Over the years numerous people have asked me or posted on this message board one version or another of a question regarding my decision to settle the prime brokerage lawsuit against Goldman and Bank of America (which had inherited it from Merrill Lynch). A couple of weeks ago I gave lengthy answer in a reply to a message board post. It was substantial enough that it occurs to me I should elevate it to its own entry.
“Patrick I would like to hear your explanation why you settled this case. TIA
“‘The case will be heard before a jury on December 5, 2011. “It is going to be the OJ Simpson trial of the financial world,” said Byrne. “It will be heard in California, in San Francisco. It will be exciting. I have said publically that I will not settle. It would be treason for me to settle. There is really no number. It is not that complicated a case. I am hearing that it is only going to take a few weeks. It is very simple. There are emails and a bunch of data – it is just about presenting it all to a jury.””
The case did not get in front of a judge in 2011. In fact, it was dragging on in late 2015. I was hanging on by my fingertips expecting it to get to trial in December 2015, it having been delayed and delayed numerous time since that 2011 article you cited. Finally we got to December 2015, and I thought it was about to be tried, and it got delayed until April-May 2016.
Why do I say, “Hanging on by my fingertips”? Because I was dying of two things at once. My heart problems (I’d had 3 open chest surgeries in the 1980’s) led to deterioration so that during 2009-2015 I had five cardiac ablations and they had to restart my heart 400-500 times (cardioversions, and a bolus of Adenosine from time to time). I was spending 40-80 days/year in hospitals, and convalescing another 100 days per year. Normally after 2 cardiac ablations they go to AV-node-ablation-with-pacemaker, which buys one 3-4 years (they normally only do it in people in their 70s and 80s). I had to talk them into trying cardiac ablation a third time. By the fourth, I could not convince them to try it, but a woman in my life argued my case until they did. When it came to the 5th, she basically had to throw herself and her ankle-length dreadlocks over my body, Pocahontas-style, to keep them from doing the AV node ablation, and give me a 5th ablation.
Somewhere in there they also diagnosed me with raging HepC, of a genotype that the new drugs coming to market did not cure (because I caught it in Central Asia in 1983 from a “Barefoot Doctor” sewing up a scalp wound, and it is somewhat different than the types for which the drugs were developed in the West). They gave a try with one regimen in 2015, and I was briefly clear, for about 1-2 months. Then I got a call from the hospital in early August 2015: it was back. I was officially Stage IV. I had 6-36 months to live absent successful intervention of which the odds were 23%, but they were going to “blast” me with a new drug in Stage III clinical (which has since been approved for general use). If I did not respond to the drug, or if I got through the 6 -8 months of treatment and then it came back, they were going to start cutting out organs.
I got that news and 90 minutes later walked over to NASDAQ and delivered this speech:
You may notice that I was a little foggy and off-my-feed throughout it. That is because 90 minutes earlier i had had that call from the hospital.
But I hung in there, excited about the trial coming up. I think the trial was scheduled for November, 2015. I just wanted to see things through that, then retire and enjoy life a bit for maybe just a few months before or until they started cutting.
By November, 2015 it got moved to December. Things were looking shitty medically. I was commando-crawling through being “blasted” by a heavy dose of this new drug (they were still working out tolerances). We got ready for trial in December, and it got moved out again to April-May. I knew that I was finishing my drug treatments in March. There was still a 50% chance that within three months of finishing (i.e., by June, 2016) I would fail again, and then we would go to surgical options to buy some additional time. In fact, I would not be completely out of that window until September, 2016.
When I got the news in December 2015 that the trial was moved again, I weighed all the odds. I knew then that I would be finishing treatment in March, 2016 but there was a ≈ 50% chance they would start cutting out organs in the months after that. I was also told by the lawyers on the board, “You know, even if we win in May, they will appeal, and it will be 5 or 6 more years before we get any cash.” I did not even know if I would be able to appear in a May trial, or even be alive.
The fuckers had outlasted me. Barely. After a decade-long battle, it had come down to a handful of months. If it had gone to trial in December 2015, we would have just made it. I would have been sick, I would have been on powerful meds, but I would have seen it to court. But May 2016 was a bridge too far.
I said, “Go cut the best deal you can.” We got $18 million.
I left 1,500 colleagues and 40,000 shareholders at Overstock in order to come public. Please do me a favor and help them out by doing your Christmas shopping at Overstock.com.