Skip to main content

Posts

Showing posts from May, 2010

Patrick Byrne Pockets $3.1 Million from Dumping Overstock.com Shares While Trying to Stave Off Possible SEC Enforcement Action

Amidst an ongoing Securities and Exchange Commission investigation into financial reporting violations by Overstock.com (NASDAQ: OSTK), CEO Patrick Byrne's 100% controlled High Plains Investments LLC dumped 140,000 company shares and collected over $3 million in proceeds during the last several days, according to SEC filings. This marks the first time that Patrick Byrne has ever sold any Overstock.com shares under his control, not a bullish signal to investors.

Meanwhile, the company is desperately trying to stave off an enforcement action by the SEC. Before I discuss that issue, let's review some recent history.

Why the SEC is Investigating Overstock.com

So far, each and every initial financial report for every reporting period issued by Overstock.com from the company's inception in 1999 to Q3 2009 violated GAAP or some other SEC disclosure rules. Likewise, every single audit report issued by PricewaterhouseCoopers, Overstock.com's former auditors, from 1999 to 2008 w…

The Brutality of Non-violent Organized White-Collar Crime Groups

The most difficult crimes to deter, investigate, and prosecute are committed by organized crime groups who share the same race, religion, ethnic, and cultural backgrounds. The social cohesiveness of such criminal groups makes it relatively easy for them to coordinate their actions to effectively execute and cover up their crimes over long periods of time.

When most people think of organized crime, they think in terms of violent criminal groups such as the Mafia. However, not all organized crime groups use violence in the execution of their crimes.

Some of the most effective organized crime groups consist of white-collar criminals who do not use any violence at all. Such organized white-collar criminal groups can be found among primarily family based businesses, even after such businesses become public companies because their management is dominated by well coordinated and cohesive family members.

Members of the Antar family, myself included, who committed the Crazy Eddie fraud, used …

Barry Minkow Gives Medifast the Middle Finger

If Medifast (NYSE: MED) thought that a lawsuit and complaints to the Securities and Exchange Commission against certain critics would get them to back down and retreat from criticizing the company, they are badly mistaken. This morning, Fraud Discovery Institute co-founder Barry Minkow effectively gave Medifast the middle finger by releasing a very detailed and potentially devastating report by pyramid scheme expert Robert L. FitzPatrick detailing additional allegations of potentially serious improprieties concerning Medifast's business model, marketing practices, and financial disclosures to investors in reports filed with the SEC. (Robert L. FitzPatrick’s 18 page report can be downloaded here).

Note: Convicted felon Barry Minkow (co-founder of Fraud Discovery) has publicly disclosed holding short positions in Medifast securities. As a successful fraud investigator, Minkow has uncovered over $1.8 billion of fraud involving over twenty companies and has received an official commen…

Can We Trust Bidz.com’s Financial Reporting?

In Bidz.com's (NASDAQ: BIDZ) recent 2009 10-K and Q1 2010 10-Q reports, the company reported "material weaknesses in internal controls over financial reporting." Among the many weaknesses in internal controls cited by Bidz.com was "control deficiencies related... (iii) maintaining an effective control environment over management oversight and anti-fraud controls specifically in processing of financial transactions, vendor review and payment processing." However, management "concluded" its financial reports "are fairly stated in all material respects in accordance with generally accepted accounting principles in the United States."

In other words, Bidz.com cannot effectively prevent anyone from robbing the company blind and cannot prevent material errors in paying its vendors. Yet, the company wants you to believe that its financial reports contain no material errors and comply with GAAP. Should we trust Bidz.com's numbers?

My personal op…

More Nepotism and Undisclosed Shady Related Party Transactions Found at InterOil

In his second installment in a series of reports detailing undisclosed shady related party transactions by InterOil (NYSE: IOC) insiders, iBusiness Reporting investigative blogger William Lobdell takes aim at certain transactions between the company and Direct Employment Services Corp (DESC).

Note: iBusiness Reporting is a division of Fraud Discovery Institute. Convicted felon Barry Minkow (co-founder of Fraud Discovery) and former LA Times investigative reporter William Lobdell have publicly disclosed holding short positions in InterOil securities. As a successful fraud investigator, Minkow has uncovered over $1.8 million of fraud involving over twenty companies and has received an official commendation from the FBI for his work in uncovering crime. Minkow and I are close personal friends and I do research work for Fraud Discovery on InterOil, but I do not own any securities in InterOil, long or short.

According to Lobdell, InterOil did not disclose that Christian Vinson who owned 50…

Straight Talk about Brutality of White Collar Crime from a Convicted Felon

Updated to include another interview

If you want to truly understand the brutal nature of white collar crime in all of its gory detail, please listen to my videotaped interview below that is featured on the Con Artist Hall of Infamy website (here). In part one and two of a series of chilling interviews with journalist Becca MacLaren, I discuss the basic tactics that white collar criminals use to exploit and scam their victims:
White collar criminals consider your humanity, ethics, and good intentions as a weakness to be exploited in the execution of their crimes. White collar criminals measure their effectiveness by the comfort level of their victims.

White collar criminals build a wall of false integrity around them to gain the trust of their victims. Sam Antar Interview, Part 1: The Rules of Criminality



Sam Antar Interview, Part 2: Humanity, or the lack thereof
.


The Con Artist Hall of Infamy was founded by Warren Hellman and Arthur Rock, two billionaires with a fascination of white…

Is InterOil Another Tyco or Crazy Eddie?

iBusiness Reporting investigative blogger William Lobdell has published the first installment in a series of reports detailing undisclosed shady related party transactions by InterOil (NYSE: IOC) insiders that apparently include such favorable terms to enrich their relatives at the expense of company shareholders.

In an accompanying press release, Fraud Discovery Institute (co-founded by convicted felon turned fraud buster Barry Minkow) compared InterOil's related party transactions to another well known fraud involving Tyco years ago and is asking the Securities and Exchange Commission to investigate the company for possible misconduct. The undisclosed InterOil related party transactions detailed by Lobdell remind me of how the Antar family treated Crazy Eddie as a personal piggy bank, back in my criminal CFO days.

Note: iBusiness Reporting is a division of Fraud Discovery Institute. Both Barry Minkow and William Lobdell have publicly disclosed holding short positions in InterOil…

Can Investors Rely on Overstock.com's Reported Q1 2010 Numbers?

Updated

A close examination of Overstock.com's (NASDAQ: OSTK) Q1 2010 10-Q report financial disclosures reveals that the company still failed to remediate serious material weaknesses in internal controls that have resulted in three restatements of financial reports in four years to correct GAAP violations. In addition, a close examination of the company's financial disclosures reveals serious questions about the quality of its reported Q1 2010 earnings of $3.7 million.

Continuing Weaknesses in Internal Controls

Each and every initial financial report for every reporting period issued by Overstock.com from the company's inception in 1999 to Q3 2009 violated GAAP or some other SEC disclosure rules. Likewise, every single audit report from 1999 to 2008 was wrong and every single Sarbanes-Oxley internal control certification signed by management turned out to be false, too.

In its Q1 2010 10-Q report, Overstock.com disclosed that the company has not remediated serious weaknesse…

Bomb Found in New York City's Times Square: A Warning from a Convicted Felon

Usually the bustling streets of Times Square in Manhattan are overflowing with pedestrians on a warm Saturday evening. However, tonight those streets were emptied as police found a bomb in a parked van. Mayor Bloomberg said, "We are very lucky. We avoided what could have been a very deadly event.”

America cannot afford to be "lucky" when it comes to any terrorism and crime.

The Paradox of Law, Morality, and Crime

The same foundations of law, justice, and freedom that help make America great are also exploited by cold-blooded criminals to help them effectively execute their crimes. Your laws, your morality, your ethics, and your decency limit your behavior as a society, while giving heartless criminals the initiative and the relative freedom of action to commit their crimes.

Criminals have no respect for the law, society, and their victims. The more humane you become as a society, the more bold and arrogant the criminal element within that society becomes, too.

While You …