To bring new readers up to speed: DeepCapture long ago exposed hedge fund towel boy Roddy Boyd through such literary gems as Mark Mitchell’s “Michael Milken, 60,000 Deaths, and the Story of Dendreon” (N.B. Chapter XII), and my own essay, “Roddy Boyd Sucks It Like He’s Paying the Rent (Fortune Magazine)“, an exegesis of the collapse of Rocker Partners and review of the journalistic fellatio Roddy performed thereon (this latter piece should be read in conjunction with “Carol Remond Tells a Joke She Doesn’t Get“). I encouraged Fortune spokeswoman Katy Reitz to follow the emerging story on Roddy: whether for that reason or others of their own, Fortune and Roddy parted ways soon thereafter, Roddy to slither into his own unique and arrest-warrant-laden world (that’s him, just above the child porn guy).
As my feelings may not be obvious, even-handedness and transparency dictate that I disclose that compared to Roddy I’ve observed more intellect in a ice addict sitting on the floor of a 7-11 trying to remember how to use Comet and Pam Spray to cook meth, and more dignity in a crackhead living off $2 hand-jobs at the bus station.
Followers of the Overstock story (itself a sub-plot of the DeepCapture epic) know that at the end of 2008 Gradient Analytics’ Donn Vickrey and Bettis Brothers Carr and Leland apologized for and retracted years’ worth of lies, accusations, and smears about Overstock. Given that they had made their allegations a cornerstone of their business development, their decision to apologize and recant may, I suspect, have undermined their ability to represent themselves as anything but lapdogs willing to charge for shill “research” one day those same fund managers they’ll sell out the next. Then in late 2009, Rocker Partners dropped their counter-suit against Overstock and made their own apology in the form of a $5 million check.
In a process known as “discovery”, in the course of this lawsuit both sides turned over millions of pages of documents to the other. Since the turning over of documents and depositions thereon, Gradient Analytics publicly retracted their accusations and apologized, and Rocker Partners dropped their counter-suit and coughed up $5 million: the litigation-conversant reader may make her own inference as to how the weight of evidence tipped the scales of justice in this particular case.
Of more immediate interest, however, is the fact that, though those millions of pages of documents are covered by protective orders of the court, and hence their disclosure by Gradient, Rocker Partners, or their esteemed counsels (e.g., Fred Norton, Esq.) would be illegal, Roddy Boyd today emerged in possession of this material, which he proceeded to use in clumsy attempt to reprise his role as minor Wall Street lick-spittle.
Now having spent my share of hours in the company of all of these luminaries of ethics and right action, which one violated the court’s protective orders is difficult for me to say. I’ve had mops with more character than the lads at Gradient Analytics. David Rocker is bitter and insane (I wonder how he played it at his country club: “I swear I’m innocent, folks, but just in case, I hired David Boies’ criminal defense partner“). Of course, in four years of litigation the ever-charming Fred Norton managed (as far as I could tell) precisely one moment of humanity, and even there, his motives were not entirely clear. So I’ll call it a photo-finish. (Though if I were a gambling man, I might have to put my money on the long-shot bet: the guys at Gradient, who give off that unique scent of low-rent hustlers just bright enough to have figured out they are playing out of their league but not bright enough to back away from the table).
Setting aside the issue of which of these pillars of our community gave the finger to a sitting California judge (and a retired federal judge who acted as Discovery Master in our litigation), an interesting question remains: will Roddy Boyd, having lost all appearance of reputation, honor, and employment, be game for another try?
And once again, Roddy doesn’t let us down.
Alas, beyond his brief stint at now-defunct criminal bacchanal that was Refco, Roddy has no actual work experience by which to make sense of the material thus provided him. So I think it best to let his email tell the story, with my brief answers inserted in bold italics.
From: Roddy Boyd [mailto:firstname.lastname@example.org]
Sent: Wednesday, January 13, 2010 7:04 AM
To: Patrick Byrne
Roddy Boyd here. I am writing a story for Slate’s thebigmoney.com. I have set up this email account for this query and will no longer use it after 4:30 pm EST tonight. I will phrase the questions as bluntly as possible because I am not seeking to engage in an E-mail exchange. Should you need to reach out to the story’s editor, Please approach Jim Ledbetter. I believe his email address is James.Ledbetter@thebigmoney.com. Please have your response in by 4:30 pm EST.
Your response will be linked to in its entirety, as well as referenced within the body of the story–I imagine it would look something like, “Patrick Byrne said, ‘xyz…..'” (To see Byrne’s full response, click here.)
Answer: Thanks for the tip, Roddy, but I just decided to answer here on DeepCapture. We appreciate the link, though, and will return it once you publish. Remember, we journalists have to stick together.
The story deals with Overstock’s state of affairs in the fall of 2005 and winter of 2006. Specifically, It (sic) references the problems you had with factors such as CIT because of Overstock’s losses and its percieved (sic) weak operating position. The governing theme of the piece is that financial investigative reporting on fully operational companies is imprecise (unlike say doing a post-mortem on Lehman or Enron.) In other words, the concerns of OSTK critics about liquidity and the build-your-own-jewelry initiative appear correct, but that they (likely) could never have guessed precisely why.
“[A]ppear correct”, do they? Well we’re still here and doing quite well, thank you, while your patron David Rocker plays shuffleboard in Florida, muttering my name under his breath like a wino’s lament as he realizes that for years to come his own name will give off a foul stench among the smart money set he unsuccessfully aped.
An Email (sic) I quote, from 11/14/05, from David Chidester to you, Jonathan Johnson and Jason Lindsey says, “Unfortunately what we feared has begun. Some factors and banks have stopped insuring our payables.”
This clearly had been a problem of some duration for OSTK, since on 9/22/05, five weeks after your suit was filed, you stated in an email to your colleagues, “I just sat with CIT. They confirmed that at one time we were reasonably good (not great), and have turned to shit in the last six months.” You added: “For years, I have been hearing from accounting that we pay our vendors super-promptly.”
Answer: The fact that we were considering the views held by some does not make them material any more than, for example, my saying that “Roddy Boyd is a half-bright hedge fund shill” would have been a material event for New York Post, or Fortune, or whomever was then displaying the unfortunate judgment of employing you. Some folks at CIT said one thing, some factors said another, our accounts said something else, our Paydex score (you may have to look that one up) held up throughout (and is now an 80, pretty much at the top of the vendor-payment pyramid in our industry), and CIT turned out to be the one that went under. Ohhh, the irony, the irony.
The story also references emails between Rich Paongo and Chidester on January 20, 2006 which looked at the problems three of Overstock’s factors and lenders had with the company: “Not meeting projections, no profits, low cash, and slow payments .” On February 28, 2006, Joanne Dalebout, E-mailed you and your colleagues, “All [vendors] are saying that with Overstock in the papers a lot and the lawsuit they don’t think we will be in business and that we are too much of a risk? Also having problems with CIT not approving small orders.”
Answer: It appears your understanding of “material” includes how some people react to how other people react to exaggerated hedge fund-planted media pieces written by…. You. These were not prevalent internal views or conclusions nor, most importantly, my views: I thought they were wrong, I proved to be right, and CIT went the way of the wild buffalo and your job at Fortune.
Why did OSTK not reference the troubles it was having with its key credit providers in any of its public communications?
Answer: So your understanding of “material” would include the report of a buyer about the rumors spread by a factor to the companies that this factor charged to justify the price of its services? Did I miss anything?
As you will recall, one of the concerns that OSTK critics had was the company’s cash-flow and operational soundness. For a retailer, this would clearly appear to meet the threshold of materiality. Do you disagree?
Answer: I do.
And would you elaborate on this decision?
Answer: Same answer.
The story will also mention “Operation heist and freeze” with your “Lubbavitcher friends” from Ice.com.
Answer: Right on.
–Why did you not disclose, per Jonathan Johnson’s report to the OSTK board on 7/13/05, that the diamond VIE was structured as it was to avoid “Nexus in the State of New York for sales tax purposes.”
Answer: Same answer plus the issue was not material plus tax is discussed in the due course of the conduct of any business plus have you ever considered trying the fact-fact-logical-inference thing instead of the stuck-on-stupid-reporter thing?
–Please elaborate on Overstock’s decision to avoid paying sales tax and to not disclose the identities of Moshe Krasnanski and Meyer Gniwisch.
Answer: I think you mean “collect sales taxes” and the law of this country requires us to collect sales tax in some cases and not in others and remind us again, What’s it like to go through life with a room temperature IQ? Can you hide your own Easter Eggs?
Don’t mention it, Roddy. Remember, I’m always here to help.
Patrick Byrne, Journalist
PS I see Roddy just sent a follow-on:
From: Roddy Boyd [mailto:email@example.com]
Sent: Thursday, January 14, 2010 12:53 PM
To: Patrick Byrne
Subject: one follow up question
Forgive the additional query, but it is germane.
The big diamond block, the trade you staked with Moshe and Meyer for about $7.5mm, appears to have originated from one Lev Leviev, a rather interesting man.
Leviev, outside of his NYC and West-Bank real estate operations, is also one of the more active miner and marketers of Angolan diamonds, an area whose extraction methods and principles are quite controversial.
Were those diamonds sourced from Angola? If so, could you elaborate on any debate you had with respect to doing this sort of business?
Answer: Fred Norton went down the same line of questioning, and I’ll give you the same answer I gave him. No they were not sourced from Angola nor were they blood diamonds, and yes I conducted an investigation to that effect before doing the deal: said investigation consisted of asking my four Lubavitch rabbi friends plus the family patriarch (himself, a Ha-Shoa survivor who spends half his day in Talmudic studies) and having them tell me what I already knew, which is, that they would never engage in or draw me into any business which was not super-clean.
And thanks for playing, Roddy.