Skip to main content

Barry Minkow Releases New Document to Show Microsemi Exec Peterson Lied

In a video posted on YouTube, a confident Barry Minkow, co-founder of the Fraud Discovery Institute, charged Microsemi Corp. (NASDAQ: MCSS) President and CEO and STEC Inc. (NASDAQ: STEC) Board Member James J. Peterson with "stock fraud."

Minkow said that Peterson knowingly "lied" in a Microsemi press release, when Peterson "categorically" denied Minkow's background report last week that he falsified his academic credentials in reports filed with the Securities and Exchange Commission. Minkow said that Peterson "knew it was a lie. He did it to salvage the stock price."

Minkow held in his hand a "Verification of Enrollment" that contained Peterson's birthday (information redacted), social security number (information redacted), and student identification number that was signed by the Brigham Young Registrar. The new document verified Minkow's background report that showed Peterson had falsified his academic credentials, stating there were "No degrees awarded at BYU as of December 9, 2008," to Peterson.

On December 3, 2008, Barry Minkow released a background report of Microsemi Chief Executive Officer and STEC Board Member James Peterson, showing that Peterson did not receive a "B.A. in business administration and an M.B.A. from Brigham Young University," as claimed in STEC's proxy filing with the SEC.

In response to Minkow's report, Microsemi issued a press release that same day stating:

I am working directly with the University to clarify this situation,'' Peterson said. "It appears that the background check there may have mistakenly been made with the name 'James J. Patterson,' not mine, as stated in a Seeking Alpha report.''

Peterson further questions the reliability of tipster Barry Minkow, a convicted felon who spent seven years in prison for fraud, as the source for the reports. Minkow uses his tips as a means to profit from "put options'' he buys on companies he researches. He uses a disclaimer on the factual accuracy of his reports.

"I have every reason to expect that Brigham Young will investigate this allegation shortly and officially confirm my degrees,'' Peterson said.

Minkow publicly discloses on his web site, to the media, and law enforcement agencies that he legally purchases put options before he issues his reports to bet a company's stock will decline after such reports are issued.

In addition, Peterson probably read my blog posted, earlier that day, which was also syndicated on Seeking Alpha. While I correctly spelled his last name several times, I misspelled his last name once in a paragraph towards the end of that post.

However, the background check by Minkow was done under the name "James J. Peterson" and not "James J. Patterson," as suggested by Peterson. The birthday and social security number (redacted from the report) is clearly Peterson's and does not belong to anyone else.

Minkow's report that Peterson falsified his academic credentials was verified by a Brigham Young University spokesperson before it was released and reported in Bloomberg News and the Wall Street Journal. After, Peterson categorically denied Minkow's report, a Brigham Young spokesperson reaffirmed to Bloomberg News that Peterson did not obtain any degrees from the school.

On December 5, 2008, Microsemi issued another press release in support of its embattled President and CEO James J. Peterson. See below:

Microsemi Corporation (NasdaqGS: MSCC - News) announced today that its Governance Committee of its Board of Directors is currently reviewing the status of the academic credentials of its President and Chief Executive Officer, James J. Peterson, and intends to work to resolve such status. Microsemi Board Chairman Dennis Leibel emphasized that Mr. Peterson has the full support of the Board and there are no plans to alter his role as President and Chief Executive Officer of Microsemi. "I want to assure our shareholders that Jim's educational credentials in no way reflect on the strength of Microsemi, which has been an industry leader. The Board's continuing support of Jim Peterson re-affirms our backing of his strategies, operational excellence and proven executive leadership,'' he said.

Note: Bold print and italics added by me.

In his YouTube video, Minkow responded, "We decided to help the board of Microsemi" investigate the status of Peterson's academic credentials. He said:

We will post the document from the school on our web site, so maybe the Board of Microsemi will not have to work too hard to conclude their investigation that their CEO lied and put it on the wire.

The press release hinted that even if Peterson falsified his educational background, as reported by Minkow and reasserted by Brigham Young University, Peterson is still assured his job at the company.

Apparently, Board Chairman Dennis Leibel is trying to hedge the company's position, just in case Peterson cannot substantiate his educational credentials by saying, "I want to assure our shareholders that Jim's educational credentials in no way reflect on the strength of Microsemi...." In others words, he is implying that it is OK for the President and CEO of a public company to lie in SEC filings about his educational background and in a subsequent press release by denying that he lied in SEC filings.

With Barry Minkow's latest document from Brigham Young University, Microsemi Board President and CEO James J. Peterson faces increasing pressure to resign and the company's Board of Directors faces pressure to fire Peterson, absent his resignation. Meanwhile, Minkow has contacted the SEC and the FBI and forwarded his reports to them.

Minkow's YouTube Video is below:

Last week, Broadcom (NASDAQ: BRCM) fired Senior Vice President Vahid Manian and a day later Manian resigned from the Board of Directors of STEC, after Minkow issued a similar background report showing that Manian lied about receiving a “B.S.E.E and an M.B.A from the University of California, Irvine” as claimed in a Broadcom proxy filing and an STEC proxy filing with the SEC.

Vahid Manian and James Peterson are long-time friends dating back to when Peterson hired him at Silicon Valley in the mid-1990s. They both served on STEC's board of directors and were members of that company's audit, compensation, and nominating committees, before Manian resigned from the board. STEC faces the grim prospect of losing two of its six board members and two of four members of its audit, compensation, and nominating committees.

Written by:

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

Other blog posts of interest:

12/03/08: Barry Minkow Reports More Corporate Scoundrels Misrepresenting Credentials

12/03/08: Broadcom Executive Fired Today For Phony Credentials, While Microsemi Executive Remains Under Scrutiny

12/04/08: Manian Resigns From STEC, A Day After Broadcom Fires Him For Phony Credentials


I am not short or long any of the companies named in this blog post. However, the Fraud Discovery Institute and/or Barry Minkow may have a short position in the companies mentioned in this blog post. Please read the Full Disclaimer on FDI for Profit Status from Minkow's web site.

Over a year ago, I provided funds to Fraud Discovery Institute (FDI) to help pay costs of its investigations, though I had no control over any monies spent. I am not an owner, manager, employee, or consultant of Minkow or FDI and I have not received any compensation from them.

Index to White Collar Fraud Blog Posts

Other Blog and Media Reaction to my Blog


Popular Posts

Did a Clever SEC Bait Goldman Sachs into Compounding Its Legal Problems With the "Kiss of Death" Message?

Updated: At 3:48 AM ET 04/20/2010 on bottom

The Kiss of Death

In filing its lawsuit against Goldman Sachs (NYSE: GS) on a Friday, the Securities and Exchange Commission sent what I call the "kiss of death" message to the embattled company. In other words, the SEC wanted to stick it to Goldman Sachs and Fabrice Tourre, the Executive Director of Goldman Sachs International, who is also a defendant in the complaint. While the SEC as a practice does inform target companies and individuals of an impending enforcement action, it does not always tell them exactly when such an action will be filed.

Apparently, the SEC filed its lawsuit without giving Goldman Sachs the heads up that it was planning to file it that day. Business Insider observed that Goldman Sachs was clearly unprepared to respond to the complaint as news of the lawsuit dominated the headlines all day. Goldman issued a short denial around noon and issued an extensive denial late in the afternoon, after most people had … CEO Patrick Byrne Sleeps With a Gun

Suggested Reading: Hatchet Man Judd Bagley's Downward Spiral: Junkie, Confessed Criminal, Admitted Adulterer by Sam Antar (here), and Closing the File on a Criminal and Junkie Named Judd Bagley by Gary Weiss (here)

In numerous blog posts in the past, and in widespread media coverage, evidence has accumulated for years that CEO (NASDAQ: OSTK) Patrick Byrne has shown signs of being mentally unbalanced and paranoid.

Byrne has blamed his company's financial woes on an unnamed "Sith Lord." He hired paid goons to stalk his real and imagined adversaries and to write lengthy conspiracy theories on the Internet. Byrne has close ties with Bo Gritz. The Anti-Defamation League lists Bo Gritz as a far-right extremist with “extensive connections to both white supremacists and anti-government groups and leaders.”

Patrick Byrne's infamous temper tantrums when he doesn’t get want he wants are well documented too. He made obscene and misogynistic commen…

Nature's Sunshine Products, Willbros Group, Cal Dive International, and BSQUARE Violate S.E.C. Rules on Calculating EBITDA

Nature’s Sunshine Products (NASDAQ: NATR), Willbros Group (NYSE: WG), Cal Dive International (NYSE: DVR), and BSQUARE (NASDAQ: BSQR) have recently issued earnings reports which include a calculation of EBITDA (earnings before interest, taxes, depreciation, and amortization) that apparently does not comply with Securities and Exchange Commission interpretations for Regulation G governing such non-GAAP financial measures. In each case, their erroneous EBITDA calculations have enabled them to significantly distort their financial performance by erroneously reporting a positive EBITDA, when they should have reported a negative EBITDA in the latest quarter.

How EBITDA is supposed to be calculated under Regulation G

According to the S.E.C. Compliance & Disclosure Interpretations, EBITDA is defined under Regulation G as net income (not operating income) before net interest, taxes, depreciation, and amortization. See below:

Question 103.01Question: Exchange Act Release No. 47226 describes E…

InterOil, John Thomas Financial, and Clarion Finanz: Anatomy of a Stock Market Manipulation Scheme

In this blog post, I will provide evidence of what I believe is a stock market manipulation scheme involving InterOil (NYSE: IOC), John Thomas Financial, and Clarion Finanz AG. I believe that InterOil with the assistance of Clarion Finanz concealed John Thomas Financial’s involvement in helping it raise $95 million through a private placement of convertible debt securities.

Clarion Finanz acted as a buffer between InterOil and John Thomas Financial to help InterOil hide John Thomas Financial's role in raising funds. Afterwards, InterOil filed false and misleading reports with the Securities and Exchange Commission in an effort to conceal John Thomas Financial’s role in helping the company raise $95 million in convertible debt.

Carl Caserta, who in 1991 was barred by the Securities and Exchange Commission from “association with any broker, dealer, or investment advisor” played a role in helping InterOil use John Thomas Financial to obtain funds from investors. InterOil, John Thoma…

Class Action Complaint against Amedisys uses Sarbanes-Oxley Act Corporate Governance Provisions to Battle Alleged Corporate Malfeasance

Updated at bottom of article

Last week, Pomerantz Haudek Grossman & Gross LLP filed a class action lawsuit against Amedisys (NASDAQ: AMED) charging the company, its CEO William F. Borne and its CFO Dale E. Redman with securities fraud.  In the next few days, Bernstein Liebhard LLP and Finkelstein Thompson LLP filed similar class action lawsuits against the company. The lawsuits allege that Amedisys abused Medicare's reimbursement system for at-home therapy care based on a compelling analysis of company revenues in an April 27 Wall Street Journal article.

In addition, the lawsuits innovatively utilize a provision under Section 406 of the Sarbanes-Oxley Act 2002 which provides a back-door way for investors to force ethical corporate governance and sue public companies for malfeasance. That provision requires Senior Financial Officers, such as the CEO and CFO of public companies, to abide by a strict code of ethics which broadly defines corporate malfeasance and effectively makes…