Overstock.com CEO Patrick Byrne Loses 'Deep Capture' Libel Suit

Defendant Mark Mitchell: "the truth was of no consequence"

Update: Byrne's appeal of the Nazerali suit was rejected by the British Columbia Court of Appeals in March 2018. The decision is posted here.

No libel suit victory is worth celebrating, not even the famous suits against the anti-Semite Henry Ford and the red-baiter Westbrook Pegler. The same goes for the C$1.2 million libel judgment just awarded against Overstock.com CEO Patrick Byrne and his minions for unleashing a campaign of lies.

While occasionally used to advance the cause of truth, as they were against Ford, Pegler and Byrne, more frequently libel suits are used to punish and harass reputable journalists. This is one of those rare cases when a libel suit was used against a corporate astrotufing site dedicating to spreading kooky conspiracy theories and Trumpesque smears.

In a scathing decision released on May 6, a Vancouver court found Byrne and his "Deep Capture" fake news venture had fabricated lurid accusations of criminal conduct against a Vancouver businessman named Aly Nazerali. The damage award consists mainly of punitive and aggravated damages, and the judge found that the conduct of Byrne and his minions was so egregious that he slapped a permanent injunction on the defendants.

Judd Bagley after his forgery arrest

I've written about Byrne quite a bit in the past because he was the very worst of Corporate America, from his bizarre stock-market conspiracy theories to his well-documented accounting games, which he countered by vicious personal attacks on critics and the media. He is a kind of small-bore Donald Trump, a "born on third base who thinks he hit a triple" kind of guy. Byrne lies so frequently and with such gusto that it's hard to say if he can distinguish fact from fiction. He is on indefinite leave from Overstock because of a Hepatitis C infection, a disease ordinarily caused by intravenous drug use—or, if you believe him, a wound sewn up by "barefoot doctor in China."

Byrne's main vehicle to attack his critics was "Deep Capture," a fake news website created by his public relations director, a convicted forger and drug addict named Judd Bagley. Joining Bagley was the right-wing conspiracy theorist Mark Mitchell, who was fired several years ago from Columbia Journalism Review.  (Bagley went back on the Overstock payroll before the Nazerali articles were published. He was dismissed from the case, as was Overstock itself.)

Mitchell wrote the Nazerali articles and was the main architect of this fiasco. His strange behavior—more like a television detective than a journalist—was lambasted in the decision.

The 102-page judgment, which I've embedded at the bottom of this blog item, is worth reading for anyone who has followed the erratic career of this CEO, who lately has reinvented himself as a Bitcoin advocate. Long before this suit was filed, Byrne was noted for his rich fantasy life. Once he recounted how a gangster straight out of a film noir once sat down next to him at a bar and made threats out of the side of his mouth. He fancied himself "Wall Street's worst enemy," and he expended considerable effort finding journalists dumb enough to believe him (his only success outside Utah was Cade Metz of Wired).

Byrne also has political ambitions, once financed a failed school-choice initiative in Utah, is a major GOP donor and is almost single-handedly financing the Utah governor campaign of former Overstock chairman Jonathan Johnson. The latter has repaid the favor by calling the Nazerali suit "spurious."

As recounted in a November 2015 article in The Daily Beast, the articles made wild accusations. If true, you'd think Nazerali would be in Guantanamo, not Vancouver:

. . . Mitchell described Nazerali as a man in cahoots with “Osama Bin Laden’s favorite financier,” and said that he worked with a variety of criminal outfits around the globe, including La Cosa Nostra, the Colombian drug cartel, the Russian mafia, and various “jihadi terrorist groups” including al Qaeda’s Golden Chain. According to court documents, Deep Capture also accused Nazerali of “delivering weapons to war zones in Africa and to the mujahedeen in Afghanistan,” of orchestrating “small-time ‘pump and dump’ scams… [and] bust-outs, death spiral finance and naked short selling,” and of carrying out dirty work for “a Pakistani ISIS asset” who “works for the Iranian regime.”

Nazerali was raked over the coals by Byrne's lawyers in days of pretrial examination. But at the trial the defendants did not put on a case, producing not a shred of evidence. The judge blasted Byrne & Co. for abusing pretrial discovery, saying:

The reasonable inference to draw is that they knew from the beginning of the trial that they could not justify the Articles’ false and extravagant language. Their approach to the defence of the action was an attempt to intimidate the plaintiff and to humiliate him into abandoning his lawsuit.

In justifying the award of punitive damages, the judge pointed to the extreme malice shown by Byrne and Mitchell, "the overt animosity, even hatred of the plaintiff, expressed by Mr. Byrne," their "reckless indifference for the truth," their "reckless disregard for the reputation of non-parties." The decision singles out Mitchell's creepy attempt to blackmail Nazerali, contained in an email published in the decision.

Among the highlights, so to speak, of the decision:

• "Mitchell did not attempt to contact the plaintiff before posting the Articles;" and blew off Nazerali's effort to get him to remove his lies. "No effort of consequence was made after Mr. Nazerali contacted Mr. Mitchell to review the Articles to determine if they were false. On the contrary, Mr. Nazerali’s approach to Mr. Mitchell was treated with scorn."

•  Byrne said to Nazerali during a deposition, in the presence of the court reporter and parties: "I know your kind, you are not the kind that does the dirty work themselves. You employ others to do your dirty work.  I hate your kind of people."

• Mitchell emailed Byrne “this is going to be fun” and said, "I am open to changing the story if he can provide other verifiable information that would be valuable” and “I might even suggest that I will be willing to remove his name from the story altogether if he were to provide me with, say, trading records" on a "global terrorist."

• Mitchell added: “if Nazerali agrees, nothing lost, after he gives me the information I will just put him back in the story. Sleazy, but, well it is what it is”;

Sleazy is putting it mildly. The decision concluded:

Mitchell, Byrne and Deep Capture LLC engaged in a calculated and ruthless campaign to inflict as much damage on Mr. Nazerali's reputation as they could achieve. It is clear on the evidence that their intention was to conduct a vendetta in which the truth about Mr. Nazerali himself was of no consequence. Their mission was to expose what they conceive to be corrupt business practices damaging to the global economy. Mr. Nazerali became a convenient means to that end, even when he himself could not be demonstrated to be corrupt.

"The tortious misconduct of Mitchell, Byrne and Deep Capture LLC demonstrates an indecent and pitiless desire to wound," the decision continued.

The court imposed a permanent injunction on Mitchell, Byrne and Deep Capture, as well as Google, given the likelihood that they will seek to evade payment of the judgment, as well as their "apparent intention to inflict as much damage on the plaintiff." The judgment also provides for imposition of costs, which means that Nazerali can petition the court to award him his legal fees.

The verdict, while not in the megabucks frequently awarded in U.S. courts, is large, perhaps even a record, by Canadian and especially British Columbia standards. At the current rate of exchange it comes to about $925,000 (U.S.), which is well within the capacity of Byrne's trust fund. His father was the insurance mogul John J. Byrne.

Like I said, no libel verdict is worth celebrating, not even this one, brought by the victim of faux journalism written by a faux journalist in the pay of a deranged CEO. I hope that this one doesn't become weaponized against real journalists who have written real articles about bad people. If that happens, it will mean that Byrne, described a decade ago as a "menace" by Joe Nocera of the New York Times, has once again stuck it to the press.

Altaf Nazerali vs Mark Mitchell Et Al - Reasons for Judgment by Sam E. Antar

Some previous posts on the libel suit; see also posts tagged "Deep Capture":

• Genesis of a libel: How Mark Mitchell turned a rehash into a nightmare
• Patrick Byrne defies court order
• Mark Mitchell botches CJR article

© 2016 Gary Weiss. All rights reserved.

Patrick Byrne Admits Ownership of Deep Capture

Not exactly a well-kept secret, yet Byrne still lied about it

Two posts on the corporate crime petri dish Overstock.com in one day! My goodness.

Overstock's loony CEO, Patrick Byrne, has been curled up under his desk since his company announced that its financial statements dating back to 2008 have been phony. But before the cone of silence descended, Byrne made a startling admission: he conceded that he owns the Deep Capture smear site. It just came to my attention, and nobody has picked up on it.

In a post on Stacie Kitts' excellent accounting blog on Jan. 18, Stacie had said in passing,

Now, if I am getting this right, Patrick Byrne is the CEO of Overstock.com and a purported owner of a website called Deepcapture.com.

Byrne materialized the following day with a comment:

Thanks for the story and the link. There are, however, some minor suggestions I’d make. You say:

“and a purported owner of a website called Deepcapture.com.”
Actually, for much of its existence we just put a big bubble on the upper right hand corner of the home page explaining that I am indeed the funder of DeepCapture.com; later, we added a whole page about it and who we are. So there is nothing “purported” about it. [Emphasis added]

Now, Byrne's ownership of Deep Capture was not exactly a well-kept secret. It used to be that users of that website could click on a link taking them to Overstock, and 5% of purchases would go to the site (see illustration at top of item).

But this is the first time he's fessed up and admitted owning the site, which is dedicated to personal attacks on the "criminal" journalists, bloggers and ordinary citizens who have dared to criticize Byrne: myself, Sam Antar, Roddy Boyd, Joe Nocera, Betany McLean, Susan Antilla, Herb Greenberg, and a host of others. Some of the targets are message board users, people you've never heard of, who hate crooks.

It's not clear why Byrne decided to let the cat out of the bag. Perhaps the subject came up in the SEC probe. Perhaps he's off his meds. Perhaps he's on his meds. Who the hell knows? All I know is that Byrne and his minions have lied about this in the past, and that if Stacie hadn't mentioned it in her blog today I might have missed it entirely.

Byrne had previously gone to great lengths to conceal his ownership of Deep Capture, initially listing a Byrne-controlled entity as owner in Utah corporate records, and then erecting a separate corporate shell. Ditto the bottom-feeding creep who runs the site, Judd Bagley. The latter denied that he worked for Byrne in a webcast last week. Byrne had admitted to the extent of his funding in a New York Observer article last month, but never came clean about actually owning it.

In a comment to an article in The Industry Standard in 2008, Byrne explictly denied that he owned Deep Capture.

The author of the article asked:

A few questions for you regarding your statement that Deep Capture is a work of "investigative journalism": Are the writers paid by you? Are they paid, full-time employees, or freelancers? Who pays their salaries? You describe yourself as a reporter, but are you also an editor? Do you assign and vet their work? Would you ever kill something that they wrote?

Byrne responded:

PS In direct answer to your questions: the employees of DeepCapture are paid by DeepCapture, LLC. I founded DeepCapture and gave it its initial capitalization, but then withdreww as a member of the LLC, and am not an employee. Yes, I am a reporter for DeepCapture, but I do not get paid. I am neither an editor nor do I "assign" stories. Occasionally I see stories before they go live and give my comments (which they are free to accept or ignore as they wish), but more often, I do not see the stories before they go live. And you did not ask, but I'll tell you anyway: yes, I enjoy being a reporter. [emphasis added]

I guess he forgot he said that. What's the old saying, something about "a liar requires a good memory"? Note that he wasn't even asked if he owned Deep Capture. He volunteered that information, while ignoring most of the questions.

The problem with lies like this is that they violate the securities laws (Rule 10b-5, to be exact) by deceiving shareholders about a material aspect of the company. The SEC can't regulate the morality of corporate officers, but fraud definitely falls within its purview.

In its filings, Overstock has never admitted that it has a link to Deep Capture, and a Deep Capture web page to which Byrne links in his recent blog comment does not disclose that he owns the website. Instead, it makes the misleading statement that "it is not part of Overstock" and refers to the three creeps who churn out attacks as "co-owners."

No, not directly. But under accounting rules--admittedly not one of Byrne's strong points--he is required to disclose his ownership of Deep Capture. As blogger Sam Antar pointed out in a blog post last month, the Overstock-Deep Capture relationship is covered by Statement of Financial Accounting Standards No. 57 (SFAS No. 57) governing "Related Party Disclosures":

Statement of Financial Accounting Standards No. 57 (SFAS No. 57) entitled "Related Party Disclosures" provides some "examples of related party transactions" such as:

transactions between... (d) an enterprise and its principal owners, management, or members of their immediate families; and (e) affiliates.

SFAS No. 57 defines an affiliate as:

A party that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with an enterprise.

In addition, SFAS No. 57 defines control as:

The possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an enterprise through ownership, by contract, or otherwise.

Furthermore, SFAS No. 57 defines related party transactions to include "services received or furnished" between such related entities. Deep Capture LLC furnishes services to Overstock.com in the form of retaliation against company critics.

I'm still uncertain that the SEC actually will take action against Overstock, but Byrne's admission on this point--especially considering that he's lied about this in the past--makes that possibility somewhat more likely.

UPDATE: It's not related to this, but Henry Blodget describes a problem he just experienced: the nauseating Judd Bagley appearing, unwanted, in his email box, which apparently is as pleasant as finding a dead mouse on the kitchen floor. "How do we get rid of him?" he asks. "You open up YOUR Buzz and see Judd Bagley tweeting at YOU and see how you feel about it."

Indeed. The only answer that comes to mind is the simplest: incarceration.

© 2010 Gary Weiss. All rights reserved.

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, Overstock.com, 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 Overstock.com, 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 Overstock.com 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.

Annals of Public Relations

 

The ultimate objective of all corporate p.r. strategies is to avoid this 

Today's chapter: Five thousand words beginning with this psycho rant...

   

...that can be summed up in one word: Guilty. 

Evidently former Fortune and New York Post reporter Roddy Boyd has an imminent article in The Big Money, hearkening back to Overstock.com's ill-fated venture into the diamond business. 

Judging from the questions that prompted this tantrum, the article will show that Overstock.com engaged in some activities that may be construed as criminal in nature, including tax evasion. 

I assume CEO Patrick Byrne's hysterical response (the language! oh my) in his astroturf blog was drafted without consultation with his attorneys. Unfortunately for him, filing an 8-K isn't going to get him out of this particular hot water. 

Here's Roddy's email to Byrne:

From: Roddy Boyd [mailto:roddyboyd@ymail.com]

Sent: Wednesday, January 13, 2010 7:04 AM

To: Patrick Byrne

Subject:

Patrick, Roddy Boyd here. I am writing a story for Slate’s thebigmoney.com. I have set up this email account for this query and will no longer use it after 4:30 pm EST tonight. I will phrase the questions as bluntly as possible because I am not seeking to engage in an E-mail exchange. Should you need to reach out to the story’s editor, Please approach Jim Ledbetter. I believe his email address is xxxxxx. Please have your response in by 4:30 pm EST.

Your response will be linked to in its entirety, as well as referenced within the body of the story–I imagine it would look something like, “Patrick Byrne said, ‘xyz…..’” (To see Byrne’s full response, click here.)

The story deals with Overstock’s state of affairs in the fall of 2005 and winter of 2006. Specifically, It references the problems you had with factors such as CIT because of Overstock’s losses and its percieved weak operating position. The governing theme of the piece is that financial investigative reporting on fully operational companies is imprecise (unlike say doing a post-mortem on Lehman or Enron.) In other words, the concerns of OSTK critics about liquidity and the build-your-own-jewelry initiative appear correct, but that they (likely) could never have guessed precisely why.

An Email quote, from 11/14/05, from David Chidester to you, Jonathan Johnson and Jason Lindsey says, “Unfortunately what we feared has begun. Some factors and banks have stopped insuring our payables.”

This clearly had been a problem of some duration for OSTK, since on 9/22/05, five weeks after your suit was filed, you stated in an email to your colleagues, “I just sat with CIT. They confirmed that at one time we were reasonably good (not great), and have turned to @#$% in the last six months.” You added: “For years, I have been hearing from accounting that we pay our vendors super-promptly.”

The story also references emails between Rich Paongo and Chidester on January 20, 2006 which looked at the problems three of Overstock’s factors and lenders had with the company: “Not meeting projections, no profits, low cash, and slow payments .” On February 28, 2006, Joanne Dalebout, E-mailed you and your colleagues, “All [vendors] are saying that with Overstock in the papers a lot and the lawsuit they don’t think we will be in business and that we are too much of a risk? Also having problems with CIT not approving small orders.”

Why did OSTK not reference the troubles it was having with its key credit providers in any of its public communications?

As you will recall, one of the concerns that OSTK critics had was the company’s cash-flow and operational soundness. For a retailer, this would clearly appear to meet the threshold of materiality. Do you disagree?

And would you elaborate on this decision?

The story will also mention “Operation heist and freeze” with your “Lubbavitcher friends” from Ice.com.

–Why did you not disclose, per Jonathan Johnson’s report to the OSTK board on 7/13/05, that the diamond VIE was structured as it was to avoid “Nexus in the State of New York for sales tax purposes.”

–Please elaborate on Overstock’s decision to avoid paying sales tax and to not disclose the identities of Moshe Krasnanski and Meyer Gniwisch.

Thank you,

Roddy Boyd

There's a follow-up:

Forgive the additional query, but it is germane.

The big diamond block, the trade you staked with Moshe and Meyer for about $7.5mm, appears to have originated from one Lev Leviev, a rather interesting man.

Leviev, outside of his NYC and West-Bank real estate operations, is also one of the more active miner and marketers of Angolan diamonds, an area whose extraction methods and principles are quite controversial.

Were those diamonds sourced from Angola? If so, could you elaborate on any debate you had with respect to doing this sort of business?

thank you

Roddy Boyd

Here's an article in New York magazine on Byrne's chum Lev Leviev. Note the stuff about Angola. I assume the other characters in the story are equally colorful, which I trust explains why Byrne was foaming at the mouth. I guess this explains why Big Money editor Ledbetter was a target of Byrne's pretexting scheme. I had always wondered about that. Looks like Roddy has quite a story. Thanks to Wacky Patty, P.R. genius, we have a sneak preview. 

UPDATE: William Wolfrum has an amusing "review" of "The Patrick Byrne & Overstock.com Show":

Emotional, paranoid, afraid and angry simultaneously at all times, Byrne is to corporate drama what Meryl Streep is to Hollywood drama. The set-up for the latest episode is apparently an upcoming article by former Fortune and New York Post reporter Roddy Boyd.

The following morning, Byrne apparently sobered up and rewrote his hysterical headline:  

Note the emphasis on "ethics." Apparently Byrne believes that Boyd breached some kind of ethical precept by, supposedly, using stuff leaked from depositions under court seal in one of his recent junk lawsuits. 

Aside from the Olympian hypocrisy of Byrne lecturing even Charles Manson on ethics, I'm left scratching my head. Byrne had always welcomed discovery. So why is anything under court seal? If he has nothing to hide, he should demand that all discovery be open to the public and press. 

Apparently he does have something to hide. Something to do with the New York State sales tax, and the days when he was a would-be diamond baron. Back in 2005, Byrne said he had gotten the "steal of a lifetime" in diamonds and was going to blow Blue Nile out of the water. Like all of Byrne's other big ideas, this one went bust, Ralph Kramden style. 

Blogger Jeff Matthews observed at the time: ". . . even assuming Overstock.com has—thanks to its 'skunk works'—figured out how to convert $7 million of diamonds into a profitable business, it would be worth understanding how exactly one goes about getting a 'steal' on $7 million worth of diamonds." 

Stay tuned. 

© 2010 Gary Weiss. All rights reserved. 

Patrick Byrne Admits Funding Dirty Tricks Operation

Throws down the gauntlet to the SEC

(See Update: Overstock cleaned up after Byrne's latest mess by issuing an 8-K)

A chilling story is out today in the New York Observer on Overstock.com's dirty tricks operation. Apart from the usual "oh my goodness" stuff, what's most interesting from a securities fraud perspective is further evidence of how Overstock.com CEO Patrick Byrne is flouting SEC disclosure rules.

First, Byrne has failed to disclose in any Overstock filing his ownership and ongoing financing of the "Deep Capture" astroturf website. The article made clear that it's his website, bought and paid for with a cool half million bucks, making rather pointless his efforts in the past to erect corporate shells to disguise his role.

The second and more clear cut violation of the securities laws is his flippant, almost giddy disregard of Regulation FD:

. . . Overstock does not enjoy getting into why it’s never recorded an annual profit in its history. (Mr. Byrne, though, said at deadline that the company is about to report its first annual profit. “I’m probably going to get a lot of shit for having said this,” he offered.)

That's entirely possible, but it depends on how serious the SEC is about enforcing Regulation FD, as in "fair disclosure." That's designed to ensure investors get material information uniformly, and not through the online editions of newspapers not ordinarily read by investors in Utah stock frauds, and teasers planted on bulletin boards ("PS: Patrick gives some interesting "guidance" in the piece. You OSTK investors will probably appreciate it.")

I'll be interested to see if Overstock wipes up after this latest mess by issuing an 8-K before the start of trading today. Whether it does or not, Byrne has just thrown down the gauntlet to the SEC, and it's up to them to accept the challenge or, as usual when crooked execs throw down gauntlets, do nothing.

"Profit" of course is an elastic term as Overstock, which is why the SEC is investigating its accounting.

You can't write about Byrne or his nauseating lackey Judd Bagley without being grossed out, so we have this creepy bit of stalking:

. . . Afterward, he was looking on a map to get his bearings. “And I saw this little cul-de-sac. I thought, ‘I know I’ve heard of that before.’ And I remembered, ‘That’s right! Gary Weiss lives there. So I just kind of walked down it.”

Bagley was off target. We haven't many young kids for him to stalk where I live, but there's a public school just around the corner.

“Posting the name of my 16-year-old son, what did that prove?” said the Barron’s editor Eric Savitz.

Well, I guess it proves that Bagley is a special kind of douchebag, as this article makes abundantly clear. But you have to admit that he's a well-financed douchebag.

The article was written by Max Abelson, who shares a surname (I don't know if he's related) with Alan Abelson of Barron's. Alan Abelson years ago was subjected to constant legal harassment by bagholders of companies he wrote about, who blamed him for the decline of stocks in which they invested. The only thing that's changed is that the harassers are getting scummier, and that they're going after families.

The parting shot from Barry Ritholtz is probably the best description of naked shorting that I've ever seen:

“It’s like a guy leaping off the Empire State Building, and he hits the pavement, and it turns out he also has high cholesterol,” Mr. Ritholtz said. “When they do the autopsy, I don’t think they’ll give a fuck about the high cholesterol. Naked shorting is the high cholesterol.”

UPDATE: BusinessInsider reminds me that Byrne, reconfiguring his nutty "Sith Lord" rant from 2005 is now saying there is not one but two "Sith Lords": Michael Milken and Steven Cohen of SAC Capital. Sort of the Sith Lord Twins. I'm surprised he didn't throw in Bernie Madoff and Al Capone, to make it a quartet.

A sarcastic message board post sums up Byrne's latest self-created problem: "An annual profit! Wow! OK, I am changing my sentiment to STRONG BUY, because of this information. . . . Now that I have changed my sentiments based on this statement by Mr. Byrne, I am going to start searching for the Reg FD filing."

Late in the day, Overstock's legal beagles shot over to the SEC a clean-up-the-latest-Byrne-mess filing, with the Observer article attached, but they were tardy. The filing came after the market closed, after an illegal runup of the stock, which ended up nearly a percentage point.

Ahem. I call that closing the barn door after the cow, or in this case the Reg. FD violation, had gone.

The filing says basically nothing: "The Company has not yet completed its financial statements for the year ended December 31, 2009. The Company intends to issue a press release containing financial results for the year ended December 31, 2009 when they are available." So what is that supposed to mean? That just makes the whole thing murkier. This is one of the weirdest 8-Ks I've ever seen, even from these buffoons.

This has happened before. Let's face facts: Patrick Byrne does not like abiding by the securities laws. I mean, they're not included in the envelope with the check that comes every month from the trust fund, so why should he obey them?

By the way, when Byrne said “I’m probably going to get a lot of shit for having said this,” the term of art for that is scienter.

© 2010 Gary Weiss. All rights reserved.

Patrick Byrne's Growing Defamation Payroll

Seems that Overstock.com CEO Patrick Byrne, the unsuccessful Utah Internet tycoon, has been subsidizing defamation of his critics longer than anyone thought.

That interesting tidbit emerged in a post by Byrne on the Motley Fool message board a couple of days ago, and in an exchange today on Herb Greenberg's blog. Scroll down to the April 29 entries here.

In his post, Byrne admits that he hired a lawyer for a dude named Dave Patch. As anyone knows whose spent more than a few minutes on stock message boards, Patch -- a fraudulent-stock aficionado -- spends much of his (spare?) time disseminating stock market conspiracy vitriol, and slinging mud at critics of Byrne and other CEOs who blame naked short selling for their incompetence.

Now it emerges that Patch (right) was subsidized by Byrne in his vicious attack on Jim Cramer a couple of years ago. In his post, Byrne strolls down memory lane as follows:

The last time I saw a threatening letter from these knuckleheads was from the General Counsel of TheStreet.com, directed at Dave Patch. There were a series of them, threatening lawsuits. I hired a lawyer for Patch, and the lawyer responded simply, Go ahead and sue: the first thing we are going to do in discovery is demand the personal financial statements of certain journalist(s) associated with TheStreet.com (you guess which one[s]).

You know what? They never wrote back.

Just so you can get an idea of what he's talking about, hold your nose and wander over to this link to a January 2006 item in Phil Saunders' "Sanitycheck" website, in which Patch describes his solitary faceoff against big, bad TheStreet.com -- not saying he had Patrick Byrne's lawyer on his side.

In his post today, we get this cock-and-bull story from Patch:

Reality is, I sought out legal counsel from a mutual third party. An individual I had dealt with for years and before I ever spoke to Mr. Byrne. This counsel agreed to draft a document for me for which I sent a check shortly thereafter. After receiving the document my check was likewise returned stating that “we are covering the bill.” Who the “we” was I did not ask, I simply extended my gratitude.

Yeah, right. Byrne just descended out of the blue, just happening to know the lawyer representing this creep. But then we get this:

I can tell you that Patrick Byrne offered to match Jim Cramer dollar for dollar if Cramer wanted to persue [sic] this any further but it never came to that.

...which is credible, particularly since it contradicts his claim that he didn't know who paid the lawyer.

Patch goes on to say that

As I have also stated before, I have been compensated in the past for efforts involving the requisition of and the analysis of FOIA requests into fails data on selected companies by the lawyers that represent these companies. The payments were nominal considering a FOIA request costs $28.00 ea. and I spend a few hours breaking each one down.

It's already established that Byrne puts on the payroll whatever carpet sweepings he finds on the Net that he thinks can be programmed to sic on his critics: Judd Bagley, Evren Karpak and now Mark Mitchell are three names that have become public, and undoubtedly there are others.

It would be useful to know how much of the anti-naked shorting campaign -- be it phonies like Patch or astroturf groups like the so-called "National Investor Protection Coalition"-- are subsidized with "nominal" under-the-table cash and legal fees from Byrne and other wealthy corporate benefactors.

UPDATE: Forensic accountant Tracy Coenen lays out the gruesome details of Overstock's history of dissembling in its financial statements -- the root cause of its campaign of menace against critics -- in a blog post.

Bethany McLean has a review in Fortune of David Einhorn's new book, in which he recounts his encounters with creepy companies like Overstock. The beginning of her review is food for thought:

"This is indeed a concern and we will tackle it." That was SEC chairman Christopher Cox's handwritten note to a senator worried that companies were retaliating against analysts who produced research critical of them.

Almost three years later, it's hard to see any sign that the SEC takes this issue seriously. Stories about companies not permitting questions on conference calls from critical analysts, or excluding them from meetings, are routine. These days we have lawsuits, job loss, and the slander of those whose livelihoods depend on their reputations.

The SEC, which is already investigating Overstock for the reasons detailed in Tracy's blog, needs to take seriously the history of issuer retaliation practiced by the company.

© 2008 Gary Weiss. All rights reserved.

Ordinary Perople Versus Corporate Bullies

The Overstock.com slo-mo train wreck continued last night, with its resident stalker, the so-called "director of social media" Judd Bagley, reiterating a threat he had made a week ago to contact the employers of people criticizing this disgusting company. 

It's interesting how Bagley and his boss Patrick Byrne have focused their venom on ordinary Internet users, as well as gutsy reporters who have taken them on (such as Susan Antilla of Bloomberg and Joe Nocera of the New York Times). This is a new and disturbing element of Overstock's "campaign of menace," as it was so accurately described by Nocera.

While it is unclear whether Bagley can actually do any damage by his tactics -- replaying his smear campaign against a Florida reporter when he was a flack in the Jeb Bush administration -- there's no doubt that this slimeball would love to destroy his boss's critics. 

 After all, that is what Bagley is paid to do. His cover story, a joke called "Omuse, was revealed last week to have been outsourced, and another fairy tale, that Bagley was put in charge of a "cars" project, disintegrated today with a routine announcement referring to a "vice president for cars." It ain't Bagley.

It's clear that he and Byrne are hell-bent on diverting attention from Overstock's miserable financial condition, as in Byrne's moronic "hold up the sign" stunt on CNBC last March (right). Overstock's finances have become so awful that it has begun liquidating assets. See Jeff Matthews's analysis of Byrne's sale of a once-hyped travel subsidiary, and a Seth Jayson article in Motley Fool describing the O-Meltdown. 

The number one target on Overstock's enemies list is a software engineer who runs the excellent O-Smear blog, who was instrumental in revealing that the antisocialmedia.net smear site was run by Overstock. 

 O-Smear recently deconstructed Bagley's smear campaign against Antilla, commenced after she wrote a column excoriating Bagley and Byrne. Bagley, typically, centered an entire item around a fiction -- Antilla's "marriage to a hedge fund magnate," constructing a brand new conspiracy theory. A few minutes of checking records on the Internet-- or, God forbid, a phone call to Antilla -- could have ascertained that they are divorced. 

Bagley and Byrne are also terrified of Sam E. Antar, former CFO of Crazy Eddie's, who devotes his life to exposing the Overstocks of this world. They worked hard to get him kicked off the Investor Village Overstock message board, where he was removed for "clogging" the board with smart questions. 

Sam's analysis of Overstock's accounting, through sharp questions such as this, provides a road map for regulators in the months ahead. 

David Carr talked about "citizen journalists" in the New York Times today. But these aren't journalists. They are just citizens. 

What I don't understand is why regulators and law enforcement (who are fully aware of Overstock's actions, believe me), haven't stepped in by now, particularly since Overstock's strange share price behavior is sucking in still more "dumb money." 

 All regulators need to do is follow the trail of bread crumbs -- left for them by citizen sleuths who have already done much of the spadework. 

Meanwhile I wonder what's next on Bagley's agenda. Drowning puppies? 

UPDATE: Nope, looks like the next item on his agenda was covering his tracks. All of Bagley's posts on the Yahoo Overstock message board, where he is "antsaresocialinsects," abruptly vanished on March 20. The puppies will come later. 

© 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.

A Death in Baloneyland

The new look at NCANS

The astroturfing website that promoted "naked short-selling" conspiracy theories -- a phony issue pushed by CEOs of crappy companies to divert regulators from real investor concerns -- is no more.

Visitors to the "National Coalition Against Naked Shortselling" site -- and there sure as hell haven't been many lately -- are now greeted with the dread Internet error message that means that a website has given up the ghost.

The site pushed the interests of corporate excuse-mongers everywhere, and was especially shrill at promoting the disastrous Novastar Financial subprime lender and the SEC-investigated monstrosity Overstock.com. The group was fronted by a coot named Mary Helburn, who once famously called Enron a victim of naked shorting.

This "organization" was so brimming with baloney that it didn't even know what its name was. It was variously known as the "National Coalition Against Naked Shortselling" on its site and the "National Coalition Against Naked Shorting" in its incoherent SEC comment letters.

A note on the "sanitycheck" stock market conspiracy website says that "NCANS is going to be incorporated into this site over the next few weeks, as this site is the de facto hub now for issues NCANS is grappling with." Translation: NCANS is kaput. The ostensible reason it was a "duplication of effort" to keep the site active.

Since that is a lame lie by even Baloney Brigade standards, I assume the site's funding source -- Patrick Byrne of Overstock.com, I would imagine -- has closed his checkbook for legal reasons.

Since the NCANS did not exist except for the little-viewed website and a similarly moribund Yahoo discussion group, this means that a minor but annoying source of investor misinformation has, thankfully, bitten the dust.

The NCANS site promoted kooky conspiracy theories, smears against media critics, and served as a sounding board for "Dr." Patrick Byrne, the wack-a-doo CEO of Overstock.com. Since it was created a couple of years ago, the anti-shorting movement has lost whatever credibiltiy that it may have had, thanks to Byrne's antics and the stench of his creepy house stalker, Judd Bagley.

Though barely alive, the "sanitycheck" website, run by a former used medical equipment salesman named Phil Saunders (a/k/a "Bob O'Brien), seems ready to give up the ghost as well. At one time it was interesting to see what clearly insane people had to say, but the shock value of that is also getting a bit old.


Though Alexa numbers are notoriously unreliable, they do give a rough gauge of readership, and indicate that Sanitycheck's following has flocked elsewhere. (To 9-11 conspiracy sites I would reckon.) As you can see from the three-year Alexa chart above, the site received a spurt of readership when promoted by Byrne, in a famously wacky CNBC appearance (below), and was sustained by links on every single Overstock page under the misleading title "Market Reform."


The page links have now dwindled from thousands to a mere one, as Byrne -- doubtless acting under legal advice and/or SEC pressure -- has taken down the links to Saunders's site. Byrne now has taken the important job of smearing his critics in-house, with screwball posts on an Overstock message board and the antisocialmedia.net corporate smear site.

Withdrawal of Overstock support has meant that "sanitycheck's" Alexa chart now has an uncanny resemblance to the price chart of Saunders favorite stock Novastar, which he shamelessly hyped on the web. It still amazes me that people would buy, or not sell, stock on the basis of the ravings of an unhinged anonymous idiot like Saunders. But it really happened.

To be sure, Byrne and other corporate blame-deflectors have not given up. Byrne's checkbook is still open, and is pouring Overstock's scarce cash into lobbying the SEC over this nonexistent problem. But any pretense of the anti-shorting movement being anything other than a corporate-financed astroturf operation is now, officially, kaput.

© 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.

Technical Boner Snares Overstock.com in a Lie

Overstock computers linked to "antisocialmedia"

Of all the mammoth lies that have spouted forth from Corporate America's Lie Machine, Overstock.com, and its CEO Patrick Byrne, none has received as much well-deserved ridicule as his claim that his antisocialmedia.net corporate smear site is unconnected to the company.

Well, this lie was laid to rest this afternoon by the O-Smear blog.

Seems that Byrne's paid stalker, Judd Bagley, made something of a boo-boo when he set up a "wiki" on the astroturfing site. As O-Smear points out, it doesn't take much technical expertise to see that edits to the site were clearly made from Overstock.com and by Bagley, and during normal business hours.

Aw gee. That will never do. The purpose of astroturfing is to hide the sponsor's involvement, not to advertise it -- particularly when the head of a public company has been saying that there's no involvement.

Golly. Is there something wrong with a CEO lying like that? I wonder if the SEC, which is investigating Byrne and Overstock.com, have any thoughts on the subject? Here are Sam Antar's thoughts on the subject.

As I noted recently, O-Smear has found that Bagley uses the term "black ops" to describe what he does. The term refers specifically to operations of questionable legality and ethics. Lawyers will have a field day with that sooner rather than later, I reckon. Today's item ties a bow on the whole thing by landing the "black ops" right on the door of Overstock.com.

UPDATE: Some insights from a person familiar with Overstock from the inside:

• Prior to being caught using spyware, Bagley had been spending most of his time surfing the web and working on Byrnes Jihad. Now he "apparently" just surfs the web from 9-5. (And his fingers just happen to slip onto the keyboard by accident from time to time.)
  
• Byrne is trying to distance himself figuratively and literally from Bagley, and has moved Bagley from the executive suites down to a small cubical in the marketing department.
• This person believes that Byrne is only to glad to have his misdeeds "deflected to the more visible Bagley."
• This person has heard, but cannot prove, that Yahoo banned Overstock IPs for 24 hours because of the spyware revelations, most of which were from O-Smear.
  

Interesting stuff. If I were Bagley, I'd read Sam Antar's post today -- the one about how prosecutors use the little fish to snare the big fish in federal prosecutions.

I have a funny feeling that some of the smaller fish may already be chatting. Call it intuition.



© 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.

Overstock.com Hits New Low: Targets Teenage Boy

Bagley: now he's chasing after a teenage boy

You have to give Overstock.com CEO Patrick Byrne a lot of credit. He may not be very good at running his company, but when it comes to attacking critics -- well, at that he is an innovator who would put Thomas Alva Edison to shame.

Byrne's latest gambit is to attack a teenage blogger who dared to lampoon the great man. The blogger's name is Zac Bissonnette, a 19-year-old college freshman. Zac has written a number of perceptive articles for AOL's Blogging Stocks blog, and also runs a parody website called Hedgefunnies.

As in the past, Byrne did so through his director of communications, Judd Bagley, whom he hired in August to run an anonymous smear website called antisocialmedia.net. The site was run anonymously until Bagley was outed by the New York Post in January.

Now Bagley openly runs the site with Byrne's blessing and support -- though always with a patina of deniability. Such "astroturf" sites provide a buffer between sleazy companies and corporate-sponsored websites dedicated to advancing their interests.

Antisocialmedia, dedicated to attacking Byrne's critics as "market manipulators," is part of what Bloomberg's Susan Antilla has called a "creepy" corporate strategy of lies and attacks on critics. In a column last March, New York Times columnist Joe Nocera observed as follows:

"It has always seemed to me that Mr. Byrne's primary mission had less to do with the supposed evils of naked short sellers, and more to do with making life miserable for anyone who dared to criticize his company."

The Overstock "campaign of menace," as Nocera put it, continues, with Nocera and Antilla immediately attacked by Byrne's proxies once their articles came out.

Attacks on journalists are creepy enough, but pursuit of a teenage blogger is nothing less than sick.

Here is the Hedgefunnies post that lampooned Byrne, and no doubt caused him to sic his underling Bagley on Zac.

Bagley began by issuing a threat to Zac on a Yahoo message board, which he later reiterated in an email to Zac, that he was about to smear the teen blogger on the antisocialmedia corporate smear website. Sam Antar recounts the details in his blog, and forensic accountant Tracy Coenen has a good account in her blog.


Then Bagley turned to his favorite stomping grounds, Wikipedia, which he has sought to undermine -- and attack Byrne's critics -- by use of dozens of sockpuppets.

Bagley smeared Zac as a "dropout" in the discussion page of an article on the charter school this young man had attended.

The glassy-eyed flack then posted the following threat on a Wikipedia page he believed was associated with Zac:

Zac, let this be a lesson to you...think about what you write and the consequences words bring. Eventually, we're all held to account for our words. Hint: it typically works out better when your words are truthful.

Bagley, using the same moniker "WordBizzle" then went to the discussion page of the article on Mary Kay cosmetics, to attack Tracy, also a critic of Bagley's employer. The attack has since been deleted by Wikipedia administrators. The two sockpuppets Bagley used were banned today by Wikipedia as sockpuppets of "WordBomb," Bagley's Wiki user name.

Bagley's behavior was so disgusting that he even drew brickbats from Wikipedia Review, an anti-Wikipedia site that usually supports his cyberstalking of Wikipedia administrators. (Note that this corporate jackal calls Zac a "high school dropout worm," drawing a rebuke from a Wiki Review administrator.)

You really have to wonder the kind of mentality at work here, which is only slightly more elevated than that of a child molester as far as I am concerned. But something else bugs me:

Where are regulators, who are fully aware of Bagley's actions?

Were are Overstock's so-called "independent" directors, including its latest entry Joseph J. Tabacco -- a class action lawyer who ordinarily would sue, not support, a creepy company like this?

Where is the media?

After this latest atrocity, I cannot see how parents of teenage children can purchase products at a company such as this -- no matter how much its bachelor CEO spouts libertarian platitudes about "first class education."

It's time for Overstock to be treated as the pariah that it is.

© 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.

Will the Last Overstock.com Director Please Turn Out the Lights?

The Overstock.com train wreck appears to be progressing faster than I had expected, and, as usual, CEO Patrick Byrne's nutty behavior is the catalyst.

Last night, the company announced the resignation of Ray Groves, a member of its board of directors audit committee and one of two "financial experts" on the board. The announcement did not mention the reason, which Groves disclosed in an SEC filing -- "My resignation relates to the Company’s prime broker suit."

Here's Sam Antar's and Herb Greenberg's take on the situation, and a good column by Seth Jayson. The stock tanked in reaction to the news. Herb observes: "Interesting to note that in its official press release, Overstock didn't mention the official reason, instead leaving it to an SEC filing on the day before a three-day weekend." Yeah. You'd think he didn't want people to notice, or something.

The "prime broker suit" is, of course, the moronic junk lawsuit that Byrne filed against half of Wall Street just before announcing fourth-quarter earnings, in a crass attempt to divert attention from the Niagara Falls of red ink.

This is now the third board member to quit because of Byrne's nutty antics.

The first was his father, insurance magnate John Byrne, who was chairman of the company. He quit after an embarrassing falling-out over Byrne's anti-naked-shorting "jihad." As I and others observed at the time, the elder Byrne's departure was a mockery of corporate governance, because a responsible board chairman would have forced a bizarre and delusional CEO's departure, and not just slinked away.

The second board member to leave because of Byrne's craziness was John A. Fisher, who like Groves was a member of the audit committee and who also quit because of the prime broker suit.

More recently, another audit committee member, Allison Abraham, dumped 15,000 shares of the stock. A real vote of confidence, that.

Now, this being Overstock.com, the Groves question raises regulatory questions. Among them: Is that the only reason Groves (and, for that matter, Fisher and the elder Byrne) resigned?

And why is Groves resigning now over a lawsuit filed in early February? Fisher quit in March.

Are there other disagreements that have not been disclosed?

And why wasn't the reason for Groves's resignation disclosed in the press release?

Remember that Hewlett-Packard recently was penalized by the SEC for not providing a full disclosure of the reasons for a board member resigning.

It is interesting, I think, that the two board members who have left -- supposedly solely because they don't like the lawsuit -- were both on the audit committee. This company is under SEC investigation, and one of the subjects of its subpoeanas to the company and Byrne is its accounting practices. Sam Antar has, additionally, raised many serious questions concerning the company's accounting, particularly for inventories, on his blog. I understand that accounting practices are a central focus of the SEC's investigation.


As usual when bad news is about to hit the headlines, Byrne dispatched his in-house cyberstalker, the newly promoted director of communications (and official corporate spokesperson) Judd Bagley, to produce a diversion on the antisocialmedia.net corporate smear site. It appeared on ASM early this morning, and was announced by Gagley (sorry, I wrote that while gagging) on the Investor Village message board shortly after 6 a.m., Eastern time, today.

This one claims mysterious "emails" asserting a closeasthis relationship between myself and the hated Depository Trust and Clearing Corp., the Wall Street back office operation that is a subject of a junk-lawsuit campaign by the naked shorting nutcases.

Bagley also drags in Roddy Boyd of the New York Post, who clearly terrifies Byrne. Boyd was the subject of Bagley's last smear. With the Boyd smear, Overstock.com now has a 100% track record on the media -- it now has published lies about every single reporter who has written negatively about Overstock, via smears from surrogates like Bagley and directly from Byrne.

My favorite part of the ASM post is the last line: ". . . a disturbing picture of that organization’s policy of defamatory, surrogate-driven, scorched earth public relations is beginning to emerge."

Note that the nauseating Bagley precisely describes himself and his own job at Overstock.com, in the context of lies directed at innocent people. The term "surrogate-driven," of course, describes Byrne's own use of surrogates such as Phil Saunders, a/k/a "Bob O'Brien," to smear critics and members of the media.


Byrne's and Bagley's habit of projecting on others their own sleaziness will make for an interesting study in abnormal psychology after this is all over, and Overstock.com is just a foul memory.

Speaking of which, I think a test of the SEC's credibility will be the extent to which it includes this nightcrawler in its future Overstock.com- and Byrne-related enforcement actions. Surely those fabricated "emails," if they exist, should be promptly subpoeanaed by the SEC.

Yes, I realize that Overstock.com's accounting practices are the focus of regulatory scrutiny. But its systematic violations of corporate ethics -- via the employment of at least one full-time cyberstalker and smear peddler -- surely deserve appropriate sanctions.

© 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.

Judd Bagley Hears His Master's Voice

I'm practically gagging on this tiresome subject, but here we have yet another lurid story sliming its way out of the wild and wacky world of Overstock.com CEO Patrick Byrne.

Fans of the old Lassie TV series will appreciate this: it is the story of a CEO, and the lapdog that loves him.

In a message board post yesterday afternoon, Byrne mentioned in passing that he had been asked to comment upon something by a terrific New York Post financial reporter, Roddy Boyd. Roddy, you may recall, wrote an article the other day on Byrne delaying for one year his disclosure of a subpoena.

Obviously Roddy Boyd is not on Byrne's list of favorite people. In fact, having just written an article unfavorable to Byrne, and at work on yet another, he is No. 1 on the hit parade.

And then..... look what we have here!

Later that same day, Overstock.com's stalker-in-residence, the nauseating Judd Bagley, announced a brand new post on Overstock's antisocialmedia corporate smear site, which he operates.

The subject of the smear site's latest overheated fantasies is none other than New York Post reporter Roddy Boyd!

Byrne had spoken, and his lapdog was on the case. Boyd was not one of Bagley's favorite people either, because it was his Jan. 2 article in the Post that exposed Bagley as the operator of the then-anonymous antisocialmedia smear site. That ruined Bagley's careful efforts, such as an anonymous registration, to keep the site anonymous. Bagley and Byrne constantly issued dishonest and misleading public pronouncements seeking to hide Bagley's involvement.

All this would be funny if it wasn't so creepy -- and if this did not involve a public company that is a grotesque parody of corporate ethics.

However, one thing you have to admit is that this stomach-wrenching toady has been doing an excellent job stalking and and spreading fabrications about Patrick Byrne's enemies! I just learned -- and this has not been picked up anywhere -- that Byrne has recognized Bagley for his excellent performance as his personal lapdog by promoting Bagley to the position of "director of communications."

The former "director of social media" of a company that has no social media is now "director of communications" of a company that "communicates" by rambling, unsigned posts in message boards, and by maintaining a unique astroturfing smear site.

It was never announced -- which is odd for someone moving to such a visible position -- but instead was tucked away in an Overstock conference handout here. As you can see, he was elevated to his job sometime before April 30.

Note the typical Bagley lie in the handout. He was not "speechwriter and press secretary for then-Governor of Florida Jeb Bush." He worked for a minor commissioner, Cynthia Henderson, head of the Department of Business and Professional Affairs. Bagley's major achievement there was a smear campaign against a Tampa reporter who wrote tough stories about Henderson, as reported in a previous item.

Hey, you've got to admit that Bagley has worked hard for his position. Not every company has a full-time cyberstalker, and Bagley had filled that position admirably, making him richly deserving of promotion.

Besides, with all the SEC scrutiny and all, I suppose it was time that Byrne gave Bagley actual responsibilities at the company apart from running the antisocialmedia.net corporate smear site. However, this assumes he does have responsibilities other than running the smear site. This is Overstock.com and not a normal company, after all. A normal company would not only disavow such a site, but would have fired its proprietor. This being Overstock, the stalker is encouraged and promoted.

You have to admit, not every "director of communications" has done such an excellent job of getting miserably poor media coverage, with more bad coverage coming every day! His attack on the integrity of Roddy Boyd will certainly add to his reputation as a kind of one-man corporate press-enraging mechanism.

Another nice thing about his promotion is that the SEC now has a much higher-visibility target in its investigation of Byrne's misconduct, as well as securities law and ethical lapses at Overstock in general. I understand that the company's accounting practices are a particularly serious focus of the SEC's attention.

This elevation means that from the date of his employment as "communications director," whenever that was, all of his many antisocialmedia and message board posts have -- more than ever before -- the official imprimatur of Overstock.com. He certainly was speaking for Overstock on the boards before his promotion, but this underlines the official character of his Internet activities.

It means a bunch of other things that I'll be describing in future blog posts.

So let's break out the champagne and toast an upward move for one of Corporate America's most truly loathsome characters.

Oh, and I know a perfect gift to give Bagley in recognition of his crawl up the corporate ladder: a framed copy of Overstock.com's Code of Ethics.

UPDATE: An interesting coda involving the Investor Village message board, which has become an extension of the Overstock.com cyberstalking apparatus.

After Bagley's post appeared on the Investor Village message board, a user posted two message containing personal details about Bagley and his family. Those messages were almost instantaneously deleted -- in contrast to the dozens of cyberstalking messages posted on the IV board by Bagley and others, may of which are obscene or threatening in nature. One, containing a death threat against me, is still there.

IV has also kicked off critics of Bagley and Byrne, notably felon-turned-corporate whistleblower Sam Antar, as I've previously pointed out.

© 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.