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Showing posts from 2009

Is Overstock.com Shopping for an Audit Opinion?

Updated

Overstock.com (NASDAQ: OSTK) just hired KPMG as its auditors to replace Grant Thornton who was recently fired by the company, despite previous assurances by CEO Patrick M. Byrne (photo on right) and company President Jonathan E. Johnson that they would not hire new auditors until after the Securities and Exchange Commission Division of Corporation Finance completed its review of certain financial reporting irregularities.

Both the SEC Enforcement Division and Division of Corporation Finance started investigating Overstock.com after I alerted them that the company violated Generally Accepted Accounting Principles (GAAP) by improperly establishing what is known as "cookie jar" reserves to inflate its financial performance starting in Q4 2008. Afterwards, Overstock.com fired Grant Thornton as the company's auditors and publicly vilified them when they recommended another restatement of the company's financial reports, just as I previously called for in my blog. Th…

Open Letter to the Securities and Exchange Commission (Part 5): Issuer Retaliation Complaint Against Overstock.com

To the Securities and Exchange Commission:Last week Overstock.com (NASDAQ: OSTK) CEO Patrick M. Byrne ordered his paid internet stalker Judd Bagley to post an enemies list that included the "Facebook friends" of his critics on the DeepCapture.com web site, which has received both direct and indirect funding from the company and Byrne. As I will describe below, Overstock.com uses DeepCapture.com as a vehicle to viciously vilify and intimidate critics of the company and Patrick Byrne.Recently, the Securities and Exchange Commission started investigating Overstock.com's improper use of "cookie jar" reserves to inflate the company's financial performance starting in Q4 2008 as well as other financial reporting violations, as a result of reporting in this blog. I urge you to also investigate Overstock.com's vicious corporate sponsored retaliation and intimidation campaign against company critics such as myself.Overstock.com's Board of Directors have brea…

Overstock.com and Patrick Byrne Have an Enemies List That Includes Friends and Family Members of Critics

Updated:

If you are a critic of Overstock.com (NASDAQ: OSTK) beware that CEO Patrick M. Byrne and his paid stalker Judd Bagley wants to know all about your friends, acquaintances, and family members on Facebook in a desperate effort to intimidate you into silence. According to Barry Ritholtz:
Here is something weird, and a little creepy: The freakshow that is DeepCapture.com seems to have grabbed all of the Facebook friends of anyone who has ever: a) written anything positive about short selling or 2) said anything negative about Overstock.com.....For those of you who are unaware of what DeepCapture is, the name suggests that the short sellers have “Captured” the press. Deep Capture is a work of Patrick Byrne, founder of Overstock.com.For those of you who are unaware of what DeepCapture is, the name suggests that the short sellers have “Captured” the press. Deep Capture is a work of Patrick Byrne, founder of Overstock.com.DeepCapture.com is a web site financed by Patrick Byrne and its m…

Open Letter to the Securities and Exchange Commission (Part 4): Patrick Byrne Ignores Real Issues As He Vilifies Grant Thornton

Updated for two additional notes to the SEC at bottom of post

To the Securities and Exchange Commission:

Recently, Overstock.com (NASDAQ: OSTK) CEO Patrick M. Byrne has engaged in a vile public denunciation against Grant Thornton, the company's former auditors. On November 24, 2009, Overstock.com issued a press release disputing allegations by Grant Thornton that it did not approve the company recognizing the Q1 2009 recovery of a 2008 $785,000 overpayment to a fulfillment partner as income in 2009. Embittered CEO Patrick Byrne told the Salt Lake Tribune:
We refuse to knuckle under the SEC's and Grant Thornton's insistence that we abandon generally accepted accounting principles.I am not surprised by Patrick Byrne's desperate lies given that every single financial report issued by the company since its inception has at least initially failed to comply with Generally Accepted Accounting Principles (GAAP) and SEC disclosure rules. Patrick Byrne, former CFO David Chidester, …

Advice For Patrick Byrne: The Cover-up is Always More Dangerous Than the Crime For Lying CEOs Like You

Overstock.com (NASDAQ: OSTK) CEO Patrick Byrne has engaged in a public dispute with Grant Thornton, the company's former auditors. Yesterday, Overstock.com issued a press release disputing claims by Grant Thornton that it did not approve the company recognizing the Q1 2009 recovery of a 2008 $785,000 overpayment to a fulfillment partner as income in 2009. Details are provided in my third Open Letter to the Securities and Exchange Commision.Other blogs covering the latest events are:Going Concern: "Patrick Byrne: Noooo, Grant Thornton, You’re Lying" by Caleb NewquistBusiness Insider: "Overstock: Actually, Grant Thornton Is Lying (OSTK)" by Henry BlodgetNew York Times:" You lie! No, You Lie!" by Floyd NorrisI will have a blog post out about those issues by Monday. However, I'll provide you with a small teaser.Patrick Byrne apparently believes that he can scam Grant Thornton, like I scammed Main Hurdman/Peat Marwick Main/KPMG back in the Crazy Eddie …

Open Letter to the Securities and Exchange Commission Part 3: Overstock.com Lied About Grant Thornton and Concealed Error

Updated:To the Securities and Exchange Commission:In my last letter, I detailed how Overstock.com (NASDAQ: OSTK) deliberately concealed a 2008 overpayment to a fulfillment partner that was later recovered and improperly reported as income in Q1 2009. Now Grant Thornton has written a rare public letter to Overstock.com agreeing with me and taking issue with its former client's representations regarding that certain fulfillment partner in last week's conference call, and filings with the SEC. See below: In its Q1 2009 10-Q, Overstock.com originally disclosed that:In the first quarter of 2009, we reduced total cost of goods sold by $1.9 million for billing recoveries from partners who were underbilled in 2008 for certain fees and charges that they were contractually obligated to pay, and a refund due of overbillings by a freight carrier for charges from the fourth quarter of 2008.Note: Bold print and italics added by me.Overstock.com's Q1 2009 10-Q report made no mention of t…

Open Letter to the Securities and Exchange Commission Part 2: New Information on Overstock.com's GAAP and SEC Disclosure Violations

To the Securities and Exchange Commission:On November 18, 2009, Overstock.com (NASDAQ: OSTK) held conference call where CEO Patrick M. Byrne, company President Jonathan E. Johnson, and CFO Steve Chesnut sought to justify the company's improper treatment of accounting errors under investigation by the SEC, the company's firing of Grant Thornton as its auditors after they told the company to correct its financial reports, and the company's filing of an "unreviewed" Q3 2009 10-Q with the SEC. Patrick Byrne did not permit me to ask crucial questions about Overstock.com's accounting irregularities while I was on the call and Jonathan Johnson lied when he said, "We we don't have any other questions lined up."Therefore, in this letter I will analyze certain accounting issues under investigation by the SEC based on new company disclosures. In addition, I will show why Overstock.com's excuse for its treatment of accounting errors, which is based on t…