Respectability Can't Be Purchased

No substitute for a conscience

It's always struck me how corporate and Wall Street miscreants try to buy respectability, using their ill-gotten gains to contribute to political and religious causes.

Randolph K. Pace, operator of the notorious Rooney Pace penny stock firm of the 1990s, gave large sums to Jewish charities in New York City. Bob Brennan of First Jersey Securities also tried to buy his way to respectability, before he was caught and hauled off to jail. More recently, Richard Altomare, the loudmouth ex-boss of Universal Express, was appointed to three committees by the U.S. Chamber of Commerce after a federal judge found his company to be rife with fraud.

So I was not surprised to read that Patrick Byrne, the wacked-out CEO of the Overstock.com corporate train wreck, has been busily trying to buy respectability. The Salt Lake City Tribune reported yesterday that Byrne has been a major bankroller of an effort to force a school voucher program down the throats of the parents of Utah:

A pivotal local contributor to the voucher effort is Utah entrepreneur Patrick Byrne. The founder and head of Overstock.com has pumped $290,000 into the "yes" effort. Byrne has single-handedly financed a Republican legislators' PAC, Informed Voter Project, with a $200,000 donation.

What Byrne does with his ancestral wealth -- Overstock is, of course, bleeding cash -- is his business. But it makes you wonder: Why is a confirmed, fortysomething, childless bachelor, a product of private schools all his life, meddling in a public education system that he has never experienced and knows nothing about--and cares about even less?

I can understand Byrne throwing money away on his nutty "naked shorting" obsession. It was recently reported that Byrne took $120,000 of Overstock's scarce cash and flushed it down the toilet by throwing it at a lobbyist to push his goofy stock market conspiracies. Not including state contributions or bucks to federal candidates, Overstock has pissed away $680,000 on influence-buying since 2005.

It's funny to see Byrne whine about "co-opted regulators," as he is a major "co-opter" -- and an abysmally inept one at that. Remember that this is the same individual who practically got involved in a fistfight with the majority leader of the Utah legislature, and who has called Alabama Senator Richard Shelby a "gangster" and a "cracker." Does he really think his bucks will make people overlook that he has behaved like a spoiled brat?

No surprise here. This is a co-opted regulatory system that swims on a river of corporate cash -- some of it hard-earned, some of it stolen, and some of it, as in the case of Byrne, obtained by selection of the right parents.

But what's with this school voucher thing? After all, it's not as if Byrne has ever shown any interest in kids learning. You don't see him donating his vast ancestral wealth to actual schools or kids or anything meaningful. Since his own education was private schools paid for by his millionaire daddy, ex-GEICO CEO John Byrne, it is not surprising that he would push a program that would undermine the educational system for ordinary working people.

One Utah commentator noted:

One of the most amazing facts about the money being spent on the November voucher referendum was published in this morning's Trib but it wasn't inside the big story, it was at the very end of it:

If all the money spent on the referendum campaign so far went directly to the classroom, it would have:
* Paid to educate 380 Utah public school students;
* OR covered the annual costs of 17 average-sized classrooms;
* OR funded a year's education, with plenty left over, of all 310 students enrolled last year in the Piute School District.
* OR provided 1,143 private-school vouchers, with a mean value of $1,750.

So Byrne's faux political posturing is not only grimy and cynical, but also typical of a man who has a special aptitude for wasting money. Just look at Overstock's financial statements, if you want to see more of that.

Sam Antar provided the best analysis of this phenomenon that I've found, describing how Crazy Eddie tried to buy its way into the good graces of respectable society:

Fraudsters like myself, we build a whole world of respectability around ourselves. I gave money to a lot of charities while I was committing my fraud. My cousin Eddie, he gave a lot of money with his stolen money to a lot of charities. He gave a lot of money to politicians. He built wings on to hospitals and built a big aura of respectability around him and people were in awe of him. This is what fraudsters do.

© 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.

THE METROPOLITICAL PATRICK BYRNE: I see that the CEO of Overstock Inc., Patrick Byrne, got heat last week from some bloggers for describing a suit he is pursuing against short-sellers as "my jihad." This is fairly mild, as verbal clumsiness goes, but it got me to thinking about his politics. What other "jihads" does Byrne endorse?

After all, my only personal experience with jihads is this one, which happened down the street from me a few years ago. It was unpleasant, but I'm willing to keep an open mind on the subject. Maybe there are some good "jihads" out there that Byrne can suggest (in addition to, of course, his screwy feuds with Bolshie newspapers like the New York Post and his advocacy of the constantly discredited, goofy naked shorting crusade.)

To find out Byrne's position in the great political divide, I turned to a database called Newsmeat that compiles campaign contributions. Seems that Byrne has given us some clues as to his political leanings. And it is quite a picture! He is clearly a man for our times.

If you lean a bit to port you'll be glad to know that Byrne is firmly in the Democratic camp. Just this past November, Byrne gave $5,000 to the Campaign for America's Future.

This group is very much in the "progressive" camp. "We are challenging the big money corporate agenda by encouraging Americans to speak up — to discuss and debate a new vision of an economy and a future that works for all of us," says its website. CAF is critical of the Bush administration, with articles and action campaigns such as "Bush Running on Empty Promises."

The picture gets a whole lot less "progressive" if you go back in time even a little bit. Byrne gave $2,000 to conservative Utah Republican senator (and short-selling foe) Robert Bennett. True, Bennett is from his home state. But what about the $2,500 contribution Byrne made to the anti-John Kerry "Swift Boat Vets and POWs for Truth" on Aug 20, 2004? Or the $25,0000 he gave to the Democratic Senatorial Campaign Committee in 2003 and the $10,000 he gave to the Republican National Committee in 1996? Was there a lot of party-switching among senators during those seven years?

When Byrne's generosity with the anti-Kerry forces was first noted by Carol Remond in a Dow Jones News Service story, she said that this indicated a move to the right. Not really, Carol. Seems that what we have here is a new kind of political guy, a metropolitical whose real politics are... well, I don't know, but who is comfortable in both the "progressive" and the "hard-right-anti-Kerry" camp.

I admire Byrne's ability to change political affiliation so often, and so dramatically. Maybe he'll come to his senses on the naked shorting issue as well. Come on, Patrick. Flip-flop on this one too! It will do your reputation a lot of good, believe you me.