Monday, December 26, 2005

A Necessary Correction


Friday's post, “Conspiracy of the Jews?—Part II,” quoted from Overstock.com CEO Patrick Byrne’s mid-December appearance on Christian Financial Radio Network (motto: “Prosperity…For God’s People”).

During that hour-and-a-half interview, Byrne fingered various criminal elements, including “the Israeli mob,” as being “at the bottom” of “every rabbit hole you go down” while pursuing the so-called Naked Short scandal which he believes engulfs his company and others.

I noted in my post with some disgust the fact that a Google web search, which Byrne suggested during the interview would back up a point about the long arm of the so-called “Israeli mafia,” leads to a gaggle of profoundly disturbing web sites from the likes of Al Jazeera, Radio Islam, Lyndon LaRouche and an Auschwitz gas-chamber-denying historian.

Byrne himself responded at length in a Motley Fool post flagged by a reader, and while I am not sure when Byrne’s response appeared it was probably some time after his Friday morning appearance on Bloomberg television, during which he disclosed to the Bloomberg-watching audience “disappointing” revenues for Overstock.com during the holiday season and a “negative” cash flow forecast for the year.

That negative cash flow forecast appears to be sharply at odds with at least one of Wall Street’s Finest (Craig Bibb of WR Hambrecht), whose last model (December 13) shows precisely $42.098 million of expected positive “Cash flow from operating activities” for Overstock.com in 2005.

Thus Byrne’s Friday morning disclosure appears to be a change of guidance compared to Wall Street forecasts, even though such disclosures are, I believe, supposed to be offered in 8-K filings with the SEC and not on Bloomberg TV according to my understanding of Regulation Fair Disclosure.


Regardless, in Byrne’s Motley Fool dismissal of “Conspiracy of the Jews?—Part II”), Byrne claims that he brought up so-called Israeli mob involvement in the ecstasy trade merely in response to a question from the interviewer about the reality of an Israeli mob.

Patrick writes:

Jeff omits precisely the part of the quote that makes the connection, and that is, after I mentioned the Italian, Russian, and Israeli mobs, and discussed the Russian mob, the interviewer said/asked, “I didn't know Israel had a mob?” To which I replied that, yes it does: for example, it is widely thought to control the US ecstasy trade.


And that is where a correction is due: what Patrick wrote is not correct.

You can listen for yourself to the sequence of what Byrne said at
http://cfrn.net/investigates/, but here is an approximate timeline of Byrne’s comments on that broadcast, about 13 ½ minutes into it:

13:35 "The Israeli mob and the Russian mob are the two ones who scare me...I think the Italian mob is part of this, but they’ve gone quasi-legit as far as Wall Street…”

The interviewer concurs with Byrne's comment on the Italian mob going “from concrete to Wall Street,” and Byrne continues by bringing up the ecstasy trade issue:

14:15 “The Israeli mob—in fact I was just reading Ha'aretz, which is an Israeli newspaper, ah, and a very good one, and you can Google this-- If you Google ‘ectasy Israeli mafia’ you’ll find articles that basically the Israeli mob…is thought to control 75% of the ecstasy trade in the U.S.”

It was not until after this, at 14:40, that the interviewer says, “I didn’t know there WAS an Israeli mob,” to which Byrne responds by launching into a bizarre and inaccurate discussion of Israeli extradition laws:

14:45 “Ah, well…in fact they are about to, they are about to, they are considering extraditing someone from Israel, and you know, Israel, I think it’s part of their constitution, or it’s one of their basic laws that if they, if a Jewish person reaches Israel they just never get extradited, and in Israeli history they’ve only extradited two people…”

Byrne compounds this whopper—which is not true—by expounding as follows:

“One is this fellow, I’m blocking his name…he oversaw the smuggling of 30 tons of MDNA, or ecstasy, into the United States…. The last time and only other time they ever did this was Meyer Lansky…”

For the record, it is not true that “if a Jewish person reaches Israel they just never get extradited.” And it is not true that “the last time and only other time they ever did this was Meyer Lansky.”

Eddie Antar—the famous fraudster also known as “Crazy Eddie”—fled to Israel in 1990 but was extradited from Israel in 1993.

Mail-bombers Robert and Rachel Manning were extradited and returned to the U.S. in 1993 after seeking safe haven in Israel.

The fact is that the Israeli law which Byrne claims does not allow extradition actually frowns on those who commit crimes before seeking Israeli citizenship under the “Law of Return.”

How do I know all this? I Googled it. Took ten minutes, max.

Tomorrow we move on to more interesting—but not necessarily more important—topics than setting right these inaccuracies.


Jeff Matthews I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations.

31 comments:

Its_strange said...

Mr. John Byrne .....Its time you offered a explanation. Same with you Mr. Macklin.

Its_strange said...

There are some very interesting posts on the Mark Cuban blog. If you are following this OSTK story you shouldn't miss them

padawancowboy said...

Yes, it appears that Israeli has gotten more open about allowing extradition: of late they are allowing numerous drug kingpins to be extradited. Not sure how that helps your pettifoggery, Jeff, because it means Byrne understated the case.

Jeff Matthews said...

"PadawanCowboy": Your incoherency is only exceeded by your lack of facts.

Byrne said only two individuals had ever been extradicted from Israel.

And Byrne is wrong on that--it is not even close to the truth.

Read my blog again: Eddie Antar, for one, was extradited in 1993--and Eddie was not a "drug kingpin" as you say. He was a corporate fraudster whose company collapsed under a massive accounting scam.

What would be interesting to know is how a highly educated, erudite PHD like Byrne so gullibly swallowed that misinformation.

He spent so much time writing on Motley Fool last year, you'd think he could have checked his "facts" on Israel rather quickly online.

Its_strange said...

Patrick is on businessjive again. This time with " Dark Side of the Looking Glass : Part 2 " . I just started listening but so far he is really going after the SEC . I find this is truely amazing . How about you John Byrne ? Mr. Macklin ?

Its_strange said...

Patrick goes into the origins of "grandfathering" and the Civil War. If you get a chance you should listen to atleast that . Its in the final minutes... Figure on a Part 3

Its_strange said...

David Patch ( stockgate and CNBC guest ) seems to the think the short sellers are cheating . He is on Mark Cuban's blog outlining a email exchange he had with Jim Cramer. He also seems to think the press is part of a scam.

padawancowboy said...

Jeff,

I fail to see how that matters. So there were more than two. Maybe there were 10. Maybe there were 20. The point is that Israeli extradition law has a high burden of proof.

The more important point--which you ignore entirely--is that mob money is tied up in hedge funds. It doesn't matter if it is Russian, Israeli, Italian or otherwise. Do you dispute this?

You also label Byrne an antisemite and that is dishonest demagoguery. I doubt you really believe this; no one else does.

This was all just a ploy to draw attention to your vapid blog, no?

- pc

Jeff Matthews said...

"Padawan Cowboy": no, the point is not that Israel has a "high burden of proof." Lots of countries have a "high burden of proof." When was the last time the U.S. extradited somebody to Israel?

And the point is not some crackpot theory that mob money is invested in hedge funds--although I'm confused now, because Patrick Byrne didn't make that specific point in the interview I reported on.

He merely said the Israeli, Italian and Russian mobs were "at the bottom of every rabbit hole" in this whole Sith Lord conspiracy.

He didn't actually say that "mob money is tied up in hedge funds." That's what you said. So is that your take on what Patrick is saying? Or is that what Patrick is saying?

The actual point I was making is that Patrick Byrne did not state the correct facts when he said Israel has only extradicted two individuals in its entire history.

And a CEO who doesn't get those facts right...well, what does it say about him?

For the record, I never did "label Byrne an antisemite." I reported on a CEO whose Motley Fool rant Christian radio interview took eerily anti-Semitic tones. If you do try that Google search he mentioned on Christian radio, you will find some seriously shocking stuff.

Its_strange said...

CFRN.NET plans to create a blog dedicated to naked shorting . They also plan on printing it every Friday and sending it to Washington. They also want Cramer to invite Dave Patch on his show. Bob plans to create a new website. I have a question...

Does OSTK have enough cash to continue

padawancowboy said...

Jeff,

First, thank you for not deleting my blog entries for once. Am I moving up in the world?

Next, I do not think it is useful or constructive to quibble over details in Byrne's comments. I take what he says to mean that naked short selling is happening and bad money is behind it. Again, do you deny this?

You are simply attacking the man in an attempt to distract from the merits of the case.

Do you still, as in your CNBC appearance, insist that "We don't naked short; I don't know how to naked short; I don't know anybody who can naked short."

Finally, how can you deny that you accuse Byrne of being an anti-semite? Your entry was titled "Conspiracy of the Jews!"

No one denies that those sites are seriously disturbing, but you brought them into this discussion. Byrne's source was Ha'aretz!

Why don't you work with Byrne to end naked short selling? Or does it benefit you, as a short seller, to see it continue?

-pc

tahoe kid said...

PC-

I would think Byrne has his hands full trying to get Overstock profitable. Or has he given up on the goal? The best weapon against naked short selling in Overstock is to get the fundamentals to start going up and to the right. Too bad the fundamentals and the stock keep going down.

Its_strange said...

OSTK answers the Rocker / Gradient motion

http://www.shareholder.com/overstock/suit.ckm

Its a good read

padawancowboy said...

Tahoe Kid,

I do not have an opinion on how Dr. Byrne's fight with the shorts affects the business side of OSTK.

From my perspecive, unscrupulous money managers are stealing from investors and illegally destroying shareholder wealth.

Are none of Jeff's fans bothered by this? Or is the spectacle of Byrne-bashing simply too much fun?

The SEC does nothing. The DTCC says it is not their problem. I applaud Byrne for leading the charge.

- pc

john lichtenstein said...

Its_strange, the suit.ckm is a page not found error when I look at it. Can I ask you yo please check your link.

Its_strange said...

You can access the filings by going to OSTK's investor relations page and than go on to the lawsuit page

Jeff Matthews said...

"Padawan Cowboy":

1. You really should read Warren Buffett—Patrick’s mentor. Especially Buffett’s warning that "the CEO who misleads others in public may eventually mislead himself in private."

2. I’ve never "attacked" Byrne, as you claim—-merely the inconsistencies and absurdities in his public statements, and the real bizarre stuff, like a fact-distorted discussion of Israeli extradition policy.

But he does like to dump on me personally. “Smarmy” was a big favorite of his during our CNBC meeting. Ouch!

3. Oh, the old naked shorting thing. Who are all these naked shorts? Do you know? Can you help Patrick find them? Maybe he should ask his own brother—who runs a hedge fund—if his brother knows somebody who shorts naked. Because I don’t.

4. I never accused Byrne of "being an anti-Semite," as you say. I simply wondered why on earth a CEO would discuss the so-called Israeli mafia’s control of the ecstasy trade during an interview about the stock market. Any thoughts there?

5. Byrne is the one who talked about Googling "ecstasy Israeli mafia" and what he learned about the Israeli mob from it. Not me.

And if you can find anything of value by Googling a phrase that brings up web sites from Al Jazeera and Radio Islam and worse, then I am sorry for you—-because all I found were a bunch of very sick web sites.

6. I’ll join Patrick’s crusade when the man who told Wall Street he practices "Buddhist non-attachment" and "walks past the parking dog" stops suing people.

Good luck with it!

Its_strange said...

www.thesanitycheck.com

Phil's new website.

Hit " advertise on the site" and
"advertise on www.apostlepersonality.com/apostle/" comes up !! ...i kid you not !!!

padawancowboy said...

Jeff,

1. A brief mistatement buried in a long radio interview is not a "lie." Dr. Byrne is one of the most honest and open CEOs out there. You are a picker of knits.

2. "Patrick Byrne-style paranoid-attack-dog DNA" is a personal attack.

3. If naked shorting doesn't happen, then why do we need Reg SHO? Have you bothered to read the SEC website where they say they grandfathered the fails b/c "large, pre-existing open positions" might create volatility? Ofcourse no one knows who is doing this because the SEC and DTCC won't say.

4. You wrote, "But it’s the apparent anti-Semitism that makes me wonder whether this is a legitimate post."

5. I suspect his statement about Googling was intended to show that it can be found on the web. No one disputes that the sites you mention are horrible and disturbing. But by lumping Byrne in with hate groups you lower yourself to demagoguery.

6. Taoist principles like 无为 ("wuwei") do not apply when laws are being broken and people are being harmed. How sad you choose to be part of the problem and not part of the solution. Again, I suspect you delight in the naked shorts' ability to move the supply curve infinitely to the right. As Cicero said, "cui bono" (who benefits)? You.

I CHALLENGE YOU TO DEBATE BYRNE IN PERSON, ON CNBC, ONCE MORE.

- pc

Its_strange said...

Phil just removed the "advertise on this site" link that took you to his apostlepersonality site...lol !

john lichtenstein said...

its_strange, check out
http://www.thesanitycheck.com/About\
thisWebsite/tabid/71/Default.aspx

Bloggers and those making comments on the blots agree to:

1. Upload, post, email, transmit or otherwise make available any content that is unlawful, harmful, threatening, abusive, harassing, tortuous, defamatory, vulgar, obscene, libelous, invasive of another's privacy, hateful, or racially, ethnically or otherwise objectionable;
2. Harm minors in any way;
...


I wonder if you have to agree to do all those things to post there, or just one of them. Maybe the Sith have gotten to him.

Also, long ago you asked a question about "stated income" mortgages. I don't want to beat a dead horse here and I have no specifics on NFI or its dispute with PMI but if you contact me offline I can give a little background on the range of oppinion on those loans.

Its_strange said...

This Phil clown is something . You read his bogus bio ? He has 2 novels ready for publication, " The Hedge" and " Fatal Trade " and he is writing something called " Symphony of Greed - Financial Terrorism and Super-Crime on Wall Street " which he claims is a non-fiction. ....And now the ads on his site are for publishers looking for writers and something called " Hedge Fund Watch"...

And to think Patrick fell for this act ...lol !

Jeff Matthews said...

“Padawan Cowboy”:

1. I never used the term “lie.” Stay honest here.

2. You call Byrne “one of the most honest and open CEOs out there.” Hmmmm—that sounds like something Byrne would say about himself. Hey, I think it IS something Byrne said about himself! Where did I hear that? The CNBC interview? You must really admire the guy.

3. “Paranoid-attack-dog-DNA” is what I believe to be a fair description of what he showed us on the Sith Lord conference call rant, but you’re free to disagree. How would you describe him?

4.. “If naked shorting doesn’t happen, then why…” Padawan, I guess you haven’t actually read this blog, or else you need to switch to decaf. I’ll say it again: it does happen. I even own two stocks on the Reg SHO list.

The way I see it, those nasty Israeli-ecstasy-funded-naked-short-sellers will be eventual buyers of those stocks at substantially higher prices, assuming my research is correct. I suggest you and Byrne do the same, and get a life.

5. Yes, I wrote “the apparent anti-Semitism.” That’s very different from calling Byrne “an anti-Semite,” which I did not do. Sorry—nice try, though. Very devious.

6. Byrne is the one who suggesting Googling “ecstasy Israeli mafia.” Not me.

7. Now I’m all confused! So does Byrne practice “Buddhist non-attachment” or doesn’t he? I mean, first he says he walks past the barking dog. Now, you’re saying, if he thinks the dog is breaking the law he can attack the dog. What if the dog is barking in the woods and nobody hears him?

8. YOU challenge me to debate Byrne on TV? What—are you his old boxing manager? Speaking of boxing, since you seem so close to him, do a Google search on his boxing career. Back in 2001 Byrne was described as a “former pro boxer” in some Macklin Business Institute lecture series. But I’ve also seen it written that he “trained to become a professional boxer” and his “nose was broken during a bout.” So was he ever a professional boxer or not? What’s up with that? Or am I nit-picking again?

padawancowboy said...

Jeff,

I admit it, I laughed when I read your response. You can be funny when you are not being smarmy.

Nevertheless,

1. "Mislead." Do you moonlight as a Whitehouse Press Secretary?

2. Correct: his words. I agree.

3. He is a concerned CEO frustrated by captured regulators. You bash him personally and do nothing to help.

4. This is news to me. On the CNBC interview you sure seemed skeptical that naked shorting occurs. Gomen.

5. I do not understand the distinction.

6. True, he did, but as I said before I believe his comment was meant to show that the information is in the public domain. Again, his source: Ha'aretz.

7. Even a Buddhist would react if a dog bit him.

8. Funny. I read somewhere that he challenged a union boss to a fist fight once as well.

Is our Noh dance to continue indefinitely?

~ pc

Its_strange said...

So Patrick was a boxer or trained as a boxer or told some people he was a boxer or Macklin told some kids he wanted to be a boxer ......Well if OSTK doesn't stop burning cash real soon he will have all the time in the world to tell people he has a boxer who now is in training for a lead role in a Phil Saunders written SciFi ...." Night of the Living Shorts "

Jeff Matthews said...

“Padawan Cowboy”:

Oh, right—-that one about standing up to a bunch of union thugs who wanted to rip his head off.

It's a good story, like so many of his others.

Its_strange said...

Phil is lying up a storm over on the oSTH yahoo board. ( Post number 56834 ) He is trying to tell us he took his position in OSTK cause of his admiration for Patrick and his stance against the miscreants and not some understanding of OSTK fundamentals. Fact is he told Patrick about the miscreants and naked shorting . Fact is he was long before Patrick started this campaign . Or he was lying on the conference call...Look guys.... Mr Macklin ....Mary ... Please try to get it straight

Its_strange said...

This is something to see. Phils new site is starting to look like a internet portal , a mini Yahoo . Its a real marketing campaign . With ads and links and books forsale . I wouldn't be surprised to see OSTK offer NCANS members a addictional 20% off and perhaps we might see OSTK customers being invited to join the NCANS cause. ...

Anyone hear how OSTK is dealing with holiday returns ?

Its_strange said...

Now businessjive.com is on Cudan's blog asking for what he seems to believe are paid bashers for interviews. He offers 100% confidentiality . Think Phil will agreed to a interview ?

Its_strange said...

Phil has blocked me from his site. I guess i should thank him.

john lichtenstein said...

Strange it will be worth going through an anonymizer to read PMB's email to Tim Mullaney.

One of many items PMB should have self censored:

I said that whatever hole one goes down in naked shorting, one comes on Italian, Russian, and Israeli mafias. In my view, it seems to be especially Italian and Russian mafias. I don't recall saying that I am "afraid of the Israeli mafia" and in fact, believe myself to be on relatively good terms with them.
(my emphasis)

You have to go back to Kaiser Wilhelm's interview with the London Daily Telegraph to find someone so bad at managing the press. He really needs to hire an editor.