On May 31 TheStreet.com (which at one point had notorious Wall Street villains Jim Cramer and David Rocker as shareholders #1 and #2, and has repeatedly been used by Jim Cramer in the pursuit of the kinds of illegal market practices for which he so proudly took credit in this video), published an “upgrade”: Overstock.com Inc. Stock Upgraded (OSTK). Given my history with Jim Cramer, including unsuccessfully attempting to draw a libel suit from him some years ago by writing ““Jim Cramer is a Complicated Man and by calling Cramer a “criminal” in an Overstock.com marketing email to close to 20 million people , the compliment is something of a surprise, and reminiscent of the full Churchill line, “By its sudden collapse, … the proud German army has once again proved the truth of the saying, ‘The Hun is always either at your throat or at your feet.’”
N.B. Generally I divorce references to my day job at Overstock from my writing on DeepCapture. I mention Overstock here only when it is unavoidable, as it is here. Nothing in this brief post is meant to suggest endorsement of Overstock or TheStreet.com (which I continue to maintain is one node in a criminal enterprise that has emerged on Wall Street in the last 15 years, abetted by an SEC which has bravely re-branded itself as Wall Street’s Towel Boy), nor make any comment about the stock price.
Some months ago, while scraping the bottom of the barrel of possible speakers, the esteemed Rutgers Philosophy Department invited me to give a talk. Also invited to attend were the Economics and Law faculties and students. I decided to speak about some of my greatest teachers in life, and show how what I learned from them ties into various decisions I have made in business and in life. I hope you enjoy it, because I put my back into it.
I first heard of William K. Black over 20 years ago as the regulator who had stood up to the “Keating 5″ and come out the hero of the S&L crisis (in which I gained some early experience: hence my awareness of him). Later, as a professor of law and economics at University of Missouri in 2005, Black wrote a book about control fraud, “The Best Way to Rob a Bank is to Own One,” available here. You should read it.
Yet I had never heard Black speak until one night in April, 2009, when he appeared on Bill Moyers. How refreshing it was to see the tabloid analyses be at last replaced with discourse about the system itself (and remember that while the following claims now seem barely controversial, in 2009 most were still heretical): Banksters. Fraud versus trust. Moral hazard and pathological incentives in the financial system (e.g., lending firms’ Ninja Loans + investment bankers pooling mortgages + captured ratings agencies = toxic waste = systemic risk). FBI warned on mortgage fraud in 2004, but the Machine failed to react. Bank lobbyists. Glass Steagall. Brooksley Born and Credit Default Swaps. Bailout of the elites. Bank CEOs. Cover-up. Strategy to keep the public from understanding how bad the problem is. Prompt Corrective Action Law: Nationalize zombie banks. WHERE IS OUR PECORA COMMISSION? Scared of insolvent banks being revealed. Mimicking the strategies of Japan’s Lost Decade. AIG-to-Goldman bailout. Increasingly horrific give-aways of taxpayer money. Stop hiding the losses. The current bleak numbers still vastly underestimate the fraud problem.
Black had me at “control fraud.” I leave it to the community of readers to judge the familiarity of the other claims he made:
Alas, Bethany McLean and I are not so sympatico, and in fact have had a challenging relationship. Her side of the story is told here:
DeepCaptures’ side, here:
One interesting aside: in the last year I have had numerous journalists bring up to me Bethany’s emails wherein she schemes with a hedge fund (emails obtained by DeepCapture from a New Jersey courthouse and published in Bethany McLean: your benefit of the doubt is hereby revoked). These journalists have told me that they know about it and see it as a tremendous breach of journalistic ethics. So there it sits, an open secret, although not, apparently, a secret anymore, but just something about which one whispers. In a similar fashion, Jim Cramer’s video sat on DeepCapture for a couple of years drawing no comment, until Comedy Central confronted Cramer with it.
In any case, this week on CNBC Maria Bartiromo invited William Black and Bethany McLean on as guests to discuss the Justice Department’s decision not to pursue criminal charges against Goldman Sachs for its role in the financial crisis in general, and for selling financial products from whose specific failure Goldman profited. Truly remarkable performances were delivered by all, albeit in different ways.
Black responds to Maria’s opening by stating the obvious: Generating liar loans and packaging them for resale is fraud. There is no evidence that there was a significant federal investigation, or that a grand jury was convened. There is an absence of accountability. Goldman has been given a pass by Obama and Bush.
Bethany responds with bromides delivered with a dulcet confidence intended to suggest that she knows what she is talking about. Her analysis: I don’t think anybody is giving Goldman Sachs a pass to be honest. I think this is a tough case to make. I do think integrity needs to be restored to the financial system, but you don’t do that by bringing a case that shouldn’t be made. Goldman Sachs didn’t make liars’ loans - they actually among the Wall Street firms were not on the ground making mortgages. So if you can’t bring a case against Countrywide how can you possibly bring a case against Goldman Sachs? … From an overall perspective Goldman Sachs as a firm lost money in the mortgage business. Awfully tough to bring that case to a jury and win, I think… I’m not giving Goldman a pass or any of Wall Street a pass. I think I’m with Bill on that. But I don’t think this was a criminal case. I think Goldman’s customers should make the call: Do we want to do business with this firm? …
These vapid apologetics draw Maria Bartiromo’s stammering, nodding approval: As you said earlier, stupidity does not mean criminality.
Bethany: Greed and venality do not make a criminal case.
There are two remarkable items about Bethany’s performance. First, note the air of confidence she exudes when in fact (as will become clear) she has essentially no idea of what she is talking about (hence the expression “a journalistic understanding”). Second, note that Bethany is apparently unaware that the man she is debating on-air, Professor William K. Black, knows a lot about what she is talking about. In fact, he is perhaps the nation’s foremost expert on precisely the issue she and Maria are trying to spin to Goldman’s behalf: the federal prosecution of white collar crime at financial institutions.
Professor Black continues like a gentle professor with two weak students: Critical area here…. First, I’m the type of person that was involved in training the FBI agents, the assistant US attorneys, serving as the expert witness in these successful prosecutions where we had a 90% successful rate. Um, clearly people are not understanding fraud mechanisms. In accounting control fraud, the firm – loses – money. Indeed that is one of the defining elements because the way you maximize it is by making bad loans. And Goldman did make liar’s loans, it did it through subsidiaries, and Goldman purchased loans that it knew to be fraudulent, and it packaged them and sold them as if they were good loans. This belief that this is the first virgin crisis in which fraud was not driving it is amazing. Nobody believes it about the savings and loan debacle. No one believes it about the Enron era fraud. And given what you’ve seen in the last three weeks, how can you believe it out of the current…”
Bethany appears to panic slightly then, unable to respond substantively to a single one of Black’s arguments, simply locks into a repetitive, droning regurgitation of the talking points she just delivered a moment earlier (which amplifies my suspicion that some Goldman PR flack gave them to her to memorize). Behold Bethany McLean’s verbatim analysis of legal culpability in the greatest financial collapse of our lifetime (so far):
Maria, I think there was a hue and a cry and a lot of political pressure to bring charges in this case. And I think that if they could have, they would have. And I don’t think that any of our interests are served… I think it’s just as dangerous to bring a case that shouldn’t be made as to not bring a case that should be made. Neither one helps with the integrity of the financial system. I agree – peoples’ behavior during this crisis was unethical, it was abhorrent, it was every word you can come up with for ‘wrong.’ But if you are going to bring a case against Goldman Sachs you have to bring a case against every single other Wall Street firm as well as every mortgage originator as well as every home owner who lied on his or her mortgage application. You cannot single out one firm and say we are going to charge Goldman and we’re not bringing charges against everybody else. That’s wrong.
Maria Bartiromo: That’s a great point.
William Black (like a professor exasperated with dull students he can no longer humor): No, it’s not a great point. It’s a terrible point. You’ve got to start with somebody. Your first prosecution is always your first prosecution. And you can always say where there’s been an epidemic of fraud…”
Bethany’s nails-on-a-chalkboard apologetics have received a fair bit of shocked attention this week:
Columbia Journalism Review: “Bill Black goes on CNBC and shreds Maria Bartiromo and Bethany McLean on whether Goldman Sachs (and others) could and should have been prosecuted for fraud related to the financial crisis…”
Bethany McLean Demonstrates her Profound Lack of Understanding of Control Fraud, Gresham’s Dynamics, and Justice: “In this painful CNBC segment, former Goldman Sachs employee Bethany McLean provides a heartfelt apologia for her much-maligned former employer. Bethany says it is time for us all to move on for the good of confidence in the economy…In the process of prostrating herself for GS, she demonstrates her complete lack of understanding of control fraud, Gresham’s Dynamics, and how white collar crime can be pursued.”
I think this interview was unusual in that her panic drew Bethany into baring her biases incautiously (though frankly, the first sentence she uttered the first time she called me in 2004 conveyed to me that she is a shill and a Mean Girl). Asserting without argument that political pressure supported bringing charges against Goldman, Bethany appears literally incapable of considering the possibility that net political pressure ran in the opposite direction, and that in fact were it not for “political pressure” Goldman Sachs would have been prosecuted years ago.
But personally, I think Bethany is not really incapable of considering such a possibility, and that her adamancy thus has other motive.
Daily headlines disappoint with lack of prosecution, making clear that this will go down as history’s “first virgin financial crisis” (in Professor Black’s phrase) in which fraud played no role. When you read these headlines, imagine Bethany McLean, or someone very much like her, standing in an oak-paneled room in Washington, DC, droning through the same set of talking points to some senior decision-maker, and that decision-maker slowly getting snowed in under the same dulcet non sequiturs as appear in this remarkable exchange.
Two months ago a schlubby-but-savage Goldman lawyer named Joseph E. Floren made a mistake that caused some previously redacted information about Goldman Sachs to slip into the public’s hands. The event was ably covered by such globally-respected publications as Bloomberg, the Economist, and Rolling Stone.
Economist: An enlightening mistake
Leading legal blog “Above the Law” described the situation this way: ”It has been quite a while since we have covered a grand mal discovery screw-up here at Above the Law,” and summarized the moment with the accompanying image.
And seminal law journal DeepCapture.com published its May, 2012, analysis entitled “Joe Floren Screws the Pooch“, referencing the Bloomberg, Economist, and Rolling Stone stories cited above.
Since May I have wondered, With the truth emerge at last in publications such as Economist, Bloomberg, and Rolling Stone, surely the Bad Guys must understand they have lost control of the narrative. Surely, I thought, they are working out some new damage control strategy to deflect or usurp the truth as it comes out.
And as always, Gary Weiss doesn’t let us down.
This weekend brought forth from Weiss an effort that takes the same facts as the articles cited above, spins them to best advantage for the criminals, and is most remarkable for being an obvious rip-off of Taibbi. That’s right, Barron’s published an essay cribbed from a previously-published essay by a competing magazine’s journalist in a plagiarization so bald it would not pass muster at one of those companies that sells term papers to college undergraduates. Moreover, it presents clear evidence that the Bad Guys realize they have lost control of the narrative, and are searching for ways to restore their control.
Alas, the best weapon they have in their arsenal is…. Gary Weiss?
I encourage readers to compare Taibbi’s article side-by-side with Weiss’ treatment of exactly the same set of documents.
Matt Taibbi, Rolling Stone (May 15, 2012):
Gary Weiss, Barron’s (August 4, 2012):
”The lawsuit between Overstock and the banks concerned a phenomenon called naked short-selling, a kind of high-finance counterfeiting that, especially prior to the introduction of new regulations in 2008, short-sellers could use to artificially depress the value of the stocks they’ve bet against. The subject of naked short-selling is a) highly technical, and b) very controversial on Wall Street, with many pundits in the financial press for years treating the phenomenon as the stuff of myths and conspiracy theories.”
Gary Weiss (two months later):
“Naked short selling has long dwelled in the grassy knoll of the equity markets, denounced by crackpots, devotees of penny stocks, and troubled companies eager to divert attention from their failings. In other words, sightings of it often turn out to be bunk.
“Despite this, a failed naked-shorting lawsuit lodged against all of the major Wall Street prime brokers, including units of Goldman Sachs Group and Merrill Lynch, by Overstock.com, has raised intriguing issues. The case, filed in California Superior Court in San Francisco in 2007, was summarily dismissed in January on a technicality;…”
“A quick primer on what naked short selling is. First of all, short selling, which is a completely legal and often beneficial activity, is when an investor bets that the value of a stock will decline. You do this by first borrowing and then selling the stock at its current price; then, after the price drops, you go out, buy the same number of shares at the reduced price, and return the shares to your original lender. You then earn a profit on the difference between the original price and the new, lower price.
“What matters here is the technical issue of how you borrow the stock. Typically, if you’re a hedge fund and you want to short a company, you go to some big-shot investment bank like Goldman or Morgan Stanley and place the order. They then go out into the world, find the shares of the stock you want to short, borrow them for you, then physically settle the trade later.”
Gary Weiss (two months later):
“NAKED SHORTING—selling stock that the seller doesn’t have and hasn’t borrowed, in the hope that its price will quickly fall, letting the seller repurchase it at a lower price and then deliver the stock to the buyer—is generally illegal. Usually, sellers must borrow a stock, or at least determine that they can borrow it, before they can sell it short.”
One can go through this new article doing this one-to-one mapping of content and tone from the August piece by Gary Weiss onto Matt Taibbi’s story from May. It’s all rather creepy, actually.
It is an attempt to re-highjack the narrative. I predict that however this plays out over the next couple of years you will see Weiss tagging along trying to reconstruct the story to the benefit of the criminal element described in DeepCapture. He’s obsessive. It is almost as if his job is to downplay, minimize, and cover-up in vain attempt at damage control.
No, it’s exactly as if his job is to downplay, minimize, and cover-up. We’ll see how vain it is when we see what publications go along for the ride, besides Barron’s.
That, of course, is the most remarkable thing of all: That a publication like Barron’s would publish something by Gary Weiss, given what has long been publicly documented about him. We know, because we documented it. Newcomers to this story might start with the Reader’s Digest version by reading “Gary Weiss: Psychopath and Scaramouch“. For the graduate course on this psychopath, look him up on antisocialmedia.net.
I think, however, that this was a strategic mistake by the Bad Guys, in that it provides the public (and importantly, other journalists!) with a controlled experiment: one set of facts being handled by three real journalists and one hedge fund choagie.
Perhaps decades from now it will be a case study in some school of journalism’s graduate seminar on “Journalism and the Fall of the American Oligarchy, 2008-2014″:
“OK students, the assignment for next week’s class is a paper that examines Goldman’s inadvertent release of those its documents as treated by Bloomberg, Economist, and Rolling Stone, versus how the same event was treated by Gary Weiss, a pseudo-journalist who had already been exposed long before that as a hedge fund shill. For extra credit, describe the significance of its publication in Barron’s: Did Barron’s willingness to publish an obvious rip-off of Matt Taibbi reflect the desperation felt by the Sith to recapture the narrative?”
A story is told that Bertrand Russell, while teaching for a year in India, was once interrupted from a lecture on modern cosmology by an audience member who declared, “The universe rides on the back of a turtle.”
To which Russell replied, “But what’s the turtle ride on?”
“Another turtle,” replied the audience member.
Insisted Russell, “But what’s that turtle ride on?”
Came the answer, “I’m sorry Professor, but it’s turtles all the way down.”
That story has often come to mind over the last eight years. In the early part of the last decade I had cause to mingle in financial circles, and by 2004 I had smelled skunk regarding a range of Wall Street activities such as are chronicled extensively on DeepCapture. I went with plenty of data, anecdotes, and experts, first to NASD, then to the SEC, then the House, then Senate Banking, and finally to the financial press. All of them reacted with something between indolence and hostility (and thus began seven years of one federal investigation against me after another, just as I had been forewarned). I began to use the expression “Turtles all the way down” to describe the Establishment and its capture by financial interests, and wondered if the turtles would run all the way down, forever, or if we would ever hit something solid.
Today has brought good cheer in the form of an excellent piece by Gretchen Morgenson, “Into the Bailout Buzz Saw“, concerning Bailout, by Neil Barofsky (coming out Tuesday, July 24). Ms. Morgenson, one of several journalists at the New York Times, describes assertions that will not be strange to long-term readers of DeepCapture:
“IT might seem remarkable that there’s more to say about our late Bailout Age. But there is more — a lot more…..
“We tag along with Mr. Barofsky, a former federal prosecutor, as he walks into a political buzz saw as the special inspector general for TARP. Government officials, he says, eagerly served Wall Street interests at the public’s expense, and regulators were captured by the very industry they were supposed to be regulating. He says he was warned about being too aggressive in his work, lest he jeopardize his future career…
“‘The suspicions that the system is rigged in favor of the largest banks and their elites, so they play by their own set of rules to the disfavor of the taxpayers who funded their bailout, are true,’ Mr. Barofsky said in an interview last week. ‘It really happened. These suspicions are valid…’
“THIS was just one of many examples from Mr. Barofsky’s 16-month tenure, during which, he says, Washington abandoned Main Street while rescuing Wall Street. ‘There has to be wide-scale acknowledgment that regulatory capture exists, dominates our system and needs to be eradicated,’ Mr. Barofsky said in the interview. ‘It was my job to bring as much transparency to taxpayers so they knew what was going on. Writing the book, I tried to bring the same level of transparency so people understand how captured their government has become to the financial interests.’”
The first time I heard Joe Floren speak I was standing behind him in an elevator in his law firm’s San Francisco office tower as another lawyer informed him that the subpoena Joe Floren had served the previous day on a colleague of mine had reached her in the hospital, after a difficult delivery of her first child, while she was breastfeeding for the first time.
“Really? That’s beautiful. I love it!” He replied with glee.
Joseph E. Floren, Esq., is a lawyer at Morgan Lewis, the white shoe law firm defending Goldman Sachs against Overstock’s prime broker litigation, and tonight I celebrate the mistake Joe Floren made yesterday. In filing Goldman’s response to Overstock’s motion to vacate the trial court judge’s decision to stay his own decision to unseal various documents related to this litigation (in more straightforward English: the trial court judge decided to unseal some documents while also deciding to delay acting on his decision, but we objected to this delay, and Goldman responded to our objections), Joe Floren screwed the pooch. He filed something containing an attachment he forgot to redact. That attachment is a previous filing of Overstock’s, a filing which contains but a sample of the shenanigans at Goldman and Merrill that has turned up over the course of five years and millions of pages of discovery, but which filing we had redacted when we made it (as good litigants do).
Fortunately for the cause of all that is good and right about America, Joe Floren’s goof came to the attention of a diligent 1st amendment attorney in California named Karl Olson, who represents the Economist, Bloomberg, the New York Times and Wenner Publications (owners of Rolling Stone magazine) in their efforts to obtain the documents. Karl Olson provided Joe Floren’s sloppy filing to his clients. Tonight these stories appeared:
Economist: An enlightening mistake
Really, Joe Floren? That’s beautiful. I love it.
In October 2011, Ali Nazerali, a Canadian resident who has operated boiler rooms (though he denies it) and whose business relationships drew the scrutiny of DeepCapture, went to court in British Columbia to obtain an injunction ordering DeepCapture to be vanished. In an ex parte proceeding (meaning that DeepCapture was not even notified of the proceedings, let alone allowed to present any argument), the Canadian court issued an injunction against the 1st Amendment to the US Constitution. Immediately and also without notification, US corporations Google, Bing, and GoDaddy complied with this foreign court’s order to disappear all trace of DeepCapture like some recalcitrant Argentinian muckracker.
However, in December, 2011 DeepCapture had its chance to speak in court in Canada. Once it had heard our side, the Court pulled its injunction, and found that Nazerali’s lawyers had misled the Court.
As famed Stoic philosopher Nicholas Cage put it in Con Air, “On any other day that might seem strange.”
But this is, after all, the world of DeepCapture, where dogs and cats dance together and the fire rain falls. So now, the rest of the story….
Early in 2011 Mark Mitchell began a multipart story exploring the way that various elements of transnational Organized Crime, international terrorist financiers, and foreign intelligence services have entwined, infiltrated the global financial system, and are manipulating and destabilizing it.
Which sounds like a lot to swallow, I know, until one considers that on July 25, 2011, President Obama signed an Executive Order declaring a national emergency on pretty much precisely those grounds:
I, BARACK OBAMA, President of the United States of America, find that the activities of significant transnational criminal organizations, such as those listed in the Annex to this order, have reached such scope and gravity that they threaten the stability of international political and economic systems. Such organizations are becoming increasingly sophisticated and dangerous to the United States; they are increasingly entrenched in the operations of foreign governments and the international financial system, thereby weakening democratic institutions, degrading the rule of law, and undermining economic markets. These organizations facilitate and aggravate violent civil conflicts and increasingly facilitate the activities of other dangerous persons. I therefore determine that significant transnational criminal organizations constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States, and hereby declare a national emergency to deal with that threat.
The US National Security Council immediately followed up with this statement:
“Transnational organized crime (TOC) poses a significant and growing threat to national and international security, with dire implications for public safety, public health, democratic institutions, and economic stability across the globe. Not only are criminal networks expanding, but they also are diversifying their activities, resulting in the convergence of threats that were once distinct and today have explosive and destabilizing effects…. The apparent growing nexus in some states among TOC [Transnational Organized Crime] groups and elements of government—including intelligence services—and high-level business figures represents a significant threat to economic growth and democratic institutions… As they expand, TOC networks may threaten stability and undermine free markets as they build alliances with political leaders, financial institutions, law enforcement, foreign intelligence, and security agencies.”
These statements from the White House and NSC are precisely on point with DeepCapture’s thesis. In fact, the Executive Order goes on to name four criminal networks which figure prominently in DeepCature’s story
We knew DeepCapture’s story would raise eyebrows, but we believed, and still believe, that it is important journalism concerning issues that clearly are of global concern and should be part of the public debate. And as journalists, we at DeepCapture are quite proud of having been so far ahead of the curve, and so shockingly far ahead of the US mainstream media, which (we contend) are (with rare exception) such lapdogs to corporate America, and especially to the financial interests, that they would never have been able to put this story together even if all the relevant evidence were shoved up its nose (which it was).
Deep Capture believes that it is not incidental that only the British journal The Economist has been able to cover this issue, with such recent stories as:
In September 2011 Altaf Nazerali, who, while not a central character in the story, is mentioned numerous times, contacted us raising concerns that certain statements regarding him were inaccurate. Mark looked back at his reporting and, in cases where he believed it was warranted, modified the story: While we believe that facts should be reported, we are never above taking another look at the story to make sure that we are as fair as possible. Good journalism stirs good debate. And we are responsible journalists.
Mark sought further contact with Nazerali in early September but heard nothing further.
Then without any warning to Deep Capture, Nazerali attempted to silence Deep Capture.
On October 18, 2011, without notice to Deep Capture, Mark, or Deep Capture’s internet hosts, Nazerali filed a lawsuit in Vancouver, Canada and appeared the same day before a judge seeking an injunction taking Deep Capture off the internet and seizing its domain name. Only Nazerali and his lawyer were in the courtroom when he asked for this injunction so the judge only heard one side of the story. Nazerali got his injunction.
Ali Nazerali delayed serving formal notice of this injunction on Deep Capture and its reporters. The first mailed service was made about 10 days after the injunction was made. The actual personal service did not occur for several weeks. Nazerali did not comply with Canadian law and promptly serve Deep Capture with copies of all of the affidavits and legal submissions he put before the judge on October 19, 2011 at his one-sided injunction application. That only came to our attention in late November. All of this had the effect of delaying Deep Capture’s ability to seek relief from the court.
However, Nazerali’s lawyers immediately sent notice of the Canadian court’s injunction against Deep Capture to Google, Bing, GoDaddy, and other internet companies demanding that they comply with it, and black out the DeepCapture site.
Amazingly (to me), these US companies complied, and blacked out Deep Capture. GoDaddy took down the site. Google and Bing both erased all of DeepCapture from the caches. In the most literal sense, we disappeared down Orwell’s Memory Hole.
On December 13, 2011 Deep Capture and Mark were able to appear before the British Columbia court . We presented our case through affidavits showing the basis for our reporting. We presented the judge with the governing Canadian law which places severe restrictions on pre-trial injunctions, limiting them to rare and special circumstances which do not apply to Deep Capture.
Ruling from the bench (i.e., immediately), the judge denied Mr. Nazerali’s request that the injunction be extended beyond December 13, 2011.
In addition, the judge expressly ruled that Ali Nazerali’s lawyers had misled the judge who heard Nazerali’s earlier argument on October 19, 2011.
At that point Deep Capture was free to return to the internet.
However, Ali Nazerali was not done. He had his lawyer send an e-mail to Rackspace citing to the original October 19, 2011 injunction order and asking that Rackspace refuse to host Deep Capture. He neglected to tell Rackspace that the British Columbia court had already refused to extend the injunction and that it had ceased to have any force. And he certainly did not tell Rackspace that the British Columbia court had criticized Nazerali’s submissions to the original judge on October 19, 2011, finding that Nazerali’s lawyer had misled the court.
Ali Nazerali wants to keep Deep Capture and its reporting away from the public. But why would Mr. Nazerali sue Deep Capture, a Utah company, in Canada? We can only speculate. As Gary Weiss (himself a shill for criminal elements, as has been widely documented within DeepCapture) noted in his blog almost immediately after the original injunction was issued, Canadian law provides far less protection for free speech than is guaranteed by the United States Constitution. In fact, Canadian defamation law differs in so many key respects from United States law that at least one federal court has held that Canadian defamation judgments are unenforceable against United States citizens.
In fact, one key difference is what is meant by “defamatory.” It is true that the Canadian court noted that Deep Capture’s reporting regarding Mr. Nazerali was “defamatory.” But, importantly, this does not mean that it was not true or that it was not fair reporting. It does not mean that such statements may not be published. And it does not mean that Mr. Nazerali is entitled to any damages. Rather, it simply means that the statements regarding Mr. Nazerali tended to harm his reputation.
“Carole took the cookies from the cookie jar” is defamatory under the law of British Columbia. Stating that Carole took the cookies tends to harm her reputation even if she did, in fact, take the cookies. Here Mr. Nazerali has been involved with certain individuals and cultivated certain relationships that may harm his reputation as such connections become known. But this does not mean that such relationships cannot, and should not, be fairly and freely reported.
Importantly, no court has held that Deep Capture’s reporting as to Mr. Nazerali was “actionably defamatory.” After the Canadian Court was given the chance to read Mark’s affidavit explaining the basis for his reporting, it denied Mr. Nazerali’s request for an extension of the injunction keeping Deep Capture away from the public on the basis that the claims and defenses should be heard and determined by a jury at a trial.
Most hilariously, I had an idea that seems to have worked. For years a Cone of Silence had surrounded Deep Capture. Once the supine and obedient mainstream press could no longer speak for me, but had to confront me, in my own words, on this website, they revealed themselves for what they are: Barroom bullies who, once called out, stick their faces back in their beers and pretend not to have heard. But during the time that DeepCapture was blacked out, the Cone of Silence surrounding Deep Capture was finally lifted. Parties that once made great circumlocutions to avoid mentioning us (lest they let readers evaluate the arguments and evidence for themselves) suddenly were pounding their chests. So I decided to let DeepCapture stay down for a few weeks, to give them a chance to strut. I am utterly confident that, now that Deep Capture is back online, they will return to muttering into their beers, as has been their practice lo these many years.
Now that we are back on-line you deserve to know what happened, especially since the facts should cause concern in everybody that appreciates the role a free press and free speech play in a free nation (and the offending story will be republished, in full, and with a great deal of new information that Nazerali’s legal jousting caused to come our way: thank you, Ali Nazerali).
The US mainstream media apparently find unremarkable the alacrity with which Google, Bing, and GoDaddy would accede to a foreign court’s injunction to black out a US website. Thus, Deep Capture was forced to tell the rest of this story (which, we maintain, is but a microcosm of the whole story of capture) in order to continue our investigative journalism within our constitutional rights to freedom of speech and press.
After all, we are the red pill.
Gandhi said, “First they ignore you, then they laugh at you, then they fight you. Then you win.” Holman Jenkins Jr.’s April 12 Business World column “Do Nudists Run Wall Street?” moves us to stage No. 3: It contains the normal amount of distortion I have come to expect from financial media, but as it also makes the first attempt to confront the right issue, it is a step forward. Bravo.
Mr. Jenkins claims that I “propound a theory” that Overstock’s “shares are grossly undervalued.” This is wrong: I have never lamented Overstock’s valuation nor connected it to the naked shorting issue. The “elaborate Webcasts . . . found at businessjive.com” cited by Mr. Jenkins never once mention Overstock. He provides no other citations, which is appropriate, as there are none. Last, the quote he attributes to me, “If I’m crazy, why am I running a public company?” is something I never said. I challenge Mr. Jenkins to produce this or any similar quote.
However, Mr. Jenkins correctly depicts me as a jihadi against naked shorting. I do believe blackguards have practiced “failure to deliver” (FTD) for profit, while incidentally destroying businesses and (probably) destabilizing our capital markets. I also think that if this nation ever grasps how its savings have been looted through this mechanism, a few million Americans are going to show up at the corner of Wall and Broad with pitchforks and nooses. Thus, financial journalists spin countless, “Just another CEO who’s mad at shorting” stories, of which Mr. Jenkins’s piece is an example.
Patrick M. Byrne
Salt Lake City
Mark Mitchell’s writings seem to be striking a nerve, at last. After months of no response but silence, in the last few weeks DeepCapture has suddenly been receiving all manner of Nasty-Grams and intimidating phone calls from various people and organizations mentioned in Mark’s work. The similarity of the threats would almost make one think there was a plan. In any case, I will lay out four ground rules here.
1) DeepCapture remains committed to the highest journalist standards. Any error in our work should be pointed out immediately, and we will rectify it .
2) DeepCapture is better than mainstream media, whose intellectual self-confidence, rigor, and integrity I described in my 2008 piece, “Carol Remond Tells a Joke She Doesn’t Get (DowJones)”:
“Before publishing the following critique of Carol Remond’s recent article on Copper River, I contacted Carol for comment. Unlike Joe Nocera and Floyd Norris (both of the New York Times), who have at least had the integrity to defend their work, however haplessly, Carol refused any on-the-record comment on this subject. Thus she joins that tradition of journalistic worthies which includes Bethany McLean, Herb Greenberg, and Roddy Boyd, who refuse to defend their work. They can critique, but not engage, opine, but not defend: the sophomores of intellectual discourse.“
Because DeepCapture is better, we are happy to engage, and self-confident enough in our work that we practice “right of response” journalism: We will publish, unedited, any response (of any reasonable length) by miscreants named in our stories. If Specially Designated Global Terrorists have spokesmen, we’ll publish them.
3) All goombas should understand that the day anything untoward occurs is the day that The Collected Works of Mark Mitchell 2008-2011 appears in the in-boxes of 41.7 million people.
4) Finally, Mark has been acting entirely at my direction. So all nastiness should be directed at me, not him.