Patrick Byrne Rewrites History on the 'Sith Lord'

Byrne takes a blue pencil to his Sith Lord ravings

My favorite flipped-out CEO, Patrick Byrne of Overstock.com, has been working intently at his day job, which is haunting Internet message boards in pursuit of whatever demons (mostly in his head) that are bothering him. Lately Byrne has a new jihad: rewriting the history of his famously paranoid "Sith Lord" conspiracy theory in August 2005.

As Bethany McLean later described in Fortune:

Even hardened denizens of Wall Street were shocked by a conference call that Patrick Byrne, the CEO of online retailer Overstock.com, held on Aug. 12. "I want to get something off my chest," Byrne announced. Then he launched into a rant about a "miscreants ball" in which he mentioned hedge funds, journalists, investigators, trial lawyers, the SEC, and even Eliot Spitzer. "I believe there's been a plan since we were in our teens to destroy our stock, drive it down to $6--$10 ... and even a plan for how the company would then get whacked up." The "designated final owner," who provided the "orchestration," was someone Byrne dubbed the "Sith Lord," a person he refused to identify other than to say that "he's one of the master criminals from the 1980s."

It was just the first of many such episodes for Byrne, who subsequently established a unique position in Corporate America as a kind of one-man lunatic fringe. Today, his credibility has bottomed out to the point that nothing he does, not even hiring the washed-up former journalist Mark Mitchell to shill for him, generates the publicity that it might have a year or so ago. Not even personally and openly running a smear site is greeted with more than a shrug of the shoulders. The "oh my goodness" factor (to use Joe Nocera's phrase) is gone.

Now, probably just for the joy of lying, Byrne is trying to go back and change what he said in the Sith Lord rant. He can't, for the simple reason that he said it, but little things like that have never stopped Byrne. Note the exchange of comments at the bottom of this blog post (that's right, Byrne spends his waking hours responding to criticism on obscure blogs):

William [a previous commenter] is lying. For exmaple, he writes, “Another lie Patrick was caught in was his recent assertions that he never said his fantastic claim about a ‘Sith Lord’, who was supposed to be controlling a vast web of people who were naked shorting Overstock, really referred to an individual.” This is a lie. At first the Party Line was to exaggerate what I had said: once I succeeded in getting people to understand the truth (in this case, by pointing out that the “Sith Lord” comment was made in passing at the end of an hour speech), the Party Line became … well, just what William is regurgitating above.

In fact, as a transcript from 2005 attests, Byrne didn't just drop in a comment at the end of the speech. It was an extended and specific rant, in which he said that the Sith Lord was "a name that everybody on the phone, every single person on the phone would recognize this person’s name. He’s one of the master criminals from the 1980s, and he’s back in business."

He went on in that same conference call to say, "the man I’ve identified here as the Sith Lord of this stuff I just say, you know who you are and I hope that this is worth it, because if the feds catch you again, this time they’re going to bury you under the prison. And I’m going to enjoy helping."

The Sith Lord, of course, turned out to be imaginary, and Byrne went on to move on to other demons, starting with Bethany McLean, and including me and others who have criticized him. He now has three stooges on his payroll -- Mitchell, the ever-nauseating Judd Bagley and Evren Karpak -- whose job it is to smear people Byrne doesn't like.

Having made a fool of himself on larger outlets once too often, Byrne now begs for interviews on low-wattage AM stations, where he spews his nonsense to whomever will listen. His latest "media appearance" was a chat on Internet radio with a gent who runs a flooring company. Here's an amusing item on his latest rant from Tracy Coenen's blog. (Note Byrne saying that the financial press makes Byrne "throw up in his mouth a little." I have no doubt that Byrne throws up in his mouth, and frequently, but not because of anything he reads.)

Any other corporate board would have long ago tossed out Patrick Byrne on his keister. But he just goes on and on like the Energizer rabbit, endlessly lying, the gift that keeps on giving.

© 2008 Gary Weiss. All rights reserved.

Common Sense Prevails on Dick Grasso

An appellate panel of the New York State Supreme Court has thrown out the longstanding litigation aimed at forcing Dick Grasso to cough up all the money he extracted from the New York Stock Exchange. I've long felt that while Grasso was greedy, he earned his money by keeping the NYSE antiquated -- a goal ardently desired by his constituency.

Besides, it struck me and many others as an odd use of public reasources for the New York State Attorney General to pursue a case on behalf of the millionaire seatholders of the NYSE. The court more or less agreed, in a decision that hinged on the fact that the NYSE is now a public company.

The decision can be found here. The relevant language is as follows:

Here, the Attorney General is using public funds out of appropriations to his office to prosecute causes of action on behalf of an entity that is no longer a not-for-profit corporation and seeks only a money judgment that would benefit the owners of the for-profit entity into which the not-for-profit has been converted (even if the judgment nominally would be paid to the not-for-profit corporation). The Attorney General's continued prosecution of these causes of action, as is clear from People v Ingersoll and People v Lowe, vindicates no public purpose

No public purpose except advancing the career of Eliot Spitzer, and we know what happened with him.

© 2008 Gary Weiss. All rights reserved.

Did a Reporter Kill a Newspaper?

An article in the Arizona Republic, picked up by Romenesko, suggests that the work of a single "muckraking reporter" named "John Biancini" led to the death -- yup, the death -- of a weekly newspaper called the Winslow Mail.

This report intrigued me because I can sympathize a bit with "Biancini," as I started out in a small town bureau of a newspaper and can understand the urge to be "muckraking" even when some readers just want happy-talk news. (The dumber readers, usually, because the bad news can affect their health and their property values.)

So I went to Google, using the "Winslow Mail" and "Biancini" as key words, and discovered a couple of things.

First, the reporter's name is Bianchini not "Biancini." (That's why I put his name in quotes.)

Second, I couldn't find any "muckraking." Maybe it's out there, but here is what I found in my Google search:

An article on drug-sniffing dogs visiting a school.

A bridge burned by an arsonist.

Something about a river's watershed.

Winslow's mayor is running for something.

State attorney general reaches out to Winslow.

The Republic article quotes someone as saying that he wrote only "bad stuff" which the Republic reporter could see, if he bothered to check, was just plain wrong.

I then ran the reporter's name (his real name) in the Winslow paper's internal search engine, and I got much the same output: routine small town news. Oh, no, sorry, I noticed this horrific bit of "acerbic" journalism: on how Winslow is in need of a business leadership to improve the local economy.

Terrible!

And then there is this article that, I guess, doesn't read like a press release from the city government. Judging from the editor's note on top, apparently it resulted in some action. Which is what journalism is all about.

What strikes me is this: why was the Republic reporter, working for a paper which has a glorious history of investigative reporting itself, so quick to assume the worst about another journalist?

Seems to me that if there is any shoddy journalism here, it is the Republic story and, as best as I can tell, not the work of this Bianchini fellow.

There's an old saying that goes something to the effect that communities get the newspapers that they deserve. Winslow has no newspaper, and according to the poorly researched article in the Republic is now relying largely on the bush telegraph for local news.

If indeed the paper died because Bianchini "alienated readers and advertisers" (and I have no idea if that, or anything in the article, is true) then Winslow deserves to have no newspaper at all. In fact, it's those kind of attitudes that turned thriving western communities into ghost towns, with tumbleweeds blowing down the street.

UPDATE: John Bianchini responds to the above in the comments section of this blog. I'm taking the liberty of printing it in full below:

Help! I've fallen in Winslow and can't get up.

I found this blog's comments while googling the AZ Republic story about how I allegedly destroyed a community institution - the newspaper. I guess when being paraded into the street and beated before a statewide audience, it is natural to wonder what the crowd is thinking.

Wagner's article failed to mention some things I told him such as:

1.I bought a house in Winslow when I started the job two years before it closed.

2.I did so knowing Winslow was poor, but truly believed in its potential,

3.and advocated constantly for the community to seriously look at economic development, arts, improving relations with our neighboring Native American communities, increasing local agriculture, respecting water resources, and to clean up the town thrid world appeal.

My experience in Winslow was a real lesson in democracy and journalism.

John Bianchini

Amen to that, brother.

© 2008 Gary Weiss. All rights reserved.

Supreme Court Passes the Johnny Friendly Relief Act

There's a scene in On the Waterfront, late in the movie, where waterfront gangsters lovingly pull out their revolvers, and mob boss Johnny Friendly takes them away. "Did you ever hear of the Sullivan Law?" he says.

That's what immediately came to mind when I heard of the Supreme Court's decision recognizing the right of the Johnny Friendlys of this world to own handguns. Now a host of gun control laws around the country are subject to challenge, including New York's tough Sullivan Act.

This law wasn't enacted in the sixties by gun-hating bleeding-heart liberals, but was put on the law books way back in 1911 by gun-weary New York pols. At the time, New York City was plagued by armed street gangs. At one point in 1903 there was a Wild West-style shooting under the El tracks on Allen Street between the "Bowery Boys" and "Eastmans."

While the pedigree of the law is not the greatest (Tim Sullivan was no choir boy, as you can see from the article hyperlinked), there was a genuine need for this law. Now it is in danger, thanks to the Supreme Court and its Johnny Friendly Relief Act.

By the way, there's a great line in the screenplay that didn't make it into the movie. The hoodlum "Truck" says, after his gun is taken away, "How are we gonna protect ourselves?" Sounds like he belonged to the NRA.

Here's another great line: "You take them heaters away from you and you're nothing, you know that?" Tell that to Scalia.

© 2008 Gary Weiss. All rights reserved.

Not So Crazy

Someone sent me a book with a provocative title, "Crazyman's Economics," by T.E. Scott as told to Stephen Edds. A photo of the former, in overalls, is on the cover. Not a typical investment book, to be sure.

Having read through it -- not always agreeing, mind you -- I have to say that it is not crazy at all, but actually applies good, solid horse sense to the financial markets.

The basic premise of the book, as in Wall Street Versus America (which is liberally cited in publicity for this book, but not the book itself), is that Wall Street is a loser's game in which what are described here as the "Masters" have an edge. That point is illustrated with a liberal use of charts and illustrations.

I don't agree with what is recommended in this book (elimination of margin and limitation on trading) but I guess my main beef is that it lacks much of a "next step" for investors. Since buying individual stocks (and of course, commodity contracts) is a bad idea, what does one do with one's money?

It's a mistake to just avoid the stock market, and in fact this may well be a good time to invest. The solution I described in WSVA, index funds and index products, is the answer I think and I'd like to have seen that addressed in this book.

© 2008 Gary Weiss. All rights reserved.