Thursday, April 16, 2009

Don't criticize Overstock.com and Patrick Byrne, especially if you are going through a divorce

Updated

Divorce is hard enough. However, when the CEO of a public corporation hires a paid internet stalker to spread innuendo, smears, and lies about a company critic’s ongoing matrimonial action to discredit him, that is called issuer retaliation. I’ll just call it outright scummy. Even worse is the threat leveled at me to “settle the case” by a corporate sponsored internet stalker. I’ll get to those points, later.

The company is Overstock.com (NASDAQ: OSTK). It is a company that has not produced a single financial report in compliance with Generally Accepted Accounting Principles and Securities and Exchange Commission disclosure rules from its inception, without having to later correct them, unless such reports were too old to correct.

Throughout its history, Overstock.com has restated financial reports due to noncompliance with GAAP and SEC rules and even restated many of those same financial reports again. The company never had a profitable year and has reported accumulated losses of over $260 million to date. Now, Overstock.com is buying back senior notes at a discount or profit after it lured investors to buy such notes based on what turned out to be financial reports that violated GAAP and SEC disclosure rules.

The CEO is Patrick Byrne (pictured right), who masquerades as a stock market reformer, while pathologically lying about his company’s financial performance for about ten years. He employs a group internet stalkers including Judd Bagley, below, to intimidate, threaten, harass, blackmail, smear, slander, and defame his critics.

The paid internet stalker is the nauseating Judd Bagley, who has used multiple anonymous aliases on internet chat boards to blackmail, defame, harass, and intimidate critics of his boss, Patrick Byrne. He has implanted spyware in emails to track critics of Byrne.

Judd Bagley once ran a an anonymous blog called antisocialmedia.net with Patrick Byrne’s full knowledge and support (despite Byrne’s public denials) until New York Post reporter Roddy Boyd exposed the charade. Bagley now spews innuendo, smears, and lies directed at Byrne's critics at Deepcapture.com which is funded by Byrne. Judd Bagley works with washed up Columbia Journalism Review reporter Mark Mitchell who left CJR after evidence surfaced that he violated its journalistic integrity standards.

The critic is me. In this blog, I have documented misconduct by Patrick Byrne and his unprincipled management team going back almost ten years. Here are some examples:

CEO Patrick Byrne’s serial lies about Overstock.com’s financial performance going back to 2000. Byrne misled the public by using non-GAAP revenues to overstate revenues while lying that Overstock.com was profitable when it was not profitable (Details here).

Overstock.com’s willful non-compliance with GAAP in reporting revenues since its inception (Details here).

Overstock.com took advantage of record losses in Q4 2006 and inflated inventory reserves. Former company President Jason C. Lindsey told investors that, "we used the fourth quarter to get rid of all the slow-moving inventory. I am quite pleased with the inventory balances we have now. ...I am pleased that the fourth quarter is now over. We have sold it." However, Overstock.com later disclosed that inventory reserves had actually increased. If Overstock.com had actually sold "all the slow-moving inventory as claimed by Lindsey, there is no way that inventory reserves can increase. The company overstated its inventory reserves to create a cookie jar reserve so it could increase profits in future quarters (Details here).

Former company President Jason C. Lindsey backdated his resignation (Details here).

Company President Jonathan E. Johnson lied to Wired.com about Overstock.com’s GAAP compliance (Details here). Shortly afterwards, he subsequent sold almost $1 million in stock (Details here).

Overstock.com’s willfully violated SEC Regulation G governing non-GAAP disclosures, such as EBITDA, to materially overstate its financial performance. CEO Patrick Byrne, company President Jonathan E. Johnson, former CFO David Chidester, now demoted by the company, lied to investors about Overstock.com’s compliance with SEC Regulation G (Details here).

Overstock.com Q4 2008 violated GAAP by failing to restate prior financial reports to correct a material accounting error and instead recognized a one-time gain to show its first profit in 15 quarters (Details here).

Lee Webb from Stockwatch chronicled my year long battle with Overstock.com to successfully force the company to comply with SEC Regulation G for certain non-GAAP financial disclosures and my ongoing battle to force the company to comply with GAAP and SEC rules in reporting accounting errors (Details here).

Overstock.com paid a $1.2 million fee to Icent LLC, a company run by resigning Board Member James V. Joyce, to terminate a consulting agreement. The termination fee amounted to 3.5 years of annual fees paid to Icent. The company did not disclose the enormous contract termination fee in its press release announcing Joyce's resignation. Instead, Overstock.com left investors with the mundane task of finding out about termination fee by disclosing it in a separate SEC filing (Details here).

Patrick Byrne is a ruthless corporate bully who maliciously retaliates against his critics

Patrick Byrne has viciously retaliated against me and other brave journalists and bloggers with innuendo, smears, and lies for having the courage to expose his misdeeds. Overstock.com sued independent research firm Gradient Analytics and short seller Copper River Management, formerly Rocker Partners for questioning Overstock.com’s financial disclosures, even though the company has historically violated GAAP and SEC rules. Gradient was running out of money and settled, while Copper River has counter sued Overstock.com charging financial fraud.

Byrne even paid Bagley to stalk, threaten, and harass a teen-age blogger, Zac Bissonnette, because he did not like his blog posts criticizing his actions.

Patrick Byrne can be extremely ruthless as he vents out his vile and baseless hatred on his perceived enemies. According to a Fortune Magazine article entitled, "Phantom Menace," written by Bethany McLean, Patrick Byrne made disgusting remarks directed at both McLean and Donn Vickrey from Gradient Analytics:

Even in that successful year, there were signs that Byrne was remarkably thin-skinned. In the fall of 2004, I wrote a FORTUNE story titled "Is Overstock the Next Amazon?" After the piece came out, Byrne sent me an e-mail saying "Fair. And balanced." Two days later he wrote another e-mail: "I actually thought it was crap.... So, why exactly did you become a reporter? Giving Goldman traders blowjobs didn't work out?" Around that same time, after Gradient released another report questioning board members' independence, Byrne wrote to Vickrey: "Donn, you make a living toadying to bully hedge funds ... you deserve to be whipped, f--d, and driven from the land."

Note: Bold print and italics added by me.

In April 2007, I was researching a blog post on Patrick Byrne and his paid stalker Judd Bagley. I visited Bagley’s antisocialmedia.net multiple times over a couple of days. Using an anonymous alias "panamapump" that Judd Bagley later acknowledged was his, Bagley posted on the Yahoo Overstock.com message board each time that I visited his blog and threatened me and my family:

On behalf of your family and in the interest of your own employability I ask you to please never visit ASM again. I'll email you new articles when they come out.

Note: Bold print and italics added by me.

Judd Bagley colluded with his trusted friend Edward Manfredonia to spread vile anti-Semitic trash talk about Conde Nast contributing editor Gary Weiss and I. Manfredonia once wrote the International Herald Tribune, “Don’t judge the Nazi’s too harshly.” He has sued Gary Weiss, the Securities and Exchange Commission, and Yahoo claiming among other things delusional criminal conspiracies singling out Jews, in particular. All of those cases were thrown out of court.

Patrick Byrne even bribed of Utah Attorney General Mark Shurtleff to write a letter (issued as a press release and still posted on Overstock.com’s web site) defaming me by claiming that I made certain agreements that I never made with Shurtleff's office. I went to Utah at my own expense and took no fees to train Shurtleff’s staff on combating white collar crime. However, taped transcripts of phone conversations with Chief Deputy Attorney General Kirk Torgensen and Deputy Attorney General Richard Hamp revealed Byrne’s scheme with Shurtleff to defame and discredit me (Details here).

Judd Bagley posts innuendo, smears, and lies about my divorce in an effort to discredit me

Most recently, I have been embroiled in a divorce with my former spouse. On January 7, 2008, she requested an order of protection against me, allegations of which I have steadfastly denied. She later withdrew her application for an order of protection.

On April 8, 2009, she asked the Court for another order of protection and restraining order on new issues unrelated to the previous January 7, 2008 order of protection application that she later withdrew. The Judge denied both of her requests.

That same day, despite the above facts, Judd Bagley (pictured right) took the opportunity to use my continuing divorce proceedings to deliberately post innuendos, smears, and lies about me on the Yahoo Overstock.com chat board using anonymous alias "sweetpotatobullmacho" that he has acknowledged is his.

Referring to my former spouse's April 8, 2009 request for an order of protection and restraining order, that evening Bagley wrote (Copy here):

Actually Sam, I'm having a blast figuring out what you did to get the judge -- who knows you very well by now -- to grant your wife's request for a restraining order AND a protective order against you today.

Wow. That's quite an accomplishment.

As detailed above, and as the Court documents show, the Court did not grant my former spouse's request for a restraining order and protective order. The Judge denied both motions filed by my former spouse on that same day.

Judd Bagley tells me to "settle case" or he will "attend trial"

On April 9, 2009, Judd Bagley tried to smear me again and intimidate me into settling the divorce case or he'd "probably attend" the trial (Copy here):

Sam,

Here's another saying for you: it's not cool for a man to threaten a women. Just don't do it. Here's some advice: settle the suit...give her whatever she wants. Because if it goes to trial, I'll probably attend.

How could Bagley even imply that I threatened my former spouse, since she withdrew her January 2008 motion and the Court denied her April 2009 motions?

Finally, Bagley threatened me by saying, "settle the suit...give her whatever she wants. Because if it goes to trial, I'll probably attend." In other words, if I don't settle, Patrick Byrne's paid internet stalker will attend my trial in an attempt to humiliate and discredit me.

What on earth does my divorce have to do with Overstock.com? For what purpose would Judd Bagley threaten to attend my trial, if I don't settle?

Patrick Byrne wants Judd Bagley to intimidate me into backing down from exposing fraud and misconduct at Overstock.com.

On April 13, 2009, Judd Bagley made another post on the Yahoo message board (Copy here):

http://iapps.courts.state.ny.us/webcivil/

And one more thing: as the above link shows, Sam apparently physically threatened his wife and so a judge issued protective and restraining orders against him.

But it's ok because spinsters Darla Dumont and Michelle Hartman decided to re-define domestic abuse as a virtue, so Sam's in the clear with them.

Again, my former spouse's January 2008 application for an order of protection was withdrawn by her and her March 2009 motion for an order of protection and restraining order was denied by the Judge that same day.

The link to Court rulings, referred to by Bagley above, clearly shows that my spouse's January 2008 request for an order of protection was withdrawn and Judd Bagley knew it before he posted his libelous remarks on Yahoo (Antar motion detail copied here).

Bagley should also have known that just because a decision by the Court on my former spouse's April 2009 motions is not yet posted, it does not preclude the fact that the Judge denied her motions.

In Conde Nast Portfolio, Gary Weiss wrote about Patrick Byrne's ongoing smear campaign against his critics and Judd Bagley posting lies about my divorce case:

Byrne is famous for a 2005 rant in which he claimed that his company was victimized by an imaginary "Sith Lord," and since then he has turned Overstock into a kind of corporate Somalia. He has consistently used smoked and mirrors to minimize his company's ongoing financial trauma--as corporate crime-fighter Sam Antar has chronicled--and has flushed any concept of ethics down the toilet by using his company's website as a platform for attacking critics (myself included), and by hiring a nauseating hatchet man named Judd Bagley.

In addition to his ongoing smear campaign against critics, Byrne has perfected the art of issuer retaliation (a subject not on the SEC's to-do list) by suing investors and analysts who don't like Overstock.

It's a really down-and-dirty smear campaign. Recently one Yahoo screen name, which has claimed to be Bagley, has taken to posting lies about Antar's divorce case on the Yahoo Overstock.com message board.

I complained about Judd Bagley's vicious smears in an email to Overstock.com's Audit Committee member Joseph J. Tabacco Jr, the company's Board of Directors, and the Securities and Exchange Commission:

Issuer retaliation against a critic that has exposed false disclosures by Overstock.com is a serious issue and yet the company has done nothing to stop it and has violated its Code of Business Conduct and Ethics. Such inaction on violations are considered implicit waivers of Overstock.com’s Code of Business Conduct and Ethics and must be disclosed on form 8-K.

Hours later, I received an email from Judd Bagley acknowledging that he authored the posts (above) slandering me and saying that he might be "wrong."

From: Judd Bagley [mailto:writerjudd@gmail.com]

Sent: Wednesday, April 15, 2009 8:06 PM

To: Sam E. Antar

Subject: your divorce

So, Sam, if I've got it wrong, and the judge did not issue restraining and protective orders against you, please do tell me exactly what did happen. If I've been wrong, I'll set the record straight as well as I can.

-- Judd Bagley

801.618.8455

Rather than rely on paid internet stalker Judd Bagley, who works for serial liar Patrick Byrne to smear critics, I chose instead to set the record straight, right here.

Divorce is very painful on both spouses, especially on their children. Despite our differences, Robin was still my wife for 28 years and we have three children. Patrick Byrne and Judd Bagley should stay away from Robin and our kids. My former spouse and our kids have enough issues to deal with, without Byrne and Bagley exploiting them in a smear campaign.

Udpate 1:

True to his sleezy form, the unrepentant Judd Bagley posted more information about my divorce using his acknowledged alias De Daumier-Smith on the Investor Village Overstock.com chat board (Copy here) and asked readers for help. He still does not believe that the Judge denied my former spouse's motions the same day that they were filed:

I need a trial attorney to look at this and tell me it doesn't mean that protective and restraining orders were issued against Sam on 4/8. I've had two others tell me that's what it does say. I'd take Sam's word, but the entire planet knows what that's worth.

What on earth does my divorce have to do with Overstock.com? How does my divorce justify Overstock.com's phony financial reports and its management team's serial lies to investors?

My private divorce proceedings are irrelevant to matters relating to Overstock.com and the company's history of GAAP violations, SEC disclosure violations, management lies to investors, and management violations of its Code of Business Conduct and Ethics.

Bagley's boss Patrick Byrne is still attempting to use my divorce to punish me for my continuing exposure of frauds committed by Byrne on investors.

Message to Overstock.com CEO Patrick Byrne: Take your best shot.

Update 2:

In a new Conde Nast Portfolio article, entitled, "The Whisper Campaign Against an Overstock.com Whistleblower," investigative reporter Gary Weiss writes:

Sam is the target of an increasingly crude smear campaign openly conducted by Byrne and his paid goon, a former Florida Republican go-fer named Judd Bagley, which has recently degenerated into a whisper campaign spreading lies and innuendo about his personal life.

I've written about these nightcrawlers a great deal (they've targeted me, which tends to focus one's attention on the matter), so I can say with some authority that the latest episode in this corporate Addams Family is a new low.

Sam, you see, is engaged in a divorce battle with his wife of 28 years. I've met Mrs. Antar; she is a lovely lady and that what's happening is a tragedy. Not even the grimiest criminals, not even Mafia hoods (and I've met my share of them), would think of intruding in such an unfortunate personal spat, but keep in mind that we are dealing with a particularly loathsome group of people here.

Note: Bold print and italics added by me.

Update 3:

On April 18, 2009, Judd Bagley was asked the following question by a person on the Investor Village Overstock.com message board:

4) Antar said that within hours of contacting an OSTK board member about your protection order mistake you wrote him somewhat apologetically saying that you were willing to redress any misunderstanding. Should I take it that you will go on record that no rebuke concerning this was transmitted to you directly or indirectly by an OSTK board member? Remember Judd, if any of the people you question refuse to go on record denying something, you assume they are guilty. So I look forward to yr answer.

In his latest display of arrogance, the sleazy and unrepentant Judd Bagley offered the following excuse in a posted message using his acknowledged alias De Daumier-Smith (copy here):

Someone sent me a comment Sam had made to Gary Weiss's blog, claiming that I was wrong about the orders. This was odd as it followed a week of Sam refusing to go on record denying something, so I assumed he was guilty. My email was not "apologetic". I just wanted to pin him down.

Note: Bold print and italics added by me.

In other words, Bagley took it upon himself to assume that I was "guilty" of physically threatening my former spouse because of my refusal to comment to him (a paid internet stalker) on the private matter of my divorce. Even any journalism or law school student will tell you that a refusal to discuss the private matter of a divorce is not any evidence of guilt.

Update 4:

Recommended reading: Sam E. Antar: From Crazy Eddie to Patrick Byrne's worst nightmare by William K. Wolfrum

Written by:

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

Disclosure:

I have no position in Overstock.com securities, long or short.

1 comment:

Laser said...

Dear Mr. Antar;

You are on point about Mr. Bryne's ethics. In mid year 2000 - Overstock began its toy web campaign with the acquisition of Toytime.com's inventory in Ohio.

They originally tried to acquire $10 million in new inventory for only 10 cents on the dollar.

Learning from our ways to halt bad faith dealings - the Creditors were able to push Overstock to 50 cents on the dollar ($5 million)

Then - Overstock tried a stunt in verification of the inventory seeking only to pay $2 million.

We were asked to do an Emergency supervision on Labor day weekend. That caused us to fly in a group of people from out of state to Ohio.

A wording within documents that our team was not made aware of stated that all "old" invoice items having no prices within the systems of Toytime would be counted as Zero.

Speciously and conveniently - all Beannie Babies (a very hot item) and all Nintendo etc games and other "expensive" items appeared to have no price in the system.

We spent a month in counting wars and came back to the Real price of 50 percent and then Patrick played his hole card - he took me out to lunch and offered to allow my company to sell all the Open cases (that were so for processing mail orders - which is what a Dot.com retailer is a New Age version of)

I told him that he was committing collusion in offering a bribe of sorts in a bankruptcy case.

The way I got them was - somehow the computer had Zero value on the high end products - so we flew to the home office of Toytime and copied the Invoices

All of them

They walked in and I told them we now had found the prices and showed them the boxes of invoices.

The next stunt they tried was - even though we had a mandate that no one could get past security - until all parties were there - a security guy was neatly Ill and vacant.

They moved pallets from one counted pallet row to the other side - saying they had proof my count was off 20%.

Discussions with the Creditors and their anger at Patrick's games led to the following.

I knew they had a big campaign planned for Christmas - it was now almost Oct 2000 and I said - with the back up of the Creditors - that we want 3 people from Overstock and 3 from ours - that we would count every pallet - 1 by 1 - and all 6 would sign and park the pallets as complete.

If - after that count - it did not come to exactly as our count had stated - they could have it at the $2 million less actual cash they were seeking to pay.

If - however - the count came to as documented - they would have to pay the extra costs of Pinkerton (a new Security that would sign a bond to quarantee no separate party entry and all the extra costs of counting (est to be $250,000 total)

The very next day Overstock agreed to pay $175,000 extra and accept our count!

Advertisement - Forbes Network

Advertisement - Google AdSense

Advertisement - Google AdSense