A Hagstrom For Regulators

I believe I've used the expression "road map for regulators" more than once to describe ex-scamster Sam Antar's detailed analysis of Overstock.com's sleazy accounting practices.

So here's a different metaphor: The detailed post out today is very much in the tradition of the venerable map-maker, Hagstrom. Except that the only motorists who need follow it are investigators for the SEC.

The title says it all: "Overstock.com and Patrick Byrne: Phony Accounting and False and Misleading Disclosures." You can read it here.

I really don't have much to say beyond "read it." If, that is, you are interested in how a widely publicized company can manipulate its financial statements, right in plain view of an army of feckless brokerage house analysts and the world media.

Byrne has lately been posting on the Overstock website a warmed-over attack on former Business Week reporter Tim Mullaney, who posed a series of tough questions to Byrne two years ago. Byrne has been practically begging the media to pick up on his smears. Anything to divert attention from his shady accounting. I guess he feels that in glorying in his past victories -- he browbeat Business Week into not writing about his dreary financial results -- he can relive them.

The irony is that Mullaney's questions were right on the mark, and Byrne's replies were slippery and deceptive. Byrne also said in the exchange with Mullaney that "I think 'EBITDA' is the stupidest thing I ever heard emanate from Wall Street (no small feat)." Yet he recently trumpeted -- and inflated -- the company's EBITDA numbers.

Byrne's view of his face-off with Mullaney as a public relations triumph borders on the delusional. It established his reputation in the media as a bully and as a CEO with something to hide.

I doubt that the SEC, which is investigating Overstock and Byrne, is focusing massive resources on his "campaign of menace" (as Joe Nocera put it) against critics. Their case largely centers on accounting. Silencing critics is, I believe, largely secondary, sort of icing on the cake.

Now they have no excuses for further dilly-dallying, as the accounting issues that are evident in public statements ( Lord knows what is buried in their books and computer files) has now been laid out for them.

They've got a great road map. Time to step on the gas.

© 2007 Gary Weiss. All rights reserved.

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.

Yet Another Road Map for Regulators

Will the SEC revoke Byrne's "Get Out of Jail Free" card?

I've used the expression "road map for regulators" at least twice in describing how white collar crime-fighter Sam Antar has exposed the phony accounting used by the corporate crime petri dish Overstock.com. Sam's latest post this morning describes the latest sleight of hand CEO Patrick Byrne has used to juggle the numbers.

Sam lays out in detail how Byrne was only able to report a "profit" in the most recent quarter, which sent share prices climbing, by violating Generally Accepted Accounting Principles and other smoke and mirrors.

As William Wolfrum points out, Byrne has had a busy week, trolling Internet message boards and unleashing his attack dog Judd Bagley on critics. As usual. But "the real story is in the financial reports," as Wolfrum points out. The rest is just icing on the cake.

As usual, the question is whether the SEC will take action, or continue to give Byrne a "get out of jail free" card that he uses every fiscal quarter.

There. Two metaphors for the price of one.

© 2009 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.

Overstock.com: More Roadmaps for Regulators to Ignore

It's now becoming clear why, out of the blue, Overstock.com's ditsy CEO Patrick Byrne is on a cyberstalking frenzy, unleashing his hireling Judd Bagley on the usual suspects (mainly me): Byrne is, as usual, cooking the books to manufacture phantom profits.

It's all in an "Open Letter to Mary Schapiro" posted today by white collar crime fighter Sam Antar.

As usual it's all spelled out, a road map for regulators, if they have the guts to take on Byrne. Which they don't.

I can understand if Sam feels frustrated that his campaign to expose the accounting gimmickry at Overstock has resulted in absolutely nothing so far. But frankly I am not surprised, as the SEC's uselessness has been proven time and again. Under Schapiro, the agency has been engaged in a protracted struggle for survival, at a time when Treasury Secretary Tim Geithner plans to eat the SEC's lunch with a new consumer protection agency.

More and more, Schapiro's tenure at the SEC is reminding me of her term as president of NASD Regulation, which began in 1996 at the height of the microcap fraud era. At the time, her main job was generating press releases, while the "chop houses" continued their ripoffs unaffected. It took the FBI to shut down the crooked brokerages.

Similarly, you can't expect Mary Schapiro's SEC to actually enforce the law against Overstock. There's too much political pressure being brought to bear, too many ex-SEC lawyers working hard to keep Overstock and Byrne from being sanctioned. The media doesn't care, because "Byrne is cooking the books" is, like "Byrne is a nut," an old story, and outside of Salt Lake City nobody cares. Only Fox puts him on the air, and I don't know how long that is going to continue after a debacle like this interview.

Frauds don't continue forever, and Overstock's cash reserves are being depleted. While Sam is right that Byrne produced an accounting "piggy bank" to inflate his earnings, the actual piggy bank is getting lighter and lighter. That can't continue forever.

© 2009 Gary Weiss. All rights reserved.