Another Overstock Hatchet Job

[Parsad]

Former NY Post scumbag Roddy Boyd wrote an article for Slate.com about Patrick Byrne.  

 

http://www.thebigmoney.com/articles/judgments/2010/01/19/americas-nastiest-ceo?page=0,0

 

It's interesting how at the end of the article, Boyd holds up Herb Greenberg as a beacon of journalistic integrity.  I remember talking to Herb Greenberg at the very first New York VIC, where he and Chanos had just finished lambasting Fairfax and Prem.  When I cornered Greenberg in the hall upstairs and asked a few questions about his research methods, his answers were mind-blowing.  

 

I asked him if he had read Fairfax's annual reports when doing his research.  His response was no.  I asked how he came up with his conclusions.  He said he had two very reliable and knowledgeable sources.  I said, how can he come to any conclusions without reading the financials.  He said, he just doesn't have enough time, and that his sources had done the work.

 

Interesting, a journalist writing negative stories about an insurance company that can't even read financial statements.  He was perspiring profusely, not unlike condensation on a shower door...dribbles of sweat beading down his forehead.  Agitated, he excused himself and went on to talk to other people.

 

So unfortunately, I would ponder a reasonable guess that neither Boyd, Eavis nor Bethany McLean can read financial statements as well. That much of their articles are probably written based on material from their numerous and "reliable" sources.  For those that remember Eavis' articles, virtually all reeked of the same stench as the smears that John Hempton and John Gwynn were passing along to various people.  That diligent journalist Fabrice Taylor, who ran "Frank" magazine into the ground in less than year, used to write the same identical crap in his VOX column in the Globe & Mail.  

 

Who are all these journalists that Boyd refers to as the "reporters who have done the epic and heavy lifting in holding American businesses accountable?"  All the ones I've seen don't even do any research, and rely mostly on sources.  What heavy lifting have they done?  You can still find all my arguments with Greenberg online...the best one is when I asked him why he wasn't covering New Century during the beginning of the real estate bust in very early 2007?  

 

http://blogs.marketwatch.com/greenberg/2007/02/novastar_delinq/

 

Was it because David Einhorn was on the board of directors?  It was the largest mortgage bankruptcy at the time, and Greenberg had not written one iota on the subject.  Heavy lifting...yeah right!  Cheers!

[FFHWatcher]

Do you figure 'business journalists' have increased your overall investment gains or reduced them? 

[Parsad]

Do you figure 'business journalists' have increased your overall investment gains or reduced them?  

 

Helped.  But so have the unscrupulous bank executives who enabled the mortgage boom and bust, and the reckless executives who run quality businesses into the ground.  Even though they've been very profitable, I wish the world didn't work that way.

 

Perhaps some of these journalists, like a doctor taking the hippocratic oath, could hold themselves to a higher standard of conduct.  The Roddy Boyd's, Herb Greenberg's and Peter Eavis' of the world are the equivalent of doctors who perform breast augmentations or botox injections...superficial research accompanied by unproven inference and hearsay.  Cheers!

 

http://www.studyjournalism.com/?p=278

[lessthaniv]

Sanj,

 

Not sure if you saw this yet but it's a funny read. Boyd contacted Byrne for comments while writing this article and Byrne posted Roddy's questions & his responses on the Deepcapture.com website.

 

http://www.deepcapture.com/rocker-gradient-scoff-at-law-and-roddy-boyd-shills/

 

__________________________

 

 

Today’s Yawn: Scoffers of Law Rocker-Gradient Ignore Court Order & Roddy Boyd Shills, Exhibit Z

Posted on 14 January 2010 by Patrick Byrne To bring new readers up to speed:  DeepCapture long ago exposed hedge fund towel boy Roddy Boyd through such literary gems as Mark Mitchell’s “Michael Milken, 60,000 Deaths, and the Story of Dendreon” (N.B. Chapter XII), and my own essay, “Roddy Boyd Sucks It Like He’s Paying the Rent (Fortune Magazine)“, an exegesis of the collapse of Rocker Partners and review of the journalistic fellatio Roddy performed thereon (this latter piece should be read in conjunction with “Carol Remond Tells a Joke She Doesn’t Get“). I encouraged Fortune spokeswoman Katy Reitz to follow the emerging story on Roddy: whether for that reason or others of their own, Fortune and Roddy parted ways soon thereafter, Roddy to slither into his own unique and arrest-warrant-laden world (that’s him, just above the child porn guy).

 

As my feelings may not be obvious, even-handedness and transparency dictate that I disclose that compared to Roddy I’ve observed more intellect in a ice addict sitting on the floor of a 7-11 trying to remember how to use Comet and Pam Spray to cook meth, and more dignity in a crackhead living off $2 hand-jobs at the bus station.

 

Followers of the Overstock story (itself a sub-plot of the DeepCapture epic) know that at the end of 2008 Gradient Analytics’ Donn Vickrey and Bettis Brothers Carr and Leland apologized for and retracted years’ worth of lies, accusations, and smears about Overstock. Given that they had made their allegations a cornerstone of their business development, their decision to apologize and recant may,  I suspect, have undermined their ability to represent themselves as anything but lapdogs willing to charge for shill “research” one day those same fund managers they’ll sell out the next.  Then in late 2009, Rocker Partners dropped their counter-suit against Overstock and made their own apology in the form of a $5 million check.

 

In a process known as “discovery”, in the course of this lawsuit both sides turned over millions of pages of documents to the other.  Since the turning over of documents and depositions thereon, Gradient Analytics publicly retracted their accusations and apologized, and Rocker Partners dropped their counter-suit and coughed up $5 million: the litigation-conversant reader may make her own inference as to  how the weight of evidence tipped the scales of justice in this particular case.

 

Of more immediate interest, however, is the fact that, though those millions of pages of documents are covered by protective orders of the court, and hence their disclosure by Gradient, Rocker Partners, or their esteemed counsels (e.g., Fred Norton, Esq.) would be illegal, Roddy Boyd today emerged in possession of this material, which he proceeded to use in clumsy attempt to reprise his role as minor Wall Street lick-spittle.

 

Now having spent my share of hours in the company of all of these luminaries of ethics and right action, which one violated the court’s protective orders is difficult for me to say. I’ve had mops with more character than the lads at Gradient Analytics. David Rocker is bitter and insane (I wonder how he played it at his country club: “I swear I’m innocent, folks, but just in case, I hired David Boies’ criminal defense partner“).  Of course, in four years of litigation the ever-charming Fred Norton managed (as far as I could tell) precisely one moment of humanity, and even there, his motives were not entirely clear. So I’ll call it a photo-finish. (Though if I were a gambling man, I might have to put my money on the long-shot bet: the guys at Gradient, who give off that unique scent of low-rent hustlers just bright enough to have figured out they are playing out of their league but not bright enough to back away from the table).

 

Setting aside the issue of which of these pillars of our community gave the finger to a sitting California judge (and a retired federal judge who acted as Discovery Master in our litigation), an interesting question remains: will Roddy Boyd, having lost all appearance of reputation, honor, and employment, be game for another try?

 

And once again, Roddy doesn’t let us down.

 

Alas, beyond his brief stint at now-defunct criminal bacchanal that was Refco, Roddy has no actual work experience by which to make sense of the material thus provided him. So I think it best to  let his email tell the story, with my brief answers inserted in bold italics.

 

From: Roddy Boyd [mailto:roddyboyd@ymail.com]

Sent: Wednesday, January 13, 2010 7:04 AM

To: Patrick Byrne

Subject:

 

Patrick,

 

Roddy Boyd here. I am writing a story for Slate’s thebigmoney.com. I have set up this email account for this query and will no longer use it after 4:30 pm EST tonight. I will phrase the questions as bluntly as possible because I am not seeking to engage in an E-mail exchange. Should you need to reach out to the story’s editor, Please approach Jim Ledbetter. I believe his email address is James.Ledbetter@thebigmoney.com. Please have your response in by 4:30 pm EST.

 

Your response will be linked to in its entirety, as well as referenced within the body of the story–I imagine it would look something like, “Patrick Byrne said, ‘xyz…..’” (To see Byrne’s full response, click here.)

 

 

Answer: Thanks for the tip, Roddy, but I just decided to answer here on DeepCapture. We appreciate the link, though, and will return it once you publish. Remember, we journalists have to stick together.

 

The story deals with Overstock’s state of affairs in the fall of 2005 and winter of 2006. Specifically, It (sic) references the problems you had with factors such as CIT because of Overstock’s losses and its percieved (sic) weak operating position. The governing theme of the piece is that financial investigative reporting on fully operational companies is imprecise (unlike say doing a post-mortem on Lehman or Enron.) In other words, the concerns of OSTK critics about liquidity and the build-your-own-jewelry initiative appear correct, but that they (likely) could never have guessed precisely why.

 

“[A]ppear correct”, do they? Well we’re still here and doing quite well, thank you, while your patron David Rocker plays shuffleboard in Florida, muttering my name under his breath like a wino’s lament as he realizes that for years to come his own name will give off a foul stench among the smart money set he unsuccessfully aped.

 

An Email (sic) I quote, from 11/14/05, from David Chidester to you, Jonathan Johnson and Jason Lindsey says, “Unfortunately what we feared has begun. Some factors and banks have stopped insuring our payables.”

 

This clearly had been a problem of some duration for OSTK, since on 9/22/05, five weeks after your suit was filed, you stated in an email to your colleagues, “I just sat with CIT. They confirmed that at one time we were reasonably good (not great), and have turned to shit in the last six months.” You added: “For years, I have been hearing from accounting that we pay our vendors super-promptly.”

 

Answer: The fact that we were considering  the views held by some does not make them material any more than, for example, my saying that “Roddy Boyd is a half-bright hedge fund shill” would have been a material event for New York Post, or Fortune, or whomever was then displaying the unfortunate judgment of employing  you. Some folks at CIT said one thing, some factors said another, our accounts said something else, our Paydex score (you may have to look that one up) held up throughout (and  is now an 80, pretty much at the top of the vendor-payment pyramid in our industry), and CIT turned out to be the one that went under. Ohhh, the irony, the irony.

 

The story also references emails between Rich Paongo and Chidester on January 20, 2006 which looked at the problems three of Overstock’s factors and lenders had with the company: “Not meeting projections, no profits, low cash, and slow payments .” On February 28, 2006, Joanne Dalebout, E-mailed you and your colleagues, “All [vendors] are saying that with Overstock in the papers a lot and the lawsuit they don’t think we will be in business and that we are too much of a risk? Also having problems with CIT not approving small orders.”

 

Answer: It appears your understanding of “material” includes how some people react to how other people react to exaggerated hedge fund-planted media pieces written by…. You.  These were not prevalent internal views or conclusions nor, most importantly, my views: I thought they were wrong, I proved to be right, and CIT went the way of the wild buffalo and your job at Fortune.

 

Why did OSTK not reference the troubles it was having with its key credit providers in any of its public communications?

 

Answer: So your understanding of “material” would include the report of a buyer about the rumors spread by a factor to the companies that this factor charged to justify the price of its services? Did I miss anything?

 

As you will recall, one of the concerns that OSTK critics had was the company’s cash-flow and operational soundness. For a retailer, this would clearly appear to meet the threshold of materiality. Do you disagree?

 

Answer: I do.

 

And would you elaborate on this decision?

 

Answer: Same answer.

 

 

The story will also mention “Operation heist and freeze” with your “Lubbavitcher friends” from Ice.com.

 

Answer: Right on.

 

–Why did you not disclose, per Jonathan Johnson’s report to the OSTK board on 7/13/05, that the diamond VIE was structured as it was to avoid “Nexus in the State of New York for sales tax purposes.”

 

Answer: Same answer plus the issue was not material plus tax is discussed in the due course of the conduct of any business plus have you ever considered trying the fact-fact-logical-inference thing instead of the stuck-on-stupid-reporter thing?

–Please elaborate on Overstock’s decision to avoid paying sales tax and to not disclose the identities of Moshe Krasnanski and Meyer Gniwisch.

 

Answer: I think you mean “collect sales taxes” and the law of this country requires us to collect sales tax in some cases and not in others and remind us again, What’s it like to go through life with a room temperature IQ? Can you hide your own Easter Eggs?

 

Thank you,

 

Roddy Boyd

 

Don’t mention it, Roddy. Remember, I’m always here to help.

 

 

Very respectfully,

 

Patrick Byrne, Journalist

 

LATE EDITION:

 

PS I see Roddy just sent a follow-on:

 

From: Roddy Boyd [mailto:roddyboyd@ymail.com]

Sent: Thursday, January 14, 2010 12:53 PM

To: Patrick Byrne

Subject: one follow up question

 

Forgive the additional query, but it is germane.

 

The big diamond block, the trade you staked with Moshe and Meyer for about $7.5mm, appears to have originated from one Lev Leviev, a rather interesting man.

 

Leviev, outside of his NYC and West-Bank real estate operations, is also one of the more active miner and marketers of Angolan diamonds, an area whose extraction methods and principles are quite controversial.

 

Were those diamonds sourced from Angola? If so, could you elaborate on any debate you had with respect to doing this sort of business?

 

thank you

 

Roddy Boyd

 

Answer: Fred Norton went down the same line of questioning, and I’ll give you the same answer I gave him. No they were not sourced from Angola nor were they blood diamonds, and yes I conducted an investigation to that effect before doing the deal: said investigation consisted of asking my four Lubavitch rabbi friends plus the family patriarch (himself, a Ha-Shoa survivor who spends half his day in Talmudic studies) and having them tell me what I already knew, which is, that they would never engage in or draw me into any business which was not super-clean.

 

And thanks for playing, Roddy.

 

 

 

 

From: Roddy Boyd [mailto:roddyboyd@ymail.com]

Sent: Thursday, January 14, 2010 12:53 PM

To: Patrick Byrne

Subject: one follow up question

 

 

Forgive the additional query, but it is germane.

 

 

The big diamond block, the trade you staked with Moshe and Meyer for about $7.5mm, appears to have originated from one Lev Leviev, a rather interesting man.

 

 

Leviev, outside of his NYC and West-Bank real estate operations, is also one of the more active miner and marketers of Angolan diamonds, an area whose extraction methods and principles are quite controversial.

 

 

Were those diamonds sourced from Angola? If so, could you elaborate on any debate you had with respect to doing this sort of business?

 

 

thank you

 

Roddy Boyd

 

 

[Parsad]

Yeah, I read it and thought it was dead on.  These scumbags coordinated their articles again...Gary Weiss, Sam Antar, Roddy Boyd all published today and I would guess Tracey Coenen will also be writing something.  Herb Greenberg is now a private analyst...phhpppphtttt!  I wonder if he actually reads any financials now, or does he produce the reports based on his sources?  Cheers!

[Smazz]

Roddy Boyd?

 

Id rather get my news from Roddy Piper!

[GaliPart]

Parsad (and others),

 

At the risk of taking the unpopular view here, I feel that Patrick Byrne has really undermined his credibility by comparing the author of the article unfavorably to those performing cheap sex acts and cooking meth.  In fact, I stop reading at that point, thinking that (at least with me) the author is not rational on the issue--he has lost his perspective along with his credibility.  And, to a certain extent, those who think that such over-the-top characterizations are dead on lose some luster in my eyes as well.

 

I'm not taking any stand on the facts in the article (or the response), but rather its civility.  And if Patrick Byrne doesn't understand that he is totally undermining his message by saying (and writing) such things, then I'm afraid that he won't be taken seriously by many people--even if he ends up being correct on the facts.  I feel that he really does undermine his case with this type of behavior. 

 

Oh, and by the way, I don't think that I would want to see the CEO of any company that I owned a part of putting that type of language or behavior out there for public consumption.  (Disclosure: I have absolutely no position in the company.)  I'd much prefer someone who was both civil and rational, as are the members of this board.

 

Just my $0.02.

[JAllen]

After following the whole OSTK, NSS etc. saga the last 4 years I can say that Patrick has kept his cool quite a bit longer than most very decent people I know.  This is by far the most lascivious behavior or commentary I have seen him commit and I don't judge him negatively for it.

 

I can say that I would rather not a CEO of a company I own a part of engage in the war that he has engaged in but I don't judge him negatively for that either.  Actually, most people would just avoid the more powerful, corrupt financiers, journalists, and traders, he has exerted much energy against.

 

I don't have any position in OSTK. 

 

 

[Guest ValueCarl]

Hmm, as if he had a choice? Would his business not have suffered more profusely by standing down? I would not want to be a judge of this man, one who has given so much of his time, intellect, effort and money to benefit all market participants with uncanny foresight as to the inner workings of this filthy Wall Street Machine, in the final analysis. One could only imagine the stress he has endured for fighting such a good fight against the evil he vividly confronts. He is only describing what many of us would choose to believe doesn't exist in our nice comfortable worlds, while he dares to explore the deep caverns and dark side of their universe. He is a damn good man, Dr. Byrne, and I applaud him for his courage and convictions. Investors in America, and the globe should also.     

 

<Actually, most people would just avoid the more powerful, corrupt financiers, journalists, and traders, he has exerted much energy against.>

[Parsad]

Parsad (and others),

 

At the risk of taking the unpopular view here, I feel that Patrick Byrne has really undermined his credibility by comparing the author of the article unfavorably to those performing cheap sex acts and cooking meth.  In fact, I stop reading at that point, thinking that (at least with me) the author is not rational on the issue--he has lost his perspective along with his credibility.  And, to a certain extent, those who think that such over-the-top characterizations are dead on lose some luster in my eyes as well.

 

Gali,

 

I totally agree with you that Patrick's time would be much better spent on Overstock.com, rather than trying to counter the likes of Roddy Boyd via Deepcapture.  And I definitely agree that his message would be viewed as more objective and rational if he did so.  

 

At the same time, if you read the fifth paragraph, shortly after the second paragraph which alludes to the use of crystal meth and sex acts, you would have read that his whole attack was based on a particularly disturbing incident:   Boyd and his minion defied a protective court order, and released restricted and private emails by Overstock.com that were produced in discovery in their case against Gradient Analytics.  A case that Gradient subsequently settled for five million dollars!  

 

Now we aren't talking about Bernstein and Woodward revealing a break-in at the Democratic National Committee's headquarters, but several journalists who decided to defy a court order, flaunt the First Amendment, and drive down the price of a company they've had a personal vendetta against for five years.  Perhaps Byrne should have chosen different analogies for these miscreants...lickspittle was a very popular one in my mind...but instead he decided to roll around in the gutter with these pigs.  So be it!  

 

I think most of us would agree, that we would rather see him use Prem's strategy and focus solely on the business.  At the same time, I'm very happy to see a CEO who is relentless in his attempt to bring to light blatant manipulation of market prices, which in the correct circumstance can obliterate a company's credibility, ability to borrow or issue shares in the open market.  Cheers!  

[Partner24]

If I was an owner of a toaster store, and several miscreants would try to close my shop with repeated public lies, fraud, diffamation, etc. I would'nt just still sell toasters and let them keep doing that without any personal reply.

 

Patrick Byrne has balls. He is a real boxer and he's a cancer survivor. If he did just kept selling toasters like too much executives do, these miscreants would still kill several public companies with infamy and injustice without any serious consequence. To me, he deserve a lot of admiration for his fight for the right cause.

 

That being said, I think he is getting quite emotive (a very understandable behavior in these circumstances) and it is dangerous to make mistakes when you feel like that.

 

Prem strategy to be quiet for some time and then strongly fight back in court is a good one too. But, I think that Patrick's public replies helped a lot of people to realize what is truly happening and why these guys must be stopped. What he has accomplished so far is mind blowing to me. Without him, I wonder what would happen with these miscreants today.