Criminal Past Haunts Bidz.com - Barron's 15 comments
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David Zinberg is the CEO of BIDZ.com (BIDZ), one of the largest online jewelry retailers. This year, the website is expected to auction $250M in jewelry to buyers across the world. But Zinberg is unhappy that the stock price of his growing company has fallen to $8.72 from $22.50 over the past nine months and blames naked short sales for the depressed stock price. Barron's Bill Alpert thinks the low share price may have just as much to do with the cadre of shady business associates Zinberg has collected over the years.
Zinberg himself doesn't have a criminal record, but several of his partners and key staff do, and there have been additional arrests and convictions during their employment at BIDZ. A company statement said Zinberg was unaware of his associates' rap sheets, and VP Leon Kuperman insists there is nobody in the company today with a criminal record. But Kuperman also admits that the company only started investigating allegations recently after its board received an anonymous letter. This past Wednesday, BIDZ received a first look at documentation alleging the company's co-founder and director was managing an illegal strip club while he was CFO in 1999. His alleged partner for the strip club was a licensed agent for several of Zinberg's pawn shops. These are only two of a long list of criminal allegations and convictions.
Calling the stock undervalued, BIDZ bought back $10M of its own stock this month and Zinberg says it plans to buy another $10M. Company officials waved off any criminal past as no longer relevant, but that may not be true for investors who are understandably hesitant to invest in a company dogged by lawsuits, arrests, and convictions.
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- Bidz.com is no stranger to controversy. John LaRouche timelines the complex web of rumors and innuendo surrounding this bloggers' delight.
- BIDZ.com expects Q3 revenue of $55-58M and EPS of $0.10-$0.11.
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1. You state that "several of [Zinberg's] partners and key staff do [have a criminal record]". Yet, nowhere in the article is a single present employee of Bidz.com named who has a criminal record. In fact, the most recent employment of anyone with a criminal record named in the article is 2003, a good 4 years before the company went public. By directly stating that current employees of the company have criminal records, you are slandering the company.
2. You state "VP Leon Kuperman insists there is nobody in the company today with a criminal record. But Kuperman also admits that the company only started investigating allegations recently after its board received an anonymous letter." However, given that all actual criminal convictions and charges are attributed to either former employees or people who were never employed by the company, one must wonder why you would expect them to have investigated in the first place. Should all public companies ask every employee for a list of co-workers at every place that they worked previously and run background checks on them too to make sure that the person never made the mistake of having social contact with someone who is less than stellar? To paraphrase Kuperman, how precisely does the fact that people who were never employed by the company in the first place warrant any change in their operational policies and procedures?
3. You state that Itkin managed an illegal strip club. In reality, Itkin's role is left unknown by the article, and the general impression that I got was that he served as a financial advisor. Furthermore, the strip club itself wasn't illegal. The liquor license issue would seem to be a zoning problem brought on by an overzealous dancer or two who didn't follow the rules. So, really, the only thing that you can tie to a present associate of Bidz is that they served as an advisor to a club nearly a decade ago where some girl stepped over the line and flashed her breasts or something. That's pretty weak.
4. I know that you're trying to get some buzz by parroting a juicy story, but you ought to be more accurate. Furthermore, I think the more juicy story is that Barron's has allegedly used Andrew Left (allegedly convicted of stock fraud), Sam Antar (convicted of the biggest IPO scam ever in the 80's) and Amr Elgindy (currently serving time for many charges, including stock fraud and selling non-existent stock) as sources.
5. Furthermore, what about the fact that former Barrons senior editor Cherly Einhorn allegedly published articles that supported the short positions of her husband hedge fund manager David Einhorn and his alleged friend Daniel Loeb? Do you think that a writer and an institution can be unbiased when they have social and financial ties to the people taking short positions?
6. If Barrons is to stand as the journal of record for dictating morality, shouldn't they be subject to scrutiny? If they are or did publish articles with the specific intent of creating collusion with short sellers in order to support their position, don't they lose their moral ground? Wouldn't one then have to doubt both the accuracy of their facts and their motivations? Given their supposedly large influence over the market, this would seem like a bigger story, and I can only wonder if less influential bloggers are too fearful to cover it.
You state: "Zinberg himself doesn't have a criminal record, but several of his partners and key staff do", AND "dogged by lawsuits, arrests, and convictions."
Yet your provide nothing no detail to support either of those, that is slander, point blank. To publish any article w/ such controvery and negative tone and have no details, is a discredit and disgrace to the honest 5% of journalism out there.
However, my reasons behind posting have very little to do with that. I hold stock in plenty of companies, but never have I seen one so mercilessly attacked on erroneous grounds. Despite the fact that I occassionally tease Patrick Byrne, I'm a pretty big fan of deepcapture.com, and I keep on seeing more and more parallels between the fragmeneted conspiracy that he is trying to expose and the principles involved in slandering Bidz. I feel that the matter is not being properly addressed by the media, and consequently, I feel that it is my duty as someone who is conscientious to speak out. I don't have a site or a magazine, so I can only hope that my comments do some small good in clearing things up for people who aren't sure what to think.
www.citronresearch.com...
He has been right on quite a few stocks AMSC, ARTC and has the same type of analysis on these guys which includes some mischief.
The argument that they were supposedly right about other companies and thus must be right about this company is a logical fallacy. If you put a blind fold on someone and have them throw thousands of darts, you can assume that one or two will hit a dartboard. However, using the fact that they threw one or two successful throws would not be a logical way to argue that all of their throws would be successful.
2. Nor would I believe you since you don't even know what day it is.
3. Nor would I believe Barron's since they seemingly have connections to criminals and hedge fund gurus and would seem take their editorial positions accordingly.
As a Bidz shareholder, I am not going to tell anyone whether they should sell, buy, go long, or go short. That's up to the individual, their budget, and their gut feeling. However, what I can say is that the accusations seem overblown and unrelated to the actual nature of the business, and furthermore that the motivations of Barron's seem deceitful. Take from that what you will.
according to BEAR-RUNS, victims of shady
employee shenanigans since SUV's actually
continue to be very popular and short selling
is just a fairy tale.
About 30 years ago my family's church was
rocked by a scandal where the trusted treasurer
ran off with about $50,000.00 in church funds.
Now, because of that incident, are other members
of the church suspect or morally "tainted" to
the point that outsiders would begin to talk
ill of them and shun them socially and not do
business with them?
With all credit to Gerry Spence, champion of the
underdog, I rest my case.
What the hell is the point behind these articles??? Same crap over and over. The shorts need to cover, and this is a last ditch effort to drive the stock price down. It is transparent, and it is on EVERYONES radar. Don't get caught in the web.
Whether you choose to agree or take issue with Barron's research, our position is that providing the summaries is useful for investors who want to know what this week's Barron's has to say.
More importantly, why are you Rachel's mouthpiece? She can't defend her own trash? Or is it more likely she is concerned that she is now implicated in this investigation?
The article states: "Zinberg himself doesn't have a criminal record, but several of his partners and key staff do" yet the article does not name any current key staff or partners with records. You may see it as a small point, but wouldn't inserting the word former add more accuracy to the summary? Do you think this was simply an editorially mistake? If so, will you rectify it?
What conclusions did your independent investigation of what the barron's writer had to say lead you to?
Or is your intent to just summarize what the writer has stated?
If the latter, why should a person take the time to read what you have written? To save the cost of a Barron's subscription?