Deep Capture » Take 5 With Patrick – Essays on Unrelated Subjects

Political Campaigns and Overstock

Patrick Byrne — Thu, 14 Feb 2008 03:48:33 +0000

We often receive political complaints at Overstock . I am posting this so that in the future, when customer service agents get harangued by people angry about statements they believe are being made by our decision to advertise certain places or carry certain products or sell certain books, music, or magazines, those agents can just send a link to this post.

During the 2004 election, we created a book page with books by Hillary and Bill Clinton on one side, and two books by Dick Morris criticizing them on the other side. On the left, another book by James Carvel (as I recall). On the right, one by Ann Coulter. All images were of the same size, and there were an equal number of them on each side.

We were inundated with complaints from the Left and the Right about featuring books from the other side. Go figure.

We hear from from Family Values folks about the movies and music we sell (even though we actually are quite conservative, selling, for example, Playboy, but not the steamy stuff).

When we advertised on AirAmerica, we got flack for it.

A few weeks ago we heard from the Ron Paul folks protesting our advertising on Fox, given his exclusion from a debate they covered. I wrote a letter to our customers about it, saying that while I happen to support Paul personally, I was not going to change our TV advertising to punish Fox. Then we heard from people angry that I had mentioned that I personally support Ron Paul.

Last week we heard from the Family Values folks protesting the TV shows on which we advertise.

This week we are hearing about the Hillary Clinton Nutcracker on our site.

I respectfully suggest that people should remember, Different strokes for different folks. It is not up to us to make statements with what products we do or do not carry or where we advertise them. Playboy is often our fastest selling magazine. The Hillary gadget was briefly one of our fastest selling items. We have about 1 million products, and I’m not going to police American tastes, beyond not selling hardcore or kiddie porn (like some other etailers), and firearms and ammunition and such.

There was one exception: when Rush made fun of Michael J. Fox, we yanked our advertising.

This is going to be a long and exciting campaign. I don’t recall anything like it since 1980. I hope the citizenry gets through it as friends.

Most respectfully,

Patrick

“On any other day, that might look strange.” – Nicholas Cage, Con Air

Patrick Byrne — Tue, 29 Jan 2008 18:45:10 +0000

From: Sam E. Antar [mailto:sam@whitecollarfraud.com]
Sent: Monday, January 28, 2008 7:22 PM
To: Patrick Byrne
Cc: israelk@sec.gov
Subject: Overstock.com Fourth Quarter Fiscal Year 2007 Earnings Call

Dear Mr. Byrne: This is in response to your email and post on the InvestorVillage Board (see below). At your third quarter fiscal year 2007 earnings conference call, you had asked if I was on the line and said that you would accept questions from me if I was on the conference call. If that statement at the last conference call was not intended to intentionally mislead your shareholders, I would expect that you would welcome my participation at Wednesday’s call on an equal footing with all other participants.It is highly irregular for a participant in a conference call to be singled out and limited to three questions posed in advance, each consisting of 25 words or less. I believe that such a condition would be at variance with the principles of free and full disclosure required by the securities laws at conference calls. You appear to be imposing conditions on me that are not imposed on other conference call participants. I will not accept special conditions that are not imposed on other participants in the conference call.Accordingly, I again request that I be permitted to participate in this conference call on an equal footing with all other participants.I await your response.Sincerly,

Sam Antar

Original email from Sam E. Antar to Patrick Byrne (CEO of Overstock.com): From: Sam E. Antar [mailto:sam@whitecollarfraud.com]
Sent: Monday, January 28, 2008 4:10 PM
To: ‘Patrick Byrne’
Cc: ‘Kevin Moon’; ‘Joseph Tabacco’; ‘Clay Corbus’
Subject: Overstock.com Earnings Call on 01/30/08Patrick Byrne:

Can I participate in Overstock.com’s earnings conference call scheduled for Wednesday, January 30, 2008 at 11:00 ET? Please let me know by tomorrow morning.

Regards,

Sam E. Antar

E-Mail: sam@whitecollarfraud.com

Web Site: www.whitecollarfraud.com

Blog: www.whitecollarfraud.blogspot.com

Patrick Byrne’s email response to Sam E. Antar

From: Patrick Byrne [mailto:PByrne@overstock.com]
Sent: Monday, January 28, 2008 7:21 PM
To: Sam E. Antar
Subject: RE: Overstock.com Earnings Call on 01/30/08

Sam,

http://www1.investorvillage.com/smbd.asp?mb=3532&mn=13943&pt=msg&mid=3984919

Peace baby.

Patrick

Patrick Byrne’s InvestorVillage message board post (under the alias Hannibal) linked to in Mr. Byrne’s email response above:

Dear Sam,

Sure, you are welcome to participate: please send me your top three questions (in the interest of avoinding your endless “Do you pick your toes in Poughkeepsie” rants, please limit them to 25 words each, and know that I will treat compound questions as multiple questions).You know my email (N.B. your email address for Clay is out-of-date).

Your friend,
Patrick

Integrity-Challenged Journalists Harm Children

Patrick Byrne — Thu, 10 Jan 2008 15:47:33 +0000

The Salt Lake Tribune again provides example of the harm being done to society by shoddy, agenda-ridden journalism.

In November, 2007 The Salt Lake Tribune published two articles by Lisa Schencker and Rebecca Walsh regarding education. Their work (especially Ms. Walsh’s) displayed such astonishing intellectual dishonesty that I, assuming the customary right to respond granted to those who figure prominently in such coverage, wrote a response. With characteristic integrity, The Salt Lake Tribune refused to publish it. Today, however, they published another article by Lisa Schenker which could have been titled, “Oops! We were wrong about everything we were fighting Byrne about.”

I will first provide easily verifiable data regarding Utah’s test scores by which we may substitute facts for their bromides and impressions. Then I will use this data to address Ms. Schencker’s misrepresentation of a recent education study (which was itself dubious). I will then turn to Ms. Walsh, who, when it comes to sheer intellectual duplicity, never lets us down. Last, I will return to today’s story, which thoroughly vitiates their earlier point of view.

First, the data. The United States and 29 other nations make up the 30 developed countries of the OECD, the set of countries that represent our competition in the global economy. How does the USA within the OECD? The Digest of Education Statistics, Table 399 , gives the answer: when tested in reading, math, science, and problem-solving skills, and where rank #1 = “the best,” our nation’s 15 year-olds rank #15, #24, #19, and #24, respectively, out of 30 countries. With an average rank of 20.5, the USA ranks in the bottom 1/3 of the 30 OECD countires.

How does Utah rank within the United States? The National Assessment of Education Progress (known as “The Nation’s Report Card” http://nces.ed.gov/nationsreportcard/nde/statecomp/ ) provides the tool by which one may judge. Here are Utah’s most recent test results in reading, writing, and math, ranked versus other states: #30, #34, and #31 (only in science do we show above-average #19). However, for historical and socio-economic reasons there are disparities in educational achievement by ethnicity, and one must control for that otherwise one ends up measuring ethnic composition more than achievement. When one does so, Utah slips substantially. For example, Utah’s white students rank 38th in math, 39th in writing and 41st in reading when compared with their peers in other states. That is, Utah‘s white kids rank around the lowest 1/5 of their peers in this country, which is in the bottom 1/3 of the OECD. Unfortunately, Utah’s Latino and African-American children fare even worse: according to Utah State Office of Education, 42% drop-out without finishing a basic education.

With such data at hand, let us turn to the Tribune’s work.

Lisa Schencker’s November 18 piece (“Utah in Top 10 in Math and Science”) explored a then-recent American Institutes for Research study comparing the educational achievement of states within the US with the achievement of other countries. The study is flawed in that the set of countries to which it compares the United States omits 17 of 30 OECD countries, all of which score higher than we do. (Arguably it is also flawed in that it looks only to math and science scores, the latter of which is Utah’s one above-average score, but omits reading and writing, subjects in which Utah fares worse, and does nothing to control for ethnicity when ranking US state results.) What is shockingly disingenuous, however, is the Tribune’s claim that Utah is “top 10 in math and science”: it is only top 10 on a list of 46 countries which includes such educational luminaries as Saudi Arabia, Botswana, Tunisia, and Serbia, but which omits essentially all of our true international competition.

That is, yes, Utah is in the top #10, if we don’t count 17 out of 20 OECD countries and don’t count 40 out of 50 states and don’t consider subjects in which Utah has low scores. Ms. Schencker blithely buys this Procrustean Bed, but by this logic, I could claim to be a top 10 skier, as long as I am allowed to eliminate from consideration the tens of millions of people who ski better than I do, and eliminate the events in which I ski slowest.

When it comes to just not getting the joke, however, all honors are due Ms. Rebecca Walsh. She writes: “If Byrne had really put his money where his mouth was – with low-income and minority families frustrated with public schools – he could have paid for thousands of private school scholarships.” If Ms. Walsh were capable of performing that modicum of research one would expect of a sophomore journalism student she would learn that I do, in fact, support precisely such causes, paying for hundreds of scholarships for minority children in Utah as well as building 19 schools educating about 6,000 kids in Africa and Asia (and funded the DC voucher movement, which is now serving thousands of children). Why it is wrong to seek to provide choices for, not hundreds, but hundreds of thousands, Ms. Walsh leaves unaddressed.

Ms. Walsh notes the demands for apology that were spawned by a deceptively-edited statement of mine that appeared on You Tube: she neglects to mention that the demands for apology disappeared as soon as the complete statement was posted. In fact, I received numerous apologies from some who had previously demanded them, again, a fact Ms. Walsh could have discovered had she tried “research.”

Ms. Walsh notes that I feel so let down by our governor that I said I would back an opponent of Huntsman (“even a communist”) while neglecting to note that I also said, “That’s not going to happen. There is not going to be anybody who seriously threatens him… I like the guy, he’s a decent, he’s a lovely intelligent guy, I like him” but I could not support him again myself, given his abdication of what he led me to believe was a core principle.

http://www.kutv.com/content/news/politics/default.aspx?articleID=30196

Most significantly, Ms. Walsh apparently misunderstood my Tribune editorial asserting that Referendum #1 was not an IQ test but a sanity test (following Einstein’s dictum that insanity is doing the same thing over and over while expecting different results, which is what Utah committed itself to do by rejecting Referendum #1). It was not a retraction, it was an escalation. So that Ms. Walsh not waste any more ink on poorly aimed rejoinders, I’ll state it with total clarity: I wish neither to disrespect nor scold my adopted state, but I believe that Utah’s elimination of choice for low-income and minority kids was an utterly shameful act. Utahns who voted against Referendum #1 can save their breath criticisng my bluntness: I think they are the ones who should be ashamed of themselves. In fairness to Ms. Walsh, however, she may have been misled here by the Tribune’s decision to headline my editorial, “What I mistakenly called a statewide IQ test was actually an insanity test”: the insertion of the word “mistake” was a fabrication on the part of the Tribune, one that seems to have confused Ms. Walsh regarding the tone of my piece.

Curiously, Ms. Walsh made no discernible attempt to grapple with my arguments. Her one nod in that direction is her statement that I “gussied up [my] argument with statistics comparing Utah students’ test scores to those in other states, minority graduation rates and surging enrollment (sic).” Beyond its grammatical infelicities, it is hard to know what to make of this complaint. If including data in argument bothers Ms. Walsh perhaps she should have suggested an approach which avoids the minimal commitments to rational discourse and intellectual integrity she and the Salt Lake Tribune clearly find distasteful.

That was the set-up. Here is the punchline. Today, January 9, 2008, The Salt Lake Tribune ran a story whose headline read, Utah’s overall school quality grades put it near bottom nationally. The story accurately describes precisely what Ms. Schenker could have herself ascertained months ago.

What damage is done to society by journalists so supercilious they can rationalize distorting the news as heavily as these folks did in November? Do they simply think that they they can obfuscate the public discourse to steer the polity to decisions about which they, the anointed, know best? What damage did it do when they misled a state that “ranks among the bottom eight states in the nation when it comes to education” (in a nation that ranks near the bottom of industrial countries) into thinking that it was “Top 10 in Math and Science”?

I am given to understand that many Utah got angry at me for my comments about “a statewide IQ/insanity test.” I am indifferent to it, but I do think their anger is misplaced.

Another leaf turns over: the Wikipedia connection

Patrick Byrne — Tue, 04 Dec 2007 02:03:58 +0000

Posted: Mon Dec 03, 2007 7:03 pm
Post subject: Another leaf turns over: the Wikipedia connection

http://www.theregister.co.uk/2007/12/04/wikipedia_secret_mailing/

Did something just hit a fan?

Voucher Webcast Information

Patrick Byrne — Tue, 06 Nov 2007 00:38:02 +0000

Posted: Mon Nov 05, 2007 5:38 pm
Post subject: Voucher webcast tonight – call in!

Hey Sports Fans,

Utah has passed a pro-freedom law providing vouchers for kids to attend schools of their choice. It is heavily slanted towards poor kids, who get $3,000 (versus the $500 that children of families earning over $100k will receive). ( http://www.youtube.com/watch?v=4tpVnenIpSU )Even in Utah there are, regrettably, people who are against freedom. They have a referendum on tomorrow’s ballot to prevent this law from going into effect. I have been going around the state debating the anti-freedom teams. Tonight I am doing a conference call at 9 PM Mountain Time. Please feel free to call in and listen or ask questions. Even more importantly, find the phone numbers of 5-10 folks you know and call them tomorrow and persuade them to go out and vote for Utah’s Referendum #1 tomorrow.Even the miscreants must understand the situation with education in this country. Those guys are venal, but not stupid. So I invite even them to show some class and help out here.

Patrick

Q&A regarding Referendum 1

Dr. Patrick M. Byrne
Chairman & CEO, Overstock.com

To ask a question, dial (800) 510-9661
The passcode is 910 38 485

Deep Capture: The Movie

Patrick Byrne — Fri, 02 Nov 2007 20:19:32 +0000

Posted: Fri Nov 02, 2007 1:19 pm
Post subject: DEEP CAPTURE: THE MOVIE

Hey Friends.Two years ago I began a campaign to expose a massive circle of corruption on Wall Street involving something called “naked short selling.” The financial press, which had previously been quite generous towards me, immediately began devoting a tremendous amount of energy to misrepresenting, dismissing, and downplaying my allegations. It began to seem as though they were taking part in a cover-up, especially given that I simultaneously became persona non gratis on Wall Street, so that the entire discourse about whether or not I was right went forward with precisely one person precluded from taking part: me. The lengths to which this cover-up was prosecuted astonished even me: for example, last year a large conference (“Value Investors’ Congress”) invited me to speak, but some powerful hedge funds threatened to boycott if I were allowed to tell me side of the story, and the invitation was rescinded.Times are changing, however, and a few weeks ago I was invited to speak to an even bigger conference of hedge funds. I did so, and was finally able to connect the dots for the public. Please view this by clicking the red button above, and, if you like it, send the link to a dozen friends (or better yet, post links elsewhere on the Internet to this page and www.deepcapturethemovie.com).

Respect,
Patrick M. Byrne
Concerned Citizen

Education, Teachers’ Unions, and the NAACP

Patrick Byrne — Sun, 28 Oct 2007 22:17:00 +0000

Posted: Sun Oct 28, 2007 3:17 pm Post subject: Education, Minorities, Teachers’ Unions, and the NAACP

SEE THE CLIP ON YOU TUBE: http://www.youtube.com/watch?v=4tpVnenIpSU Dear Customer, The NAACP is demanding an apology from me. I must respectfully refuse. Since this is making national headlines, I write to explain what is going on.Overstock is based in Utah, where 42% of minority children fail to graduate from high school: this is a calamity of epic proportions. In the last few years I have sought to use such resources as Overstock’s success provide me to pay for the education of hundreds of low-income and minority children in Utah, where many private schools have tuitions ranging from $2,500 to $3,800. (I also built 19 schools and orphanages in Afghanistan, Nepal, and in Africa and South America, schools that now educate 6,000 kids, mostly female: all these schools are named after my Mom). Recently I appeared on TV to criticize the Utah system for failing 42% of minority kids. My argument is that in a global economy people compete on the skill sets they acquire in school. Accepting the current situation is like saying that we as a society are OK with discarding 42% of minority kids, wasting their lives like one would burn a pile of leaves (incidentally, I purposefully choose such horrific images in order to cut through the polite euphemisms by which some assuage their guilt over the current situation). Indeed, I have been supporting a new Utah law that will allow such low-income children to receive grants of $3,000 towards tuition in private schools (the law, which provides grants of only $500 to children of higher-income families, is designed to serve the interests of lower income children). Nationally, between 57% and 77% of Hispanic and African-Americans support such programs: the numbers are even higher when considering just those minority families with children of school age years. http://www.friedmanfoundation.org/friedman/schoolchoice/ShowFaq.do#faq_14 Teachers’ unions are against letting poor children get a better education outside of the current system. They are defending their guild, which is to say, the status quo, which is to say, in this case, a system that currently destroys the prospects of 42% of Utah’s minority kids. In a fine display of the intellectual integrity that marks their arguments, they are attacking an excerpt from that recent appearance I made, carefully edited to make it seem like I was endorsing the act of throwing such kids away rather than decrying the system which permits it. It apparently is convincing to no one, as 100% of the dozens of letters I have received (many from people who identify themselves as minorities) make clear they support and understand what I said, even through the deceptive editing. Even journalists writing about it are exposing the mendacity of this campaign. http://www.sltrib.com/ci_7292445 Unfortunately, this is an issue where the NAACP’s ties with the teachers’ union leaves it at odds with the wishes of the great majority of African American and Hispanic families. Last Friday the Utah Chapter of the NAACP held a joint press conference with the teachers’ union, which apparently had misled the NAACP by not even providing them my statement, unedited. Based on a review of this, the NAACP has demanded an apology from me. I refuse. I have long respected the NAACP, but their moral authority is their brand, and I believe they are squandering that moral authority by staking out a position based on so deceptive a tactic as the one to which this union has resorted, and more generally, by being so joined-at-the-hip to this union that they would oppose a law which is supported by a strong majority of Black and Hispanic families and whose benefits are overwhelmingly directed to their children. The statistics we read about drop-out rates are, in fact, statistics about lives shredded: if my language be gruff, it is because I want Americans to see what is at the tip of their newspaper spoon. In my view, the ones who owe an apology are those who accept and defend a status quo which is squandering the prospects of 42% of Utah’s minority kids. Respectfully, Patrick M. Byrne CEO, Overstock.com

Our Corrupt Federal Regulator the SEC

Patrick Byrne — Fri, 10 Aug 2007 18:25:30 +0000

Posted: Fri Aug 10, 2007 11:25 am Post subject: Our Corrupt Federal Regulator the SEC

Dear Reader,Two years ago I became convinced we were standing at the edge of an economic crisis perhaps comparable to the 1929 market collapse, due primarily to the SEC having become a “captured regulator” which turned a blind eye to the fraud it was created to suppress. The proximate cause of systemic failure, I argued, was that our financial system was building up latent derivative risk (in the form of unsettled trades in our settlement system) among a vast network of hedge funds and their prime brokers. But the conditions for collapse were created, I argued, by an indolent SEC.In an attempt to force action before there was a systemic crisis, I tried to open the eyes of the financial media to these conditions, and drew nothing but vilification that was, in the words of one professional media observer, “like nothing we’ve seen in America since the 19th century.” They uniformly refused to report on the substance of my claims, instead stretching (often quite ridiculously) to portray it all as just a CEO ticked about his own stock price. I organized a fairly extensive effort to bring relevant information to those senators who provide political oversight to the SEC, but was stymied in these efforts by Senator Richard Shelby of Alabama, a politician known in DC for his penchant for milking maximal dollars from all sides of every issue, then voting for whatever serves the interests of Wall Street (even at the obvious and profound expense of the citizenry). In a somewhat desperate measure, I encouraged legislation at the state level: reformist legislation passed the Utah legislature almost unanimously, but was then blocked by Wall Street through a series of threats, legal action, and (I am informed) cash dispensed to some state legislators who obediently flip-flopped.Through these efforts the SEC was not only 0 help, they actually aided those whom I was hoping to expose before a systemic meltdown became inevitable. SEC Commission Annette Nazareth, who has a vested interest (through marriage) in continuing the cover-up, was quoted as being dismissive of my claims (though they were already supported by hard, uncontestable data, much of it in published economic research). SEC Commission Campos also personally opposed me, telling an associate of mine in a public forum, “Imperfect regulation does not justify vigilantism by Patrick Byrne or Overstock.com” (actually it does, when the stakes are as high as they are proving to be, the form of the “imperfection” is corruption, and the “vigilantism” is simply exposure). I pushed hard on the SEC, even writing and narrating a presentation that explains the situation in fair detail, and which has been downloaded 500,000 times, but drew no response from the SEC beyond becoming the target of their federal investigation.One man came forward to support my claims: former SEC investigator Gary Aguirre. Recognizing that the Senate’s oversight of the SEC was fundamentally broken, he went to the Senate Judiciary Committee, sending letters that supported my view of rampant fraud within Wall Street protected by a co-opted regulator (and, it turns out, delivering boxes of evidence in support of these contentions). Naturally, the same journalists who had obediently clogged, cluttered, distorted and dismissed my claims, also went to work on Aguirre. Both The New York Times and The Wall Street Journal published articles and editorials so derogatory, inaccurate, and insulting about Mr. Aguirre, that when the smoke clears they will stand for ages as examples of yellow journalism at its worst, and the costs it can impose on our society. However, in the Senate Judiciary Committee the irresistible forces of fraud and money met the immovable objects of Senators Grassley and Specter. They held hearings and dug into Aguirre’s claims. In an unbelievable display of hubris, the SEC had the gall to subpoena the United States Senate Judiciary Committee, which told them to get stuffed: Senator Grassley’s two letters (since made public) lecturing the SEC on the meaning of “congressional oversight” within the framework of the US Constitution are remarkable both in content and in the simple fact of their necessity. Senators Grassley (from Iowa) and Specter (a former prosecutor) refused to be bullied, and instigated an investigation by the Government Accounting Office.

Seven months ago the wig began to slip. The GAO issued a preliminary report that confirmed “the whiff of a cover-up,” as Senator Specter summarized it in January. Last Friday, the Senate Judiciary Committee and General Accounting Office released their final report thoroughly vindicating Gary Aguirre (and in the process, my own long-standing criticisms of the SEC). It makes it clear that those on Wall Street with “juice” (as one higher-up called it while killing an investigtion) are considered untouchable by our regulators, who turn out to be negotiating for $1 million jobs with the same firms for whom they are derailing investigations. The report excoriates the SEC’s Office of the Inspector General (OIG) in particular as having taken part in the corruption and cover-up.

This week, SEC Inspector General Walter Stachnik (who has held that position since the SEC OIG was created in 1989), announced his retirement. Commissioner Roel Campos followed suit and, according to today’s newspapers, Commission Annette Nazareth is leaving soon as well.

When a corrupt Sheriff turns a blind eye to thuggery from his patrons, self-defense is justified but not obligatory. However, when that sheriff’s indolence leaves not just oneself but also innocent strangers to be mugged by the bullies, a civilized person takes it as his duty to get up in their grills. The corrupt sheriff will naturally denounce as “vigilantism” this decision by another to do that job for which he, the sheriff, is paid, but at which he is so abjectly failing.

When the Securities and Exchange Commission was created in 1934, it was given the daunting mandate of restoring investor confidence in what was left of America’s battered capital markets. In recent years they and the New York financial media have degenerated into cronies of Wall Street. As a result, our global financial system is now teetering on precisely the kind of systemic event of which I have been warning, brought about by precisely the kind of deep, latent derivative risk we were told could not exist, but which came to exist under the noses of the See-No-Evil Twins of the SEC and the New York Financial Media. Sadly, I predict that in the weeks and months to come we’ll learn that Aguirre was just the footnote to what has been covered up. And, regrettably, our nation will suffer deeply for it.

Most respectfully,

Patrick M. Byrne

PS Regarding the federal investigation: I have no beef with it, actually. Everything I have done has always been legal and ethical, but I do recognize that my actions have been somewhat irregular and, coloring outside the lines as far as I have, I do not begrudge the attention I have received from the Federals. In addition, I have no desire to express disrespect for, nor hurt the feelings of, those hundreds of honest, hard-working government employees who come to work each day wanting to do a good job regulating the capital markets. I simply think that a fair share of their bosses, the brass at the SEC, have been corrupted in one way or another. The departure of the OIG, and especially Annette Nazareth, is a first step in fixing this most vital of regulatory bodies.

PPS In all fairness I should exclude a small number of the Wall Street financial media from the charge of being hand-puppets for financial elites. Barron’s is nothing but marketing literature for about 8 hedge funds, the Wall Street Journal is to Wall Street as Sports Illustrated is to sports, Fortune is People Magazine for capitalists, and The New York Post is for folks who move their lips when they read People Magazine. But the same New York Times which employs Establishment-defending hacks like Floyd Norris and Joe Nocera also employs Gretchen Morgenson, who has integrity. Forbes reporters doing highly-credible jobs on these and related issues include Liz Moyer and Nathan Vardi, while Bloomberg has explored it through the superb investigative stories of Bob Drummond, and broadcast a shocking 25 minute Bloomberg Special Report by Gary Matsumoto. In addition, PBS gave fair treatment to Aguirre. In the same vein, I believe there are honest SEC Commissions (e.g., Cox and Atkins), and that the rank-and-file of the SEC are straight-shooters as well: it is the upper echelons that have lost track of for whom they work. In short, these systems are not monolithic.

PPPS TO GET YOUR COUPON please click here. It will take you to Overstock. When you checkout you will find the coupon deducted from your order. The coupon expires on Monday, August 13, 2007. It will take 10% off (not applicable to Entertainment products, and limited to $250 of benefit, so do not buy more than $2,500 with it!) If you have more than one coupon in your account, our checkout process will apply the one that gives you the biggest discount on the order.Last edited by patrickbyrne on Tue Sep 18, 2007 11:14 am; edited 33 times in total

Posted: Fri Aug 10, 2007 12:25 pm Post subject:

patrick, didja really write this letter ripping the SEC & then give em an overstock coupon? ROFL! i gotta admire yer gumption! wonder if any of em used it? btw, the SEC couldn’t deserve it more. (the ripping, not the coupon.)

Posted: Fri Aug 10, 2007 1:52 pm Post subject:

Yes, ’twas I.

Posted: Sat Aug 11, 2007 7:19 am Post subject:

Hello Patrick,I admire your persistence in the fight against this corruption. I think I have an idea what this is costing you, and the dangers you are facing. Wickedness in high places….I have a question for you:Have you considered hiring a weekend auction employee to man a fraud hot line? I usually don’t go looking for it but report it when I happen to see it.I spent a few minutes this morning and found 2 persons that keep coming back here with new user names. One of them has used the same name over and over and just adds a couple of numbers to the end of the name to change it. Another usually “sells” computers and in his listing he asks people to email him for off-site transactions. Yesterday I saw about 30 counterfeit handbags by a new user that have been listed for over 3 days already.I think the Content Review team does a wonderful job. I can only imagine how busy they must be.Thanks for your time, Silvia

Posted: Sat Aug 11, 2007 5:11 pm Post subject:

I’m so impressed! The counterfeit handbag auctions are still up but the other 2 have been disabled.Way to go, Content Review team!

Posted: Sat Aug 11, 2007 8:08 pm Post subject:

Quote:

Yesterday I saw about 30 counterfeit handbags by a new user that have been listed for over 3 days already.

Quote:

I’m so impressed! The counterfeit handbag auctions are still up but the other 2 have been disabled.

Yes they are and I am fairly certain that they will run till the end of their auction time. What a shame!!

Posted: Mon Aug 13, 2007 7:46 am Post subject:

Great article – I’ve thought something was fishy for some time now – thanks for expressing it so well!

Posted: Mon Aug 13, 2007 8:17 am Post subject:

Nandupuy,Thanks for reading it.Best,Patrick

Posted: Mon Aug 13, 2007 9:39 am Post subject: Thanks!!

First time reader - So glad the opportunity to read this was posted on my e-mail “flyer”. Otherwise I’d have never gotten this article and opportunity to learn the details of this. Have sent it to about everyone I know who is actively watching/working investments . . . thanks for educating an amateur!

Posted: Mon Aug 13, 2007 12:21 pm Post subject:

I want to thank you for a eye opening, thought provoking article! I am going to forward this to everyone I know. Wish it could be on the home page of every internet provider for more people to read!!

Posted: Mon Aug 13, 2007 7:52 pm Post subject: THANKS!!!!!!!!!!!!!

Thank you Patrick. You’re a very intelligent man. I’m glad somebody is keeping an eye on those thugs and thieves.

Posted: Mon Aug 13, 2007 8:27 pm Post subject: Wow

Thank you for this information. I got a finance degree back in 1988 but went straight on to law school and never used it… now I wish I had kept up with the markets over the years so I would know more of the background information. I am shocked and appalled by all of this. The corruption is real, isn’t it?? How long until our culture falls into abject decay?

Posted: Mon Aug 13, 2007 10:14 pm Post subject:

Valerie,I am afraid we may be reaching that point already.Thanks to all of you for taking the time to read this.Patrick

Posted: Mon Aug 13, 2007 10:14 pm Post subject:

PS Stay tuned. More to come.

A $10 coupon for my friends

Patrick Byrne — Sat, 28 Jul 2007 21:04:14 +0000

Posted: Sat Jul 28, 2007 2:04 pm Post subject: A $10 coupon for my friends

Hi Folks.It occurs to me that I have asked much of those who come here: to provide me feedback on business ideas, to understand patiently as we work through different business problems, to provide witness to the perfidy of various journalists, and ultimately, to get involved in comprehending a complex financial crime on Wall Street.That is a lot for me to ask of thousands of folks whom I have never met. As Don Corleone put it, “Let’s just say, ‘I owe you.’”As a small token of my appreciation, I have created a discount coupon that takes $10 off any purchase > $100 on our shopping site. Just in case it gets out of hand (as happened to me when I posted an offer on someone else’s blog a month ago), I have set the coupon to expire on Monday evening, July 30, to limit the damage I can do to Overstock’s budget for such promotions. By the way, I am not imagining myself a munificent Santa Claus here: I am just trying to do a nice thing for folks who visit. Feel free to post a link to this page anywhere else around the Internet (I know there are sites and blogs devoted to searching for shopping specials and various deals). However, if you folks seem to like this, I will make a habit if including these coupons in my blogs. In any case, here goes nothing: If you want the $10 off $100 coupon, good until Monday night, please click here. Your most humble servant, Patrick UPDATE: For those to whom this is new, to use the coupon you just click on the link above. It takes you to Overstock, you shop, and then when you checkout you will find the coupon deducted from your order. If you have more than one coupon in your account, our checkout process will apply the one that gives you the biggest discount on the order. So for example, if you are a Club O member you receive a 5% discount. If you order $105 worth of stuff, this coupon will drop it to $95. If you order $300 worth of stuff, you will get a $300 X 5% = $15 discount.Last edited by patrickbyrne on Sat Jul 28, 2007 8:05 pm; edited 3 times in total

Posted: Mon Aug 27, 2007 7:42 am Post subject: Signatures and delays

Wings,Yes, I did forget to sign it. You’re right.”Somebody call somebody!” – Panicking helicopter cop’s line at the end of the movie, “7″. By the way, I put that notice up of the show about my friend because the producer called that day to say it was going to be on. Evidently it got bumped. She wrote me this weekend: “There was a scheduling change at ESPN because of a WNBA game so the new air date is Friday the 31st at 7:30pm (ET) on ESPN2.” So I hope you tune in this Friday. Patrick PS There is a profound irony in the fact of its being bumped for a WNBA game. Somewhere, good-naturedly, Brian is laughing until tears roll down his face. As was his style.

Carol Remond

Patrick Byrne — Wed, 25 Jul 2007 18:55:33 +0000

Posted: Wed Jul 25, 2007 11:55 am Post subject: Hello Carol Remond!

Dear Carol,

We have not heard back from you, so I am writing to make clear that I would be most happy to provide comment or answer any questions that you have. Given our history, I think it best that you provide them to me in email form. I will respond within 60 minutes. Anything that is on the record for me must be on the record for you as well, but I will accommodate any reasonable request regarding delaying my publication, so please indicate to me your preference regarding the timing of my release of the article. Respectfully,

Patrick M. Byrne

Question for Brad Stone of the New York Times

Patrick Byrne — Mon, 23 Jul 2007 05:12:35 +0000

Posted: Sun Jul 22, 2007 10:12 pm Post subject: Question for Brad Stone of the New York Times

Hello Brad,Your recent article stated, “Patrick M. Byrne, founder and chief executive of the beleaguered online retailer Overstock.com, has for years been accused of anonymously resorting to the Internet to do battle with his company’s critics. In an interview, Mr. Byrne said that he never hides his true identity and always signs his name when he posts under his online handle, ‘Hannibal’ (the Carthaginian conqueror, not the celluloid serial killer).”Please tell me on what basis you make the claims:1)”Patrick M. Byrne, founder and chief executive of the beleaguered online retailer Overstock.com, has for years been accused of anonymously resorting to the Internet to do battle with his company’s critics.” That is, I understand many have criticized my appearance on the Internet, but I am not aware of having been “for years …accused of anonymously resorting to the Internet to do battle with [my] critics.” Please provide a citation for such accusations.2) Please provide a citation for this claim: “Mr. Byrne said that he never hides his true identity and always signs his name when he posts under his online handle, ‘Hannibal’”. Is it your claim that I used the words “always” and “never” in some message board post (and if so, please cite that post), or is it your claim that I stated this in our interview? I know for a fact that the claim is false as regards our interview, and believe it to be false with regard to any online posting, but I stand ready to be corrected.Respectfully, Patrick M. Byrne

Posted: Sun Jul 22, 2007 10:24 pm Post subject: Sent to public@nytimes.com

Dear Sir or Madam,In your July 16 article, “July 16, 2007 – The Hand That Controls the Sock Puppet Could Get Slapped” your reporter made a claim that was false. In addition, he had to go way out of his way to make it.Since you have not previously even responded to my requests for citation, I decided simply to make this one public.Explanation welcome.Patrick Byrne, CEO, Overstock.comHello Brad,

Your recent article stated, “Patrick M. Byrne, founder and chief executive of the beleaguered online retailer Overstock.com, has for years been accused of anonymously resorting to the Internet to do battle with his company’s critics. In an interview, Mr. Byrne said that he never hides his true identity and always signs his name when he posts under his online handle, ‘Hannibal’ (the Carthaginian conqueror, not the celluloid serial killer).”

Please tell me on what basis you make the claims:

1)”Patrick M. Byrne, founder and chief executive of the beleaguered online retailer Overstock.com, has for years been accused of anonymously resorting to the Internet to do battle with his company’s critics.” That is, I understand many have criticized my appearance on the Internet, but I am not aware of having been “for years …accused of anonymously resorting to the Internet to do battle with [my] critics.” Please provide a citation for such accusations.

2) Please provide a citation for this claim: “Mr. Byrne said that he never hides his true identity and always signs his name when he posts under his online handle, ‘Hannibal’”. Is it your claim that I used the words “always” and “never” in some message board post (and if so, please cite that post), or is it your claim that I stated this in our interview? I know for a fact that the claim is false as regards our interview, and believe it to be false with regard to any online posting, but I stand ready to be corrected.

Respectfully,
Patrick M. Byrne

Posted: Tue Jul 24, 2007 12:07 pm Post subject: Parsing The New York Times

Mr. Wings,I applaud your comment, in that your use of language is more crisp and precise than is Mr. Stone’s….”it is essentially saying that you don’t hide your true identity when posting online.”"…your postings are made in such a way that people will always know it was you in particular who made the posting and that your ‘handle’ is usually ‘Hannibal’…”Both of these are precise and accurate statements about what I do and how I describe what I do. I feel Mr. Stone stretched this to suggest that I made a further claim about “always sign[ing]” as “Hannibal”, a claim that (had I made it) would false and easily demonstrated as false, if I made it, which I didn’t. Mr. Stone’s inexactitude did, however, open the floodgates of pettifoggery, obfuscation, anf falsification so enjoyed by the shills.I have a modest history with The New York Times. I have, with their permission, taped conversations with their reporters which other nationally known journalists later listened to and said things like, “This makes me ashamed to be a journalist”). Mr. Stone’s decision to push this quote (or since it’s not even a quote, to push his description of my position) on precisely the issue that is the focus of attention, to create precisely the opening that blackguards were seeking, is hard to consider a coincidence, for if it is, it is one of those “coincidences” that happens over and over with clockwork-like regularity and complete predictability.Thank you for your helpful comment, Wings. I trust you understand why, given the situation, it was best not, in fact, to leave this alone, but to parse these claims as carefully as I have, and I thank you for your contribution to this effort.

Respect,

Patrick

PS You also wrote, “I may be mistaken on this part, you may of said your handle was always Hannibal…” That is correct: to the extent I have ever used a handle, it was always “Hannibal” or some cognate thereof (“Hannibal100″ on Fool, I think).

Posted: Tue Jul 24, 2007 6:01 pm Post subject:

I’m sorry but I am having trouble equating this text from the article

Quote:

In an interview, Mr. Byrne said that he never hides his true identity and always signs his name when he posts under his online handle, ‘Hannibal’ (the Carthaginian conqueror, not the celluloid serial killer).

with your responce to me here of

Quote:

stretched this to suggest that I made a further claim about “always sign[ing]” as “Hannibal”,

To me, the article is not implying that you always sign as Hannibal but just that you always sign your “name” and that your handle (bulletin board ID, etc) is always Hannibal. Yes, I remember now that you had mentioned the Hannibal100. Ofcourse you may have found yourself unable to get Hannibal as a user ID at various boards in the past and are just as likely to not be able to get it in the future (Hannibal is a significant historical figure and unfortunately the screen persona is popular for reasons that probably should be left unsaid). I’m not sure anyone would find a problem in seeing you sign a posting somewhere as Patrick Bryne (Mr. Bryne, P. Bryne, etc.) of Overstock with a user ID of Hannibal2000.Perhaps here the problem should be considered to be what was left open? Whereas you always sign your postings when using the ID of Hannibal, possibly you don’t let anyone know who you are when you use an ID that is not Hannibal? This leads back to the earlier (false?) statement of

Quote:

has for years been accused of anonymously resorting to the Internet to do battle with his company’s critics.

It’s a pretty sneaky way of implying that you have been posting anonymously but one that is not too likely to be picked up on by most people.The English language certainly has some problems with it at times and can be used to distort most anything. Having gone through a divorce I certainly know how hard it is to answer a question that has been phrased in the manor of “So, when did you stop beating your wife?” The implied statement is that you beat your wife and there is nearly no way to answer this question and be believed that you have never beat your wife. Apparently journalist are not the only professionals to distort things in a statement. Unfortunately, I feel that your specific response to this editor may have left in the realm of having failed on this one by going after the wrong problem. In essence, you may of answered that you stopped beating your wife, not have never beat your wife.

Posted: Mon Jul 23, 2007 7:03 pm Post subject:

Mr. Byrne,

Quote:

Mr. Byrne said that he never hides his true identity and always signs his name when he posts under his online handle, ‘Hannibal’”

I’m sorry but I’m having trouble understanding the problem you are having with this particular part of the article. Yes, it probably isn’t the best use of the English language in a sentence but it is essentially saying that you don’t hide your true identity when posting online. My thought would be that you would be complaining about it’s specific of saying you always sign your name and always use the same “handle” Hannibal (although I’m not even sure if is to your advantage to bother to correct this). Seems to me that I read here somewhere what it was that you sent to this person and it was along the lines of saying your postings are made in such a way that people will always know it was you in particular who made the posting and that your “handle” is usually “Hannibal” (I may be mistaken on this part, you may of said your handle was always Hannibal).I’m fully in favor of what you are doing concerning the stock market and applaud you for it. But I am wondering if I am missing some nuance here or if maybe this should not of been something for you to complain about? Sometimes, some things are just best left alone.

Posted: Tue Jul 24, 2007 10:19 pm Post subject: Philadelphia Lawyers and Child Threateners

Hi Wings,Thanks for taking the time to write such thoughtful analysis. I think we are close to agreement. I will reply by starting with something you wrote:”Yes, it probably isn’t the best use of the English language in a sentence but it is essentially saying that you don’t hide your true identity when posting online.”I will say three things about this, at least two of which we agree on.1) I agree Mr. Stone’s English on this key point was not terribly precise. No worries, no blood no foul, Mr. Stone.2) I agree that your reading is, in fact the natural reading. And, for the record, I will go further and confirm the truth of the assertion as you read it: I do not hide and have never hidden my true identify when posting online.3) Where we differ is in how we view the importance of Mr. Stone’s lack of precision. The miscreants jumped on it and immediately began counting times I had signed “Patrick” versus “Patrick Byrne” versus “Hannibal” in some weird (and to me still inexplicable) attempt to find an inconsistency. I thus insisted on clarifying the Stone’s imprecise statement. Tonight one of the knuckleheads is back taking my effort to restate precisely what Stone said, and falsely claiming that it was an “admission” (“Byrne admits that he posted on the Internet under anonymous pseudonyms”): I doubt anyone will fall for it, since he neither actually cites such an admission nor gives an example of it, though it be the main claim of his blog. Which is pretty funny and wholly typical. So in short, Wings, your reading is correct. Stone’s English does have only a small imprecision in it. Because the blackguards think they’re Philadelphia lawyers they jumped up and down in the space Stone’s imprecision created, and when I went to seal it up, they used that as an opportunity simply to reverse their allegation. So for the record, for any stranger, or reporter, who wanders in here: I have, in fact, never hid my identify when posting online. I have always posted as myself, or as Hannibal. I have only used the name “Hannibal” at Fool, InvestorVillage, and Overstock itself, after extensively making it clear that Hannibal was I. I have posted on other people’s blogs a few times, generally consumer information and shopping blogs, but always identifying myself. The only possible exception to the preceding statements is this: in 1999-2000, I posted as Hannibal a few times on F—-ed company.com, looking for inventory to liquidate, and while I think I did reveal my identity there, it hardly mattered anyway because we were a tiny upstart of whom almost no one had ever heard, and I do not have a record of those posts. One would think that would be as simple and clear an assertion no one could misread it. Let’s watch. By the way, thank you for taking the time to tease this analysis out, Wings. Send me an email and I’ll hook you up with a coupon. Respectfully, Patrick PS As long as we are talking about these guys, I’ll give you a taste of who they really are. The other day one of the blackguards threatened me and a friend by posting our personal information on the Internet (and in the case of my friend, that of his wife and children as well). Personally I am indifferent because I am 10 feet tall, bulletproof and invisible, but I don’t think blackguards should be threatening children. Who did the threatening? A fellow named Sam Antar, a convicted felon who reduced his own time in jail by ratting on family members. Some guy. What does he do when he is not threatening children? He goes on CNBC to be fetted by the likes of Herb Greenberg. This may seem strange until you start to get what is going on down the rabbit hole: CNBC (and much of our financial news industry, for that matter) is more or less a 24 hour infomercial where Herb & Cronies hawk whatever cookware sets, Total Gyms, or stock and bonds they are instructed to hawk by a few hedge funds. But the cronies are growing silent because they are starting to realize the game is up. Herb is in too deep to stop, so he has been tasked with creating another crony with whom he can then quote back-and-forth. They cannot even find a Chanos to make denials (given how shifty Chanos looked in the recent Bloomberg expose on naked shorting http://images.overstock.com/f/102/3117/8h/www.overstock.com/07-0313Bloom_PhantomShares_NSS.wmv). So they are having to dig pretty deep, and the best they could do is come up with a convicted felon, relative-ratting, and now, child-threatening, Sam Antar.

Posted: Tue Jul 24, 2007 11:04 pm Post subject:

Patrick,I don’t mean to interrupt this thread, but, there is a serious situation on the message forums right now. A user, mistuff4yu, has been posting ALL day with the worst kind of filth and foul language you can imagine. He has been reported over and over again, all day, and is still on the boards with more of the same filth! Any customers that may come to the message forums would be horrified. It’s bad enough for the sellers to have to deal with it, but, where is the moderator for the forums? Back when Byron was handling it, it would have been dealt with swiftly. Please contact your people and tell them to get the user totally banned and wipe those posts out. It’s an abomination for anyone to see them. Thank you and again, sorry for interrupting your thread but no response from the techs in charge.Myra

Posted: Tue Jul 24, 2007 11:47 pm Post subject: Myra

Myra,On it. Will be taken care of tonight or first thing in morning.So sorry.Patrick

Posted: Wed Jul 25, 2007 4:55 pm Post subject:

Quote:

The miscreants jumped on it and immediately began counting times I had signed “Patrick” versus “Patrick Byrne” versus “Hannibal” in some weird (and to me still inexplicable) attempt to find an inconsistency.

Sounds like some people need to “get a life”. But ofcourse this seems to be the life they decided to get.I guess I now have a better understanding of the particular aspect that you chose to address. Who in their right mind would really care if in one post you signed Patrick Byrne CEO of Overstock and in a different post you signed Mr. Byrne of the Overstock Corporation? Obviously you have more problems with these people then I had thought.You may still wish to consider addressing on a more specific basis the point I had made

Quote:

Perhaps here the problem should be considered to be what was left open? Whereas you always sign your postings when using the ID of Hannibal, possibly you don’t let anyone know who you are when you use an ID that is not Hannibal? This leads back to the earlier (false?) statement of

Quote:

has for years been accused of anonymously resorting to the Internet to do battle with his company’s critics.

Quote:

It’s a pretty sneaky way of implying that you have been posting anonymously but one that is not too likely to be picked up on by most people.

Ofcourse with them saying that you have ‘admited’ having made postings on the Internet under anonymous pseudonyms which is not even implied in the original article, you have to wonder if sneaky implecations are beyond their mental capabilities to grasp.Just a thought.

Quote:

By the way, thank you for taking the time to tease this analysis out, Wings. Send me an email and I’ll hook you up with a coupon.

I’ve found this discourse interesting enough to be it’s own reward and have not been looking for any compensation. So, as the offer is appreciated, I will decline it with hopes of not offending the offerer.Regards
Lee McGuire
wings3
I don’t normally bother to actually sign my name on the board as it generally doesn’t matter to anyone but what with the current discussion felt it would be best.

Posted: Wed Jul 25, 2007 9:24 pm Post subject: Wings

Wings,Thanks for the generosity of your reply. I will accept your invitation to address one last specific point:”Whereas you always sign your postings when using the ID of Hannibal, possibly you don’t let anyone know who you are when you use an ID that is not Hannibal? This leads back to the earlier (false?) statement of… has for years been accused of anonymously resorting to the Internet to do battle with his company’s critics…. It’s a pretty sneaky way of implying that you have been posting anonymously but one that is not too likely to be picked up on by most people.”You got it exactly: it is a sneaky way of implying just that, and while this could be coincidence, but since this is the nth time a reporter has done precisely this, it is hard not to see a pattern. So, again for the record:”Whereas you always sign your postings when using the ID of Hannibal, possibly you don’t let anyone know who you are when you use an ID that is not Hannibal?” Answer: I do not “use an ID that is not Hannibal” (unless it is “Patrick Byrne”).”has for years been accused of anonymously resorting to the Internet to do battle with his company’s critics” Answer: This is just a flat lie on Mr. Stone’s part. No on “has for years been accus[ing me] of anonymously resorting to the Internet to do battle with [my] company’s critics”. Just a lie. I asked Mr. Stone to produce some examples of these years of accusations, but received no reply.Lastly, you are right about the rest. “Who in their right mind would really care if in one post you signed Patrick Byrne CEO of Overstock and in a different post you signed Mr. Byrne of the Overstock Corporation? ” Because you are new to this battle, you may not know that underneath essentially all the press accounts you read of me there lies precisely this kind of pettifoggery, over and over. That is because the Establishment press is itself engaged in a cover-up. By the way, we are going to win. We are building a great company, we are getting discovery in our two lawsuits, the information dam is cracking and this scandal is moving into the mainstream (I get more and more calls each week, do radio interviews, etc). If the NYT thought that Jason Blair episode was a problem, I cannot wait until real reporters start looking into these cozy relationships. “Of course with them saying that you have ‘admitted’ having made postings on the Internet under anonymous pseudonyms which is not even implied in the original article, you have to wonder if sneaky imprecations are beyond their mental capabilities to grasp.” Not beyond their mental capabilities. They are just practitioners of the Big Lie. Lie over and over and over about something like that, and readers get disoriented, confusing hard facts with balderdash. It is nice to meet a gentleman such as yourself here. Take care. PatrickLast edited by patrickbyrne on Sat Jul 28, 2007 2:22 pm; edited 1 time in total

Posted: Thu Jul 26, 2007 9:08 am Post subject:

Quote:

“Whereas you always sign your postings when using the ID of Hannibal, possibly you don’t let anyone know who you are when you use an ID that is not Hannibal?” Answer: I do not “use an ID that is not Hannibal” (unless it is “Patrick Byrne”).

Apparently, Brad hasn’t done his research. I hear they offer a great research class at the local community college.This is the problem with journalism. If the guy had spent 2 weeks on this site analyzing the posts made by you.. he wouldn’t have made those statements. How hard is it for a journalist to pick up the phone and ask before making it public?What he has posted is no big secret, its no surprise.. in fact it’s outrageous that he even took to the time to write it. How many people are registered on Overstock Auctions? He couldn’t take the time to ask anyone?You see, they say when you assume you make an @$$ out of you & me.. Unfortunately Patrick, you’ll be the one to clear it up.

It amazes me really. Every post made by Hannibal has always been replied by buyers & sellers on this site that call you ‘Patrick’. We’re not morons, and we know who we’re talking to.

I have good news and bad news

Patrick Byrne — Fri, 20 Jul 2007 03:46:07 +0000

Posted: Thu Jul 19, 2007 8:46 pm Post subject: I have good news and bad news

As readers of this blog know, I have been arguing that our nation is on the brink of a massive financial scandal as a result of unsettled trades in our financial system (it colloquially goes by the name, “naked short selling” though this is in fact just one of the origins of these trades). For two years I have struggled to bring this to the publics attention, but the low-rent of the financial media have not just ignored it, they (to this untutored eye) seem to have done everything they could to cover up the problem. At first a cone of silence descended around the issue, but then, when that was no longer possible, they tried to spin it as just about an eccentric CEO (that would be I) mad that his own stock went down (though I started this when it was going up, and did everything I could to divorce it from Overstock and show the systemic consequences of this crime). Someday someone smarter than I will kick through the rubble and draw the connections between those who benefited from the crime, and those who hijacked the discourse, but that is beyond this Bear of Little Brain.Strange dynamics seem to have been set in play on this subject. On July 5 the WSJ, who for months barely let a week slide by without denouncing, misquoting, or fabricating something about me, wrote a story that described this whole issue pretty fairly. Kara Scannell did not dig too hard, but it was a moderate, fair piece (the target of her investigation squealed like a stuck pig in a follow-on press release, but so it is with bullies who see their control slipping). What was odd about the piece is that it did not mention Overstock, or myself, in any place: it is not as though my feelings are hurt (I have had more press than I ever wanted in this lifetime), but given that I had a pretty fair role in bringing the issue into the mainstream, and given the number of times the WSJ has denounced me for leading this fight, the omission could not have been stranger.I have good news and bad news to report.The good news is that word has just been released that tomorrow night a news channel is going to discuss the issue of naked shorting. The bad news is that that station is going to be CNBC, a group that has been at the heart of the spinning of this story in what appears to have been a deliberate attempt to prevent word of it from reaching the public. But who knows, maybe tomorrow night they will redeem themselves. I have an idea. I volunteer to go on CNBC Fast Money tomorrow night and make sure it is not a whitewash. CNBC has had me on a dozen times or more, so they cannot have objections to it in principle. Yet even though I represent one side of the debate, I bet they will refuse to have me on to discuss it, because it will interfere with their plans to spin it. If they do have me on (without doing the normal shout-him-down routine), I will give them credit for it (and not even bring any signs or affidavits). If, even though I have become synonymous with this issue, they refuse, it will make my larger point for me. In any case, they know where to reach me. Patrick

Professor Christine Hurt

Patrick Byrne — Thu, 19 Jul 2007 03:58:25 +0000

Posted: Wed Jul 18, 2007 8:58 am Post subject: Professor Christine Hurt

Ruh-roh.They are losing control of the narrative. An Illinois law professor named “Christine Hurt” apparently decided to take an independent look into the Mitzvah and discovered… that things are not quite as they are being portrayed in the financial media. She has to make the obligatory swipes about my “tilting at windmills” (that’s OK, I’m used to it, and besides, where I come from we believe in Quixotic quests). And she succumbs to the normal tendency to assume that this is all about Overstock, (after all, what CEO ever does anything out of patriotism or an internal moral code?) That’s OK though. Expect one of two things to happen: Professor Hurt will continue following and writing about these developments with independent eye, in which case she will be widely denounced as a lunatic fringe academic, crazy crazy crazy, etc. Or some hedge fund (linked to a notorious, now banned-from-the-markets-for-life short-biased financier) will show up and make a huge donation to her college of law (as happened with one other group that began digging into this story from outside the confines of the Party Line). And she will be asked to go silent. I have suddenly come to appreciate the value of tenure in our society. Your humble servant, Patrick http://www.theconglomerate.org/2007/07/overstockcom-v-.html Overstock.com v. Gradient (and the Rest of the World) Posted by Christine Hurt While the blogosphere (even here) has been debating the propriety (and legality) of the CEO of a publicly-held corporation to anonymously tout his company and denigrate a potential acquisition target, I’ve been following a story that sounds different, but has some commonalities. Overstock.com (and several shareholders) sued Gradient Analytics, Inc. and Rocker Partners for shorting Overstock shares, publishing false negative analyst reports, then profiting as the share price drops. The actual causes of action are libel, intentional interference with prospective economic advantage and various other California statutes. Many in the financial community pooh-poohed this as another example of CEO Patrick Byrne’s tilting at windmills, but so far a California court says there is something to it. Yes, Byrne seems to be paranoid about Wall Street, but that doesn’t mean someone isn’t out to get him! In the lawsuit, Overstock alleges (and has affidavits from Gradient employees supporting the allegations) that Rocker Partners approached Gradient Analytics about creating reports about Overstock.com. Apparently, much of Gradient’s business model centered around customers subscribing for tens of thousands of dollars a year and getting the opportunity to request negative reports on companies of their choice. Gradient even touted to potential customers how much a negative report on Gradient could cause the share price of a company to drop. At the request of Rocker Partners, Gradient published no fewer than 24 reports in a six-month period, and Gradient was able to approve and request changes to those reports before their release. Neither Rocker Partners nor Gradient deny the reports or the fact that Rocker was short selling Overstock shares. Their defense is that the reports are free speech. Under California law, they moved to dismiss the suit under California’s anti-SLAPP law. This motion was denied by the trial court and upheld by the appellate court (2007 WL 1545611, May 30, 2007). (I will discuss the “free speech” aspects of the case in a different post.) In the opinion, the court stated that the plaintiffs in all probability would prevail on the merits, given what was in the pleadings, and stated “The malice is in the very business model and practices that preordain negative reports and provides probative evidence that Gradient acted in reckless disregard of the truth in making the false statements and implications that it did.” All of the legal documents are collected at Overstock.com’s investor relations hub here. And yes, Byrne has been railing against short sellers for years as the share price of Overstock.com has declined, and most of written off those (somewhat bizarre) rants. Indeed, Byrne has also filed a lawsuit against major Wall Street investment banks for being part of a vast short-selling conspiracy against his company. The short-selling conspiracy story does make one shake one’s head, though; Overstock.com has been on the naked short-selling watch list for over 500 days. For some reason, this company is not only sold short more than any other company, it is sold short for pure speculation, with the bettors skirting the law not to actually borrow the shares they are shorting. In any given day, more shares of Overstock.com are shorted than are in the public float. Whether that mystery will ever be resolved to uncover illegal machinations remains to be seen; however, this very discrete and particular case against Gradient and Rocker Partners seems to have some teeth. Securities Regulation TrackBacks (0) TrackBack URL for this entry: http://www.typepad.com/t/trackback/38673/20075268 Links to weblogs that reference Overstock.com v. Gradient (and the Rest of the World): Comments (4) 1. Posted by anonymous on July 17, 2007 @ 11:12 \| Permalink Ms. Hunt, Judging by your blog post, it looks like you read only one court document. That’s problematic for the following reason. The law requires that the court assume that the overstock claims are true at this point so that they can assess whether or not the Anti-SLAPP law applies. The court has not yet examined the veracity of those claims. In fact, the overstock claims are based entirely on the declaration of one disgruntled, fired ex-Gradient employee. That same ex-employee has been completely discredited by several journalists. He will be discredited at trial too, if the case ever goes to trial. You should read some of the other court documents to get a more balanced view of the issue. 2. Posted by Patrick Byrne on July 17, 2007 @ 19:45 \| Permalink Professor Hurt, Congratulations on a cohesive summary of the situation. I respectfully warn you, though, if you keep at it you will see articles appearing about “paranoid rants” being written by a UICL law professor. One aspect of this affair that has been eye-opening for me has been the realization of how “captured” are various social institutions. First and foremost of these is, of course, the SEC. For example, the practices described in our lawsuit have long been widely known on Wall Street, and our allegations seem to be widely regarded to be true by the “smart money”. Years and years ago, long before Overstock existed, this type of behavior was explained to me in a “this is how the game is played” kind of way. Several of the most prominent figures on Wall Street today have encouraged me in this fight, saying things like, “I’ve watched these jerks do this for years, it is about time someone stood up to them.” It is not a tough problem to solve. It is, however, a tough problem to solve without seeing about two dozen rich guys get their heads handed to them in court. The SEC lacks the will to do that. They can take on Martha Stewart over a few tens of thousands of dollars, but they cannot stand up to the toughest hedge funds on Wall Street. Regulatory capture is nothing to be surprised about, I know, but the capture of the industry of financial journalism is especially disheartening. I have dealt with dozens of journalists over the years, and have generally found them to be honest, intelligent, and fair. In fact, for years I told people that the common perception of journalists was way off the mark in that way. However, when it comes to reporters on the Wall Street beat, what I have found has amazed me, in that they will not even consider data that is coming out of academia, based on Freedom of Information Act requests of our government, that indicate the problems in our settlement system are deep. The hedge fund friends who feed them their stories tell them to ignore it, so they dutifully ignore it, even though there are now some serious, heavyweight economists who are saying, “Houston, we have a problem.” I should make clear that I do not think my claim about financial journalists is a universal truth. There are several good ones, notably Gretchen Morgenson at NYT, who has written compellingly of an SEC whistleblower named Aguirre who has given compelling testimony about the SEC’s capture by Wall Street figures with “juice”, as his superior once described someone Aguirre was investigating. Gary Matsumoto and Bob Drummond at Bloomberg have done explosive articles on the naked shorting controversy, as has Liz Moyers at Forbes, while her colleague there, Nathan Vardi, has written of the involvement of Russian OC in these matters. But by and large, the financial press has shown itself the lapdog of the financial industry. The Wall Street Journal is to Wall Street as Sports Illustrated is to sports, Fortune is People Magazine for capitalists, and The New York Post financial columns are for folks who move their lips when they read People. This explains the anonymous post that precedes mine. What has actually happened is that certain miscreants committed acts A, and we filed a lawsuit alleging that A occurred. Their Motion to Demur had to state not-A, but because they did not even want A out there in the public mind, their pet reporters have written about the case as being about something else entirely, X, to the point that they would not even describe the contents of the affidavits at issue. That the 5 or 6 reporters who have so studiously insisted that is is about X are the same small crew of 5 or 6 who have spent their careers writing hatchet jobs on the same companies that those miscreants have shorted, is, I am sure, entirely coincidental. It just one of those coincidences that happens over and over with complete predictability. The problem for them all is that the wig is beginning to slip. The trial judge in Marin decided on all counts, 8-0, that this suit is not about X, it is about A. The California AG weighed in with an amicus agreeing that this case is not about X, it is about A. The California Court of Appeals decided 3-0 that it is not about X, it is about A, and denied their motion to reconsider the question. So the problem for them has become, how do they keep the wig in place? A slew of hedge fund choagies from the NYT, NYP, Fortune, and WSJ (Nocera, Roddy Boyd, and the Minions of Kansas) wrote stories about how crazy and paranoid were my rants, but unfortunately for them, a small subset of the evidence from which I drew my beliefs has been examined by a trial judge, an AG, and three jurists of an appellate court, who have all said, “Yep, they’re probably going to win.” The anonymous post on your site is a fine example of what I mean. Returning from it to the real world for a moment, what we have is a series of people who worked for a company who realized it was crooked. Three of them came forward and said to their boss, “We cannot do this anymore. This business model is completely illegal. This has to stop.” A few days later they were fired. They brought their information to me, I investigated and found more employees with the same story, and I started a lawsuit. Of course, Roddy Boyd and the other cronies dutifully play their role by saying that they are all just disgruntled ex-employees: that is the stuff about, “That same ex-employee has been completely discredited by several journalists” (the insistence that “the overstock claims are based entirely on the declaration of one disgruntled, fired ex-Gradient employee” is just another of those false claims they numbly repeat with mantra-fervor in the hope that will make it true, but a quick check of the documents you linked to on our site will dispel their claim). Believe it or not, someday soon the Law & Economics, Public Choice, and CLS folks are all going to find a huge area of agreement: behind the scenes, powerful interests have jacked the controls of our society to a degree that only the most paranoid imagined. This case against Gradient, Rocker et. al, and our other against the prime brokers, are going to provide windows into that world. So when in your writings you notice simple, obvious things like the CA Court of Appeals rejects their arguments 3-0, please expect to find yourself denounced as a paranoid as well, with great energy, by the same handful of reporters (Herb, Roddy, Bethany, etc.) who write story after story on every other company (e.g., CROX shoes, Taser, Take-Two, etc.) that David Rocker and his friends short. Always, I am sure, coincidentally. Regards, Patrick Byrne

The Empire Whines Back

Patrick Byrne — Mon, 16 Jul 2007 18:44:52 +0000

Posted: Mon Jul 16, 2007 11:44 am Post subject: The Empire Whines Back

It should come as no surprise that the corporate media would object to a 2.0 world of citizens communicating outside the well-worn channels of mass media: monopolies always go down whining. However, the way in which the story of Whole Foods CEO John Mackey is being used in a broadside against those who have stepped outside the Establishment’s rules of discourse, and who attempt to shine light on the way that discourse has been hijacked, is particularly bald.From the facts as reported, what Mackey did was wrong. He never identified himself while he dissed a competitor and pumped his own company, its stock price, and his own haircut. Bad form all around, lad. Especially on the haircut.

The similarity between those acts, and my practice of writing on message boards posts that steer clear of Overstock’s stock price (and explicitly disclaim any opinion on this subject), and instead discuss a massive criminal conspiracy to defraud our nation’s capital markets that may end in 1929-style systemic failure, would be a similarity that may be lost on you. It was lost on me, too, especially given that I post in a way that is anything but anonymous (signing most of them “Patrick Byrne”, “Patrick”, “Patrick Byrne, CEO”, using either a user-name “Hannibal” which I initially forewarned and frequently reiterate is myself, or else, simply posting as “Patrick Byrne” on a message board called, “Take 5 With Patrick”). In short, given that Mackey’s posts touted his own stock anonymously, while my posts which avoid mention of the subject, discuss social issues beyond Overstock, and can only with great selective effort be read without understanding the identify of their author, one would think that any attempt at equating the two would be a superficiality too extreme even for the mass media to maintain.

Yet once again, The New York Times has not let me down.

New York Times reporter Brad Stone contacted me late last week for comment on the Mackey affair. The questions he emailed to me included,

Quote:

Talk about the temptation chief executives feel, when they see their companies getting disparaged online, to participate in the discussion?Is there something about today’s participatory Internet culture – the fact that anyone can express their views – that makes that temptation so extreme?

In conversation with me Mr. Stone attempted the same gambit, trying to draw me out on the “extreme temptation” to which I was, apparently, succumbing, in daring to step outside the mass corporate media to raise public awareness of any issue that threatens our country. I requested (and he indicated acceptance) that he should not put words in my mouth, that I do not see exercising my duty as a citizen as an example of a “temptation” whose allure was too strong to withstand. As I wrote to him:

“You became a journalist: would you have characterized this as having caved in to some ‘temptation’ that was too ‘extreme’ to withstand? Then why describe in such terms another’s decision to take part in the public discourse? ”

On the general history of my postings and my identification therein, this is what I wrote him:

Quote:

In the very early days of the company (1999-2000?, well before we went public) I used to go to a website called F—-d company, seeking information on businesses that might be looking to liquidate their inventory. Eventually I posted a couple-few times under the name “Hannibal” suggesting that if anyone had inventory to liquidate to please contact me.
Incidentally, I chose “Hannibal” as an allusion to the Carthaginian general (one of history’s great underdogs, in my view), and not to the cannibal of modern fiction. However, given that our business model at the time was liquidating the inventories of failing dot-coms, the irony was not lost. I believe I did reveal my real name, but I am not sure.
I have not been back in 5 or 6 years.I have read some bashers claim that my posts are hard to find there, and that I must have caused them to be removed. I have no idea if my posts are hard to find (as I said, I think there were just a few), but I have had nothing to do with it either way: the assertion is pure fabrication.

A couple years ago I started posting on Fool.com. I continued using “Hannibal” (and added “100” because of some requirement of Fool) but revealed who I was right away, signed my postings, and generally made sure that it was common knowledge to everyone on the board that Hannibal100 = Patrick Byrne. Of course, I disclaimed any attempt to encourage anyone to buy our stock, any opinion on our stock, etc. I was there for other reasons than to discuss our stock.

In time, the discourse on Fool was hijacked by the same people who hijacked Yahoo, using the same methods (clogging, non sequitors, sock-puppeting, etc.) A site called “InvestorVillage” started up. Some people there asked openly if I would switch. So I did.

Somewhere in there Overstock created an auction site, and in it, an auction message board. My original name on auctions was “Hannibal” but anyone who checked my user page would see that Hannibal was Patrick Byrne, and in addition, it was widely known (that is, everyone who communicated with me on the auction message board knew they were communicating with the CEO).
In time, however, I created an area on our auction message board called “Take 5 With Patrick”. I noticed that I could post there and others would repost them in the other places, so I gradually narrowed my posting to our own site. Also, most of my posts there generally started as small columns added to our marketing emails that go out to 10 million people, with my name on them (again, I was doing anything but trying to be anonymous).
In recent weeks, we have created a small blog area as well within Omuse, a nascent social networking area of our site, but so far all I have done is move my posts over from the other places.

See upper right hand corner (that’s my picture): http://forums.auctions.overstock.com/

Other than that, I have twice, I think, posted on some shopping blogs, using my real name to answer some question about our site, or customer service (I offered free Club O memberships to anyone who wrote me within a few days: I got 1,000 requests). On both of these shopping/customer service blogs I used my real name.

I have not posted anywhere else under any other name.

I continued with a number of posts representing a fair sample of my posts. Some were signed, “Patrick Byrne, CEO, Overstock.com”, some were signed just, “Patrick”.

One would have thought that this answer was comprehensive and well-documented enough to be incapable of misrepresentation. But, once again, the New York Times reminds us once again of their agenda. Note this from today’s story:

Quote:

Mr. Mackey and Mr. Black are only the latest examples of high-profile figures who tried to exploit the anonymity of the Internet to promote their companies and combat enemies under false pretenses.Patrick M. Byrne, founder and chief executive of the beleaguered online retailer Overstock.com, has for years been accused of anonymously resorting to the Internet to do battle with his company’s critics. In an interview, Mr. Byrne said that he never hides his true identity and always signs his name when he posts under his online handle, “Hannibal” (the Carthaginian conqueror, not the celluloid serial killer).

Mr. Byrne said he uses online forums to convey what he has learned about the hidden agendas of his critics. “Nothing about being a public figure compels one to surrender one’s First Amendment rights,” he said.

While the New York Times asserts that I am “a high-profile figure[] who tried to exploit the anonymity of the Internet to promote their companies and combat enemies under false pretenses,” they have not done anything so tacky as adduce evidence to support this claim.

They adduce no evidence that I have “tried to exploit the anonymity of the Internet” (which is right and appropriate, because it is a lie).

Their attempt to characterize my efforts to bring public attention to a financial crime that may someday cause our nation’s capital markets to implode as an example of “promote their companies and combat enemies under false pretenses.” Again, they have done nothign so tacky as adducing evidence to support such these claims, no evidence that I have tried to “promote” Overstock, and no evidence of false pretenses. In fact, I would say that these are the most content-less allegations I have seen in awhile, going beyond what the normal hedge fund choagies do on their blogs (they at least have the grace to try to spin and lie about what I say, rather than simply fabricating allegations and hoping their brand carries the day, as the New York Times appears to be doing).

Of course, they have a special problem to deal with: my claim, that our country is facing a financial scandal of epic proportions, is a claim that is being confirmed in reports and statements by Bloomberg, Forbes, SEC Chairman Cox, Commissioner Atkins, and numerous economists and analysts. How do they handle that one? They resort to a play right out of Choagie Playbook – 1st edition, which insists that no coverage be given to this scandal I am trying to expose, and instead characterize it only as an effort of mine to “combat enemies.”

How long do they think they can keep the wig from slipping by just piling up misstatement upon lie upon fabrication?

Here is the funny part: I don’t think Mr. Stone (whom I dealt with in his previous incarnation as a Newsweek reporter) is a bad reporter. But The New York Times has published a bad story. Myself, I see a strong editorial hand in this story. In fact, what is really going on is that the newspaper industry, which once had a monopoly on setting the Party Line, is now a buggy whip business. The average age of a newspaper reader is in his 50′s, and essentially no one under 30 subscribes to newspapers. New forms of journalism are fresher, more accurate, and waste less of the reader’s time kowtowing to the Establishment and its various corruptions, than does the mass media. Like all monopolies before it, it will fight to hold onto its monopoly. The naked shorting issue has developed under their noses with their full awareness, and in deference to the masters they serve they have kept quiet about it. With the facts finally and clearly lining up against them they have no resort but simply to stack their credibility chips as high as they can in an effort to steal the pot. This effort of The New York Times is noteworthy in that regard for its shamelessness, if not its originality.

Incidentally, I love that they are doing this. I love putting my credibility on the line against The New York Times (and Wall Street Journal for that matter). Time and the facts are on my side.

Your humble servant,
Patrick

PS Note that Mr. Stone summarized the above lengthy exposition with these words, “Byrne said that he never hides his true identity and always signs his name when he posts under his online handle, ‘Hannibal’”. As you can see from the email above, this is a flat misstatement. It has not, however, kept one of the hedge fund choagies from writing today, counting up the times I did not sign things “Hannibal,” but instead, “Patrick,” “Patrick Byrne,” and so on. The beat goes on: lie about what is said, and then disappear down a rat hole of “analysis” of those stretched and fabricated statements. it’s just another of the things I love about this story: it is a compendium of the flailing that occurs when the wig begins to slip on a degenerate Establishment.

A Small Thing Called, “The First Amendment”

Patrick Byrne — Thu, 12 Jul 2007 21:30:13 +0000

Posted: Thu Jul 12, 2007 2:30 pm Post subject: A thing called, “the 1st Amendment”

Hi.If the WSJ is to be believed, it appears that the CEO of Whole Foods, Inc. has been going on message boards anonymously for years bashing a competitor’s stock and pumping his own. A number of journalists have contacted me today to discuss the subject of a CEO going on message boards. All have been professional, two even noted quickly at the outset the vast gulf that separates what Mackey did and what I have done, and I heard nothing in their questions that suggested an inappropriate agenda. That said, as is my wont, I am going to post here the answers I am giving, so there can be no mistake about it later, and also, for ease of reference for other journalists who have the same questions.1) What is the limit of what is appropriate when it comes to executives going online?Some obvious points first: I think the Achilles heel of the Internet is anonymity. People behave in an uncivilized fashion when they are anonymous, but when they are stripped of anonymity, those same people begin behaving politely. So in general, I tend to discount the thoughts of anyone who insists upon anonymity (unless there is a real security concern). This applies to everyone, whether they be executives or not.Second, no executive (or for that matter, any employee) should ever go online to talk up her own company’s stock or try to bash a competitor’s stock price. It is almost a tautological truth to note that an executive of a public company is in some sense a public figure (more accurately, the company is a public figure and the executive is a component of that). Anonymous posting by public figures is especially distasteful to me: put differently, I think that when a person decides to become a public figure he is relinquishing his ability to take part in public discourse without identifying himself, simply as a matter of etiquette, not law. The only exception I would suggest to this principle is if it concerned a subject well divorced from that area in which he is a public figure (e.g., if Henry Kissinger were into model airplanes, then I think there would be nothing wrong with him being on message boards about model airplanes without identifying himself). All that said, there is nothing about being a public figure compels one to surrender one’s 1st amendment rights. 2) What do I think of Mackey? From what has been reported, he sounds pretty crummy: he bashed a competitor, their stock and management, and touted his own, all anonymously. That violates every principle I articulated below. Incidentally, it may be neither here nor there for your story, but in case you are interested, there is a Yahoo poster who uses the names “netmargin15” and “can_i_use_this_alias” who both pumps Amazon and bashes Overstock. The first is the smart sock-puppet, the second is the basher. I know: • He or she is an Amazon employee. • He or she is of a rank high enough to have access to Amazon’s VPN service. • He or she displays a very high level of business knowledge, commensurate in my experience with a senior executive. As a journalist, I cannot reveal my source for this information. But you can also ping this person through Yahoo. 3) When it comes to my online activities: a. What have I done? b. Where? c. What names? d. Why? In the very early days of the company (1999-2000?, well before we went public) I used to go to a website called F___ckedcompany.com, seeking information on businesses that might be looking to liquidate their inventory. Eventually I posted a couple-few times under the name “Hannibal” suggesting that if anyone had inventory to liquidate to please contact me. Incidentally, I chose “Hannibal” as an allusion to the Carthaginian general (one of history’s great underdogs, in my view), and not to the cannibal of modern fiction. However, given that our business model at the time was liquidating the inventories of failing dot-coms, the irony was not lost. I believe I did reveal my real name, but I am not sure. I have not been back in 5 or 6 years. I have read some bashers claim that my posts are hard to find there, and that I must have caused them to be removed. I have no idea if my posts are hard to find (as I said, I think there were just a few), but I have had nothing to do with it either way: the assertion is pure fabrication. A couple years ago I started posting on Fool.com. I continued using “Hannibal” (and added “100” because of some requirement of Fool) but revealed who I was right away, signed my postings, and generally made sure that it was common knowledge to everyone on the board that Hannibal100 = Patrick Byrne. I was there for other reasons than to discuss our stock. Of course, I disclaimed any attempt to encourage anyone to buy our stock, any opinion on our stock, etc. In time, the discourse on Fool was hijacked by the same people who hijacked Yahoo, using the same methods (clogging, non sequitors, sock-puppeting, etc.) A site called “InvestorVillage” started up. Some people there asked openly if I would switch. So I did. Somewhere in there Overstock created an auction site, and in it, an auction message board. My original name on auctions was “Hannibal” but anyone who checked my user page would see that Hannibal was Patrick Byrne, and in addition, it was widely known (that is, everyone who communicated with me on the auction message board knew they were communicating with the CEO). In time, however, I created an area on our auction message board called “Take 5 With Patrick”. I noticed that I could post there and others would repost them in the other places, so I gradually narrowed my posting to our own site. Also, most of my posts there generally started as small columns added to our marketing emails that go out to 10 million people, with my name on them (again, I was doing anything but trying to be anonymous). In recent weeks, we have created a small blog area as well within Omuse, a nascent social networking area of our site, but so far all I have done is move my posts over from the other places. Other than that, I have twice, I think, posted on some shopping blogs, using my real name to answer some question about our site, or customer service (I offered free Club O memberships to anyone who wrote me within a few days: I got 1,000 requests). On both of these shopping/customer service blogs I used my real name. I have not posted anywhere else under any other name. Here are some examples: http://boards.fool.com/Message.asp?mid=23887352&sort=whole&vstest=search_042607_linkdefault Author: Hannibal100 Number: of 13190 Subject: Watch 60 Minutes Tonight Please! Date: 3/26/06 1:16 PM Post New \| Post Reply \| Reply Later \| Create Poll Report this Post \| Recommend it! Recommendations: 23 Dear Fools, For all who have not gotten the word, please watch 60 Minutes tonight. I believe that it does not even mention “Overstock.com.” However, the facts it presents and the story it tells are well known to me, as are the witnesses who will appear on camera. I expect the piece will tell precisely the story of which I became aware in the autumn of 2004. If my behavior has seemed a little strange since then, perhaps it will appear a bit more explicable if you watch this and reflect on the wider market ramifications of the behavior described. Ask yourself as you watch it, “These guys are making money from someone: whose money is being siphoned off? Yours, Patrick PS Remember the story you see tonight is itself just a chunk of the issue of the looting of the savings of Americans. But how do you get someone to eat an elephant? One bite at a time. http://www.investorvillage.com/smbd.asp?mb=3532&mn=155&pt=msg&mid=146514 Msg: 155 of 8668 7/22/2006 2:47:31 PM Recs: 26 Sentiment: Not Disclosed By: Hannibal Send PM Profile Ignore Recommend Add To Favorites Posted as a reply to msg 77 by ostkprtnr Re: Any chance Patrick will start posting here? Hi. This is Patrick. Probably not a great idea for me to post often. I want to respond substantively to folks’ points (both good and bad), but the more substantive it is, the more there is a Reg FD issue. That is a shame, because I sure would like to level the playing field for you guys. I try to keep it as level as possible by being scrupulous about FD. As much as I wish I could answer some of the questions you post here, I am pretty sure that this would not count as fair and public disclosure. Still, I will be watching: folks always email me the best posts, so I’ll be reading those. And maybe I will answer the occasional question that presents no Reg FD issue. I may have to do that on my auctions board. Or else, I might occasionally post a link to something public that answers a question someone raises. Good luck. Your humble servant, Patrick PS It is nice to see that a certain Guy With much time on his hands and who could not Get With the program over here at investorvillage has now Gone Wholly mad. Hours go by without anyone posting on Yahoo. He tries a couple of his old tricks, but there is no one to clog, all sane people having fled to investorvillage. After silence, silence, silence, he suddenly goes back and posts half-a-dozen clogs, and then when there is still no response, he writes: Much better since the scam artists left (Not rated) 7 minutes ago Too many people were getting suckered by low life, scum sucking, penny stock pumping grifters and it’s good to see that Yahoo has forced them all to leave. They were unable to continue to clog the boards and stifle discussion under the new message board formats and as a result engaged in a hasty retreat to Guyana. Rate it: 1 star + unrated 5 stars &&& http://www.investorvillage.com/smbd.asp?mb=3532&mn=171&pt=msg&mid=148713 By: Hannibal Send PM Profile Ignore Recommend Add To Favorites Posted as a reply to msg 164 by Biopharmer Re: Any chance Patrick will start posting here? Actually, I have always used as my nom de guerre “Hannibal” after Hannibal of Carthage. The Romans were 10 and 0 until they went and screwed with the wrong guy, who through a series of brilliant tactical and strategic moves took them 2 falls for 3. He didn’t just think outside the box, he didn’t care where the box was (end-running the Romans by crossing the Alps on elephants? I bet that was not one the Romans had anticipated.) Yes, he lost in the end to Scipio Africanus, fled to Syria and when the Romans caught up with him 10 years later, drank poison. But he fought the good fight. I am also aware of the George Peppard and Anthony Hopkins versions. Nothing wrong with those. One has to set one’s sights high. Patrick < EOM > Joined: 24 Sep 2004 Posts: 62 Posted: Mon Jun 26, 2006 9:34 am Post subject: My Favorite Zen Story ________________________________________ Dear Honored Guest, In a remote village in Japan there lived a Zen master named Hakuin. He was known for his devotion to the pure and simple life of a monk. One day, a beautiful, unmarried girl in the village fish market was found to be with child. As it was a conservative village, the family was furious. The girl refused to say who the father was, but after much pressure, she finally admitted that the father was the master Hakuin. In great anger the family confronted the master, criticizing him for taking advantage of the trust he had been shown. They asked him, “How could you have betrayed our trust so badly?” Hakuin’s only response was to say calmly, “Is that so?” Hakuin’s reputation was destroyed, but he did not appear to mind. When the baby was born it was brought to Hakuin. He took great care of the child, though he now had to beg to survive. The villagers would scorn him, saying, “We will never forget that you betrayed our trust, you miserable monk.” Each time, Hakuin would reply calmly, “Is that so?” Several years later, the young mother finally confessed the truth: the baby’s father was not Hakuin, but another young man from the village who had not been willing to accept his obligation, so she had accused the monk knowing that he would do the right thing. The villagers went to Hakuin to request the return of the child, saying, “We are so sorry, how could we ever have believed this of you?” Relinquishing back to the family the child who had become his own, Hakuin said gently, “Is that so?” Respectfully submitted, Patrick M. Byrne Overstock.com http://forums.auctions.overstock.com/viewtopic.php?t=13594&sid=470ff7669d1b065c059828614c4c689e Dear Honored Guest, Worldstock is special in a way that can best be explained with a few stories. Worldstock launched in September, 2001. In Peru, we found a small co-op of artisans making leather-and-wood furniture, and asked them to make ten Ottomans for us: we sold out in a day. Then they half-filled a container: again, we quickly sold out. When we wrote about placing larger orders, we received this reply: “The artisans literally wept tears of joy and danced in the streets yesterday when queried about their ability to produce these orders. They promised to do what was necessary — work night and day — to make all that was ordered as soon as possible, and more if things continued to sell for you. While many had expressed their sadness at the events of September 11, and to say they were united in solidarity with the USA against terrorism (which many of them have faced years before us), no one had mentioned work. Silently, they had feared that the repercussions of the terrorist attack would harm our economy, and that since they were producing ‘gift’ items, no one would be thinking of buying them. How would they feed their children? they worried. How would they pay tuition for their schools? How would they pay the rent? Could they pay their workers? Or should they fire them now? Should they wait to visit the doctor or buy medicine, not knowing if they’d have any income to pay for it next week? I just wanted you to know that your success with our products means food, schooling, medicine and hope for dozens of families in Peru. On behalf of a lot of happy artisans, thank you.” Now we get one container every two months from them, and their small co-op has mushroomed into a federation of hundreds of wood-and leather-workers earning good livings. Similarly, in Nepal Worldstock has been able employ metal working artisans who would otherwise be out of work have lost business due to a Maoist insurgency. In a village near Chiang Mai, Thailand, a small family business employs artisans to make us handmade furniture. In total, thousands of artisans in 35 countries are working to offer you their quality handicrafts in our Worldstock department. We abide by principles of fair trade. A detailed explanation of the history and principles of Worldstock can be found here, but the short version is, we are trying to double or triple the income of less fortunate people around the world, while offering you exotic products at a fraction of the price at which you would find them in expensive boutiques. Respectfully submitted, Patrick M. Byrne Overstock.com In one post I even reposted all my posts from the past: http://forums.auctions.overstock.com/viewtopic.php?t=15460&sid=470ff7669d1b065c059828614c4c689e 3. Why do I post? I assume these are of less interest to you, but there are simple cases where I am just giving my take on things, or discussing a new program at Overstock (auctions, Worldstock, etc.), or in one case, mourning the passing of a friend, Milton Friedman: http://forums.auctions.overstock.com/viewtopic.php?t=15908&sid=470ff7669d1b065c059828614c4c689e However, for the more controversial posts, I give two explanations: 1) I am a big admirer of Reg FD. From my time on Wall Street (years ago as an analyst, now as a CEO), I can tell you that the gestalt of Wall Street is that corporate executives get behind closed doors and are expected to cough up information that gives Wall Street elites an information asymmetry versus the ordinary investor. I think that is wrong, and think FD is one of the best regs to come along in decades. Because of this, I think that executives going into a public forum that really is open to the public, and communicating with the public directly, could be healthy for the capital markets. That said, while I go on message boards to discuss what I see as a financial scandal of enourmous consequences for our cotunry, I have made it a point not to discuss anything material about Overstock (and in general, I stay away from discussing Overstock qua Overstock, though I may discuss the scandal in ways that touch upon Overstock). 2) The second reason for why I do it is this: I have for two years thought that we are approaching a calamity in our capital markets caused by unsettled trades: these have accumulated to the point that they represent a massive latent derivative risk to which no one wants to admit. I think that if it is not addressed it will become a national disaster (the Economist noted late last year that new capital formation, the best measure of the health of an economy, has dropped in this country from 57% of global IPO capital formation to 16% over 7 years, as I recall). I have tried to stop this before it is too late. The Establishment has elements which have reaped billions by exploiting this crack, and they do not want to see it sealed. Those same deep financial interests have captured the regulatory body that oversees our capital markets (the SEC), and much of our financial press as well: CNBC, Barron’s, and the Wall Street Journal. Barron’s is nothing but marketing literature for a few hedge funds. They meet any attempt to expose this scandal by saying, “Oh, that is just some CEO who is mad about his stock” (though I started this nwhile the stock was going up, and have done everything I can to divorce it from me, Overstock our share price, etc.) Thus, I turned to the Web. If Rathergate (i.e., Dan Rather versus the bloggers) was the Concord of the 2.0 Revolution, then I believe this scandal is going to be its Yorktown, for the financial press will be shown to have not simply ignored a scandal, not simply turned a bling eye to it, but to have actively taken part in the cover-up. This post from a couple months ago says it all. Respectfully, Patrick http://forums.auctions.overstock.com/viewtopic.php?t=17296&sid=470ff7669d1b065c059828614c4c689e Posted: Sat May 12, 2007 1:03 am Post subject: Gotterdammerung of the American mainstream media ________________________________________ Ha ha – this is a great one. An all-time classic from Joe Nocera, New York Times. Below you will find an email Joe Nocera sent me asking for my “reaction” to some odd claims he wanted to include in his weekly column. Alas, he sent the email Friday afternoon at 12:11 PM his time (note the “10:11 AM” time stamp of our email system, which is in Salt Lake City, that is to say, Rocky Mountain Time) and, as I was in Texas this afternoon in a meeting, I missed the window of a few hours that I theoretically had been offered to respond before Joe’s deadline for his weekly column. Congratulations are due Joe, who has crossed a line never previously crossed (not even by Carol!) by those engaged in their desperate efforts to keep the wig in place. ======================================================= —–Original Message—– From: Joe Nocera [mailto:XXXXX] Sent: Friday, May 11, 2007 10:11 AM To: Patrick Byrne Subject: david rocker patrick– David Rocker made a speech a couple of weeks ago in which he said, among other things, that your lawsuit was nothing mroe (sic) than an effort to silence critics. He also said that Gradient did its first report about Overstock a year before Rocker Partners even became a client. And he said that Mr. Anafantis (sp?) has been discredited with the SEC’s “no action” letter. Your reaction? – Joe Nocera XXXX YYYY nocera@nytimes.com ================================================== Had Joe actually abided by the principles of Ethics in Journalism 101, I would pointed out the numerous flaws in his attempt to whitewash the criminal activity of his friend Rocker with a “Free speech in America is very important” spin. Remember, from the start Rocker’s lawyers have tried to spin his illegal activity as being about free speech, and this is how the argument has been met by the adults who have examined it: 1) On 8 counts versus 0, the trial judge in Marin Country sided with us and against Rocker’s claim that this suit was about free speech. In fact, the judge said in the courtroom that after his initial review of the evidence there was a “high likelihood” that we would win the suit. Rocker appealed. 2) The California Attorney General appeared out of nowhere and filed an amicus with the appellate court supporting our side and against Rocker’s attempt to spin this as about free speech. 3) The appellate court recently heard Rocker’s arguments. This Law.com article gives a good sense of how the appellate court responded to the hysterical attempts by Rocker’s lawyers to spin his illegal conduct as being about free speech. www.law.com/jsp/article.jsp?id=1176282246984 The Law.com article captures one judge’s reaction nicely: “Justice Ignazio Ruvolo indicated there was evidence even ‘at this stage of the proceedings’ that could substantiate Overstock.com’s claims.” Somehow Joe missed that. I’d also have pointed out that Rocker does not seem to think “Free speech in America is very important” when someone criticizes Rocker: Rocker famously sued some message board posters a few years back for daring to criticize him and his unethical behavior (incidentally, that case got laughed out of town). Free speech doesn’t seem to be that important to Rocker, Joe. In the face of these facts, Joe blithely asserts that “The facts are not on Mr. Byrne’s side” without mentioning that the trial court, the California attorney general, and the appellate judge have indicated exactly the opposite, even at this extremely early stage. Joe notes without question that, “Mr. Rocker wasn’t even a client of Gradient when it began writing its tough-minded reports on Overstock,” neglecting to mention that ex-employees of Gradient assert that the firm had a relationship with Rocker even before he formally became a client. Joe writes about his friend Rocker “But you know how lawsuits are: a year and a half later, the thing has barely gotten started” without mentioning that we have been most eager to move forward, but that his friend Rocker has stalled and delayed at every opportunity, rejecting the appellate court’s offer to rule without delay for a hearing: there was even one article where an attorney for the miscreants promised to appeal the appellate court ruling. That is, Joe bemoans the fact that “the thing has barely gotten started” while conveniently neglecting to mention that it is his friend Rocker who is doing everything he can to keep it from getting started. And so on and so forth. Is anyone else noticing that something seems to be going on this week? First, after a year of criticizing me for my decision to issue a press release celebrating my receipt of a subpoena from the SEC, the shills are now trying to make a case that I should have sent out a second press release when I received another addressed to me as a person, though it was a small fraction as long as the first, covered sub-issues of the first, as well as issues related to a broader investigation that is not about me or Overstock at all. As though there is a world of difference between a subpoena addressed to our corporate lawyer asking for our CEO’s materials, and one addressed to me at our corporate address: I hate to disappoint, but that distinction is such a fine one it did not occur to me it was worthy of a second press release. The funny part is how it still has not dawnede on the miscreants that a fair bit of the material being requested by the SEC concerns them, not me or Overstock. What would have made them so angry this week? Perhaps they are mad that last Sunday, at an event hosted by The Economist (a publication with infinitely more credibility than Joe, Roddy, Herb, Gary etc. could ever aspire to), the bad guys lost control of the narrative? http://www.cultureproject.org/index.php?option=com_content&task=view&id=49 http://cultureproject.org/video2/archivepages/hedge2.html I think these fellows better hope that the scandal whose lid they are trying so desperately to secure never blows off, because if it does, in the aftermath not only with their journalism come under examination, but more importantly, the publications which have blithely published it will be seen to have been part of the cover-up. Which is entirely right and approrpiate. And then that will be the end of it. Can anyone doubt at this point that we are witnessing the Gotterdammerung of the American mainstream media? Patrick

Posted: Fri Jul 13, 2007 8:05 pm Post subject: Auction marketing

Some people are wriiting onto these boards to discuss auction marketing.It would be better if you wrote Meghan about that directly, but since you asked: we have not found it wise to market auctions separately from the general website. What we are having some luck with is the Omuse tab. Partners of our B2C tab are going into Omuse and writing guides to their products, then linking to them from their guides.I hope that helps.Best all.Patrick