Wednesday, May 30, 2007

Open Letter to the Audit Committee of Overstock.com: The Company’s Code of Business Conduct and Ethics and actions of Patrick Byrne and others

Via: E-mail at 6:04 AM (ET)


Dear Allison H. Abraham and Clay Corbus, Audit Committee Members:

When the Securities and Exchange Commission investigated Crazy Eddie, I found them to be tenacious in pursuing an investigation of my criminal activities. Class action plaintiff lawyers are an equally persistent bunch of people, too. Crazy Eddie’s Audit Committee members spent years during the government investigations and class action law suits directed at Crazy Eddie, defending their actions using extensive amounts of time, resources, and funds.

As you know, Securities and Exchange Commission is now investigating Overstock.com and its CEO, Patrick Byrne. A subpoena was sent to the company on May 9, 2006 and a few days later on May 17, 2006, to its CEO Patrick Byrne. The Securities and Exchange Commission is concerned about possible securities law violations by Overstock.com, its CEO Patrick Byrne, and others.

An issue of concern to you as Audit Committee members is compliance with Overstock.com’s Code of Business Conduct and Ethics and reporting any amendments to, and waivers from, its ethics codes as required by the Securities and Exchange Commission.

It is possible that actions by certain employees of Overstock.com violate the company's Code of Business Conduct and Ethics. It appears that such possible violations of Overstock.com’s Code of Business Conduct and Ethics may have been executed with the approval and/or endorsement of one or more of the company's Senior Financial Officers (as defined by its Code) and may be construed by the Securities and Exchange Commission as an ethics violation by such officers. If it is determined that you failed to act on possible material ethics violations by Senior Financial Officers of the company, there may be disclosure issues with the Securities and Exchange Commission.

In the addendum at the end of this letter, I provide you with sources of information that have raised issues about activities of Patrick Byrne, Judd Bagley, and other employees of Overstock.com.

Patrick Byrne, Judd Bagley, and all other Overstock.com employees are subject to Overstock.com’s Code of Business Conduct and Ethics

Overstock.com’s Code of Business Conduct and Ethics states:

This Code of Business Conduct and Ethics covers a wide range of business practices and procedures. It applies to all our directors, officers, employees, except for Section 14, which applies only to our Senior Financial Officers. It does not cover every issue that may arise, but it sets out basic principles to guide all employees of the Company.

You should investigate Patrick Byrne, Judd Bagley, and possibly other Overstock.com employees for possible improper behavior under the company's Code of Business Conduct and Ethics.

The introduction of Overstock.com’s Code of Business Conduct and Ethics states in part:

All of our employees must conduct themselves accordingly and seek to avoid even the appearance of improper behavior.

Item 5 of Overstock.com’s Code of Business Conduct and Ethics states in part:

No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.

Item 8 of Overstock.com’s Code of Business Conduct and Ethics states in part:

Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guess work, or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos, and formal reports….
In accordance with these policies, in the event of litigation or governmental investigation please consult with the company’s General Counsel.

Additional item to consider

On May 17, 2007, Patrick Byrne received a subpoena from the Securities and Exchange Commission. Patrick Byrne’s subpoena was not disclosed until almost a year later on May 9, 2007, in the company's 10 - Q report filed with the Securities and Exchange Commission, for the quarter ended March 31, 2007.

Some questions to consider asking

When did Patrick Byrne disclose his Securities and Exchange Commission subpoena to the company’s General Counsel?

If Overstock.com’s General Counsel was informed about the subpoena by Patrick Byrne, did he promptly inform the Audit Committee?

When did the Audit Committee learn about Patrick Byrne’s subpoena?

If the Audit Committee was promptly informed about Patrick Byrne’s subpoena, why was the disclosure delayed?

When were the auditors informed about Patrick Byrne’s subpoena?

Item 12 of Overstock.com’s Code of Business Conduct and Ethics states in part:

Any waiver of this Code for executive officers or directors may be made only by the Board or Audit Committee and will be promptly disclosed on Form 8–K within five days or otherwise required by law or stock exchange regulation. Any waiver of this Code for any other employee may be made only by (i) the President (ii) the General Counsel, or (iii) the Board or Audit Committee.

Additional item to consider

Since Patrick Byrne is the CEO and not the President, General Counsel, or Audit Committee member of Overstock.com, you should consider who had the authority to approve of Judd Bagley’s activities that possibly violated the company's Code of Business Conduct and Ethics, whether it may be Jason C. Lindsey (President) or Jonathan Johnson (General Counsel).

Some questions to consider

If Patrick Byrne has endorsed and encouraged Judd Bagley’s activities on his antisocialmedia.net smear web site, did Lindsey or Johnson approve of it?

If Patrick Byrne has endorsed and encouraged Judd Bagley’s activities on internet message boards, sometimes using anonymous or misleading aliases, did Lindsey or Johnson approve of it?

Did Patrick Byrne exceed his authority, if he approved of possible waivers from Overstock.com's Code of Business Conduct and Ethics for Judd Bagley?

Item 14 of Overstock.com’s Code of Business Conduct and Ethics states:

As used in this Section 14, the term “Senior Financial Officer” means the Company’s President, Principal Financial Officer, Principal Accounting Officer and Controller, or persons performing similar functions. The Senior Financial Officers are subject to the entire Code of Business Conduct and Ethics. In addition, however, the Senior Financial Officers are subject to this Section 14, which has been adopted by the Board of Directors to deter wrongdoing and promote honest and ethical conduct, proper disclosure of financial information in the Company’s reports and documents that the Company files with, or submits to, the Securities and Exchange Commission and in other public communications, and compliance with applicable laws, rules, and regulations by the Company’s Senior Financial Officers.
In performing his or her duties, each of the Senior Financial Officers must:
  • maintain high standards of honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interests between personal and professional relationships;
  • report to the Audit Committee of the Board of Directors any conflict of interest that may arise and any material transaction or relationship that reasonably could be expected to rise to a conflict;
  • provide, or cause to be provided, full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with or submits to the Securities and Exchange Commission and in other public communications made by the Company;
  • comply and take all reasonable actions to cause others in the Company to comply with applicable government laws, rules, and regulations; and
  • promptly report violations of this Section 14 to the Audit Committee
Any request for a waiver of any portion of this Section 14 must in writing and addressed to the Audit Committee. Any waiver of any portion of this Section 14 will be promptly disclosed on Form 8-K or by other means specified by the Securities and Exchange Commission.
The Audit Committee will assess compliance with this Section 14, and shall determine appropriate actions to be taken in the event of a violation of this Section 14 by any Senior Financial Officer.

Some questions you should consider


Did Patrick Byrne (CEO of Overstock.com), Judd Bagley (Director of Communications at Overstock.com) and possibly other employees violate Overstock.com’s Code of Business Conduct and Ethics?

Do possible ethics violations by employees of Overstock.com such as Judd Bagley with the tacit endorsement of Patrick Byrne constitute an ethics violation by Patrick Byrne?

Has Patrick Byrne directed employees of Overstock.com to commit certain acts in possible violation of Overstock.com's Code of Business Conduct and Ethics?

Can a "Senior Financial Officer" of Overstock.com shield himself from ethics violations by purposely enabling and vocally supporting actions by company employees that may violate its Code of Business Conduct and Ethics (e.g. providing links to the antisocialmedia.net smear web site on his message board posts and directing people to antisocialmedia.net on Overstock.com’s web site)?

Can a "Senior Financial Officer" of Overstock.com shield himself from ethics violations by knowingly permitting certain other employees of Overstock.com to commit possible violations of the company's Code of Business Conduct and Ethics?

If any "Senior Financial Officer" such as Patrick Byrne did violate Overstock.com’s Code of Business Conduct and Ethics, what actions should the company and in particular the Audit Committee consider regarding any possible securities law issues?

Do possible violations of Overstock.com’s Code of Business Conduct and Ethics by Patrick Byrne and others possibly acting in collusion with him such as Judd Bagley, require disclosure to the Securities and Exchange Commission?

Do possible violations of Overstock.com’s Code of Business Conduct and Ethics by employees that are endorsed and/or encouraged by Patrick Byrne require disclosure to the Securities and Exchange Commission?

Do certain deceptive and/or inconsistent statements by Patrick Byrne and other Overstock.com officers about the company during earnings conference calls and other means of communication constitute ethics violations?

Are deceptive statements by Patrick Byrne about the company on internet message boards, on blogs, and in other media a violation of Overstock.com’s Code of Business Conduct and Ethics?

Does inaction by Overstock.com on possible non-compliance with its Code of Business Conduct and Ethics create serious issues under the securities laws?

Patrick Byrne, as the Chief Executive Officer of Overstock.com, is considered by the Securities and Exchange Commission to be a “principal executive officer” and Overstock.com’s Code of Business Conduct and Ethics to be a “senior financial officer” of Overstock.com.

You should consider certain disclosure requirements under Section 406 of Sarbanes-Oxley regarding possible ethics violations by Patrick Byrne and others.

For example, according to the Securities and Exchange Commission:

Companies must comply with the code of ethics disclosure requirements promulgated under Section 406 of the Sarbanes-Oxley Act in their annual reports for fiscal years ending on or after July 15, 2003. They also must comply with the requirements regarding disclosure of amendments to, and waivers from, their ethics codes on or after the date on which they file their first annual report in which the code of ethics disclosure is required.

Some questions to consider asking

Has Overstock.com made “immediate disclosure” of “any change to, or waiver from, the company's code of ethics” for its senior financial officers?

Does the Board of Directors of Overstock.com ignore actions by Patrick Byrne that possibly violate Overstock.com’s Code of Business Conduct and Ethics?

Form 8-K


The Securities and Exchange Commission instructions for Form 8–K states:

Item 5.05 Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.
(a) Briefly describe the date and nature of any amendment to a provision of the registrant’s code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulations S-K and S-B (17 CFR 229.406(b) and 228.406(b), respectively).
(b) If the registrant has granted a waiver, including an implicit waiver, from a provision of the code of ethics to an officer or person described in paragraph (a) of this Item 5.05, and the waiver relates to one or more of the elements of the code of ethics definition referred to in paragraph (a) of this Item 5.05, briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver.

The Securities and Exchange Commission defines the term “code of ethics” as:

  • … written standards that are reasonably designed to deter wrongdoing and to promote:
  • Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
  • Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant;
  • Compliance with applicable governmental laws, rules and regulations;
  • The prompt internal reporting to an appropriate person or persons identified in the code of violations of the code; and
  • Accountability for adherence to the code.

An article entitled “Corporate Ethics and Sarbanes-Oxley” (article first appeared in Wall Street Lawyer – July 2003) by Frank Navran and Edward L. Pittman, published on Ethics.org, states:

Of the five elements of the Commission's code, the only one that is specific to public companies relates to accuracy and timeliness of disclosure in public filings and other public communications. A more general statement of the requirement may be expressed as the value of "honesty." Honesty, for example, includes being candid, open, truthful, and free from deception and deceit--telling the truth, even when doing so may be difficult, and being forthcoming with all relevant facts and information. The core principle of telling the truth and coming forward with information in internal discussions is important.

Some questions to consider

Has Patrick Byrne been "candid, open, truthful, and free from deception and deceit--telling the truth, even when doing so may be difficult, and being forthcoming with all relevant facts and information" in his public communications about the company, his actions, and/or the actions of certain employees of Overstock.com?

Has Patrick Byrne been "candid, open, truthful, and free from deception and deceit--telling the truth, even when doing so may be difficult, and being forthcoming with all relevant facts and information" in his internal discussions with the company?

Implicit waivers

If the company failed to take prompt action regarding any possible material departures from its Code of Business Conduct and Ethics by Patrick Byrne and other Senior Financial Officers, it may be considered as giving Mr. Byrne and possibly others an “implicit waiver” from its Code of Business Conduct and Ethics.

An “implicit waiver” must be disclosed in Form 8–K filed with the Securities and Exchange Commission. The instructions to Form 8-K state:

2. For purposes of this Item 5.05:
(i) The term waiver means the approval by the registrant of a material departure from a provision of the code of ethics; and
(ii) The term implicit waiver means the registrant’s failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer, as defined in Rule 3b-7 (17 CFR 240.3b-7) of the registrant.

Another part of the article entitled “Corporate Ethics and Sarbanes-Oxley” by Frank Navran and Edward L. Pittman, published on Ethics.org, states:

An "implicit waiver" is the company's failure to take action within a reasonable period of time regarding a "material departure" from a provision of the code of ethics that "has been made known to an executive officer."
Later in the article, the authors' state:

…companies must disclose any amendments to their codes of ethics as they relate to the principal executive officer or senior financial officers. Presumably, this measure was designed to ensure that changes in a company's policies are not made for improper purposes and that an accurate code is available to the investing public at all times.

Later in the article, they continue:

A code of ethics and ethical values are important elements of the internal control process of public companies…. The failure of a company (and its employees) to observe the values published in its code of ethics is not, in itself, a violation of the federal securities laws. However, the recent Commission actions may trigger disclosure requirements. More importantly, failure to observe the values set forth in the code may lead to violations of the law.

Therefore, any failure to take action within a “reasonable period of time” against Patrick Byrne or certain other officers for possible material violations of Overstock.com’s Code of Business Conduct and Ethics raises serious disclosure issues with the Securities and Exchange Commission.

From my experience, the Securities and Exchange Commission considers specific individual acts separately, collectively, and in the aggregate to determine compliance with securities laws. In addition, they may consider the pattern of a person's actions and the pattern of acts by other persons acting in concert with a certain person. Therefore, I urge you to examine the totality of Patrick Byrne’s actions and others acting in possible concert with him.

Consider guidance from PriceWaterhouseCoopers (PWC), Overstock.com’s auditors

PriceWaterhouseCoopers, Overstock.com's auditors, has provided certain guidance regarding your role as Audit Committee members relating to oversight of ethical conduct and compliance.

In a publication entitled, “Audit Committee Effectiveness Taking the initiative: High-quality audit committees should present a full picture of their effectiveness,” PWC advises:

CEOs and CFOs make inherently subjective assessments and judgements every time a company produces external reports. Audit committees have a valuable role to play in overseeing this process, helping to inject objectivity and independence into CEO/CFO decision-making. By ensuring that management forms a disclosure committee (as has been the practice for SEC registrants as a result of the Sarbanes-Oxley legislation), with members drawn from the senior executive (including risk, internal audit, legal and compliance), assurance can be provided that everything that should be considered for disclosure has, indeed, been considered objectively.

According to a PriceWaterhouseCoopers white paper entitled “The Sarbanes-Oxley Act of 2002 And Current Proposals by NYSE, Amex, and NASDAQ: Board and Audit Committee Roles in an Era of Corporate Reform” about ethics compliance:

It is increasingly expected that a board will provide oversight of a company’s ethical conduct. Notably, in the Caremark case, the Delaware Chancery Court also articulated the responsibility of boards of directors for overseeing ethics and compliance.

Overstock.com’s auditors suggest certain “Key Points to Consider” for ethics compliance:

Oversight of Ethical Conduct and Compliance
Review the board’s oversight practices in this area with reference to statutory and regulatory obligations – as well as shareholder interests and expectations.
Seek to have one or more board members who understand the sensitive ethical issues within the company’s industry.
Oversee that the company is:
  • Setting a strong “tone at the top” regarding corporate responsibility for ethical practices.
  • Committed to business integrity.
  • Living its values.
  • Demonstrating that it has ethics and compliance processes in place.
  • In compliance with the new code of conduct or ethics requirements.
Take a proactive approach to ethics:
  • Ask questions about sensitive ethics situations.
  • Follow through to confirm that the situations are resolved with fair-mindedness.
  • Determine that the resolution reflects the accountability and integrity of the company and its employees, as well as compliance with legal requirements.
  • Convey to company employees the board’s commitment to having a strong ethical environment.
  • Establish a process for reviewing code waiver requests involving directors and executive officers, and others as may be desired.
Remember that perception is sometimes as important as fact and reality when dealing with ethical issues – to employees as well as outsiders.

Consider guidance from the American Institute of Certified Public Accountants (AICPA) to the accounting profession regarding auditor’s client’s compliance with their code of ethics

An article on the AICPA web site entitled, "What Does New Audit Standard SAS No. 99, Consideration of Fraud in a Financial Statement Audit, Mean for Business and Industry Members?" states:

The ethical culture needs to be set by management through their daily words, but more importantly, their actions. Therefore, the organizations value system requires not so much a written code of conduct (which is important as well) but a daily, consistent adherence to these values. Companies should also clearly communicate their ethical values, decision-making processes and codes of conduct to all employees so they may be empowered to make appropriate ethical decisions even when they are far from headquarters or confronted with a new dilemma.

Consider the Caremark case

From an article written by Rebecca Walker, entitled “Board Oversight of a Compliance Program,” I quote:

In Caremark, the Delaware Chancery Court stated that it would be a mistake to conclude that corporate boards can
... satisfy their obligation to be reasonably informed concerning the corporation, without assuring themselves that information and reporting systems exist in the organization that are reasonably designed to provide to senior management and to the board itself timely, accurate information sufficient to allow management and the board, each within its scope, to reach informed judgments concerning both the corporation's compliance with law and its business performance.

I respectfully urge you to research the issues that I have raised in this letter and in my blog posts and issues raised by others (see Addendum)

You have been notified in this letter to examine the actions of Patrick Byrne (CEO of Overstock.com), Judd Bagley (Director of Communications at Overstock.com), and possibly other Overstock.com officers and employees who may be acting in concert and in collusion with them for possible violations of Overstock.com’s Code of Business Conduct and Ethics. You should consider possible disclosure issues with the Securities and Exchange Commission. Disclosure issues with the Securities and Exchange Commission can lead to charges of violating securities laws.

Your failure to investigate these issues may subject you to certain legal consequences with the Securities and Exchange Commission and possibly with other Overstock.com shareholders. You should examine any obligation and representations made to Overstock.com's Directors and Officers insurer (assuming you are insured) as it relates to compliance with such policies.

Respectfully,

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

Addendum:

To gain a better understanding as to whether there have been violations to Overstock.com’s Code of Business Conduct and Ethics, I urge you to read the following posts from my blog:

January 15, 2007: Overstock.com: An Arsenal of Intimidation and Fear

January 17, 2007: Sam E. Antar and Judd Bagley form Overstock.com Communicate on Dealbreaker Blog

April 4, 2007: Don't Mess with Overstock.com CEO Patrick Byrne

April 16, 2007: The Deceptions of Patrick Byrne (CEO of Overstock.com) and Judd Bagley (Director of Social Media at Overstock.com)

April 25, 2007: Questions the Securities and Exchange Commission may a`sk Patrick Byrne (CEO of Overstock.com) in its investigation of (not “on”) Overstock.com

May 3, 2007: Is Patrick Byrne, Overstock.com CEO, making false, misleading, and/or deceptive statements about the company’s financial issues?

May 9, 2007: Patrick Byrne, CEO of Overstock.com, receives SEC subpoena

May 12, 2007: To Patrick Byrne, CEO of Overstock.com: Stop Deflecting and Start Answering Questions

May 13, 2007: Patrick Byrne, CEO of Overstock.com Cannot Answer a Simple Question

May 14, 2007: Overstock.com and Patrick Byrne: The Deception Continues

May 15, 2007: Overstock.com: A Copy of its Code of Business Conduct and Ethics

May 16, 2007: To Patrick Byrne, CEO of Overstock.com - Did you comply with the Company's Code of Business Conduct and Ethics

May 17, 2007: To Patrick Byrne, CEO of Overstock.com: More Questions about the Company's Code of Business Conduct and Ethics

May 25, 2007: Why are people distancing themselves from Overstock.com CEO Patrick Byrne?


In addition, I urge to you read the following posts in other blogs:


O-Smear (Exposing online smear campaigns for what they really are)

Gary Weiss Blog – Posts about Overstock.com

Tracy Coenen: Fraudfiles Blog – Posts about Patrick Byrne

Jeff Matthews Is Not Making This Up Blog – Posts about Patrick Byrne

Herb Greenberg’s Market Blog – Posts about Patrick Byrne

Floyd Norris: Notions on High and Low Finance – Posts on Overstock.com (subscription required)

DealBreaker Blog - Posts on Overstock.com

Lee Distad’s Professional Opinion – Posts on Overstock.com


Please read these columns, too:


Joe Nocera: New York Times – Overstock.com’s Campaign of Menace (subscription required)

Joe Nocera: New York Times – Revisiting Overstock and Utah (subscription required)

Ashlee Vance: The Register – The Bizarre World of Patrick Byrne’s Overstock

Roddy Boyd: The New York Post – Overstock.com Lashes Out At Critics on Web

Finally, you should carefully examine the content of statements made by Patrick Byrne, Judd Bagley, and other Overstock.com employees on:

Earnings conference calls
Overstock.com’s web site
Internet message boards and blogs
Television
Newspapers
Other media

Friday, May 25, 2007

Why are people distancing themselves from Overstock.com CEO Patrick Byrne?

My experience

In late 1988, the government investigators were closing in on Eddie and me. Many former friends, colleagues, and co-workers distanced themselves from us. Eventually, I would learn that Eddie’s father (Sam M. Antar), brothers (Allen Antar and Mitchell Antar), and his brother-in-law Ben Kuszer had set us up to take the fall. Later, even my cousin "Crazy" Eddie Antar left me out to hang. Is a similar situation, going on at Overstock.com?

Overstock.com delays reporting a Securities and Exchange Commission subpoena to its CEO, Patrick Byrne, for almost a year

On May 9, 2007, Overstock.com disclosed in its 10-Q that Patrick Byrne (CEO of Overstock.com) received a subpoena from the Securities and Exchange Commission almost a year earlier on May 17, 2006.

Overstock.com’s two Audit Committee Financial Experts – One resigns, the other cashes out most of her holdings

Last night, Overstock.com announced the resignation of Ray J. Groves. Mr. Groves was a member of Overstock.com’s, so-called “independent” Audit Committee. He was one of the two audit committee financial experts on Overstock.com’s Audit Committee.

The other “audit committee financial expert” is Allison H. Abraham. Shortly after Overstock.com disclosed Patrick Byrne’s subpoena, she cashed out most of her position in Overstock.com’s common stock by selling 15,000 shares at $17.2175 each for gross proceeds of $258,262.50.

Patrick Byrne’s relationship with Randy Groves

During an earnings conference call for the third quarter of fiscal year 2005, Patrick Byrne, described his relationship with Ray J. Groves:

Ray Groves is a former managing partner of Ernst & Young -- Ernst & Whinney, then Ernst & Young. I worked with him in the mid '90s on a number of acquisitions, and sat on a couple of boards with him, and in fact, he made me the money that was the origin of Overstock. We did about four deals together, and two of them worked out just spectacularly. And we had a great relationship. We haven't done anything for five or six years together, but literally, the funding from Overstock, when I think of it, when we were still private -- my piece of it all came from deals that I did with Ray. We were in a printing company and a fixed base operator company and a mulch company that we just sold. He has a tremendous business mind as well as, of course, a great financial mind. I think he's going to sit on the audit committee…. [Emphasis added.]

Ray Groves continues to serve on other company Board of Directors

According to Herb Greenberg’s Market Blog:

Groves remains a director of EDS (eds), where he chairs the audit committee, and Boston Scientific (bsx). Neither company has issued a press release announcing his departure.
Other resignations by Board members


On February 23, 2007, John A. Fisher resigned from the Board of Directors purportedly over a “disagreement with the Company’s pursuit of the lawsuit against the Prime Brokers.”

On July 31, 2006, Patrick Byrne’s father, John J. Byrne, resigned from the Board of Directors. According to Overstock.com’s form 8–K, filed with the Securities and Exchange Commission:

…John J. Byrne announced his retirement from the Board of Directors of the Company due to his new role as Chairman of White Mountains Insurance Group. The resignation did not result from a disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

However, according to an article in c/net news entitled, “Overstock ‘jihad' divides father and son” published on March 2, 2006, and written by Greg Sandoval:

Even Overstock.com Chairman John "Jack" Byrne, the father of CEO Patrick Byrne, wants his son to give up his fight against bankers, investors and journalists who the younger Byrne claims are trying to purposely deflate his company's stock price.
In an interview with CNET News.com, Patrick Byrne acknowledged that taking up the issue, which has made him one of the nation's most controversial executives, has prompted his father to consider stepping down as chairman.
"I've never expected him to (understand) this fight," said Patrick Byrne of his father. "He's been making noise about stepping down."
Jack Byrne was quoted on the Wall Street Journal's Web site on Thursday as saying that "Patrick and I have had some wonderful times together on Overstock, but we've also had some stormy times. I'd rather keep my relationship with my son than be the chairman of the board...I don't think it's a wise idea to be chairman with a headstrong son." [Emphasis added.]

What is going on at Overstock.com?

According to Overstock.com’s Code of Business Conduct and Ethics, Patrick Byrne is required to:

Report to the Audit Committee of the Board of Directors any conflict of interest that may arise and any material transaction or relationship that could reasonably be expected to give rise to a conflict...

Did Patrick Byrne promptly report his Securities and Exchange Commission subpoena to Overstock.com’s Audit Committee of the Board of Directors?

Did he deliberately hide information about his subpoena from the Audit Committee?

If Patrick Byrne had reported his Securities and Exchange Commission subpoena to the Audit Committee shortly after receiving it, why did the company wait almost a year to disclose it?

Did Patrick Byrne have any disagreements with members of the Audit Committee concerning disclosure of his Securities and Exchange Commission subpoena?

Another provision of Overstock.com’s Code of Business Conduct and Ethics states:

Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guess work, or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos, and formal reports….
In accordance with these policies, in the event of litigation or governmental investigation please consult with the company’s General Counsel.

Patrick Byrne has not avoided “exaggeration, derogatory remarks, guess work, or inappropriate characterizations of people and companies that can be misunderstood.” His well documented actions have been at odds with Overstock.com’s Code of Business Conduct and Ethics.

Another question is whether Patrick Byrne promptly consulted with Overstock.com’s General Counsel after receiving his subpoena on May 17, 2006?

If Patrick Byrne had promptly consulted with the Company’s General Counsel about his subpoena, did the General Counsel advise him against disclosing the subpoena to the Audit Committee?

Waivers

According to the Securities and Exchange Commission:

Companies must comply with the code of ethics disclosure requirements promulgated under Section 406 of the Sarbanes-Oxley Act in their annual reports for fiscal years ending on or after July 15, 2003. They also must comply with the requirements regarding disclosure of amendments to, and waivers from, their ethics codes on or after the date on which they file their first annual report in which the code of ethics disclosure is required.

Did Overstock.com make any disclosures "of amendments to, and waivers from" its Code of Business Conduct and Ethics?

If the Company’s Board of Directors permitted actions by Patrick Byrne that were contrary to its Code of Business Conduct and Ethics without disclosing any waiver to the Securities and Exchange Commission, they may be afoul of securities laws.

The Securities and Exchange Commission investigation of Overstock.com and Patrick Byrne continues.

Written by:

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

Update:

In Form 8–K, filed with the Securities and Exchange Commission, Ray J. Groves gave his purported reason for resigning:

Please accept my resignation from the board of directors of Overstock.com, Inc. effective immediately. My resignation relates to the Company’s prime broker suit.

Why did Ray J. Groves resign now?

Another Director, John A. Fisher, resigned on February 27, 2007, purportedly for the same reason.

Is it coincidental that Ray J. Groves finally decides to resign after Overstock.com's disclosure of Patrick Byrne’s Securities and Exchange Commission subpoena almost a year after he was subpoenaed?

Thursday, May 17, 2007

To Patrick Byrne, CEO of Overstock.com: More Questions about the Company's Code of Business Conduct and Ethics

To Patrick Byrne, CEO of Overstock.com:

Transparency

According to the Securities and Exchange Commission, there are three prescribed alternative methods for making a company’s code of ethics publicly available:

First, a company may file a copy of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and addresses the specified elements as an exhibit to its annual report.
Alternatively, a company may post the text of its code of ethics, or relevant portion thereof, on its Internet website, provided however, that a company choosing this option also must disclose its Internet address and intention to provide disclosure in this manner in its annual report on Form 10-K, 10-KSB, 20-F or 40-F.
As another alternative, a company may provide an undertaking in its annual report on one of these forms to provide a copy of its code of ethics to any person without charge upon request.

Questions

Why is Overstock.com's Code of Business Conduct and Ethics only available by written request?

Why does Overstock.com use the least transparent method of making its Code of Business Conduct and Ethics publicly available?

Waivers

According to the Securities and Exchange Commission web site:

Companies must comply with the code of ethics disclosure requirements promulgated under Section 406 of the Sarbanes-Oxley Act in their annual reports for fiscal years ending on or after July 15, 2003. They also must comply with the requirements regarding disclosure of amendments to, and waivers from, their ethics codes on or after the date on which they file their first annual report in which the code of ethics disclosure is required.

Questions

Can Overstock.com publicly disclose the content of any amendments to, and waivers from its Code of Business Conduct and Ethics?

Why didn’t Overstock.com also mail all copies of amendments to, and waivers from its Code of Business Conduct and Ethics?

Respectfully,

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

Other blog items about Overstock.com's Code of Business Conduct and Ethics

May 15, 2007: Overstock.com: A Copy of its Code of Business Conduct and Ethics

May 16, 2007: To Patrick Byrne, CEO of Overstock.com - Did you comply with the Company's Code of Business Conduct and Ethics

Note

To obtain a copy of Overstock.com's Code of Business Conduct and Ethics, as adopted by the Company's Board of Directors on January 23, 2004:

Click here to download

Wednesday, May 16, 2007

To Patrick Byrne, CEO of Overstock.com - Did you comply with the Company's Code of Business Conduct and Ethics

To Patrick Byrne aka Hannibal, self-proclaimed humble servant, CEO of Overstock.com:I quote the following from Overstock.com’s Code of Business Conduct and Ethics, as adopted by the Company's Board of Directors on January 23, 2004:

8. Record-Keeping
Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guess work, or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos, and formal reports….
In accordance with these policies, in the event of litigation or governmental investigation please consult with the company’s General Counsel.

Questions:

Have your actions been in complete compliance with the above provisions?

Have you avoided exaggeration?

Have you avoided derogatory remarks?

Have you avoided guess work?

Have you avoided inappropriate characterizations of people and companies that can be misunderstood?

When you received your SEC subpoena, did you promptly inform the Company’s General Counsel?

When you received your SEC subpoena, did either you or the company’s general counsel promptly inform Overstock.com’s Audit Committee?

Respectfully,

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

Blog Update:

I quote from Overstock.com’s Code of Business Conduct and Ethics, as adopted by the Company’s Board of Directors on 01/23/04:

“We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethical characteristics and unwelcome sexual advances.”

Questions:

How carefully was Overstock.com's Code of Business Conduct and Ethics drafted?

Is there a typo?

The document states “…comments based on racial or ethical characteristics….”

Should it be “…comments based on racial or ethnic characteristics….”? (Note: Bold and italic print added by me.)

PS: If it is a typo, I understand that typos sometimes happen.

However, Overstock.com's Code of Business Conduct and Ethics is an important legal document governing your company’s business and ethical conduct.

Is the company paying close attention to its Code of Business Conduct and Ethics?

Recommending Reading:

Gary Weiss Blog: Judd Bagley Hears his Master's Voice

Tracy Coenen: Preserving a little piece of Sith Lord History (Yes, Overstock.com again)

Tuesday, May 15, 2007

Overstock.com: A Copy of its Code of Business Conduct and Ethics

I am releasing a copy of Overstock.com's Code of Business Conduct and Ethics, as adopted by its Board of Directors on January 23, 2004. This copy is not published on the company’s web site or in its Securities and Exchange Commission filings, to date. (Download here.)

However, according to Overstock.com’s recent 10 – K for the fiscal year ended December 31, 2006, a person may request a copy of the company’s Code of Professional Conduct and Ethics by submitting a written request.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Except as set forth herein, the information required by this Item is incorporated by reference to the Company’s definitive proxy statement for the 2007 annual meeting of stockholders.
The Company has adopted a Code of Business Conduct and Ethics, which is applicable to all employees of the Company, including the principal executive officer, principal financial officer, and principal accounting officer. The Code includes provisions that are specifically applicable to our senior financial officers. We intend to disclose any amendments to these provisions and any waivers from any of these provisions granted to our principal executive officer, principal financial officer or principal accounting officer on our Website, www.overstock.com. We will provide a copy of the relevant portion to any person without any charge upon request in writing addressed to Overstock.com Attn: Kevin Moon, 6350 South 3000 East, Salt Lake City, UT 84121.

I recently obtained a copy from a third party.

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

Monday, May 14, 2007

Overstock.com and Patrick Byrne: The Deception Continues

The deception of Patrick Byrne, CEO of Overstock.com, continues on Overstock.com’s web site, despite the company's surprise disclosure in its recent 10-Q, that Mr. Byrne received a subpoena from the Securities and Exchange Commission on May 17, 2006, about a year ago.

I quote from a page on the Overstock.com web site entitled “Lawsuit (CEO’s Crusade)” about the Securities and Exchange Commission investigation:

Patrick and Business Journalists
Q: Was Overstock behind the SEC subpoenaing business journalists?
A: No.
Q: Has Overstock been subpoenaed?
A: Yes. We received a subpoena from the SEC on May 9, 2006. Prior to receiving the subpoena, we were already cooperating fully with various agencies, including the SEC.
Q: Is Overstock being investigated by the SEC or other agencies?
A: The SEC is conducting an investigation on Overstock.com (see previous question). We are not aware of other investigations by any other agencies. [Emphasis added.]

I note that the subpoena Patrick Byrne received on May 17, 2006 is not disclosed on Overstock.com’s web site. The web site only refers to the subpoena Overstock.com received on May 9, 2006.

In addition, Overstock.com’s web site clearly plays down the Securities and Exchange Commission investigation of the company. The company infers that the focus of the Securities and Exchange Commission investigation is not Overstock.com by stating that the “The SEC is conducting an investigation on Overstock.com” rather than stating that “The SEC is conducting an investigation of Overstock.com."

Responding to questions by certain business journalists on Overstock.com's web site, Patrick Byrne has purported that:

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. [Emphasis added.]

Later, in a post (message #7271) on InvestorVillage.com, under his alias Hannibal, Patrick Byrne wrote:

...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. [Emphasis added.]

Patrick Byrne is apparently attempting to divert attention from the Securities and Exchange Commission investigation of Overstock.com, by claiming it is "not...Overstock-centric" and the "broader investigation that is not about me [meaning him]or Overstock at all."

Written by,

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

Late Notes:

According to an SEC Form 4 report, filed with the Securities and Exchange Commission, on May 10, 2007 (right after Overstock.com's recent 10 -Q was filed), Board of Directors member Allison H. Abraham had disposed of 15,000 shares of stock in the company.

Tracy Coenen has new questions for Patrick Byrne based on an alleged insider's anonymous post on InvestorVillage.com.

Sunday, May 13, 2007

Patrick Byrne, CEO of Overstock.com, Cannot Answer a Simple Question

On January 30, 2007, in a post (message # 4246) on InvestorVillage.com, I asked the Board of Directors (including Patrick Byrne, who is a board member) of Overstock.com a simple question:

To The Board of Directors of Overstock.com
It is my understanding that Overstock.com is releasing an earnings report on February 5, 2007 and the company will file a report with the Securities and Exchange Commission on that date.
I respectfully submit the following questions:
Has the Board of Directors considered any additional disclosure relating to the SEC subpoena of Overstock.com?

Patrick Byrne and his henchman Judd Bagley (Director of Social Media at Overstock.com) later responded with an array of personal attacks against me. Patrick Byrne complained about my questions openly on the InvestorVillage.com message board for Overstock.com:

For example, on February 2, 2007, in a post (message # 4463) on InvestorVillage.com, under his alias Hannibal, Patrick Byrne wrote:

So let us get this straight: Sam, who seems not to understand that I let weeks or months go by without checking in on this board, and operating under some ill-founded assumption that he is Junior Prosecutor and is owed immediate and full answers from me to any questions he posts here, criticizes me for not answering his inane and repititive questions fully and immediately…..
Is there anyone here who suspects that Sam is just trying to clog, or waste my time, or misdirect this discussion board? If you agree, please recommend this post. If we get over 20, I say that is proof that it is time we all agree to ignore Sam forever.
Patrick

Note: Despite Patrick Byrne's representation that he "let weeks or months go by without checking in on this board," Mr. Byrne has posted about twenty messages on InvestorVillage.com in the previous three weeks. He had posted about a dozen messages in the previous seven days.

Eventually, I was booted off the InvestorVillage.com by its administrator for asking Patrick Byrne and Judd Bagley “deposition style” questions. They sent me a personal message which stated:

However, we are putting our foot down on the misuse of our OSTK board for your own agenda, which, for whatever reason, seems to include clogging our forum to conduct an informal and unofficial campaign of "deposition-style" messages targeting other members of InvestorVillage.

On May 9, 2007, Overstock.com released its 10–Q for the quarter ended March 31, 2007, which contained the following disclosure:

On May 9, 2006 the Company received a notice of an investigation and subpoena from the Securities and Exchange Commission, Salt Lake City District Office. On May 17, 2006, Patrick Byrne also received a subpoena from the Securities and Exchange Commission, Salt Lake City District Office. These subpoenas requested a broad range of documents, including, among other documents, all documents relating to the Company’s accounting policies, the Company’s targets, projections or estimates related to financial performance, the Company’s recent restatement of its financial statements, the filing of its complaint against Gradient Analytics, Inc., the development and implementation of certain new technology systems and disclosures of progress and problems with those systems, communications with and regarding investment analysts, communications regarding shareholders who did not receive the Company’s proxy statement in April 2006, communications with certain shareholders, and communications regarding short selling, naked short selling, purchases and sales of Company stock, obtaining paper certificates, and stock loan or borrow of Company shares. The Company and Mr. Byrne have responded to these subpoenas and each continues to cooperate with the Securities and Exchange Commission on this matter. [Emphasis added.]

The following disclosures were omitted from previous financial reports filed with the Securities and Exchange Commission by Overstock.com:

On May 17, 2006, Patrick Byrne also received a subpoena from the Securities and Exchange Commission, Salt Lake City District Office.

And

The Company and Mr. Byrne have responded to these subpoenas and each continues to cooperate with the Securities and Exchange Commission on this matter.

Patrick Byrne cannot seem to answer some simple questions such as:

Why did Overstock.com disclose his subpoena now after excluding this disclosure from previous SEC filings by the company?

We still do not know why Overstock.com delayed its disclosure of the subpoena that its CEO Patrick Byrne received from the Securities and Exchange Commission. We do not know why Overstock.com waited for almost a year to disclose Patrick Byrne's subpoena. We do not know why Overstock.com decided to disclose Patrick Byrne's subpoena now.

Instead, Patrick Byrne and his henchman Judd Bagley (Director of Social Media at Overstock.com) have continued their smear campaign against me, members of the press, and others examining their actions.

So far, Patrick Byrne has offered no answer to my simple question.

Patrick Byrne's brutal campaign of deflection and smears continues.

However, the ongoing Securities and Exchange Commission investigation of Overstock.com continues, despite Patrick Byrne’s attempts to divert attention from his actions.

Written by:

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

For additional information:

Gary Weiss blog: Bagdad Byrne's Weekend Delusion-a thon

The Fraudfiles blog: A little slight of hand by Patrick Byrne, CEO of Overstock.com, by Tracy Coenen

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. [Emphasis added.]

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

Wednesday, May 09, 2007

Patrick Byrne, CEO of Overstock.com, receives SEC subpoena

Patrick Byrne, CEO of Overstock.com, received a subpoena from the Securities and Exchange Commission, but it wasn't disclosed until a year later.

Overstock.com's 10–Q for the most recent quarter ended March 31, 2007, was filed today (May 9, 2007) with the Securities and Exchange Commission. It contained the following disclosure about the Securities and Exchange Commission investigation into Overstock.com:

On May 9, 2006 the Company received a notice of an investigation and subpoena from the Securities and Exchange Commission, Salt Lake City District Office. On May 17, 2006, Patrick Byrne also received a subpoena from the Securities and Exchange Commission, Salt Lake City District Office. These subpoenas requested a broad range of documents, including, among other documents, all documents relating to the Company’s accounting policies, the Company’s targets, projections or estimates related to financial performance, the Company’s recent restatement of its financial statements, the filing of its complaint against Gradient Analytics, Inc., the development and implementation of certain new technology systems and disclosures of progress and problems with those systems, communications with and regarding investment analysts, communications regarding shareholders who did not receive the Company’s proxy statement in April 2006, communications with certain shareholders, and communications regarding short selling, naked short selling, purchases and sales of Company stock, obtaining paper certificates, and stock loan or borrow of Company shares. The Company and Mr. Byrne have responded to these subpoenas and each continues to cooperate with the Securities and Exchange Commission on this matter. [emphasis added.]

However, previous disclosures by Overstock.com, including, but not limited to its:


Excluded this disclosure:

On May 17, 2006, Patrick Byrne also received a subpoena from the Securities and Exchange Commission, Salt Lake City District Office.

And this disclosure:

The Company and Mr. Byrne have responded to these subpoenas and each continues to cooperate with the Securities and Exchange Commission on this matter.

Overstock.com's first disclosure about an investigation by the Securities and Exchange Commission was on May 9, 2006.

Its 8-K, filed with the Securities and Exchange Commission reported:

On May 9, 2006 the Company issued a press release regarding its receipt of a subpoena from the Securities and Exchange Commission, Salt Lake City District Office. The subpoena requests a broad range of documents, including, among other documents, all documents relating to the Company’s accounting policies, the Company’s targets, projections or estimates related to financial performance, the Company’s recent restatement of its financial statements, the filing of its complaint against Gradient Analytics, Inc., the development and implementation of certain new technology systems and disclosures of progress and problems with those systems, communications with and regarding investment analysts, communications regarding shareholders who did not receive the Company’s proxy statement in April 2006, communications with certain shareholders, and communications regarding short selling, naked short selling, purchases and sales of Company stock, obtaining paper certificates, and stock loan or borrow of Company shares.

According to Overstock.com's recent 10 - Q, for the quarter ended March 31, 2007, (filed on May 9, 2007), Patrick Byrne received a separate subpoena, and about eight days after the company received a subpoena.

Why didn't Overstock.com issue a new 8 - K and disclose Patrick Byrne's separate subpoena?

We are left to wonder why Overstock.com waited almost a year to report that Patrick Byrne had received a separate subpoena from the Securities and Exchange Commission.

Perhaps, Patrick Byrne, CEO of Overstock.com can answer this question, too.

Written by,

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


Other blogs 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

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!

Thursday, May 03, 2007

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

During my days at Crazy Eddie, I hardly ever encountered tough detailed questioning by the Wall Street analysts covering its stock. Too often, the Wall Street analysts hoped to get chummy with Eddie Antar and me, to gain investment banking business, our attendance at their sponsored forums, or to gain coveted direct access to us. We believed that we knew how to play with the wants and needs of Wall Street analysts to corrode their professional skepticism.

As criminals, we feared skepticism and cynicism from our external auditors, Wall Street analysts, journalists, and investors. We found that most people did not know how to ask good questions, whom to ask such questions to, and how to ask good follow up questions to our deceitful answers.

In my previous post on my blog entitled “Questions the Securities and Exchange Commission may ask Patrick Byrne (CEO of Overstock.com) in its investigation of (not “on”) Overstock.com” I suggested certain questions that the Securities and Exchange Commission may want to consider asking Mr. Byrne about inventory and gross margin disclosures by Overstock.com.

Afterwards, Tracy Coenen, Certified Public Accountant and Certified Fraud Examiner, had written a blog post entitled “Today’s earnings call for Overstock (OSTK)” and examined certain statements made by Patrick Byrne (CEO of Overstock.com) and Jason C. Lindsey (President of Overstock.com) at its recent earnings conference call for the 1st quarter ended March 31, 2007.

She wrote:

According to the transcript of today’s earnings call, they said:
Jason C. Lindsey: “I am pleased with the quarter. I think we made a big improvement….”
Patrick M. Byrne: “I will echo that… I think that this is what we aimed for a year ago but I am not sure that either Jason or I believed we could actually get to this point but we are excited about these operating improvements.”
Improvements? Pleased??? Come on now. Their definition of “improving” certainly must be a lot different from mine. Why? The company is doing horribly.
Revenue for the quarter was down 11%
Operating losses for the quarter were $17.7 million
Operating losses were $3.5 million more than last year
Net losses for the quarter were $21.4 million
Net losses were $5.5 million more than last year
Who in their right mind believes that such numbers represent an improvement in the business???
Oh sure, the one bright spot is that gross margins improved. That’s what they’re hanging their hat on Or did they? Sam Antar raises some really good questions about Overstock’s third and fourth quarters of 2006, and in particular, questions about inventories and gross margins. (Note that none of the analysts asked any of the questions, and Overstock executives certainly didn’t offer up any answers voluntarily.)

In a later post on her blog, entitled "Is Overstock.com misrepresenting inventory?" Tracy Coenen examined Overstock.com's inventory disclosures.

She wrote in part:

At 12/31/05, Overstock reported $98.5 million of inventory, with a reserve of $5.2 million. The reserve was 5.3% of the total inventory.
At 12/31/06, Overstock reported $26.9 million of inventory, with a reserve of $6.6 million. The reserve was 24.5% of the total inventory.
So let’s get this straight… in terms of raw dollars, the obsolete (junk) inventory was greater at the end of 2006 than it was at the end of 2005. And as a percentage of total inventory, the obsolete (junk) inventory was over 4 times higher than 2005.
How is this inventory more attractive when you’re admitting that 1/4 of it is junk??? Or, was way more junk sitting around in 2005, but the company purposely did not reserve for it? (Which would, oddly enough, probably be a material misstatement in the financial statements.)

Recent Securities and Exchange Commission Form 8–K filed by Overstock.com for the quarter ended March 31, 2007

On April 25, 2007, Overstock.com disclosed its first quarter ending March 31, 2007 financial results in a form 8-K filed with the Securities and Exchange Commission. That same day Overstock.com conducted an earnings conference call with certain Wall Street analysts.

Among the disclosures included in the form 8 – K were:

Total revenue: $157.9 million, down 11% from 2006
Gross profits: $25.3 million, up 7% from 2006
Gross margin: 16.0% up from 13.3% in 2006
Sales and marketing expense: $11.3 million, down 11% from 2006
Contribution (gross profit less marketing expense): $14.0 million, up 26% from $11.1 million in 2006
Contribution margin: 8.9% up from 6.2% in 2006
General and administrative expense: $10.7 million, down 10% from 2006
Operating loss before restructuring charge (non-GAAP): $11.6 million, an 18% improvement from 2006
Operating loss: $17.7 million versus $14.2 million in 2006
Net loss: $21.4 million or $0.91 loss per share [Emphasis added.]

In the form 8 – K, Patrick Byrne (CEO of Overstock.com) purported:

Our business is dramatically improving. Gross and contribution margins are expanding, and contribution dollars are up sharply. G&A expenses are contracting. That said, the corporate relocation to the warehouse remains uncertain: if we go forward with it, we will incur additional restructuring charges. I leave each to make her own determination regarding our results, look forward to our call, and as always, remain,
Your humble servant,
Patrick M. Byrne [Emphasis added.]

Background

For the 4th quarter ended December 31, 2006, Overstock.com suffered negative gross margins on direct revenues. In addition, sales declined. They purported that they were getting rid of slow moving inventory as net inventory levels dropped from $68.8 million from the end of the 3rd quarter to $20.3 million at the end of the 4th quarter. During the 4th quarter, the company added significant relative amounts to reserves for Obsolete and Damaged Inventory from about 6.1% of gross inventory totals at the end of the 3rd quarter to about 24.5% of gross inventory at the end of the 4th quarter. The company suffered a net loss of about $45.6 million in its last quarter of the fiscal year..

The company purported to explain its inventory and gross margins in the 10-K for the fiscal year ended December 31, 2006:

Commentary—Gross Margins. We consciously and aggressively discounted older inventory during the fourth quarter, and as a result, our direct gross margins were negatively impacted. However, we did this to significantly clean and reduce our inventory in an effort to reduce the overall SKU (stock keeping unit) count on our website and to refine our product selection to categories that turn faster and have higher profitability. We believe that we can run our direct business with less inventory than we have had in the past, while filling in product selection using fulfillment partners, rather than acquiring the inventory directly. As a result of these efforts, we believe that we should see a significant improvement in direct and overall gross margins beginning in the first quarter of 2007. With reduced inventory levels, we now have excess warehouse capacity, and we are therefore making efforts to reduce warehouse space. We believe that we will see additional improvement to direct gross margins if and when we are able to successfully do this. (Emphasis added.]

Comments by Patrick Byrne at the Overstock.com earnings conference call about inventories and gross margins

During the 1st quarter earnings conference call, Patrick Byrne (CEO of Overstock.com) attempted to reflect on his purported actions during the previous fiscal year. However, no analyst attending the earnings conference call asked him any follow up questions. Mr. Byrne said:

We had our game plan. Really, we had our game plan as of Q1 last year of what was going to have to happen.
We knew things were going to get really ugly and the company was going to have take medicine but that we could come out of it a far better company, and that medicine was going to be in the form of some expenses, it was going to be in the form of dumping a bunch of inventory as we figured out really how to take our inventory management to the next level -- all kinds of things. We knew it was going to get ugly. Maybe not as ugly as it got but we thought we would come out in the first quarter smelling like a rose operationally and this is exactly what we -- what I at least thought was going to happen in the first quarter.

Certain questions that the Wall Street analysts attending the conference call should have asked Patrick Byrne

Mr. Byrne, if you:

  • had your “game plan as of Q1 last year of what was going to have to happen” and
  • you “knew things were going to get really ugly and the company was going to have take medicine” and
  • “that medicine was going to be in the form of some expenses” and
  • “it was going to be in the form of dumping a bunch of inventory”

Why did Overstock.com wait until the 4th quarter of the fiscal year ended December 31, 2006 to take relatively high reserves against its inventory?

See the table below (click on image to enlarge).



More Comments by Patrick Byrne and Jason C. Lindsey in Overstock.com recent 8 –K and at the Overstock.com earnings conference call about inventories and gross margins

During the earnings conference call, Jason C. Lindsey claimed:

….another dynamic that is going on is as we liquidated all of our slow-moving inventory and things that did not meet our metrics last year, we really sold everything and got our inventory extremely fresh. [Emphasis added.]

Later, Jason C. Lindsey said the following:

….so we do still have several million dollars worth of stuff that we call our excess inventory from last year that we didn’t liquidate that we are going to be liquidating now and even into the beginning of the third quarter. Although we reserved against that and do feel like we have an adequate reserve and that we will be forced to -- and we will release that reserve some as we sell that stuff. I am just not sure exactly the clearing price of all that. [Emphasis added.]

Patrick Byrne elaborated further:

But the one set of things he didn’t do was the millions of dollars of that furniture, wrought-iron furniture, you can’t sell it at Christmas. But we do have -- a big chunk of our inventory is still that and when that disappears over the next two months, three months, that is a significant chunk of our inventory and Jason has taken a very healthy reserve against all of that inventory. [Emphasis added.]

Jason C. Lindsey later on claimed that:

What we are shooting for around here are margins of somewhere around 20%....
I think they will probably go up some, but again you do have two things going on there. One, we have some inventory that is kind of left over that was spring inventory that we are trying to liquidate now, and you are going to replace that with better inventory, so those two dynamics are going against each other, although the $16 million number is a net number against the reserve against that inventory, so I do think it will come up. We are retailer so we are going to build inventories in the third quarter and then sell it in the fourth…. [Emphasis added.]

Additional questions the Wall Street analysts should have asked Patrick Byrne and Jason C. Lindsey about inventories and gross margins

Please discuss the impact of Overstock.com's 4th quarter fiscal year 2006 inventory reserves on gross margins for the 1st quarter ended March 31, 2007 and future quarters.

If that entire inventory on hand at the end of the 4th quarter of the fiscal year ended December 31, 2006, was sold at its original cost of $26,859,000 in later quarters, would you agree that Overstock.com would recognize gross margins of $6,585,000 in future accounting periods?

Under such a circumstance, would gross margins recognized on that inventory (if sold at original cost) be about 24.5% (which is higher than historical gross margins for Overstock.com).

Can you discuss in detail, how the use of inventory reserves contributes to Overstock.com’s purported improvement in its financial condition?

How does the inventory reserves taken in the 4th quarter impact the purported improvements in gross margins during the first quarter of fiscal year 2007 and future quarters?

Can you describe the specific financial impact of releasing those reserves?

How does that “very healthy reserve against all of that inventory” help Overstock.com’s reported gross margins in future accounting periods?

Recent Comments by Patrick Byrne and Jason C. Lindsey in Overstock.com recent 8 –K and at the Overstock.com earnings conference call about guidance

During the earnings conference call, Jason C. Lindsey said:

Well, regarding guidance, this is kind of a slippery slope and our official stance has always been we do not offer guidance, so my comment I guess first is I don’t want to go into the line items in the model and tell you what I think and don’t think about the different line items.

However, he goes on to say:

I can say, just like I said last quarter, Dave told me 10 minutes before the call that the consensus estimate was somewhere around $60 million, and I said on the call I was quite comfortable with that. I was comfortable with that. I am comfortable with it. I am still comfortable with it. In fact, I am more comfortable with it now than I was before, but I still think it is a good number. [Emphasis added.]

Earlier, in the year Patrick Byrne was interviewed by Greg Sandoval for an entitled “Newsmaker: CEO in the Hot Seat” published by c/net news.com on March 6, 2006. I quote the following:

What are Overstock's problems right now, and when will the company be profitable?
Byrne:
I don't know. We have a plan this year that we should cross the billion-dollar mark. Put it this way: Amazon, at our stage, was losing $1.2 million a year in operations. It made up a phony accounting standard--pro forma. And when it reached pro forma breakeven, Wall Street set off fireworks.
When it reached EBITDA (earnings before interest, tax, depreciation and amortization) breakeven, Wall Street wanted to declare it a national holiday. I've never used pro forma in my life. We've had some GAAP (generally accepted accounting principles) profitable quarters, plenty of operating profit and EBITDA profitable quarters. This year, with a little luck, we should be an EBITDA-profitable year, so I'm kind of comfortable with that. [Emphasis added.]

Questions the Wall Street analysts should have asked Jason C. Lindsey and Patrick Byrne about earning guidance

Mr. Lindsey purports being “comfortable” with the “consensus estimate” of “somewhere around $60 million” for operating losses for fiscal year 2007 a code word for giving earnings guidance.

Question: Mr. Lindsey, didn’t you say the following comments during the 4th quarter earning conference call?

I have seen what the consistent estimate, or the analysts’ consensus for us for 2007 is, and I know many of the analysts have models and it’s a difficult spot that they are in because they are trying to update their models without guidance. I just want to make a couple of comments, because maybe it will help the Q&A.
You have us for the year at a 5% growth rate and 8.5% of sales on marketing. When I look at that, and you have operating income of $60 million, more than a $60 million loss, although in total I think your numbers seem reasonable and I am okay with all of them, I do think that we get there a slightly different way. [Emphasis added.]

Mr. Byrne when you said “This year, with a little luck, we should be an EBITDA-profitable year, so I'm kind of comfortable with that” were you giving earnings guidance?

You said in your interview “Put it this way: Amazon, at our stage, was losing $1.2 million a year in operations. It made up a phony accounting standard--pro forma…. I've never used pro forma in my life.”

However, during the 1st quarter earnings conference call, you said:

Next slide, slide 4. I am going to spend a moment on this to remind folks that there is the GAAP gross margin and then what we call “Juice”. The difference is basically the fixed warehouse cost and a little bit of coupons we -- internally we have already accounted for that differently. Coupons and shipping promotions we account as a marketing cost but under GAAP it is a reduction of revenue. [Emphasis added.]

Mr. Byrne, didn’t you use “pro forma” accounting during this earnings conference call?

In Overstock.com’s recent 8–K for the 1st quarter of fiscal year 2007, there was the following disclosure:

Operating loss before restructuring charge (non-GAAP): $11.6 million, an 18% improvement from 2006

However, Mr. Byrne you previously said, “It [Amazon.com] made up a phony accounting standard--pro forma…. I've never used pro forma in my life.”

Mr. Byrne, do you use pro-forma accounting when it suits your purpose on presenting the company in the best light?

Certain comments by the Wall Street analysts attending the conference call

Rather than ask detailed critical questions to Overstock.com’s management, the Wall Street analysts threw softball questions and praised the latest quarter.

For example, Aaron Kessler from Piper Jaffray commented:

Good quarter, good to see the improvement on the margin side.

Mr. Kessler asked no detailed questions about the impact of previous reserves on current gross margins reported for the 1st quarter by Overstock.com. He did not ask questions about valuations of inventory in previous accounting periods.

Instead, he asked:

Great, and then a couple of other questions; where do you expect gross margins to go in the direct side over the next few quarters?

And Patrick Byrne and Jason C. Lindsey responded:

Patrick M. Byrne: Jason, what do you want to say about core margins?
Jason C. Lindsey: I am pleased with where they are at. Hopefully they can continue to sneak up but I do not anticipate anything, any huge stair steps from here.
Patrick M. Byrne: I would not anticipate stair steps. I think that they float up but I think --
Jason C. LindseyI hope they float up as well. I hope that they do. I think that they can. [Emphasis added.]

Later, Mr. Lindsey elaborated further:

I think it should float up but I would not be surprised if it does not come up much for another quarter or two. [Emphasis added.]

However, Jason C. Lindsey had previously said:

Well, regarding guidance, this is kind of a slippery slope and our official stance has always been we do not offer guidance, so my comment I guess first is I don’t want to go into the line items in the model and tell you what I think and don’t think about the different line items. [Emphasis added.]

The Timeline according to Patrick Byrne

January 1 to March 31, 2006:

During the 1st quarter earnings conference call for fiscal year 2007, Patrick Byrne attempted to explain inventories and gross margins for the previous fiscal year. He talked about purported decisions made during the first quarter of fiscal year 2006:

Really, we had our game plan as of Q1 last year of what was going to have to happen.
We knew things were going to get really ugly and the company was going to have take medicine but that we could come out of it a far better company, and that medicine was going to be in the form of some expenses, it was going to be in the form of dumping a bunch of inventory as we figured.

See the table below (Click on image to enlarge).


However, the percentage of Reserve for Obsolete and Damaged Inventory to Gross Inventory declined from the previous quarter.

May 9, 2006:

After the first quarter 10–Q was released, the SEC subpoenaed financial information from Overstock.com as it started an investigation of the company. According to Overstock.com’s recent 10–K and other documents filed with the Securities and Exchange Commission, they subpoenaed:

….a broad range of documents, including, among other documents, all documents relating to our accounting policies, our targets, projections or estimates related to financial performance, our recent restatement of its financial statements, the filing of our complaint against Gradient Analytics, Inc., the development and implementation of certain new technology systems and disclosures of progress and problems with those systems, communications with and regarding investment analysts, communications regarding shareholders who did not receive our proxy statement in April 2006, communications with certain shareholders, and communications regarding short selling, naked short selling, purchases and sales of our stock, obtaining paper certificates, and stock loan or borrow of our shares. [Emphasis added.]

Quarter ended June 30, 2006:

After the Securities and Exchange Commission starts its investigation of Overstock.com, the percentage of Reserve for Obsolete and Damaged Inventory to Gross Inventory begins to increase. However, the Percentage of Reserve for Obsolete and Damaged Inventory to Gross Inventory is below December 31, 2005 levels.

See the table below (click on image to enlarge).


Quarter ended September 30, 2006:

The percentage of Reserve for Obsolete and Damaged Inventory to Gross Inventory continues to increase after the SEC began its investigation of Overstock.com.

See table below (click on image to enlarge):


Quarter Ended December 31, 2006:

Overstock.com records a massive increase in the percentage of Reserve for Obsolete and Damaged Inventory to Gross Inventory.

During the 4th quarter earnings conference call, Jason C. Lindsey states:

All of the things we have talked about before as far as classifying all of our SKUs as either red and green and 80% of our -- excuse me, 20% of our inventory was doing 80% of our gross profits, or even more than that. We took all that to heart in the fourth quarter and although the fourth quarter results are very bad, and I admit they are very bad, they were bad on purpose. In other words, 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. [Emphasis added.]

See the table below (click to enlarge image):


Additional issues

It appears that the caliber of many Wall Street analysts has not changed much since my days at Crazy Eddie. They seem to be more interested in serving their own personal agendas and pleasing management rather than serving the interests of the readers of their financial reports.

Patrick Byrne said in Overstock.com's 8 – K for the 1st quarter of fiscal year 2007:

I leave each to make her own determination regarding our results....

Be careful about discussing Overstock.com’s results. You may get sued!

USA Today interviewed Patrick Byrne about executives “playing dumb” in an article published on March 16, 2005 and entitled “Ignorance isn't bliss for execs on trial.”

Chief executives who are mounting legal defenses should be wary of playing dumb, warns Patrick Byrne, CEO of Overstock.com. Such a posture could insult a jury, he says. Maybe that's their only choice, but "Ebbers would have been better to plea bargain to 15 years," rather than "tick jurors off ... with a provocative defense," Byrne says.

Perhaps, Mr. Byrne should follow his own advice.

The Securities and Exchange Commission of (sorry Patrick, not on) Overstock.com continues after they dropped the Gradient probe.

If charges are brought against Patrick Byrne by the Securities and Exchange Commission, he “should be wary of playing dumb.”

Written by:

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

Additional blogs covering Overstock.com’s 1st quarter earnings for fiscal year 2007

The Motley Fool: Dramatic Losses at Overstock, by Seth Jayson

Gary Weiss Blog: Is Overstock.com’s Quarterly Delusion ‘Materially Misleading’?


Other interesting reading about Overstock.com

Lee Distand's Professional Opinion: Sam E. Antar is Mad as Hell about Overstock.com

Jeff Matthews is not making it up blog: The Patrick Awards Part 1

O-Smear blog: Overstock FINALLLY Eats Its Own cooking