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Showing posts from April, 2008

Overstock.com: Anatomy of a Stock Market Manipulation Scheme (Part 2)

Pump and dump: $1.0 million of motive and securities law violations, tooIf you listened in on Overstock.com’s (NASDAQ: OSTK) first quarter fiscal year 2008 earnings call chances are that you would come away misled into believing that the Securities and Exchange Commission has issued the company a clean bill of health in its investigation of the company's accounting policies and financial disclosures. In the process of claiming that the Securities and Exchange Commission had “sprinkled holy water” and "approved" Overstock.com’s accounting practices and financial disclosures, the company and three of its corporate officers apparently violated both Section 23 of the Securities Act of 1933 and Section 26 of the Securities Exchange Act of 1934 governing unlawful representations. Worst yet, in the two days following Overstock.com’s earnings call, Senior Vice President of Corporate Affairs and Legal, Jonathan E. Johnson III unloaded 55,922 shares of Overstock.com common shares …

Barry Minkow Finds Herbalife President Falsified Credentials

According to a Wall Street Journal article by Keith J. Winstein published today, Gregory Probert, the president and chief operating officer of Herbalife Ltd. (NYSE: HLF) does not have a Masters of Business Administration degree from California State University as claimed in at least nineteen SEC filings by the company. My good friend, former fraudster turned fraud fighter, Barry Minkow, co-founder of the Fraud Discovery Institute hired a private investigator to examine and verify the biographies of Herbalife executives.According to the Wall Street Journal:In response, Mr. Probert, 51 years old, said he nearly completed an M.B.A. at Cal State, but "the truth is that my vanity prevailed and I did not take action" to correct Herbalife's biography of him "even though I was aware it was not accurate.""I suppose that some of us who have been blessed with a certain degree of good fortune are tempted to see the paths we took in romantic versus strictly factual way…

Overstock.com SVP Jonathan E. Johnson caught lying in frantic attempt at damage control

As a criminal, I learned the hard way that lies to solve small problems often create even bigger problems. Yesterday, Overstock.com (NASDAQ: OSTK) went on a frantic defensive mode after my Monday blog post detailing how the company illegally manipulated the price of its common shares through a materially and significantly misleading recent earnings release in violation of SEC Rule 10b-5. In the process of attempting to defend Overstock.com's illegal stock market manipulation, Jonathan E. Johnson III (Senior Vice President - Corporate Affairs & Legal) made up new lies and created even more SEC Rule 10b-5 problems for the company. Overstock.com is under investigation by the Securities and Exchange Commission and its CEO Patrick Byrne has admitted to being the target of the SEC probe.In my previous blog post, one issue of many issues that I detailed was how Overstock.com’s recent Q1 2008 earnings report failed to disclose that the company compared Q1 2008 revenues reported on a G…

Overstock.com and Patrick Byrne: Anatomy of a Stock Market Manipulation Scheme – First Quarter Earnings Release

On Friday, in a surprise announcement, Overstock.com (NASDAQ: OSTK) released its first quarter fiscal year 2008 earnings report and highlighted in the very first line of Overstock.com’s “Key Q1 2008 Metrics” was Overstock.com’s much hyped increase in first quarter revenues: Total revenue: $200.7 million vs. $157.9 million (a 27% increase) In the hours that followed Overstock.com’s surprise earning release, the company’s common stock climbed from an opening price of $14 per share to $18.47 per share, a $4.47 climb in the price of the company’s shares or a whopping 31.93% single day increase. If this revenue increase were actually sustainable, the market reaction would have been justified. But as I will describe below, the Overstock news release was materially and significantly misleading in violation of SEC Rule 10b-5. Of all the many accounting and disclosure issues I have described in this blog over the past year, Overstock's Friday release was by far the most significant, the mo…

Patrick Byrne has a new pet journalist with a captured mind

It looks like Patrick Byrne has a new pet journalist with a captured mind. I just received the following email from Mark Mitchell about a story he wants to publish on Patrick Byrne's blog, hosted by Overstock.com (NASDAQ: OSTK). See Gary Weiss's blog for background on Mark Mitchell.
From: Mark Mitchell [mailto:mitch0033@gmail.com]
Sent: Thursday, April 17, 2008 1:38 PM
To: Sam E. Antar
Subject: Interview possible?
Dear Sam,

I am writing a story about short-selllers (sic) and their relationships with independent researchers and the media. I would like to give you the opportunity to respond to various allegations regarding your work.

Is there a time when I can interview you? If so, please provide me with a phone number and a time when it would be convenient for me to call.

My story is for a Web site called DeepCapture.com.

Best regards,

Mark Mitchell
847-XXX-XXXXI guess that the temperature is rising in Overstock.com's corporate suite as the Securities and Exchange Commission zeros in …

Fraud Discovery Institute Lists "Top Ten Red Flags for Fraud at Herbalife"

In a devastating new press release together with a video on You Tube, convicted felon turned fraud fighter, Barry Minkow, co-founder of the Fraud Discovery Institute takes aim at Herbalife LTD (NYSE: HLF), a multi-level marketing company, listing "ten red flags for fraud" and scolding Wall Street analysts for their failure to carefully examine such red flags stating:One day in the very near future Wall Street and all of its analysts will marvel that a company possessing so many red flags of fraud could be embraced so widely with the overwhelming credulity that it has.Minkow goes on to say that:These red flags, especially those citing saturation, are an apparent motive for the unparalleled insider dumping of the past two quarters by Herbalife (NYSE: HLF) insiders.The Fraud Discovery Institute's latest press release citing "10 red flags" is based on an updated report by noted multilevel marketing expert, Robert L. Fitzpatrick (a full copy of Fitzpatrick's rep…