Saturday, May 12, 2007

To Patrick Byrne, CEO of Overstock.com: Stop Deflecting and Start Answering Questions

To Patrick Byrne, CEO of Overstock.com: Stop Deflecting and Start Answering Questions

As a convicted felon, who battled the Securities and Exchange Commission for almost two years before giving up, I advise you that your deflection campaign will not work with them.

The Securities and Exchange Commission is primarily investigating Overstock.com and you.

The SEC has dropped its investigation of Gradient Analytics and have continued their investigation of Overstock.com and you.

Please stop playing games and answer some questions.

The focus of the Securities and Exchange Commission investigation

In my previous blog post here, entitled, "Patrick Byrne, CEO of Overstock.com, receives SEC subpoena," I wrote that Overstock.com's 10 – Q for the most recent quarter ended March 31, 2007, and filed on May 9, 2007 with the Securities and Exchange Commission, contained the following new disclosure about the SEC investigation of Overstock.com:

On May 17, 2006, Patrick Byrne also received a subpoena from the Securities and Exchange Commission, Salt Lake City District Office....The Company and Mr. Byrne have responded to these subpoenas and each continues to cooperate with the Securities and Exchange Commission on this matter.

Note: Bold print and italics added by me

I read your various responses on Overstock.com’s web site, and on InvestorVillage.com (post # 7210 and post # 7271).

On Overstock.com’s web site you wrote:

Here is the punch-line: as a matter of law I must tread carefully here, but I can say that the heart of the investigation is not, I would suggest, Overstock-centric, but rather, concerns itself with a strange set of relationships among ….. Well, let me just say that the irony here is just delicious.

Questions:

Are you claiming that you and Overstock.com are not the focus of a Securities and Exchange Commission investigation?

Are you out and out lying when you purport “that the heart of the investigation is not, I would suggest, Overstock-centric”?

The timing of Overstock.com's new disclosure about the subpoena you received from the Securities and Exchange Commission

This morning, on May 12, 2007, in your most recent post (message # 7271) on InvestorVillage.com, under your alias Hannibal you wrote:

Is anyone else noticing that something seems to be going on this week? First, after a year of criticizing me for my decision to issue a press release celebrating my receipt of a subpoena from the SEC, the shills are now trying to make a case that I should have sent out a second press release when I received another addressed to me as a person, though it was a small fraction as long as the first, covered sub-issues of the first, as well as issues related to a broader investigation that is not about me or Overstock at all. As though there is a world of difference between a subpoena addressed to our corporate lawyer asking for our CEO’s materials, and one addressed to me at our corporate address: I hate to disappoint, but that distinction is such a fine one it did not occur to me it was worthy of a second press release. The funny part is how it still has not dawnede on the miscreants that a fair bit of the material being requested by the SEC concerns THEM, not me or Overstock.

Questions:

Are you lying when you purport that the "issues related to a broader investigation that is not about me or Overstock at all"?

Why did Overstock.com finally make a disclosure about your subpoena, after almost an entire year?

Since Overstock.com made the disclosure about the subpoena you received from the Securities and Exchange Commission in its recent 10 – Q for the quarter ended March 31, 2007 (and filed on May 9, 2007), why was such a disclosure omitted from previous financial reports?

If your subpoena did not warrant disclosure almost a year ago, why does it warrant disclosure now?

Overstock.com's inventory and gross margin disclosures

In an earlier post (message # 7210) on InvestorVillage.com, under your alias Hannibal, you wrote:

Inventory: our inventory has conservative reserves against it, the calculation is thoroughly reviewed by PriceWaterhouse every quarter, and in fact I think the reserves are really ample.

Questions:

Are you talking about inventory reserves for the current quarter or all previous quarters?

Were Overstock.com’s inventory reserves for each and every quarter that the company filed reports to the Securities and Exchange Commission “conservative” and “ample”?

Were Overstock.com’s inventory reserves for each and every quarter that the company filed reports to the Securities and Exchange Commission properly recorded in accordance with Generally Accepted Accounting Principles?

Your attempts to deflect attention away from your actions

On May 11, 2007, two days after the news broke about your Securities and Exchange Commission subpoena, Judd Bagley posted an attack on Jim Cramer (TheStreet.com) on the smear web site antisocialmedia.net, entitled “THE LATEST: How not to respond to a subpoena by the SEC.”

Questions:

What does Jim Cramer have to do with the Securities and Exchange Commission investigation of accounting issues at Overstock.com?

Is he on your accounting staff?

In a post on InvestorVilage.com (message # 7259) Judd Bagley (Director of Social Media at Overstock.com), under his alias De Daumier-Smith, accused me as posting under an anonymous alias in a response to a different person:

Re: Daumier-Smith, You asked to discuss subpoena response ethics

Well I see we all now know where to find Sam Antar on this board.

Mind if I just call you HectorSAMtos?

Later in that same post he wrote:

My post on ASM is not intended to serve as a point of comparison with anything. Instead, all the chatter of responses to subpoenae (that may look like a dirty word, Sam, but it's not) merely served to remind me that I've had that post on Cramer sitting in reserve for about two months.

Questions:

Is Judd Bagley delusional?

Is Judd Bagley’s post accusing a different person of being me, another one of his fictions?

When Judd Bagley purported that “….I've had that post on Cramer sitting in reserve for about two months,” was he waiting for the most opportune time to publish it, for deflection purposes?

Patrick Byrne and Judd Bagley acting in collusion

Since your subpoena from the Securities and Exchange Commission was disclosed on May 9, 2007 in Overstock.com’s 10 – Q for the quarter ended March 31, 2007, you and/or Judd Bagley have made the following posts on Overstock.com’s web site, SiliconInvestor.com, InvestorVillage.com, and antisocialmedia.net (Note: times listed are local times for Salt Lake City, Utah):

Thursday, May 9, 2007 at 2:59 PM: Judd Bagley on SiliconInvestor.com web site

Thursday, May 9, 2007 at 3:58 PM: Judd Bagley on SiliconInvestor.com web site

Thursday, May 10, 2007 at 1:14 PM: Patrick Byrne on Overstock.com web site

Thursday, May 10, 2007 at 6:06 PM: Patrick Byrne on InvestorVillage.com web site

Thursday, May 10, 2007 at 11:16 PM: Judd Bagley on InvestorVillage.com web site

Friday, May 11, 2007 at 10:36 AM: Judd Bagley on InvestorVillage.com web site

Friday, May 11, 2007 at 1:11 AM: Judd Bagley on antisocialmedia.net web site (no link provided)

Friday, May 11, 2007 at 11:55 AM: Judd Bagley on InvestorVillage.com web site

Friday, May 11, 2007 at 4:55 PM: Judd Bagley on InvestorVillage.com web site

Friday, May 11, 2007 at 7:28 PM: Judd Bagley on InvestorVillage.com web site

Saturday, May 12, 2007 at 1:58 AM: Patrick Byrne on InvestorVillage.com web site

Saturday, May 12, 2007 at 7:30 AM: Patrick Byrne on InvestorVillage.com web site

Saturday, May 12, 2007 at 11:07 AM: Judd Bagley on InvestorVillage.com web site

Saturday, May 12, 2007 at 11:08 AM: Judd Bagley on InvestorVillage.com web site

Saturday, May 12, 2007 at 12:23 PM: Patrick Byrne on InvestorVillage.com web site

Saturday, May 12, 2007 at 5:11 PM: Patrick Byrne on InvestorVillage.com web site

In addition, Judd Bagley, under his alias De Daumier-Smith, has posted recommendations to certain comments you posted on InvestorVillage.com.

Questions:

Why are you enabling Judd Bagley to post messages on internet message boards and blogs during normal week day office hours at Overstock.com?

Is Judd Bagley acting in concert with you in an attempt to deflect attention from your actions?

Is Judd Bagley using the smear web site antisocialmedia.net in collusion with you to deflect attention from your actions?

Are you using the web site antisocialmedia.net as a tool to further the agenda of Overstock.com and you?

Are you and Judd Bagley operating as a “tag team” in attempt to defect attention from your actions?

Show transparency

You call yourself the “humble servant” of Overstock.com shareholders and once said in an interview with USA Today:

Chief executives who are mounting legal defenses should be wary of playing dumb.

Therefore, Mr. Byrne, start answering questions truthfully and unambiguously. Please stop playing games. Your efforts at deflection and smear are not helping you and Overstock.com. Show real transparency. After all, the SEC is investigating you and Overstock.com.

Respectfully,

Sam E. Antar (former Crazy Eddie CFO & convicted felon)

Other Information about Overstock.com:

White Collar Fraud Blog - Is Patrick Byrne, Overstock.com CEO, making false, misleading, and/or deceptive statements about the company’s financial issues?

Information about Overstock.com's inventory and gross margin issues:

FRAUDfiles Blog: Why the Overstock Inventory Issue Matters, by Tracy Coenen

Other blogs and web sites covering Overstock.com:

Gary Weiss - The SEC Subpoena Patrick Byrne 'Forgot'

Herb Greenberg's Market Blog - SEC Subpoenas Overstock CEO Patrick Byrne

Herb Greenberg's Market Blog - Byrne Gone Wild

Notions on High and Low Finance - A Conspiracy So Vast, by Floyd Norris (subscription required)

O-Smear - The 1,281 Word "No Comment"

Lee Distad's Professional Opinion - CEO "forgets" to tell investors he's been subpoenaed by the SEC...for over a year!

Gary Weiss - The Patrick Byrne Meltdown Continues

Gary Weiss - More Patrick Byrne Subpoena Fallout

Gary Weiss - Did Overstock.com CEO Patrick Byrne Lie to the SEC?

New York Times - Making Sure the Negative Can Be Heard, by Joe Nocera (Subscription required)

Fraudfiles Blog: Overstock.com CEO Patrick Byrne and the subpoena problem, by Tracy Coenen

2 comments:

Jeff Matthews said...

Excellent questions, Sam. Every one.

And by the way, I am not making up my name!

Sam E. Antar said...

Jeff:

We may have to wait for Patrick Byrne to testify under oath before we get any answers.

Patrick Byrne can always choose to exercise his 5th amendment privilege against self-incrimination.

Even if Patrick Byrne does choose to testify, there he no guarantee that he will tell the truth.

He may stonewall investigators with deceptive answers and rants.

We have to wait and see.

Right now, Patrick Byrne is apparently playing his game of deflection and smears in an effort to divert attention away from his actions.

Respectfully,

Sam E. Antar (former Crazy Eddie CFO & convicted felon)