For Patrick Byrne and Overstock.com, the real story is in the financial reports
July 29, 2009 by William K. Wolfrum
Overstock.com CEO Patrick Byrne has had a busy week, attacking messengers and filing reports. As should always be the case with Byrne and Overstock, the real news goes on top – Overstock’s financial reporting.
At Overstock’s Q2 conference call, former “Crazy Eddie” fraudster and current whistleblower Sam Antar came at Byrne with some tough questions, which were not answered by Byrne, who instead mocked and taunted Antar. In an epic post titled “How to Issue Phony Financial Reports and Mislead Investors – Overstock.com and Patrick M. Byrne Style,” Antar lays out the financial shenanigans going on at Overstock.com.
Overstock.com’s history is littered with a consistent pattern of false and misleading financial disclosures and lies by management about the company’s financial performance and compliance with securities laws
Since, its inception in 1999, Overstock.com is has yet to produce a financial report that has not at least initially violated GAAP and SEC disclosure rules. In fact, certain financial reports from 2003 to 2005 were restated twice to correct accounting errors.
From December 2000 to March 2002, Patrick Byrne lied about Overstock.com’s financial performance in a series of interviews on national television and in various publications prior to the company’s initial public offering in March 2002. Patrick Byrne deceptively used pro forma non-GAAP “gross value merchandise value sales” (instead of the lower GAAP commission revenue) to hype the company’s top-line performance in order to falsely claim that Overstock.com was profitable, when it never was profitable (Details here).
Antar’s story is well-detailed and brings up numerous questions about Overstock.com. Questions Byrne refuses to answer. Gary Weiss – who has long followed Byrne and has the character defamation to prove it – wrote about Byrne’s successful attack on Antar:
But the SEC doesn’t have to expand the rules to curb this kind of behavior. This isn’t Byrne hiring yet another Judd Bagley to intimidate critics. It is him, acting as CEO, doing it openly on a conference call, for the express and undisguised purpose of boosting the price of his stock by curbing serious analysis and questioning.
And boost it did. Share prices jumped 12% yesterday, climbing from 12.27 to 13.78, based on Byrne’s uncontradicted hype and intimidation of a critic.
He accomplished that by giving a graduate level course in issuer retaliation. The only question is, will the SEC learn anything from it, and act?
What the SEC does or doesn’t do in regard with Overstock.com remains to be seen. But what has been seen this week is bloggers on the left and right realizing that Patrick Byrne is not what he seems.
It started June 17, as Daily Kos Diarist Tom Sykes wrote “Bloggers Need to Steer Clear of Phony ‘Populist’ Patrick Byrne.”
Today Byrne’s latest con game is to run a website called “Deep Capture” to push his agenda and gain legitimacy for vouchers, union-busting and his other causes. This is a publicity vehicle for Byrne, according to Byrne himself, quoting the Society of American Business Editors and Writers. Byrne had applied for SABEW membership, and he got the following response: “In SABEW’s view, not all business blogs qualify as news publications just as all writing and editing doesn’t qualify as journalism. From its standpoint your activities and those of DeepCapture seem closer to corporate public relations, and SABEW isn’t open to PR professionals _ or of course to retail business executives.”
Of course, Sykes then detailed how Byrne and sidekick Judd Bagley then tried to hack into his computer using spyware – which Weiss also wrote about.
Byrne handled all this in typical fashion – ignoring any and all issues and attacking Sykes, accusing him of being a sockpuppet and other things. And now the issue has created a Diary war between DKo’s diarist Andrewtna – who bases everything on reports from the Byrne Web site Deep Capture – and Sykes. For his part, Sykes has continued researching Byrne and Overstock.
From the far left, we move to the far right, as Red State’s mustango wrote a post titled “Patrick M. Byrne, Will You Please Go Away Now!”
Byrne has, how shall I put this, some very severe personality flaws. Thin-skinned, vindictive, ego-driven — he kind of reminds me of the current occupant of the Oval Office in a way, except that he lacks the latter’s ability to maintain his composure in public. Still, he’s close enough that I think he’d fit right into the party of Nancy Pelosi and Barney Frank — but alas, he is a full-blooded conservative from that reddest of the red states, Utah.
The big problem with Byrne (and I don’t count this against his being a conservative because this is something that transcends political viewpoints) is that he is a big supporter of the First Amendment, except when it’s his own ox being gored by that pesky freedom of speech thing. Unable to satisfactorily answer the criticisms leveled against his business practices, he sadly falls back on the time-dishonored practice of attacking the messenger, defaming or otherwise attempting to ruin those who speak out against him publicly, and for those who choose to air their criticisms anonymously, he has been known to go to some rather drastic lengths to uncover their identities and then go after them.
Basically, it’s been a busy week for Patrick Byrne, and he now has a few more people to attack. I’ve done my share of reporting on Byrne in the past, and am among those perplexed that the CEO of a publicly traded company spends so much time trolling the Internet to attack any that question him.
But that’s neither here nor there. Because the real story is right there at the top of this post.