Today's Overstock.com Chuckle: Questionable Payment to Director/Consultant

One of my favorite pastimes is reading humor websites, and one of the best is the Yahoo portal for Overstock.com press releases. Yesterday's installment was a real gem. Overstock had two bits of really bad news. One, yet another director resignation, was slathered over with platitudes. The other wasn't announced at all.

This corporate fraud poster child, which just used accounting gimmicks to eke out $1 million in paper fourth-quarter profits (an $800,000 loss without the smoke and mirrors), pissed away that imaginary "profit" by paying real bucks to the departing director--$1.25 million in fees "in connection with the termination of the consulting arrangement" with James V. Joyce. That's in addition to whatever other fees Joyce might have gotten.

Overstock.com CEO Patrick Byrne omitted mention of the odoriferous consulting payment in a happy-talk press release announcing the resignation, in which he expounded on what a great guy Joyce is without saying a word on what he did to earn all those bucks.

The dirty details were confined to a Form 8-K that many small investors, particularly its brainless core of semi-literate message board followers, would probably not even know exists. Those investors provide the core of liquidity that Byrne needs to keep share prices up, and he knows it. He also knows that the SEC won't do anything about his constant effort to bamboozle his shareholders.

White collar fraud fighter Sam Antar has more in this blog post. Sam notes:

Overstock.com's $1,250,000 contract termination payment to former Board member James Joyce is over five times the sum of $225,000 in consulting services "authorized to be paid to Mr. Joyce for services rendered to the Company during 2007." The company has not disclosed additional amounts in consulting services paid to Mr. Joyce in 2008 or 2009 to-date, aside from the termination fee.

and

A shrewd person posting on the Yahoo message board noted:

And another thing - why does a retailer that's been in business a decade need "management" consulting services (rhetorical question, I know the answer)? What aspect of "management" was Mr. Joyce consulting on? How many FTE's were consulting under Joyce's banner that would require a contractual payout of a whopping 1.25 million? How many man hours does that payout represent?

Let's see, the avg cost of a non top-tier name "management consultant" has gotta be billed at around $150/hr or so these days.

Sooooooo, that's a payoff of over 8,000 man hours.

Ok hec, let's say Joyce was worth every penny of $500/hr - that's a payout of 2,500 man hours. Under most standard per-diem consulting contracts, the contracting company only has to provide 2-weeks termination warning or forfeit 2 weeks of billings. Let's see...80 hours of billable hours at the fantastic rate of $500/hr = $40,000.

Ok longs - speak up - is THIS the kind of shareholder equity stewardship you are expecting from Patrick Byrne?

Indeed, one of the questions raised by this absurd payout, which you can bet will not be raised by the cable TV idiots who occasionally lob softball questions at Byrne, or the somnolent analysts who snooze through his quarterly conference calls, is this:Precisely what did Joyce do to warrant such a payout from a cash-starved company? And here's another: Why did Joyce quit? The real reason, not the baloney.

© 2009 Gary Weiss. All rights reserved.

What's an 'Overstock.com-Style Depth'?

CJR Daily, discussing today allegations that short-sellers drove down the shares of Bear Stearns before the bailout, observed: "Let’s hope the madness induced by their net-worth deflation doesn’t lead to Overstock.com-style depths."

The link is to Bethany McLean's 2005 article in Fortune, "The Phantom Menace," which described a company and CEO, Patrick Byrne, on the brink of a meltdown. Well, the meltdown has taken place, as we all know, and has sunk to far lower depths since then.

So just what is an "Overstock.com-style depth"? How about this: he is now openly diverting corporate resources for his campaign of menace against critics.

At the top of a web page on the Overstock web page that Byrne has devoted to attacks on real and imaginary adversaries, he has inserted the following:

The link directs one back to the Overstock web page, with a code that diverts 5% of the proceeds to Lord knows where.

So here we have a company, which is already bleeding red ink, openly diverting revenues to feed its CEO's obsessions. That's on top of Byrne setting aside a portion of his company's website to attack critics, an obvious violation of its code of ethics.

As I've pointed out previously, CEOs who violate their code of ethics have a securities law issue if they have not gotten a waiver from their board of directors. Overstock is under SEC investigation, focusing on its accounting, so this falls under the category of "icing on cake."

Not that any of this matters, for this is Overstock.com, and not a normal company with a functioning board, and not a panel of snoozing sycophants like this one. Any dissenting voices, including Byrne's own father, have long since absconded.

The telegenic lifelong bachelor, having long since given up on turning his company into a profitable enterprise, whiles away his ample spare time nowadays by editing Wikipedia and getting a windfall from executive stock options. In 2007 he enjoyed $1.2 million from options that his captive board generously gave him, in recognition of the great job he has done running his company into the ground.

So, to answer the question, what is an Overstock-style depth? The answer is "about as low as you can go."

© 2008 Gary Weiss. All rights reserved.

A Commissar Will Monitor This Conference Call

Don't ask me why -- sounds to me like as much fun as getting two molars pulled -- but fraud-fighter Sam Antar has asked to participate in the Overstock.com (NASDQ: OSTK), quarterly analyst conference call, which takes place on Wednesday.

He got a response this evening from Overstock.com CEO Patrick Byrne that is truly a classic in the history of scummy CEOs :

Dear Sam,

Sure, you are welcome to participate: please send me your top three questions (in the interest of avoinding your endless "Do you pick your toes in Poughkeepsie" rants, please limit them to 25 words each, and know that I will treat compound questions as multiple questions).

You know my email (N.B. your email address for Clay is out-of-date).

Your friend,
Patrick

Too bad Byrne was born thirty years too late. He'd have made a fine functionary in any Eastern European regime at one time.

Stay tuned.

UPDATE: Sam's response, posted here, observes :

At your third quarter fiscal year 2007 earnings conference call, you had asked if I was on the line and said that you would accept questions from me if I was on the conference call. If that statement at the last conference call was not intended to intentionally mislead your shareholders, I would expect that you would welcome my participation at Wednesday's call on an equal footing with all other participants.

It is highly irregular for a participant in a conference call to be singled out and limited to three questions posed in advance, each consisting of 25 words or less. I believe that such a condition would be at variance with the principles of free and full disclosure required by the securities laws at conference calls.

You appear to be imposing conditions on me that are not imposed on other conference call participants. I will not accept special conditions that are not imposed on other participants in the conference call.

Accordingly, I again request that I be permitted to participate in this conference call on an equal footing with all other participants.

Byrne's alternatives are as follows:

1. Continue to insist that one person that he "welcomes" to his conference call, but is expected to ask difficult questions, accept unreasonable conditions not imposed on other, more pliable participants.

But the SEC (the "Ken Israel" copied on the email is SEC regional director for Salt Lake City) may not cotton to that. The SEC is investigating Overstock and Byrne, as we all know.

While I am no fan of the SEC, I do know that the agency believes in investors, analysts and the public being treated in an even-handed fashion, and really hates this kind of stuff. I remember how teed off the SEC was at the N.Y. Stock Exchange for playing games with release of Dick Grasso compensation info. But I disgress. . .

2. Open up the conference call to Antar on the same basis as other participants.

This would gain brownie points with the SEC. But then he'd have to take Sam's questions, which he wants about as much as being innoculated with an icepick. The famously unhinged Byrne has flown off the handle and rammed his Florsheims in his mouth with far less provocation.

That's a lose-lose proposition if ever there was one.

© 2007 Gary Weiss. All rights reserved.

Overstock Appoints Mr. X to Its Board of Directors

Just when you thought that the corporate train wreck Overstock.com had ceased its ability to amaze and delight: The company just announced that it had appointed a gent named James V. Joyce to be a director of the company. He replaces Jason Lindsey, who skeedaddled on Dec. 31, 2007 (more or less).

Joyce is a perfect choice for director as he is totally beholden to Overstock's loopy CEO Patrick Byrne, having been paid $615,000 in 2007 -- far more than ex-president Lindsey's 2006 compensation of $367,000 (his 2007 pay has not yet been disclosed). Joyce got that money for providing what Byrne described in the press release as "organizational consulting services," whatever that means.

Joyce is something of a mystery man as far as Overstock is concerned. His name has never surfaced before in Overstock filings, according to Edgar. He is described as CEO of something called Icent LLC, which does not turn up in Google and is not recorded in Utah corporate records.

He attended Dartmouth and Oxford, as did Byrne, which leads me to believe that they are probably more than just passing acquaintances. Nothing like an old chum to fill out a captive board of directors.

Byrne describes him in the press release as an "organizational consultant." What does an "organizational consultant" do, anyway? Isn't that why companies have presidents and boards of directors -- in other words, people whose identities are disclosed to the public?

But anyway, this is a happy day. Byrne gets another yes man for his board of directors, and the long-suffering shareholders of Overstock.com learn the identity of an "organizational consultant" who was paid more than their own president.

© 2007 Gary Weiss. All rights reserved.

Man Bites Dog: A Genuine Shareholder Rights Group

I've written so much about astroturf groups claiming to advance shareholder rights, but really pushing corporate interests, so it's refreshing to see the genuine article. This is a real man-bites-dog story.

SEC Chairman Chris Cox introduced retrogressive proposals last July that would cut back on shareholder rights, and make it harder to introduce shareholder resolutions. He actually introduced two proposals, one supposedly "pro-shareholder," but both are a step backward.

Cox is politically hypersensitive, so he probably thought his proposals would sail through without objection. Wrong.

A whopping 22,500 comment letters have poured in to the SEC to protest the proposals, spurred by a group called Save Shareholder Rights.

Here's a Kathy Kristof column that sums up the issues involved, and here is the group's website.

© 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.

Another Road Map For Regulators

Byrne: Has he been managing earnings?

Sam Antar's blog today raises yet more disturbing questions concerning accounting practices at the cretinous Internet retailer Overstock.com -- exploring whether the company has been engaged in the slimy practice of "earnings management."

As he did his first installment, this accounting ace provides a veritable road map for the SEC, which is investigating Overstock and its CEO, Patrick Byrne.

The case is pretty well laid out in black and white. The only question is whether the SEC will act-- or if Byrne's real or perceived political clout will keep the SEC from acting.

Tracy Coenen says it "looks like Byrne and company are doing even more fancy math! Yoo-hoo… SEC… are you listening?"

As I've explored in previous blog items (see items tagged "Overstock.com"), this company has engaged in a wide range of misconduct that includes, apart from its accounting issues, the targeting and stalking of critics, the wives of critics, and even a teenage blogger. Overstock.com and its CEO obviously hate scrutiny, which is why I've been focusing a lot on it and will keep doing so.

These Sam Antar blog items -- there's one more yet to go in this three-part series -- also give the public a unique opportunity to explore, in real time, the evidence of misconduct at a company under SEC investigation. We know what the regulators have in their files, except that they have a good deal more. So we have a right to ask: What are they going to do about it? The ball is in the SEC's court.

That goes not just for Overstock's accounting practices, but for the activities of its nauseating propaganda minister and paid stalker, Overstock.com Director of Communications Judd Bagley.


No doubt in reaction to the embarrassing failure of Bagley's "Omuse" Wikipedia clone -- still in "beta" status after the greater part of a year -- Bagley has lately resumed his harassment campaign against the online encyclopedia.

In recent postings on an anti-Wikipedia website, Bagley zeros in on two Wikipedia administrators and boasts about his use of spyware. This is Bagley's justification for his seeking to extract IP data from websites he does not own:

. . . if Jayjg [a Wikipedia administrator with authorized access to user data] can discriminantly view my IP data, why can't I have access to his? Ironic that the person with greatest access to user's identifying information is the most jealous about safeguarding his own privacy, isn't it?

Wikipedia, of course, has a legal right to IP data about its users. But site users -- particularly officials of companies seeking to compete with Wikipedia -- don't have the right to hijack data from other people's websites. Bagley's comment is about as logical as saying, "If IRS officials have access to my income tax data, why can't I obtain the income tax data of IRS officials?"

Later today, Bagley used Overstock.com's antisocialmedia.net corporate smear site to attack a Wikipedia administrator. "SlimVirgin." Why this particular administrator? Well, it seems that this was the one who had thwarted his persistent vandalism and use of Wikipedia to advance Byrne's agenda. He did this - after joining Overstock.com -- by clumsily using dozens of sockpuppets. Bagley omits that little detail from his item.

O-Smear reminds us that Bagley previously attempted a crude blackmail attempt against this administrator, and notes:

The fact that SlimVirgin has made it difficult for Patrick Byrne's paid PR shill to edit the Overstock.com, Byrne and Naked Short Selling Wikipedia articles has raised their ire to no end. I think that's what Wikipedia admins are supposed to do, so he is proof that she seems to be doing a good job of it. It upset them so much that Overstock burned up a bunch of shareholder dollars to create a competitor site, Omuse (try not to laugh). So now Bagley is not only harassing women he doesn't know, he's intentionally disrupting a competing (try not to laugh) web service.

If Bagley were employed anywhere but Overstock.com, he'd have long been marched out to the parking lot by the guys in security.

Again, the ball is in the court of the SEC and other regulators. Which reminds me -- I see from his blog that Sam is giving a presentation to the financial crimes unit of the Utah Attorney General on Oct. 31. They'll have a lot of questions for him, I suspect, as a leading expert on accounting fraud.

But I have a question that he may want to ask them: Will this corporate pariah continue to flout the law?

One thing for sure is that answers to such questions will not come from the lapdog Overstock.com board of directors, even with the addition of a noted class action lawyer, Joseph J. Tabacco Jr., to the board.

Tabacco and the other "independent" directors are fully aware of what is going on at Overstock, and should certainly bear the consequences for their failure to act.

© 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.

Bulletin: Overstock.com Has a 'Code of Ethics'

Isn't it amazing? The most unethical, vile company in the United States has a code of ethics. Isn't that a bit like an ice machine on the Titanic? Read all about it in Sam Antar's blog.

We know this because Overstock.com's lapdog board of directors just granted CEO Patrick Byrne a waiver from the code. Seems Byrne wants to make a..... what the hell is this? ... to make a $1.2 million loan to the "Senior Vice President, Branding and Customer Care of the Company," Stormy Simon.

Stormy came on the board the company six years ago. Like all Byrne confidantes, such as in-house stalker Judd Bagley, she has gone above and beyond the call of duty in the service of her wack-a-doo boss.

As Bethany McLean observed in an article a few years ago:

Perhaps nothing illuminates the growing strangeness surrounding Overstock better than an incident involving an Overstock senior vice president named Stormy Simon. Through the gossip mill, David Rocker heard that she was unhappy. So he got word to her that she should call him. She wasn't planning on complaining, but Byrne wanted to see what Simon could learn -- he had heard that former employees were being paid to divulge information about Overstock.

Simon's phone rang while she was in her office in Salt Lake City with Byrne. She put Rocker on the speakerphone so that Byrne could listen and told Rocker that she was in Philadelphia, close to his New Jersey office.

They agreed to meet the following morning -- she had to take the redeye to Newark to make the appointment. Simon told Rocker that she could "sink Byrne, I can sink his ship today." ("She showed him some thigh," Byrne says.)

Rocker wasn't sure whether to believe her. He told her that if she had valid concerns, she should get a lawyer and should take them to the SEC.

Since then, of course, there has been a whole lot more "strangeness" (to put it mildly) that has clung like moss to this dirtbag of a company, ranging from an astroturf website to attack Byrne's enemies to the nutty ravings of its CEO. McLean, typically, was subjected to an obscene attack by Byrne after this article came out.

Stormy, as you can see from the article, really knows how to earn a paycheck. Still, given the actual state of this train wreck of a company, I wonder why Byrne is so generous with this particular subordinate, loaning her $1.2 million out of his own personal funds, contrary to (let's hold down the laughter) that delightful and unenforced "code of ethics." I wonder what she is going to do with the loan.

Hey, wait a second! I know. She's going to get a college diploma! Wasn't it nice of Byrne to hire for a senior executive position someone with "only a high school diploma and minimal college" (as a conference bio pointed out a couple of years ago)? Damn nice of him.

Come on, don't snicker? He doesn't appear on "Worst CEO of the year" lists for nothing. It takes plenty of hard work to achieve such a distinction.

UPDATE: Sam's blog had pointed out that Overstock's "independent" directors have their "heads in the sand" by selectively enforcing -- ignoring, really -- the corporate code of ethics. Seth Jayson in the Motley Fool, pointing to the Overstock contention that this loan from the CEO to a senior VP "would not involve the company," comments:

Would not involve the company? A giant personal loan from the CEO to a senior vice president doesn't involve the company? Doesn't create any conflicts of interest?

Nice catch, Sam. But it's not fair to say they've got their heads in the sand. They don't appear to have heads at all.

Boeing, for instance, could have tried the same lame argument when Stonecipher and his employee had consensual affair. Boeing didn't, because it either had a) integrity or b) a lot of scrutiny because of its past gaffes.

Either way, the policy existed for good reason, and it didn't get waived simply because the CEO figured the rules don't apply to him.

But Patrick Byrne's pampered upbringing seems to have convinced him that no rules apply to him, not even the ones he makes up himself.

True enough. But I think it is interesting that, as Sam points out, Byrne has not decided to exempt himself from the ethics rules to paper over his other obvious violations.



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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.

The Score at Halftime: Mackey 1, Byrne 0

It's interesting to contrast the heartfelt (if belated) apology released today by Whole Foods CEO John Mackey with the swinish, sick rant unleashed by Patrick Byrne yesterday.

Both engaged in inappropriate, probably illegal conduct on message boards. Mackey is starting to "get it," while Byrne is in a paranoid haze of denial.

Contrast too the internal investigation launched by the board of Whole Foods with the inaction of the famously inert Overstock.com board of directors.

That's the difference, I guess, between integrity and sleaze.

© 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.

John Mackey, Patrick Byrne, and a Snoozing SEC

Today the news wires are buzzing about an amazing tale: the CEO of a public company, John P. Mackey of Whole Foods, systematically posted messages under a pseudonym on Yahoo message boards. The media is astonished: "How Whole Foods C.E.O. Led 2 Lives," gasped the New York Times Dealbook. I guess you can call Mackey the Lon Chaney of Corporate America.

Mackey, it seems, posted anonymously on message boards to bash a competitor and boost the company's share price -- amazing behavior that came to light not because of an SEC enforcement action, on any number of possible grounds ranging from securities fraud to Regulation FD, but in a lawsuit by the Federal Trade Commission. Seems that in those anonymous posts, Mackey bashed a competitor, Wild Oats, which he was going to acquire.

Two things are noteworthy about this:

1. The SEC's inaction.

and

2. The fact that no federal agency, including and most notably the SEC, has taken action against (speaking of horror shows) a far worse Internet-addicted CEO, Patrick Byrne of Overstock.com, whose prolific message board posts, in my view, are far worse than anything Mackey did.


Like Mackey, Byrne posts under a pseudonym -- "Hannibal" -- on stock message boards. As a rule, Byrne does not give his full name, or identify himself as chief executive of Overstock.com, chairman of its board of directors, and, just as importantly, as the single largest holder of Overstock shares.

Yet, as I have documented time and again in this blog, has repeatedly used Internet message boards to smear his critics -- spreading lies about people in the media (myself included) and making nutty accusations such as that the Motley Fool website and some of its analysts are "bent" and corrupted.

He has done so not as some anonymous "basher" but as a message board Big Kahuna -- if, that is, you are among the select few who are aware of the fact that the nutty-sounding, paranoid crackpot posting on various message boards is actually the nutty-sounding paranoid crackpot who runs Overstock.com.

The media, perhaps inured to Byrne's chronic wackiness, has missed this significant point. Andrew Leonard in Salon, in a column entitled "Whole Foods CEO John Mackey's wacky Web rants," said as follows:

One assumes that the CEO of a publicly traded company would not be dumb enough to leak insider information on a stock discussion board, or make unmerited forward-looking statements in an effort to pump up Whole Foods stock. But who knows? It's sure hard to imagine any Whole Foods corporate public relations person being anything but horrified at the news that the CEO is bashing competitors and predicting stock prices under a pseudonym out in the wild Internet.

Guess again, Andrew. Here's one example of Byrne's naked, manipulative efforts to hype Overstock shares -- and the value of his holdings -- on Internet message boards. I've written about this before, but I think a re-run is in order.

On March 12, 2006, Byrne put a tantalizing little kicker at the bottom of a post on the limited-readership, subscription only Motley Fool message board:

PPS Big story breaking next 24 hours. Stay tuned.

I repeat, this is a limited-readership, subscription-only message board, concerning a stock with a wafer-thin float.

It also needs to be taken into consideration that this was done by a CEO who takes message boards very seriously, and who has contended that "paid bashers" are involved in the famous Sith Lord conspiracy.

He really did this. No foolin'.

Here's a screen shot of the relevant portion of the post:



Here's a link to this historic post, which you can access if you are a paid member of the Motley Fool website.

I repeat: you can access this only if you are a paid member of the Motley Fool website. (I'm repeating myself, and putting the relevant passages in boldface, because I sometimes think that the SEC has either eyesight or reading comprehension problems.)

Note that this CEO and largest shareholder of a public company is not identifying himself as CEO and largest shareholder of a public company. I repeat..... OK, I made my point.

It so happens there was some activity within the "next 24 hours" -- an idiotically bullish article by investor Arnie Alsin.

The Alsin article caused the stock to explode. The shares, which traded at 22.85 on March 10, climbed 12% to 25.55 on March 13, and another 25% to 28.50 on March 14l, on massive (for Overstock) volume of more than 2 million shares each day. Nice! Until you consider that Alsin was dead wrong. The shares have since skittered down to 19 and have traded at a lot lower than that. Note the link in the comment to this article by the proprietor of the O-Smear blog.

Confronted with this blast from the past in April on the Investor Village Overstock message board, (perhaps inspired by this Motley Fool article by Seth Jayson) Byrne tap danced and pirouetted -- and came forth with the following cock-and-bull story:


"Odd that you don't quote from that one"? You might find it even odder that Byrne did not "quote from that one."

Or at least it would be odd -- if that post actually exists. As best as I can tell, it does not. In the three months since I originally posted on this subject, it hasn't emerged. No loyal member of the Byrne Fan Club has brought it to my attention.

So I think it is fair to assume that Byrne was lying in a public forum. Say, doesn't the SEC have a word for that?

Seth Jayson of the Motley Fool (Byrne's bloviation venue in the Spring of 2006, until critics there bruised his fragile ego and he sulked away), observed as follows:

Where, I wonder, is this face- (or neck-) saving "disclosure," as to what Patrick was talking about. I haven't seen a single clarification from Hannibal100 in any of the posts made under that user name on this board subsequent to the original "big news" post -- and I just read every single one of them

Further proof that the "clarification post" dwells only in Byrne's vivid imagination can be found in a June 2006 post on another Motley Fool board from a Byrne supporter. One user had pointed to the "big news" comment, and the Byrne defender responded, "Nonsense. I forwarded your post to Dr. Byrne. He replied that the big news he was referring had not happened yet. "

I've reprinted the past few paragraphs from my April 23 blog post on Byrne's deceptive conduct. What's even more amazing is that the SEC is aware of this, and is of course aware of similar if less troublesome sliminess by John Mackey, and does nothing.

The famously passive board of directors of Overstock.com has also been made aware, including its "independent" board members, who now included a noted class action lawyer, Joseph Tabacco.

I wonder about Mr. Tabacco. Is he in the chicken coop to guard the birds, or to leave the door open for the fox?

© 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.

Patrick Byrne Confronts His Reg. FD Demons

Overstock CEO Patrick "Sith Lord" Byrne is a man of many demons, most of them imaginary, but one seems to have finally gotten the best of him -- Regulation FD.

In Internet posts over the weekend, it became clear that Byrne was being pushed, dragged, manhandled and otherwise forced into admitting that -- much as he revelled in ignoring it -- yes, there is a Reg. FD, and yes, he must make some gesture at obeying it, ancestral wealth and real or perceived political influence notwithstanding.

His weekend posts also contained -- unintentionally, as usual -- some interesting tidbits about the ongoing SEC investigation into this train wreck of a company, as well as official word that "Omuse," a lame Wikipedia wanna-be that was created to provide a cover story for in-house stalker Judd Bagley, is an absolute flop.

This rich harvest of (unintentional, as usual) self-revelation emerged in a post by Byrne on his favorite venting venue, the Investor Village Overstock message board. Seems he is not posting there anymore. Maybe.

As usual, he failed to disclose his full name and corporate affiliation and thus, for the umpteenth time, spat in the eye of Regulation FD. As I've described in the past, to Byrne Reg. FD is more of a joke than a requirement that he must obey. This rule requires that companies provide information to the investment community in a fair and even-handed manner -- not in whispered conversations or, say, posts to small numbers of crackpots on limited readership message boards.

After first acknowledging that there are indeed Reg FD issues with his posting corporate information on message boards, Byrne blurted that "the Omuse blog is still not very workable."

That's pretty amazing when you consider that this Wiki wanna-be has been up and running since February -- five months -- and had been the subject of Bagley's tireless efforts for six months before that. So here we have Byrne, in a desperate attempt to salvage this failing enterprise, announcing that he has made Omuse a collection point -- a kind of septic tank -- for his ravings and smears.

Byrne inaugurated his new policy of turning Overstock.com into a literal chamber pot by posting in toto (copyright be damned!) a recent blog item by fraud-fighter Sam Antar, and calling him "Crazy Sam."

No other wiki project--and there are many--has been reduced to attracting readers by posting personal attacks on the CEO's critics, using schoolyard epithets. You really have to search long and hard in the underside of Corporate America, starting with CEOs confined to prison, to find a corporate executive or a company quite this slimy.

Responding to speculation that he has (more or less) stopped posting on IV because of pressure from the Overstock board of directors, Byrne blurted out another goody:

. . . no one has brought the least pressure on me about my posting here (well, other than by a certain polite and proper government official, who politely and properly asked me why I post on message boards: I politely noted that the first amendment applies to me, too). [emphasis added]

It's reasonable to surmise that the "polite and proper government official" quoted above is an SEC investigator or worse. It's significant, I think, that this "official" was talking to Byrne directly and not his lawyers.

Byrne was asked to clarify the point on the Investor Village board but, in keeping with his policy of ignoring discomfiting questions, he did not do so.

(Note also Byrne's whining that Yahoo and the Motley Fool are infested with "bad guys" and "shills for powerful interests" -- Byrne-speak for "people who think I suck as a CEO.")

Sam Antar has a post today describing in detail the chain of events, and how it does suggest that finally the Overstock board has woken up.

As I observed previously, external pressure also probably explains Bagley's absence from Investor Village, and the sudden disappearance of menacing comments, including a threat directed at me, from Overstock.com's antisocialmedia.net corporate smear site.

Of course, I suppose you can believe Byrne's story that he is taking leave of IV because his precious jewels of baloney "scroll off the screen." But he can't use that cock-and-bull story to explain the fact that he has stopped using a pseudonym on his own website. That's an action he obviously would not take unless forced to do so.

In recent days, Byrne has retroactively changed his screen name on his "Take 5 With Patrick Byrne" message board from "Hannibal" to "patrickbyrne." This is how it appeared in May:



And here it is today:


Byrne likewise abandoned his Hannibal user name on Omuse, replacing it with "patrickbyrne." Apparently the wiki software doesn't allow replacing one user name with another.

The rest of the planet, of course, is aware of the Reg. FD problems presented by a CEO posting obsessively on message board, particularly under pseudonyms. At real companies with real boards of directors, posting on message boards is such a serious flouting of Reg. FD that it is a firing offense (as the CEO of a company called Medifast has learned the hard way).

Obviously Byrne is not going to be fired, as any ordinary CEO would be who acts as Byrne does, by his lapdog, sham board of directors. Still, maybe one day somebody will give him the good word about other elementary concepts every CEO should know, such as "making money," or "not hiring people to stalk your critics." Stuff like that.

It will be interesting to see if this lame backfilling will be enough to placate the SEC and if he has enough juice from his campaign contributees to call off the hounds. It will take a gutsy SEC to withstand such pressure, so don't get your hopes up.

Elsewhere on the Overstock front, Gradient Analytics has filed an appeal with the California Supreme Court against Overstock's junk lawsuit.

UPDATE: A reader comments:

Reg FD is only half the problem for Byrne and the BOD as it relates to Byrnes/Bagley's internet message board & blogging.

Take the example of the clearly derogatory put-down "Crazy Sam" - does this comply with Overstock.com, Inc.'s corporate policy on Code of Conduct and Ethics? The short answer is no - it is reasonable to conclude the CEO has once again violated Company Policy. This is a Sarbanes-Oxley compliance problem for the BOD. For the BOD to ignore this translates into tacit approval, or waiver, of Corporate Policy requiring a pesky 8-K filing as Sam Antar has pointed out.

And that, as I have remarked before, is 300lbs of steaming dog poop on the Board table.

To ever so briefly put myself in Bryne's ego-ravaged shoes, it must be enormously frustrating to be barred from matching tit for tat all those who have made disparaging remarks about Bryne, his lieutenants, and his Company. However, Corporate Policy demands that he take the high road, and as the highest officer of the Firm, he has a special obligation to do so. Obviously, he either doesn't agree or doesn't care, either way that's another BOD problem.

It is possible to convey his disagreement with Sam Antar and all other critics (including myself) without diving head first into the cesspool.

One more point if I may - Byrnes semi-departure from message board posting is clearly the result of a change forced on him by presumably the BOD. Therefore, his explanation of why-fores is false, or at best, intentionally misleading, and that appears to me to be yet another Reg FD problem.

As Herb Greenberg would say - "the beat goes on".

The code of ethics referred to above is not, of course, available on the Overstock website -- even Byrne is not capable of such a monumental hypocrisy. However, it can be found on Sam Antar's blog, here.

© 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.

Is the Overstock.com Board Rousing From its Slumber?

Scam fighter Sam Antar has a detailed post in his blog this morning, detailing how the Investor Village Overstock.com message board has been turned into an extension of the Overstock P.R. department by selective enforcement of rules. But the really juicy stuff concerns the antisocialmedia.net corporate smear site.

Sam provides confirmation of what had been obvious for some time: Overstock's resident stalker Judd Bagley takes his marching orders from Overstock.com in running antisocialmedia.

Sam, you see, has been in touch by email with the Overstock board of directors concerning ASM. And as you can see from the post, one of Sam's emails quite obviously led to the deletion of some particularly vile reader comments from ASM, including a physical threat against myself from operators of Alpine Analytics that I have previously written about.


The Overstock board has apparently been aroused from its slumber. But not entirely, because the corporate smear site still exists.

No one can seriously dispute the ASM-Overstock connection. It is, after all, openly run (after his anonymous cover was blown by the New York Post) by the company's director of communications, the nauseating Judd Bagley.

But this demonstrates that Bagley takes his orders directly from the company in his Internet activities. That includes his obsessive stalking of Wikipedia editors who have curbed his efforts to put Overstock.com propaganda in the online encyclopedia (see this post and this one).


Just this past weekend, Bagley, posting under his Wikipedia pseudonym "WordBomb," posted on an anti-Wikipedia site what he described as IP addresses for two Wikipedia administrators he has stalked. "I am sneaky," said Bagley, in a rare moment of candor, in reference to the pretexting and spyware that he regularly utilizes. He was too sneaky for the anti-Wikipedia site, which later removed the IPs and threatened Bagley with expulsion if he continued.

The culpability for this hideous conduct lies, ultimately, not with Bagley but with Overstock.com and its lapdog board of directors.

Bagley, when hired by Overstock in August, was given the responsibility of operating a Wikipedia clone, using Wikipedia's software, called "Omuse."

Omuse has been a disaster, attracting few users and generally wasting corporate resources.

Yet here we have the operator of Omuse, stalking the volunteer editors of the real Wikipedia.

The board of directors of Overstock has a lot of work to do. But personally I wonder why anyone would serve on the board of an ethical train wreck such as this.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

Does Overstock.com Have a Board of Directors?

Warning: This item is not recommended for pregnant or nursing women, children under 18, persons with high blood pressure or heart disease, or anyone with a weak stomach:

Reading the latest atrocity by the nauseating (and I do mean nauseating) Judd Bagley, Overstock.com's Director of Communications, official spokesman and resident stalker, has gotten me wondering: does Overstock.com have a board of directors?

Not "does it have a competent board of directors?" or "does it have independent board members who care about their jobs?" -- the answer to those two questions obviously being no -- but whether there is such a thing as "corporate governance" at this chamber pot of a company.

What got me wondering about this was an act of blackmail, signed proudly by Bagley, directed at the proprietor of the O-Smear website, which has exposed this SEC-investigated company's unethical conduct.

You can read about the blackmail here, but I think the letter is worth replicating below:

From: Judd Bagley
To: scipioafricanus_iv@yahoo.com
Sent: Thursday, June 14, 2007 11:51:26 PM
Subject: just thought I'd ask...

I thought I should tell you that I've have known your real identity for a while now.

Up until last week, it appeared that you'd grown tired of o-smear and all the games (which would make "outting" you unnecessary) but lately it appears that's not the case.

I don't want to cause anybody unnecessary harm, but I'm beyond tired of the lies.

If you choose to continue as you have been, I will write about you on AntiSocialMedia.net. In doing so, my goal is not to intimidate, but to let you own your words; under those circumstances, I think the lies will take care of themselves.

Having said that, I'm also very much aware of the impact this could have on your reputation, especially where you live, and I feel obligated to offer you a way out. So, if you're ready to set things right, I'll keep your name to myself and figure we'll both be karmically better off for it.

I look forward to your response (and will be PMing this to your IV account, as well).

--
Judd Bagley

Note the dictionary definition of blackmail: "to force or coerce into a particular action, statement, etc."

This may go down in history as the first blackmail letter written in smug corporate P.R. doublespeak. ("I'm beyond tired of the lies"="I'm beyond tired of the truth." "My goal is not to intimidate"= "My goal is to intimidate you and every other critic of Overstock.com") I say that because Bagley was, of course, aware that his letter would be made public. He's proud of it, you see.

Note the similarity in wording to the threat that he made against a Wikipedia administrator in late August, shortly after going on the Overstock.com payroll in his initial title of "director of social media."

No other company in the U.S. would sanction such disgusting, unethical, and legally questionable conduct by a corporate official, made doubly odious by the fact that Bagley was hired to do the bidding of CEO Byrne, and his actions have a long history of being supported and promoted by Byrne.

Any other corporate board would discharge both Byrne and Bagley -- something obviously inconceivable for the laughingstock, lapdog, functionally nonexistent Overstock.com board.

Reading this email from a corporate thug to a private citizen also makes me wonder: Is there is such a concept as "SEC enforcement" when it comes to the misdeeds of Overstock and its CEO Patrick Byrne? Or has Byrne's ancestral wealth and political influence makes that concept moot as well?

This latest episode in the Bagley-Byrne saga is a test of Overstock.com's board of directors as well as the Enforcement Division of the SEC.

The board's independent members, I understand, have been advised of Bagley's latest actions. Ditto for the SEC.


If they do nothing in a reasonably brief period of time, then the answer to the question that I posed above will be answered. It will mean that Overstock.com, for all intents and purposes, does not have a board of directors.

As for SEC enforcement -- well, just read my book and you can understand why nothing has been done. If anything is done, I would surmise, it would only happen long after Ovestock is a wretched memory.

Also today, Sam Antar has a revealing, detailed post on how Bagley and Byrne have used anti-Semitism as a tool of corporate intimidation. It makes for fascinating reading.

Oh, I almost forgot to mention: O-Smear did not respond and Bagley carried out his threat on Overstock's antisocialmedia.net corporate smear site. By so doing, Bagley showed that he is as much a schmuck as he is a blackmailer.

Bagley's "revelation" is that O-Smear is run not by the Sith Lord but by some guy in Indiana -- a private citizen who is disgusted with corporate creeps like Judd Bagley.

To make the slimy picture complete, and thumb his nose at Joseph J. Tabacco Jr. and other independent directors, Bagley put a spyware bug in his ASM post, so as to track people distributing the item via email.

The onus is now on Tabacco and the other independent board members. By serving on the board of this company, they have a moral and, I suspect, legal obligation to register strong and public disapproval of the activities of Bagley and Byrne. If they don't, their silence would be tacit approval of Bagley's and Byrne's disgraceful behavior, and they will bear full responsibility for their neglect of duty.

Quite frankly, I wonder how reputable people like Tabacco could allow their reputations to be sullied by associating with a company such as Overstock.com.

Some reaction:

The Motley Fool's Daniel Rubin calls Bagley's blackmail adventures "the most incredible thing I've seen in my seven years of following the market. "

Says Rubin:

Is there ANY oversight of all this filth? Any at all? To see this mockery go on right out in the open, and involving an American public company is starting to genuinely challenge my faith in the integrity of the system. As I've said, this is the cruelest irony of this debacle. This pitiful, puke-inducing chapter of American business never ceases to turn the stomach - cyberstalking, anti-Semitism, Sith Lords, international mobsters, conspiracies, and enough message board animosity to fuel a space shuttle.

Rubin added in another Motley Fool post: "The question is when will all [Byrne's] railing and false accusations and seemingly blatant illegal activity result in his removal and legal action? This man has left a trail of animosity and denigration of the human spirit that is awe inspiring in it's scope."

That's the question. The answer is with Joe Tabacco and his colleagues.

More reaction:

• Sleazy McSleaze Now Even Sleazier (Dealbreaker)

• Is Overstock threatening its detractors? (AOL Finance BloggingStocks Blog)

• Judd Bagley is threatening people who speak out against the management and deception at Overstock.com? (Tracy Coenen's FraudFiles blog)

Digg this!

© 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.

Another Overstock Critic Silenced

Overstock.com's Patrick Byrne and loyal flack Judd Bagley are obviously feeling the heat over last week's revelation that Overstock is behind a smear site called antisocialmedia.net. They've just silenced the Internet sleuth who has tied Bagley-Byrne to antisocialmedia--a slimy relationship that could be devastating for Overstock.

The Internet sleuth in question goes by the name of "scipioafricanus," and all of this person's posts have been removed en masse, in Stalinesque fashion, from the Investor Village message board. Since IV hasn't removed the dozens of posts by Bagley (via peseudonyms), Byrne and their pals, mostly hysterical personal attacks on myself and others, it is reasonable to conclude that Byrne and/or Bagley have screamed bloody murder. It is particularly reasonable since Byrne's antisocialmedia stalker site has recently targeted message board posters, as the Post story pointed out.

This same sleuth has since shown that Bagley posted Internet messages under various IDs ("veg-o-matic" was one) showing prejudice against Jews, Mexicans and others. (I'd post links to more of his bizarre yammering, but the posts containing them were deleted by Yahoo, no doubt at Bagley's insistence). The net sleuth also traced his Internet smear campaign in 1999 and 2000 against a Florida reporter who wrote tough articles about his then-boss. Bagley has not denied the former, and responded to the latter by gloating about it.

IV's action is odd indeed for supposedly neutral message board, but apparently IV is seeking a franchise as a free-fire zone for stock touts and stalkers, undeterred by skeptics and dissenters. For example, a death threat ("you ought to be put out of your misery") against Scipio remains on Investor Village. Scip's typically civil response was erased. Ditto for attacks on me and others.

Byrne can now spew hate and lies about his critics, and generally behave like a clown, without fear of contradiction -- something that hardly benefits his shareholders, who have suffered from his inattention. The same goes for other cranks who parrot Byrne's lies, such as this idiot--who can now repeat the "Wikipedia lie" without Scipio to explain that it has been denied by Wikipedia.

Byrne is, of course, always vigorous when it comes to silencing dissent, and his desire to cover his tracks is understandable. Barron's pointed out today that Medifast CEO Bradley T. MacDonald was fired for Internet activity far more benign than Byrne's and Bagley's:

More recently, Barron's has learned, Medifast's board has become concerned about Internet postings, under the name bradmed@verizon.net, in support of Medifast on the Yahoo! Finance message board. People in a position to know say that this is a pseudonym and that MacDonald was the author of these messages.

Barron's reported that "company directors reprimanded MacDonald in mid-December after learning of a Barron's inquiry into the postings, and told him to stop posting messages, fearing, among other things, that this could violate 'fair disclosure' regulations."

That's what happens at a normal board of directors, by the way, as opposed to the collection of Byrne cronies on the Overstock board.

Barron's continued:

But even if a CEO weren't disclosing private company information, corporate governance experts say failure to identify himself as an executive of the company could be a problem. "In a worst-case scenario, it could be considered a fraud on the market if you are giving incomplete information and in my mind it is incomplete per se if you don't say where it is coming from by hiding your identity," says Nell Minow, editor and co-founder of The Corporate Library, a corporate governance group.

I wonder if a company "aiding and supporting" (to quote the Post) a vicious, lying, cyberstalking website violates Regulation FD--and a slew of other securities laws?

It obviously violates any semblance of morality and corporate ethics, but hey, this is Overstock.com!

UPDATE: Reacting to this blog item, Investor Village reinstated Scipio's posts, and IV's Ralph Kidd denied that IV had deleted the messages under pressure from Bagley and/or Byrne. (Well, sort of denied. Kidd used the words, "to my knowledge.") According to Kidd, Scipio's messages were wiped out en masse supposedly under pressure not (to his knowledge) from Bagley or Byrne but from Bagley's/Byrne's supporters, who called Scipio's posts "clogging." Without bothering to look into the matter further, but just caving in to a bunch of jugheads on a message board, IV just deleted all the posts.

It's hard to believe that any message board operator would be quite so craven and irresponsible. It is, to say the least, hard to believe, and frankly I don't (Kidd's fibs about his contacts with me not enhancing his credibility). But this does explain why IV is Patrick Byrne's favorite message board, one that he prefers to post in more than his own.

Bottom line: Scip has been forced by this ham-handed action to curtail his posts to the Overstock board. Byrne and Bagley can now lie to their heart's contend, with Scipio handcuffed. If Kidd truly is not interested in running a cyberstalker board, he will show a little backbone and allow Scipio to respond to Byrne's and Bagley's lies in the forum where they spew them.

© 2006 Gary Weiss. All rights reserved.

-----------

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.