Paragon of Integrity Whitney Tilson Gets Laryngitis, Too

In the summer of 2006  Whitney Tilson took me to lunch, and invited me to speak at his then-upcoming 2nd Annual Value Investing Congress on November 9 – 10, 2006. Here is Whitney’s original announcement:

World’s Most Influential Value Investors to Gather This November in New York City

The 2nd Annual New York Value Investing Congress will feature a compelling speaking program of value investors who have proven over time that their methods and strategies succeed. Some of today’s most prominent value investors will detail the thinking behind their investing methodology, discuss recent successes and offer their latest stock recommendations.

Speakers at the 2nd Annual New York Value Investing Congress will include:

Joel Greenblatt, Gotham Capital

Marty Whitman and Curtis Jensen, Third Avenue Funds

Larry Robbins, Glenview Capital

James S. Chanos, Kynikos Associates

William Ackman, Pershing Square Capital

David Einhorn, Greenlight Capital

Christopher H. Browne, Tweedy, Browne Company

Lisa O’Dell Rapuano, Lane Five Capital

Bruce Berkowitz, Fairholme Capital

Kian Ghazi, Hawkshaw Capital

Patrick Byrne ,

Whitney Tilson, T2 Partners and Value Investor Insight

Glenn Tongue, T2 Partners

Some weeks before the conference, Whitney contacted me to let me know that Jim Chanos and David Einhorn were insisting to him that I not be allowed to appear. Naturally, Whitney caved to Chanos and Einhorn, and disinvited me.

There were no hard feelings, on my part, anyway. No blood, no foul. Simply by way of comparison, however, I will tell a related story. In 2007  Brett Goetschius contacted me with an invitation to speak at his upcoming PIPEs conference. I told him of what had happened with Whitney Tilson. Brett said, “Don’t worry, in the last year the hedge fund community has changed their attitude. At least 50-60% of them now understand you are right. Especially the small and mid-sized ones. In any case, I’m extending this invitation, and I won’t back out.” Brett proved true to his word, and I presented to about 800 hedge fund managers a presentation I called, “DeepCapture“, to a warm reception. I launched this site a week or so later.

Given this history, however, about which some men might have felt shame, it was odd to see Whitney Tilson slag me  in a column he wrote in 2008 (as you will see below).

By 2009 Deep Capture was tracking and writing about the activities of Sam Antar and Barry Minkow.  Both were hard-core convicted felons. At the age of 23, Barry had been sentenced to 25 years in prison, and served seven.  Yet we became aware that Barry Minkow was actually working for Whitney Tilson. I was more than a little surprised to see that, as there are normally sharper difference between the riffraff and the simply spineless. While Barry claimed to be doing “research” for Whitney, but we knew that Barry did not actually do anything resembling what a legitimate hedge fund would consider research. As Florida State Judge Gill Freeman later wrote:

“Fact No. 29: Minkow withheld documents he perceived to be harmful to his case. Among other things, the concealed documents demonstrate:

• that Minkow’s investigators questioned the accuracy of statements of fact he included in his report on Lennar;

• the perfunctory nature of Minkow research and investigation before he accused Lennar and its executives of operating like a ponzi scheme, giving its COO a disguised kickback, being a financial crime in progress, and other statements;”

Deep Capture had learned that Whitney Tilson had paid Barry Minkow $40,000 to do something. But if Barry did not do research, what was Whitney paying him to do?

In March, 2011 Barry Minkow was arrested, and last week plea bargained his way down to another five years of jailhouse stew.

So I thought that was a good time to ask Whitney a few questions.

From: Patrick Byrne
Sent: Sunday, March 20, 2011 4:44 PM
To:[email protected]
Cc:[email protected]
Subject: Request for comment on news story

Dear Whitney,

I hope this finds you well. It has been too long since our lunch together.

This weekend I have finalized a nice little piece on Barry Minkow, with whom it appears you are acquainted. You may note that you are invited to respond, and may wish to take advantage of this invitation, before I give this wide distribution.

Very respectfully,

Patrick Byrne


The Honorable Gill Freeman Throws Book at Barry Minkow, Nicks Paymaster Sam Antar. Plus, A Question for Whitney Tilson, Minkow Paymaster #2

Posted on 17 March 2011 by Patrick Byrne
Tags: Barry Minkow, Gill Freeman, Sam Antar, Whitney Tilson

Barry Minkow spent last week in plea negotiations regarding a federal indictment on which he is hoping to receive only 5 years, says his lawyer. (LA Weekly: Barry Minkow to plead guilty to insider trading).  In December, 2010, a Florida judge threw her proverbial book at Barry Minkow, and it glanced off Sam Antar, who had been paid Barry’s paymaster to the tune of $250,000, Barry had testified. In addition, the judge found as a matter of fact that Sam Antar destroyed documents necessary for her trial. Minkow also gave sown testimony that well-known New York hedge fund manager Whitney Tilson paid him $40,000: more on this below.

Sam Antar, generally not short of opinion, has suddenly developed laryngitis.

Barry Minkow and Sam Antar are two of the most remarkable swindlers in recent American history, each guilty of frauds measured in the hundreds of millions of dollars. Two decades ago their names gave off the same foul stench that Bernie Madoff’s does today.

Whitney Tilson is invited to explain to DeepCapture’s audience why he would join legendarily convicted financial criminal Sam Antar in making payments to also-legendarily convicted financial criminal  Barry Minkow, who now is pleading guilty to his 58th financial felony. (You know how to reach me, Whitney. DeepCapture will give you 250 words, with no editing. But we may provide commentary.   )


From: Patrick Byrne
Sent: Sunday, March 20, 2011 7:32 PM
To:[email protected]
Cc:[email protected]
Subject: RE: Request for comment on news story

Dear Whitney,

While I am at it, I have two other questions:

1.       You wrote a story ( ) in which you said:

L) All this is a bit unsatisfying for those who would want to regulate short sellers. But unfortunately, bad news is part of any financial system.

Davidoff is becoming more and more incoherent as he tries to wrap up this hatchet job of a post. He appears to be saying that because the market sometimes (he asserts) is a sucker for media hype (by, I assume, market manipulating short sellers?), there are people who want to regulate short sellers and prevent them from ever saying anything negative about any company. Other than Patrick Byrne, who are these people?

When you wrote this, did you really believe that I “want to regulate short sellers and prevent them from ever saying anything negative about any company.”

a.       If so, on what basis did you ascribe that belief to me?

b.      If not, why did you ascribe the belief to me?

2.       Do you consider Barry Minkow’s plea bargaining to a 5 federal-year prison term (per his lawyer: see Minkow in Plea Talks With U.S. Prosecutors Over Fraud Case, Lawyer Says) an  inappropriate attempt by the federal government to “regulate short sellers and prevent them from ever saying anything negative about a company”?

I look forward to the courtesy of your response. I trust 72 hours will be sufficient.

If you choose to respond on your own blog, I predict you will be so unconfident of your response that you will find a circumlocution to avoid mention of “DeepCapture” (just wanted to get that on the record now).

Very respectfully,

Patrick Byrne


Oddly, Whitney, once so voluble on these matters, has been incapable of response. Given the integrity and moral fiber he demonstrated in withdrawing his speaking invitation at the insistence of Jim Chanos and David Einhorn, I cannot say I’m shocked that Whitney Tilson would lazily ascribed to me a claim such as that quoted above, then refuse to defend it, and also refuse to clarify his involvement with the two-time criminal Barry Minkow.

  1. Keep the pressure up on this lowlife,, Iam following a Naked short trapped in CIGX, real short 13M down 3Pts naked position by my guess is at least 30M+,,, yesterday at 3.30 with their heads ready to pop off,, the bear raid came like clockwork,, blasting away to knock stock down only 50 cents,., Bashers on that board had claimed 2 days before Minkow was caught, That he said to sell and he knows.. so your right when in trouble reach our to Barry

  2. Quick update on how thugs work this was put on bloomberg last night after their afternoon bear raid
    deficient: Issuer failed to meet NASDAQ Continued Listing Requirements.
    0- Apr/05/2011 2:28 GMT

    Company had to call Nasdaq up,, no such alert from them,, trapped like rats will fight to the death

  3. Patrick

    Maybe Whitney would answer your questions if you sent them from Charles Munger’s e-mail. Har har har.

  4. I greatest wish Patrick is that you be asked to do a weekly column for Wall St. Journal or Forbes.

  5. Today, the world is run by people that counterfeit shares and print fiat currency and fractionally hold gold and silver in trust and betray that trust, then use these proceeds of crime to purchase the media, educational system and to lobby politicians and fix elections as they foster war and the drug trade to create artificial demand to keep the system from collapsing when real people can no longer buy things and keep the demand going.

    It’s a giant so called legal ponzi scheme, where they create fake securities, the government borrows and we are taxed to pay the scumbags their interest on the fake value they didn’t create.

    You have a bunch of dumb crime families that rule humanity from one war to the next as they starve start up companies and stifle creativity in the middle class by keeping them in the rat race because they’d rather keep us down than give up control.

    Can you imagine the prosperity for all, if this central control was replaced by a peer to peer meritocracy where the best ideas bubbled to the top and good companies survived and Wallstreet pump and dump darlings didn’t?

    It’s time we peeled the parasitic billionaire scumbags from our economy, the way you’d peel off a bandaid or extract a tick that was also sucking on your blood.

    Real value is from people that work for a living, resources and energy. This counterfeit paper is fake, fake, fake and I’m sick and tired of bailing out the scumbags with our tax dollars, just because they bought the politicians, when their paper pyramid is about to collapse.

    If you’re one of these billionaire scum bags that makes money by pimping the economic activity of the rest of us, maybe you should stop and go away, before we come after you with torches and pitchforks.

    How much is enough?

    You can only push people so far and the masses are about to push you back and it ain’t going to be pretty.

  6. Boris, these are the kinds of stupid remarks that get blogs shut down or give them a bad name. I hope that is not your intent cause it won’t work (IF it is) We can go after these guys without resorting to violence. Their day will and is coming.

  7. Sean, I have been fighting this fight for 10 years- I have seen Republicans and Democrats rule the hill, and little if any real change takes place. 3 years after the meltdown, virtually all of the people who concocted the CDO, CDS scheme are free, spending every dime they stole. Naked shorting? Sedona’s case which is many years old, can’t even get to trial. Fails are rampant in the system and there is no political will to clean it up – none.

    I totally relate to people’s utter frustration. I wish I could share your thought that their day is coming- but I don’t see it.

  8. So threats with violence is the only answer Clearthinker? I think not. The way Patrick and D.C. and OSTK are doing it will suffice in my opinion.

    1. Sean,

      Let’s see how the OSTK trial goes at the end of the year, and if the FBI makes its move against Cohen. They might the last best hope for a non-violent solution.

      1. (Newser) – Revolution is raging in the Middle East, in societies that all have one thing in common: 1% or less of their population controls the lion’s share of the wealth. “As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America?” asks former World Bank chief economist Joseph Stiglitz in Vanity Fair. Because “it’s no use pretending” America isn’t the same kind of society. Our wealthiest 1% have unlimited political power.

        What’s more, they’ve used that power to the detriment of the other 99%. The middle class has seen its income fall, unemployment is staggeringly high for the young, and we have less upward class mobility than most European countries. In the long run this is bad for the economy. The top 1% may have it all “but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99% live,” Stiglitz writes. “Throughout history, this is something that the top 1% eventually do learn. Too late.”

  9. Just don’t tell me organized crime isn’t involved, or that these are just the acts of unknowing bankster idiots:

    “On 10 April 2006, a DC-9 jet landed in the port city of Ciudad del Carmen, on the Gulf of Mexico, as the sun was setting. Mexican soldiers, waiting to intercept it, found 128 cases packed with 5.7 tons of cocaine, valued at $100m. But something else – more important and far-reaching – was discovered in the paper trail behind the purchase of the plane by the Sinaloa narco-trafficking cartel.

    During a 22-month investigation by agents from the US Drug Enforcement Administration, the Internal Revenue Service and others, it emerged that the cocaine smugglers had bought the plane with money they had laundered through one of the biggest banks in the United States: Wachovia, now part of the giant Wells Fargo.”

    Wonder about the naked shortsellers…

  10. People have been short-selling ETFs up to shocking levels, like 100% short, 500% short, sometimes

    OVER 1,000% SHORT.

    That’s in a world where stocks like Apple are 1% short, or IBM is 1.4% short, or General Electric is 0.5% short. You really don’t see traditional stocks with short positions anything like this, so clearly something is fundamentally different. The difference is that ETF short-sellers – including hedge funds, dealers and arbitragers – are confident


    needed to cover, so they see less risk of being squeezed.

  11. “One concern is that the huge short interest building up essentially leaves the ETF as a fractionally reserved stock ownership system. If you have a fund, for example, that is 500% net short, then for every one holder of an actual share there are five other investors who own IOUs for the shares. Their real shares have been lent out and short-sold to someone else – usually without the original owner’s knowledge, unless they read and still remember the margin agreement they signed when they opened the account 10 years ago. For the ETF itself, it means that the fund holds only 15% of the underlying securities implied by the gross number of fund shares that investors think they own. The other 85% isn’t totally missing, it just isn’t held by the fund.”

    “The short position in an ETF like IWM being over 100% means that a large amount of the money investors think they have placed in Russell 2000 stocks has in fact been lent to hedge funds and other short-sellers. You take that across the entire ETF industry and you’re looking at about 100 billion dollars in short interest – money that did not go into the underlying shares or gold or whatever the ETF represents. It was instead lent to hedge funds. It has been deposited in a shadow banking system where ETFs allow short-sellers to borrow money from institutional and retail investors.”

  12. Patrick-

    You may not realize this but hedge funds have investors to which they must answer. They simply don’t have time to engage nut cases like yourself and Judd Bagley.

    So don’t feel bad that he didn’t write you back and don’t whine. Sometimes the objects of my affection ignore me too.

    By the way, maybe you should spend less time writing to hedge fund managers who have no position in your stock and more time studying accounting. Have you learned the difference between accrual accounting and cash accounting yet?

    Please let me know when you do.

  13. Here it is …for the simple ( all of you ). The tactic allowed in capitalism is boycott. Just get the word out…shut an exchange down (DON’T BUY OR LIST) and things will change. The only way is through the purse.

  14. The heart of your writing whilst sounding reasonable at first, did not really settle perfectly with me personally after some time. Somewhere throughout the paragraphs you actually managed to make me a believer but just for a very short while. I still have a problem with your leaps in logic and one might do nicely to fill in all those gaps. In the event that you can accomplish that, I will definitely be amazed.

  15. It certainly is practically unattainable to encounter well-qualified visitors on this theme, although you seem like you fully grasp which you’re covering! Bless You

  16. With havin so much content and articles do you ever run into
    any issues of plagorism or copyright violation? My blog
    has a lot of unique content I’ve either written myself or outsourced but it appears a lot of it is popping it up all over the internet
    without my permission. Do you know any techniques to help stop content from being stolen? I’d certainly appreciate it.

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