporate smear site, in an open letter to the Overstock board audit committee. 

I personally am not in favor of censoring the anti-Semites of the Baloney Brigade. If they've got it-- in this case, bigotry -- I say "flaunt it!" They sure have. However, I won't weep if Yahoo decides that such messages are unsuitable for a family message board.

The broader issue is why bigotry and fanaticism exists among the baloneys. It certainly is a matter of record that fans of the Baloney Brigade and its leader, Patrick Byrne, include conspiracy theorist Bo Gritz and ultra-right kook Daryl Bradford Smith (as I noted in an item a few weeks ago). 

One aggressive anti-Semite -- he used to send me anti-Semitic emails -- is a leading "stock counterfeiting" conspiracy theorist who has testified for the cause, as I described in a blog item a while back. 

Jew-baiting is actually a pretty old and much-noted phenomenon among the Baloney Brigadiers, and was first observed in 2005 by Jeff Matthews (see this post and this). Byrne himself went on a rampage on a pro-Israel message board about a year ago, after the board posted about anti-Semitism on the Yahoo board.

Byrne went berserk, posting entire an entire off-topic article, insulting the board members and generally making a damn fool of himself. It seemed at the time, and now, to be a particularly nutty way of interacting with potential customers. 

Note too that in a one-week exchange of messages, Byrne never denounced the anti-Semites among his followers, or apologize for their rhetoric. Instead he maintained they were agents of the opposition, and devoted his energies instead to attacking the people who had brought the anti-Semitism to his attention. 

That tells you something, don't you think? Something pretty darn ugly, I would say. 

One investor, after noting how Byrne had gone out of his way to alienate readers of the pro-Israel blog, made the following good point on the Yahoo message board:

The bigger problem isn't that the CEO is running smear campaigns, making threats, or wearing a dunce cap and all but that he's doing it in a way that hides it from investors. He should be linking back all of his rants at various blogs and message boards to a single site at OSTK investors can easily check to see how many potential customers Patrick has offended. And he should 8-k that so everyone is on notice.

© 2007 Gary Weiss. All rights reserved. 

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Wall Street Versus America was published by Penguin USA on April 6. Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.