My favorite corporate crime Petri dish, Overstock.com (OSTK), is involved in so much litigation that a kind of "litigation roundup" is required. So here it goes.
First, there are new developments in the long-awaited contempt of court motion in the libel suit brought against CEO Patrick Byrne and his hireling Mark Mitchell, for smears against a Vancouver stock promoter in Byrne's Deep Capture conspiracy theory site.
To recap, Byrne et al were sued by Altaf Nazerali over nutty allegations on the website that Nazerali was a kind of criminal mastermind with links to Al Qaeda. Byrne, thumbing his nose at a pre-trial gag order, publicly smeared Nazerali, after the suit surfaced, on his favorite stock message board.
The contempt motion, which was filed against Byrne and Mitchell, was to be heard on Dec. 13, but has been put off until a date in the new year that has yet to be determined. So stay tuned.
Meanwhile, I understand, the court lifted an injunction that had shuttered Deep Capture, based on assertions by Byrne's lawyer that he will indeed be putting up a defense! If he isn't allowed to run to the border, that is. So you will soon see Byrne's smears up on the Internet again, for the time being.
Byrne has sought to have the suit dismissed for lacking jurisdiction. The court also postponed a ruling on that.
And now we come to the case that Overstock filed against Goldman Sachs (GS), Merrill Lynch (BAC) and a bunch of other investment banks, for supposedly conspiring to naked-short the company into the poor house.
Is Overstock responsible for its poor share price performance? Of course not. It's not because of a goofy CEO, who has so badly mismanaged the company that he can't even get a renaming right - its "O.co" fiasco was such a disaster that Ad Age called it one of the ten biggest marketing screwups of 2011.
It's not a cash shortfall that recently sent Overstock to contemplate printing up some more stock in a secondary offering. It's none of that. It's them.
Well, the judge hearing the case, at California Superior Court in San Francisco, is not cutting Overstock very many breaks. In a ruling that just surfaced the other day, which I've taken off the court website and uploaded here, the court denied Overstock's effort to file yet another amended complaint, adding RICO allegations.
Goldman, annoyingly, has been fighting to prevent an unredacted version of the complaint from being filed in court, claiming that doing so will reveal "trade secrets," and also that Overstock poured secret stuff into the complaint as a publicity stunt. Well, one can't argue with the latter point, but the "trade secrets" argument is bullhockey.
Since there is an outstanding chance that the entire suit will be thrown out of court, Overstock wants to pile a lot of stuff into the public record so that it can squeeze maximum publicity value out of it - and a maximum settlement out of Goldman. Hey, that's what the suit is all about. That and stroking Byrne's ego.
Ultimately this will be determined on the basis of dollars and cents. Is Goldman interested in continuing to pour money into its lawyers' accounts to fight this wacko? I think that ultimately it will settle.
When that happens, expect to see a cavalcade of publicity from whichever journos Byrne can con into swallowing his baloney. The Utah media will come out in force on his side, I'm sure. The Salt Lake Tribune recently broke radio silence with an article that, amazingly, mentioned Overstock's recent financial travails - about a month after they were reported by everyone else in the universe. And, of course, without giving credit to Sam Antar, who broke the story over a month ago,
Attaboy, Steve Oberbeck! Glad you woke up. Have a cup of coffee.
So far, the Utah media hasn't had the guts to mention that the CEO of a hometown company is facing contempt of court charges. In journalism, we call that kind of nonfeasance "contempt of reader." I think that's emblazoned on the facade of the Utah Press Club, an edifice that I understand is made of jelly, extracted from the backbones of their members.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.