The Whisper Campaign Against an Overstock.com Whistleblower

If you're getting a divorce, have a date in traffic court or some other legal entanglement, absolutely do not criticize a wretched little internet retailer called Overstock.com, its loony, conspiracymongering CEO, Patrick Byrne, or any of the crew of cyberstalkers on his personal payroll.

Just ask Sam Antar, a felon-turned-white collar crime-fighter, who has been blowing the whistle on corrupt practices at this odoriferous Corporate Somalia for the past couple of years.

Sam is paying the price for his on-target, never-refuted dissection of Overstock's accounting, through detailed and dispassionate blog posts such as this and submissions to the SEC. He has repeatedly called on the snoozing securities watchdogs to take action against Overstock, so far to no avail.

It's a classic whistleblower situation, replete with a particularly noxious form of retaliation.

Sam is the target of an increasingly crude smear campaign openly conducted by Byrne and his paid goon, a former Florida Republican go-fer named Judd Bagley, which has recently degenerated into a whisper campaign spreading lies and innuendo about his personal life.

I've written about these nightcrawlers a great deal (they've targeted me, which tends to focus one's attention on the matter), so I can say with some authority that the latest episode in this corporate Addams Family is a new low.

Sam, you see, is engaged in a divorce battle with his wife of 28 years. I've met Mrs. Antar; she is a lovely lady and that what's happening is a tragedy. Not even the grimiest criminals, not even Mafia hoods (and I've met my share of them), would think of intruding in such an unfortunate personal spat, but keep in mind that we are dealing with a particularly loathsome group of people here.

Bagley--who Byrne (above) employs through a perfunctory corporate shell--believes that when it comes to the cause of serving his loopy employer, everything is fair game. Heck, Bagley once stalked a teenager who criticized Overstock, so I guess violating the privacy of a whistleblower isn't all that different.

After all, Sam Antar has committed the sin of criticizing Overstock's accounting! Such effrontery cannot be allowed to pass unavenged.

As Sam describes in a blog post, Bagley, who calls himself a "hacker" and operates in the legal twilight of cyberstalking, has been seeking to smear Sam as a wife beater on Internet message boards, including the heavily trafficked Yahoo Overstock message board. In a sneering post under a pseudonym he has acknowledged to be his, Bagley claimed that Sam's wife got a restraining order against him the previous day (yep, he has been watching the progress of Sam's divorce that minutely). He tried to do the same thing in a comment to a post here.

Bagley (left) also made a creepy threat: ". . . Here's some advice: settle the suit.... give her whatever she wants. Because if it goes to trial, I'll probably attend."

Now, if any of this were true, it would have absolutely nothing to do with Antar's extensive, devastating assessment that Overstock has systematically cooked the books, and that its recent supposed $1.2 million fourth quarter profit actually should have been an $800,000 loss. Since Sam's analysis of Overstock's accounting is correct, what else can Overstock do? Certainly not fix its accounting or, heaven forbid, can a CEO of proven incompetence.

The problem is that it's not true.

Bagley, amazingly even for a former Utah traffic reporter, had leveled that serious accusation based on a cryptic reference on a New York court website, without bothering to check with either Antar or any of the other parties.The judge denied the motion in a bench ruling, and the ever-efficient New York City court system computers, surprise surprise, didn't catch up with it.

This would be pretty disgusting if it wasn't so consistent. Byrne has been on a jihad against critics and the media since 2005, when he reacted to a critical article by Bethany McLean in Fortune thusly:

After the piece came out, Byrne sent me an e-mail saying "Fair. And balanced." Two days later he wrote another e-mail: "I actually thought it was crap.... So, why exactly did you become a reporter? Giving Goldman traders blowjobs didn't work out?"

Byrne has since evolved from a trash-talking pig into a far more menacing creature, one who is totally unsupervised by a joke of a board of directors.

So OK, this is all bad, all crappy,but there's not much Sam can do about it but spend a few years, and a few million bucks in legal fees, and sue Overstock for slander and invasion of privacy. Right?

Unfortunately for Byrne, there's the little matter of Sarbanes Oxley. The long-forgotten, little-enforced relic of the Enron era requires that CEOs get a waiver from their corporate codes of ethics before doing stuff like waging smear campaigns against their critics. Byrne never has.

I'd say the ball is in the SEC's court. Without whistleblowers like Sam and citizen sleuths like the ones I described yesterday, the agency's mission of enforcing the securities laws would be hampered significantly.

There is a name for this kind of disgusting behavior: issuer retaliation. Either the SEC recognizes that this is a problem and takes strong action against the Overstocks of this world, or it might as well close up shop and convert its Washington office building into condos.

UPDATE: Bagley later said as follows on a stock message board:
So I have to add another caveat to the ones that I raised at the beginning of this item: if you refuse to dignify with a response an email from one of Patrick Byrne's hatchet men, that is viewed as an admission of "guilt," and the smearing will commence.

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