Deny, Deny, Deny

Fall 2005 Issue: Page 128

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If denial doesn't work, concoct a conspiracy theory to divert attention.

I'm a big fan of the deny everything rule. I've invoked it many times in the past with stellar results. It's worked well on significant others, family, bosses as well as the authorities - sometimes. But even I'm dumbfounded by the growing list of people that are engaged in very public denials.

To quote the Bard, "The lady doth protest too much." Granted William Shakespeare wouldn't call Rafael Palmeiro, Barry Bonds, Lance Armstrong or Brad Pitt ladies, but you get the gist.

Another person engaged in some very public denial is Patrick Byrne. The CEO of Overstock.com, which has one of the world's largest affiliate programs, has spent months denying various allegations - being gay and a drug user. However, Byrne's added the twist of an elaborate conspiracy to account for his company's declining performance and stock price, which have dropped from a 52-week high of $77.18 in December 2004 to around $38 at press time.

Several of my old pals from the days of Bonfire of the Vanities and Liar's Poker claim that in all their years on The Street, they've never seen such a bizarre drama and such odd behavior from the CEO of a publicly held company.

In an August conference call, Byrne told investors and analysts that a "miscreants' ball" of market participants including hedge fund managers (he's suing Rocker Partners), market pundits, analysts, lawyers and the SEC had formed a "cabal" that was working to drive down his company's stock.

During the call, Byrne used slides to map out the complex web of alleged connections to bring down his company. He claimed the conspiracy against him and Overstock was "masterminded" by a financial "puppet master" who is back from the 1980s, identified only as Sith Lord.

Byrne's comments and supposed clues had Wall Street speculating that the identity of the Sith Lord was fallen '80s financier/ junk-bond king Michael Milken. Speaking on CNBC that week, Byrne declined to name the Sith Lord, but made no attempts to backpedal on anything he said previously. He stuck to his guns about a major, concerted effort to bring down his company.

But that's just the tip of the iceberg of oddities and bizarre behavior related to Byrne and Overstock.com.

There was a recent and unprompted mea culpa from Overstock's CIO. Shawn Schwegman sent a letter to Overstock's key business partners taking the heat for a wide range of technologies that weren't working out. "I cannot apologize enough for both the number of problems you all have had to deal with and for the length of time you've been plagued with these problems. I consider this one of my greatest failures over the last two years and I am terribly sorry."

Also, there have been lots of whispers, rumors and innuendo that Byrne has used drugs. I couldn't find anything in print substantiating such allegations. Nor could I find anyone to confirm firsthand knowledge of such an offense. So why would the CEO of a publicly traded company sign off his blog entry with this: "Patrick Byrne is the Chairman of the Board & President of Overstock.com. With one exception, Byrne has never even seen cocaine in his life so in case you're wondering, no, he's not a cokehead"?

He also talked extensively about the subject of cocaine use during that August conference call with analysts.

Finally, this line from a Byrne blog entry (Aug. 19, 2005) on Yard-Work.org, a popular baseball fan site, is about a whole different subject, but Byrne still finds a familiar theme.

"Johnny Damon is an innocent man. I believe that there's been a plan in place since the last out of the 2004 World Series to destroy Johnny Damon's reputation and credibility. Baseball has had it in for the Boston Red Sox since day one."

Just replace Damon's name with Byrne's and then take the Red Sox references and put in Overstock.com.

Finally, in a conference call Byrne said, "So that's where we are. You may think I'm nuts. … If you think I'm nuts about all this, just ignore. Just ignore me. Just don't do anything about it. … "

I'll let you be the judge.

Meanwhile, contact me if you've got any hot industry gossip or juicy information. I want the skinny and if I use your tip in the next column, I'll send you a Revenue T-shirt. TheSpider@RevenueToday.com or call the hotline directly at 415-732-7456.

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Tags: conspiracy theory, overstock, sith lord, dumbfounded, rafael palmeiro, bonfire of the vanities, lance armstrong, hedge fund managers, denial, ceo, william shakespeare, barry bonds, affiliate programs, stock, patrick byrne, market pundits, stellar results, odd behavior, old pals, being gay,

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