Jeff Matthews, former employee of Rocker, and concerted critic of Overstock, weighs in on the suit:
The CEO, the “Exotic Dancer” and the Lawsuit
Well, it looks like Overstock.com CEO Patrick Byrne has gone all-in during the latest round of the high-stakes public company poker he’s been playing with Wall Street.
After losing previous hands when “Project Rocket” and “Project Ocean” and—my favorite, the ridiculously named “Project Propeller”—failed to win the pot, Doctor Byrne has put all his chips on what could be called “Project Short Squeeze.”
Byrne has for some time been a little dingy about the short position in Overstock.com shares—to which I contribute a modest amount by virtue of owning a put position in Overstock options.
(Since there is no stock to borrow, I can’t short it outright—Doctor Byrne’s fantasies about a giant “naked short-selling” conspiracy notwithstanding. If I could, though, I certainly would, because in my years of experience in this business Doctor Byrne exhibits all the signs of a CEO with something to hide.)
In the January earnings call, for example, Byrne allowed a no-nothing paranoid using the pseudonym “Bob O’Brien” to take over almost a quarter of the call explaining in great and faulty detail the purported conspiracy among short-sellers.
Byrne pretended not to know “Bob O’Brien” even though they had been in contact for several months—hardly the behavior of a model CEO.
More recently, Byrne devoted fully 45 of the 83 slides in the second quarter conference call to—I am not making this up—the short-selling situation in Overstock.com’s shares. In my opinion, a tell-tale sign of CEO trying to mask a deteriorating business by focusing the spotlight away from the business and onto his perceived enemies.
Yesterday, it looks like, Byrne pushed all the chips into the center of the table.
Overstock.com, along with a lady associated with “Bob O’Brien” filed suit against my old boss, David Rocker, my old colleague, Marc Cohodes, their firm and an independent research firm known as Gradient Analytics with which I have never done business but whose work has always appeared to be worth reading.
The guts of the lawsuit appear to be contained in paragraph 23:
In other words, Gradient knowingly serves as a shill for, in Overstock’s case, at least the Rocker Defendants, Rocker, and Cohodes.
A conference call describing the suit starts in just a few minutes. It should be pretty interesting.
I worked with David Rocker and Marc Cohodes for several years. During those years we shorted two companies that were high-flyers in their day but turned out to be frauds—Regina and Media Vision. And in the dozen years since those days our paths have crossed mostly out of friendship but also doing work on short ideas—most memorably Lernout & Hauspie, another fraud.
They are smart, they do their homework, and when they lock into a company that blames its problems or attempts to focus Wall Street’s attention on the short-sellers—they have usually been right.
Patrick Byrne, on the other had, I know mainly through his erudite and increasingly disjointed writings, his rambling conference calls and his conference presentations.
And, as readers of this site know, I find him a less-than-credible individual.
Still, I would like to hear Patrick Byrne answer two questions on today’s call:
1. Why has Overstock.com not disclosed the lawsuit recently filed in the U.S. Court for the District of Utah by a Canadian company called Eydeas Technology asking for, among other things, “a permanent injunction prohibiting Overstock from utilizing the software solutions which Eydeas licensed to Ski-West.”? According to the complaint, Eydeas’ software engine is fairly important to the Ski-West offering, for which Overstock recently paid $25 million in cash.
2. Is the Stormy Simon who is a Senior Vice President of Overstock.com--a woman described by Patrick Byrne as “our secret weapon” and “my chief of staff”--the same "Stormy Simon" who was described in court documents (from a murder trial in which she was a witness) as “an exotic dancer”?
Interested readers can find it the detail at the following web site:
caselaw.lp.findlaw.com
Or just keep reading the following excerpts.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
State of Utah, Plaintiff and Appellee,
v.
David E. Mead, Defendant and Appellant.
No. 981866
F I L E D July 10, 2001
2001 UT 58
¶10 The subsequent police investigation revealed several earlier statements by David Mead implicating him in his wife's death. On separate occasions, Mead had spoken with three people, Winneteka Walls, Stormy Simon, and Mead's cousin, James Hendrix, about killing his wife….
¶11 Mead also had an affair with Simon, then an exotic dancer, in either 1991 or 1992. The affair ended abruptly, however, when Simon discovered Mead was married. Nevertheless, the two remained in contact, and, in a 1993 telephone conversation, Mead told Simon he was unhappy in his marriage. Simon advised him to get a divorce. He told her he could not do so, however, because he would lose his business to Pamela Mead and her family.(2) Instead, he said he would be better off killing his wife and getting the insurance money….
¶14 Several months later, in 1995, Mead sought out Simon, with whom he had an affair before Pamela Mead's death, at her workplace. He told her his wife had died in a "mysterious freak accident" and that investigators were looking for Simon. He told her not to speak with them and asked if she recalled the telephone conversation wherein he told her he would be better off killing his wife and getting the insurance money. She responded that she did. He told her he did not. Mead then asked her if that was something she felt she would have to admit in court. She said it was. Simon felt intimidated by Mead during the conversation.
So in this latest round of high-stakes poker by Doctor Patrick Byrne, you can put your money on the CEO who apparently entrusted his company’s marketing campaign to a former “exotic dancer.”
Or you can put it on two of the hardest-working, smartest and least-likely-to-be-intimidated-by-a-hokey-lawsuit individuals I know, David Rocker and Marc Cohodes.
Mine’s on David and Marc.
Jeff Matthews
I Am Not Making This Up
jeffmatthewsisnotmakingthisup.blogspot.com |
