In a press release and conference call on July 31, Overstock.com's CEO Patrick Byrne announced a surprisingly upbeat second quarter. The news sent the stock climbing.

Well, it now seems that these numbers may have been misrepresented.

Corporate fraud-hunter Sam Antar, who masterminded the Crazy Eddie book-cooking scheme, has a devastating blog entry this morning describing how numbers may have been dressed up via some balance sheet hocus-pocus. Sam says that a "close examination of Overstock.com's financial disclosures paints a starkly different picture than Patrick Byrne's hyped up improvement of Overstock.com's financial results."

If this all pans out, and if it turns out that there was a scheme to mislead investors, both Overstock.com and Byrne -- who are already are under SEC investigation for accounting and other issues -- would be in deep trouble. Ditto for any other Overstock official involved.

Sam's posting today is the first of three parts, and I understand that the best (or worst, if one is an Overstock shareholder) is yet to come.

Sam's blog item speaks for itself, and I urge you to read it. Still, can anyone really be surprised by any of this, after seeing the way Patrick Byrne has behaved over the psst few years? Just search "Patrick Byrne" in this blog and you can see what I mean.

When the smoke has cleared and this disgusting company is a wretched memory, I can see the class action lawyers pile on. But really, any investor who has bought the stock within the past two years -- since the nutty Sith Lord conference call -- has only himself to blame.

Sam's blog points up the value in blogs covering Byrne and CEOs like him -- heads of otherwise minor companies who distinguish themselves by incompetence and/or bad behavior. The media is simply not organized to provide the kind of in-depth attention that these CEOs deserve.

Thus the O-Smear blog has covered in depth the astonishing cyberstalking activities of Overstock.com's director of communications and spokesman, Judd Bagley. The most recent installment revealed Bagley's latest sockpuppet on the Investor Village message board.

Only at Overstock.com would an inept CEO and a cyberstalking director of communications remain employed. Byrne would have been drummed out of most companies years ago, and Bagley would have been escorted from most executive offices by security.

The media, however, simply can't be expected to follow every last turn of the screw of an ongoing corporate train wreck like Overstock.com. The company is not that significant, and its importance is mainly a function of its misconduct.

Lee Distad recently pointed out that "being angry at Byrne and Overstock seems so futile, given what a sad and tawdry spectacle they present." That is correct, but I think that the volume of wrongdoing coming out Overstock.com is no reason to reduce the amount of attention being given to it.

Corporate miscreants should not receive volume discounts -- except for the kind of three-for-one special that Sam Antar is giving Patrick Byrne this week.

© 2007 Gary Weiss. All rights reserved.



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