A Scandal Unfolds, and the Media Mob Scampers
Three years ago, Deep Capture reporter and Overstock CEO Patrick Byrne gave a famous conference call that he titled, “The Miscreant’s Ball.” His thesis was simple: Some short-selling hedge funds collude to destroy public companies by spreading misinformation, orchestrating government witch hunts, filing bogus class-action lawsuits, and, most egregiously, selling billions of dollars worth of phantom stock.
In the months that followed “The Miscreants Ball” presentation, a clique of journalists with close ties to short-selling hedge funds and CNBC’s Jim Cramer (himself a former hedge fund manager), set out to sully the reputations of Patrick and everyone else who sought to expose short-seller crimes.
Cramer pal Joe Nocera, who is the New York Times’ top business columnist, wrote that Patrick’s crusade against hedge funds that sell phantom stock was “loony beyond belief.” CNBC contributor and Marketwatch columnist Herb Greenberg, formerly an editor with Cramer’s web publication, TheStreet.com, labeled Patrick the “worst CEO in America” for taking on the shorts (ie., the same shorts who are now paying Herb for “independent” financial research). Fortune magazine’s Bethany McLean, who has yet to write a story that was not sourced from a small group of short-sellers connected to Jim Cramer, suggested in an article titled “Phantom Menace” that Patrick should be fired from Overstock for speaking out against the problem of phantom stock.
At the time, I was the editor of the Columbia Journalism Review’s online critique of business journalism. The attack on Patrick was like nothing I’d seen before, so I decided to write a story about the media’s coverage of short-sellers and phantom stock. When Herb Greenberg and Joe Nocera got word of this, they both called my editor demanding that he kill the story. Cramer sent a public relations goon to delay the story. Then a short-selling hedge fund, Kingsford Capital, appeared in my offices and offered to pay my salary.
My successor at the Columbia Journalism Review is now called “The Kingsford Capital Fellow.” One of Kingsford Capital’s managers was a founding editor of Cramer’s website, TheStreet.com. I do not believe that Kingsford’s interest in the Columbia Journalism Review is philanthropic. And I do not believe that the Columbia Journalism Review, “the nation’s premier media monitor” is capable of objectively monitoring the financial media so long as it’s chief writer on the subject is paid directly by this very controversial, Cramer-connected, short-selling hedge fund.
Perhaps facing similar pressures, or perhaps because they are unwilling to contradict Cramer’s influential Media Mob, or maybe because they’re just plain lazy, other journalists have shied away from covering the problem of illegal short-selling. Instead, reporters have incessantly repeated the party line that “short selling is good for the market. Only bad CEOs complain about short-sellers.”
In March, short-sellers destroyed Bear Stearns by spreading false information and selling millions of phantom shares. And now the shorts are going after another major investment bank. In a week of high drama, hedge funds have been circulating blatantly false and hugely damaging rumors that big institutions are pulling their money out of Lehman Brothers. If March SEC data is any indication, the shorts are also selling millions of dollars worth of phantom Lehman stock.
One of the nation’s most important investment banks is down, and another is on the brink. The American financial system wobbles.
And, suddenly, Cramer’s Media Mob is silent. Gone is all of the talk about Patrick Byrne being crazy. Nocera says nothing about the attacks on Lehman and Bear. Bethany McLean recently wrote a favorable review of a book written by David Einhorn, the most prominent short-seller of Bear Stearns and Lehman, but she dares not mention the current market predations.
Herb Greenberg, who used to sing the praises of short-sellers almost weekly, was last heard defending his hedge fund friends in April. CNBC seems to have taken him off that beat. (The network recently dispatched Herb to the San Diego County Fair, where he interviewed a vendor of deep-fried Twinkies).
But Jim Cramer is talking. No doubt to distance himself from the growing scandal, he went on CNBC today and said precisely what Patrick Byrne said three years ago. Noting that short-sellers are colluding to take down Lehman, he said the problem is “the need to be able to get a borrow and see if you can find stock….. no one is even calling to see if they can get a borrow. [In other words, hedge funds are selling stock they don’t have -- phantom stock]. It’s kind of like, well listen, let’s just knock it down. It’s very similar to what Joe Kennedy would have done in 1929 [leading to Black Monday and the Great Depression] which is get a couple of cronies together and let’s take it down…”
Too late, Jim. For three years, you, CNBC, and a clique of journalists very close to you have ignored this crime because your short-selling hedge fund cronies claimed that phantom stock is not a problem. Meanwhile, hundreds of companies have been affected. Billions of dollars of value have been wiped out. And lives have been destroyed.
It is one of the most ignominious episodes in the history of American journalism.
Click here to enter the $75,000 “Crack the Cover-up” contest.
Posted in The Mitchell Report |
July 11th, 2008 at 7:05 pm
Mark,
Thanks for telling like it is.
July 11th, 2008 at 7:10 pm
” First they ignore you, then they laugh at you, then they fight you, then you win.”
Patrick Byrne, quoting Mohandas Gandhi, soon after The Miscreant’s Ball Call
Looking forward to the 8000 email revelations.
July 11th, 2008 at 7:40 pm
Patrick-This is getting a bit much. I wish I was stupid. I wish I knew nothing. Life would be so much easier. John Lennon once wrote “living is easy with eyes closed, misunderstanding all you see.” I so wish my eyes were closed. We have hedge funds destroying companies and controling the media. We have speculators causing oil to reach unbelievable levels. We have people in power who take no dedication in protecting who they are sworn to protect. We have paid bashers on the net defaming good people and companies, for nothing more than a buck. We have people floating rumours, damaging to our citizens financial well being, so they make a profit.
Recently, a friend of mine went to DC for the first time. He took the nightime tour, and saw then Washington monument, Jefferson, Adams, Lincoln, FDR, etc. The next morning, he got on the plane to come home, and sat next to Dennis Kucinich. Enough said.
What has become of our decency? To close, I quote another musician….”where have you gone Joe Dimaggio, our nation turns its lonely eyes to you.”
Thanks for trying to be the next yankee clipper, but I truly fear the umps and owners have fixed the game. Where is Kenesaw Mountain Landis when we need him?
July 11th, 2008 at 7:53 pm
One more comment Patrick. There was an article recently about a small percemtage of unregulated hedge fund managers making a billion $ in the past year, while the rest of the majority of market participants have poor returns, due to market problems and volatility.
Let me ask you, what would Bellagio, or any casino, do under the following scenario……………….10,000 gamblers in the casino all losing or winning at historical mathematical levels. 50 of them hit black jack, a royal flush, or roll a 7 on every single hand? Think they would question it, and look into those 50????
Hello, SEC, DOJ, Congress,hello, hello……is this thing on?
July 11th, 2008 at 8:39 pm
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_L/threadview?m=te&bn=10602&tid=100061&mid=100061&tof=5&frt=1#100061
Lebed is back.
July 11th, 2008 at 8:54 pm
You have made claims which are quite spectacular, but you give absolutely no detail that make the casual observer think they are not merely opinions obtained second hand. Four claims in four consecutive sentences need explanation.
“When Herb Greenberg and Joe Nocera got word of this, they both called my editor demanding that he kill the story.”
How did you come to know this and who told you? What was the gist of this conversation? Is the editor still there? Does that person have any comment on your claim?
“Cramer sent a public relations goon to delay the story.”
I ‘m sure the PR person was a goon, but who did the PR person speak to? If not you, who told you? What was said in that conversation?
“Then a short-selling hedge fund, Kingsford Capital, appeared in my offices and offered to pay my salary.”
There is no person named Kingsford Capital. Who was the person? What was their affiliation? Did they meet directly with you or you and your editor or did you hear this through the grapevine? How did that conversation unfold? Are you claiming they offered to hire you away from you job or are you saying they offered to pay you to stay? There is an implication that they were trying to influence your content but you don’t say that. Why not? It’s quite a story if the reality is what you imply but you offer no detail to make it credible. Why leave it to the imagination of the reader?
“My successor at the Columbia Journalism Review is now called “The Kingsford Capital Fellow.”
Who calls him that? Is that an internal name at CJR or the DeepCapture name for him. Big difference.
You wrote a zillion words in that one article. Surely you can add detail to these incidents.
July 11th, 2008 at 8:59 pm
Most of all those people you see in that video ridiculed and chastised Patrick for reiterating the same statements that Patrick made on that sleaze ball station of corruption. Santelli and Gasparino are the only objective people there. Cramer and Greenberg were the biggest critics of Patricks story of NSS and would daily rip him a new one. Things are a changing just as the bunnyman said they would. Sure miss the words and wit of the bunny.
July 11th, 2008 at 9:59 pm
Congress`s feet are to the fire. And it is Congress`s problem. Nobody else is in a position to stop it. Open rebellion is next if they don`t act. The lights are on and the roaches are looking for cover.
July 11th, 2008 at 10:01 pm
YouTube pulled infamous Cramer - How I manipulate the stock market - video. After TheStreet send copyright notice
http://www.youtube.com/watch?v=GOGLvxqAk4A
I can’t find it anywhere, now. Anyone has a copy they can point me to?
Thanks
July 11th, 2008 at 10:27 pm
“I do not believe that the Columbia Journalism Review, “the nation’s premier media monitor” is capable of objectively monitoring the financial media so long as it’s chief writer on the subject is paid directly by this very controversial, Cramer-connected, short-selling hedge fund.”
Mark Mitchell needs to learn the difference between someone being directly paid and indirectly paid. If this is an example of how Mark Mitchell writes I can very well understand why he is no longer at the CJR and now shills for Patrick Byrne and does so with no objectivity at all.
Bear Stearns is gone, the world goes on without it, it’s importance is a figment of Mark Mitchell’s fevered imagination.
July 11th, 2008 at 11:30 pm
Someone needs to get Joe Lewis (Billionaire who lost a Billion Cash on Bear Stearns and is fighting the JP Morgan Chase bailout) onboard with the Deep Capture project. His company Tavistock Group owns more than 100 companies world wide.
http://en.wikipedia.org/wiki/Joseph_C._Lewis
July 12th, 2008 at 8:00 am
RTWAY, I see alot of people, includinding Patrick, think that Gasparino is a good honest guy, I hear and see different. I hope I am wrong but I believe he is a wolf in sheeps’ clothing. I know people that have spoken to him about Naked Shorting and such and his reaction was “What does that have to do with me?” Just listen to some of his interviews and his recent comments about the “Vanity Fair” article and the story by Burroughs, you’ll see. He is a consumate team player. I like Rick Santelli and what he does to Herb et al. Gasparino on the other hand is in the same league as Cramer in my humble opinion and time will prove this.
July 12th, 2008 at 10:34 am
Good luck getting more than an odd assortment of screwballs, nutjobs and malcontents to join the deepcapture jihad.
You already have a discredited political hatchet man, a washed up writer and a CEO who either does or doesn’t do cocaine and either is or isn’t gay but certainly lies like a dog.
July 12th, 2008 at 1:57 pm
For those that are criticizing maybe you should read the volumes of material on the subject before you start posting? There is more than just DeepCapture exposing this. Check out these websites also.
http://www.investigatethesec.com
http://www.thesanitycheck.com
http://www.thefaulkingtruth.com
http://www.rgm.com/shortselling.html
http://www.stopphantomshortselling.org
Read all that and see if you can still criticize the issues that Patrick and Mark raise with a straight face. This will all be exposed in a short time I’m sure as our collapsing economy will force some accountability on the individuals that are allowing this to occur. I imagine some of them are already planning their escape.
July 12th, 2008 at 5:31 pm
Wow, glad you have money( hope you do) to fight this stuff, just want you to know that the video’s are almost impossible to view. I have persisted in my efforts but it seems that what you are saying is being effectively squashed by even your site, that shows how powerful your message is. Wish you luck.
July 12th, 2008 at 9:10 pm
Scardy pantless, I have reviewed most of the videos and they are quite visable, check your computer. Also can anyone tell me what happened the the company that Cramer recommended in one of his self incriminating video clips Global Santa Fe.(GSF) I can’t seem to track it anywhere.. Thanks in advance.
July 13th, 2008 at 1:58 am
It is as if there was nothing at all wrong with Bear Stearns. As though Bear was a well run company that did not have two very large hedge funds blow up in July 2007. Poor poor Bear Stearns (a well run company) ruined by the media and other hedge funds.
I feel so bad for the wonderfully run IndyMac. It is a huge shame that that company had to go under the wheels of the media and hedge funds.
Tomorrow I’ll feel very bad for the well run Wachovia and Washington Mutual. I can just smell the media and hedge funds going after these great banks next.
Shine on you crazy diamond.
Keep telling it like the crazed fools you are.
July 13th, 2008 at 5:54 am
MRD,
No one is claiming Bear Stearns, Lehman, Wachovia, IndyMac, et al are well run companies. The issue is the phantom shares scam, you moron.
Mark & Patrick & Judd, keep up the good work. Looks like your site is starting to get some attention.
Sincerely, Crazed Fool.
July 13th, 2008 at 8:04 am
Details Please,
Here’s one: Staff Writers Anna Bahney, Liz Cox Barrett, Curtis Brainard, Ryan Chittum, Elinore Longobardi, Dean Starkman (Kingsford Capital Fellow)
http://www.cjr.org/about_us/masthead.php
Your welcome.
July 13th, 2008 at 12:20 pm
Uncle Billion,
You’ll find a low resolution version of the Cramer video here:
http://www.antisocialmedia.net/media/cramer_con-fidential.wmv
July 13th, 2008 at 12:59 pm
SEC opened a new investigation! I still believe in this great country - USA!
The Securities and Exchange Commission said Sunday it is immediately opening a probe to prevent the spread of false information used to manipulate securities prices.
SEC Chairman Christopher Cox said the investigation is aimed at “ensuring that investors continue to get reliable, accurate information about public companies in the marketplace.”
The probe comes amid a new bout of turmoil that has gripped investors. Questions have been swirling about the financial health of mortgage giants Fannie Mae and Freddie Mac as well as Lehman Brothers Holdings Inc.
Earlier this year, a run on Bear Stearns pushed the investment bank to the brink of bankruptcy and into a takeover by JPMorgan Chase. Bear officials blamed market rumors for the run.
The investigation will be conducted by the SEC’s Office of Compliance Inspections and Examinations as well as the Financial Industry Regulatory Authority and New York Stock Exchange Regulation Inc.
Cox said the probe will provide an opportunity to make sure brokers and investment advisers have “appropriate training for their employees and sturdy controls in place to prevent intentionally false information from harming investors.”
By law, brokers and investment advisers must have procedures in place to prevent market manipulation and other violations. Investigators will focus on such procedures, or controls, and whether “they are reasonably designed to prevent the intentional creation or spreading of false information intended to affect securities prices or other potentially manipulative conduct,” the agency said.
The probe is separate from SEC’s investigations, already under way, into alleged intentional manipulation of securities prices through “rumor-mongering and abusive short selling,” the agency said in a statement.
News Provided by Acquire Media Corporation
July 13th, 2008 at 4:56 pm
There is a more detailed story on Bloomberg. Seems like a good time to lay out to the SEC the roles played by Faber and Greenberg (and CNBC in general). They should be part of any criminal investigation. I assume by now somebody at SEC has seen Cramer’s YouTube confession.
Here’s the Bloomberg story link:
http://www.bloomberg.com/apps/news?pid=20601087&sid=ankVMKVBnc_Y&refer=worldwide
July 14th, 2008 at 9:16 am
Why is it that people like Patric and Jud have mass evidence and documents and yet the brain dead,bought off, willfully blind SEC can’t find what is right there out in the open?
Even to the point that Cramer crook explains the whole thing on his shows!
Only answer is they,the SEC, don’t want to find or fix any of this. They are just counting on the public staying stupid as all the money goes up in criminal smoke.
My hope is in God and that he will make then pay since the human Government that is supposed to protect it’s people have joined the crooks in the gang rape!
July 14th, 2008 at 10:01 am
Ron,
I share your frustration with the regulators. I share your hope as well.
Bottom line is, like with most scandals, it has to hit home before self-preservation sets in. SEC and FINRA are now on the hot seat, as are some of the other regulators out there such as OTS with regard to IndyMacand the projected 150 other banks likely to fail. As the regulators fight for their jobs and reputations, they will point the finger at Congress. Congress will point somewhere, and the circle of blame will continue until it is spread equally around the circle. Just look at Schumer and OTS. Some will survive the storm, others will be destroyed.
I wish I could tell you that the result will benefit the average investor or borrower. It likely will not. That is governement!
We have a few rays of light however. Some possible beacons of hope. One is it is an election year. Paulson, Bernanke, Cox, and many, many more, are at the center of a major political storm. That adds pressure to find the “culprit”. Pray that that pressure yields change. Another is that more and more CEO’s are bucking the system, at risk of being called crazy, nutty, sour, dodging, etc. Schwartz of Bear, Fuld at Lehman are in the front pages these days, but Byrne has been facing it down at OSTK, and has been maligned and denegrated for years. It’s paying off now though, through persistence and defiance.
Remain optimistic. It’s our greatest characteristic as Americans. That’s why shorts (naked or phantom shorts) can’t survive forever. It’s a negative and destructive posture, and won’t last. It will go away like every other extreme. Hopefully when it does, we’ll be vigilent, watching for history to repeat itself. In the meantime, press on to win the race!!
July 15th, 2008 at 9:13 am
Shock, I trust God and therefore am optimistic for the long range future.
I don’t trust our so called Leader or Regulators as they all seem to have gone to the evil side for self benefit and our system is about to implode because of it.
I do keep working at what I can do and am working to get those like Patrick together with others in this fight.
Patrick, hope you got the note I left you to check out Jim Sinclair (http://www.jsmineset.com/Aboutus.html)who is fighting in the jr resourse markets and offering $50,000 in gold for identifing the managers of the hedge funds naked shorting them.
He is now aware of Deep Capture as well as.. http://www.financialsense.com/metals/crime/main.html.. in the fight and my hope is if all these leaders fighting alone get together we will like a rope with many strands become stronger and carry more weight,
July 15th, 2008 at 12:58 pm
I don’t disagree with you Ron. They are years late and billions short in paying attention. Now they just want to socialize our financial system. They’re the problem to begin with, so believe me when I say I’m with you on this.
July 15th, 2008 at 2:23 pm
http://afp.google.com/article/ALeqM5jVvN1mbxHoXOu_AMEH3Xp9BJw8Pw
US acts to curb speculative sales in financial firms
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5pFHH4_r.jc&refer=home
SEC to Limit Short Sales of Fannie, Freddie, Brokers
“The emergency order will provide that all short sales in the securities of primary dealers, Fannie and Freddie will be subject to a pre-borrow requirement.”
Why don’t they make all short sales subject to a pre-borrow requirement?
July 15th, 2008 at 9:54 pm
In God we trust. Regulators, bank CEO’s, presidents, your most trusted friends, even spiritual leaders… many abuse the faith that we place in their appointed positions & in God, for their own selfish motives.
Discern & pray for wisdom & protection!
July 19th, 2008 at 12:02 am
as burell rightly points out America has been asleep at the switch for the last century. It is atragic story of deep seated corruption and proves that all economic models including capitalism are fundamentally flawed not because of their theoretical mechanics but by the power hungry pricks that run the system and the sheep who put up with it. Part of me applauds those currently trying to expose the corrupt system and part of me knows it is far too late. USA is fundamentally broken and it looks like it will take the globe with it. Like all empires the time has come to fall. Those who think they can continually dodge the judgement bullet are sadly mistaken.