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Sam E. Antar
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Sam E. Antar is a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, Mr. Antar helped mastermind one of the largest securities frauds uncovered during the 1980s. Today, Sam E. Antar advises federal and state law enforcement agencies about white-collar crime and trains them to... More
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Sam Antar
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White Collar Fraud
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  • Overstock.com (NASDAQ: OSTK) Q2 20009 Conference Call Questions Submitted

    From: Sam E. Antar

    Sent: Wednesday, July 22, 2009 2:20 PM
    To: 'Kevin Moon'
    Subject: Q2 2009 Overstock.com Conference Call Questions
     
    To Overstock.com:
     
    I ask that each of my questions be read out loud during the conference call (to prevent Patrick Byrne from distorting my questions as he did in the past) and for specific answers to be provided.
     
    From the 10-K: 
    When the underbilling was originally discovered, we determined that the recovery of such amounts was not assured, and that consequently the potential recoveries constituted a gain contingency. 
     
    Accounting Errors:
     
    What percentage of amounts underbilled fulfillment partners (from Q3 2008 and all prior accounting periods) was recovered from Q4 2008 to Q2 2009? Please provide the full amount underbilled and the amounts recovered.
     
    What percentage of amounts underbilled fulfillment partners during Q1 to Q3 2008 was recovered from Q4 2008 to Q2 2009? Please provide the full amount underbilled and the amounts recovered.
     
    What was the earliest date that Overstock.com (1) started re-billing fulfillment partners for underbilled amounts and (2) started collecting underbilled amounts?
     
    What was the specific date that Overstock.com “determined that the recovery of such amounts was not assured, and that consequently the potential recoveries constituted a gain contingency”?
     
    Please elaborate on the process starting from when Overstock.com first “determined” that the underbilled amounts “constituted a gain contingency” to the date when the company started receiving collections of underbilled amounts. Please provide specific dates.
     
    From the 8-K: 
    The increase was partially offset by a $600,000 reduction of legal expenses related to a $2.75 million payment that we received from an insurer in settlement of a dispute regarding insurance coverage of a legal matter. 
     
    Litigation (See disclosure above):
     
    Please describe what the litigation and dispute involved and identify the parties to the litigation.
     
    How did the recognition of legal fees related to that specific litigation impact the financial results in prior comparable reporting periods (Q1 2008 and Q2 2008)? Please provide amounts.
     
    Regards,
     
    Sam E. Antar
     
    Update:
     
    Read Gary Weiss about Byrne's refusal to address issues of financial reporting irregularities at Overstock.com (here).
     
    Jul 22 2:27 PM | Link | Comment!
  • InterOil, John Thomas Financial, and Clarion Finanz: Anatomy of a Stock Market Manipulation Scheme

    In my blog post linked below, I will provide evidence of what I believe is a stock market manipulation scheme involving InterOil (NYSE: IOC), John Thomas Financial, and Clarion Finanz AG.

    http://whitecollarfraud.blogspot.com/2009/07/interoil-john-thomas-financial-and.html

    Sam E. Antar

    Disclosure:

    I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other family members mastermind one of the largest securities frauds uncovered during the 1980s. I pleaded guilty to three felonies.

    I am assisting Barry Minkow and Fraud Discovery Institute in researching InterOil and Minkow has a short position in InterOil. I have no position in InterOil securities, long or short.

    Jul 15 5:26 PM | Link | Comment!
  • Overstock.com Issues Unregistered Shares to 401-K Plan

     

    Overstock.com (NASDAQ: OSTK), led by masquerading stock market reformer CEO Patrick Byrne, can’t seem to maintain proper internal controls for financial reporting. Just last Friday, Overstock.com disclosed that it improperly issued an extra 201,421 unregistered shares of common stock in connection with the company’s 401-K Plan. The company had to file a new registration statement with the Securities and Exchange Commission relating to those improperly issued unregistered shares. In addition, the company disclosed that it “may be subject to civil and other penalties by regulatory authorities as a result of the failure to register these transactions.” See below:

    Note 8 — Unregistered Shares of Overstock.comIn June 2009, the Company discovered that it inadvertently issued 201,421 more shares of the Company’s common stock in connection with the Plan than were registered on the previously filed Registration Statement on Form S-8 (File No. 333-123540) relating to the Plan. Because the Company sponsors the Plan, it is required to register transactions in the Plan related to shares of Overstock.com common stock. In July 2009, the Company filed a new registration statement on Form S-8 (File No. 333-160512) to register future transactions in the Plan.The Company has always treated the shares issued in transactions with the Plan as outstanding for financial reporting purposes.The Company believes that it has always provided the employee-participants in the Plan with the same information they would have received had the additional shares been registered. Original purchasers of the Shares may have rescission rights with respect to such Shares under applicable federal securities laws for up to one year following the date of acquisition of the shares. These rescission rights represent a contingent liability of the Company. In addition, the Company may be subject to civil and other penalties by regulatory authorities as a result of the failure to register these transactions.

    Note: Bold print and italics added by me.

    Two weeks ago, I tipped off AOL syndicated blogger Zac Bissonnette that Overstock.com filed Form 12b-5 "Notification of Late Filing" due to the company's issuance of unregistered shares into its 401-K Plan. Bissonnette reported:

    Here's today's update from the irony department -- special thanks to Sam E. Antar for e-mailing it to me. From a FORM 12b-25 filed with the SEC on June 30th:

    "The Company recently discovered that it inadvertently issued more shares of the Company common stock in connection with its 401(k) Plan than were registered on the Registration Statement on Form S-8 (File No. 333-123540) relating to the plan. The Company needs additional time to ascertain the facts relating to this issue and to analyze the effects, if any, on the plan."

    This would be a funny little accounting screw-up at any company, but that it happened at Overstock.com (NASDAQ: OSTK) makes it especially hilarious: This is a company whose CEO has complained to anyone would listen of a massive conspiracy to counterfeit shares of his company's stock and then sell them into the market -- driving down the stock price and allowing short sellers to profit.

    And now we find out that Overstock itself was issuing shares beyond what had been registered with the SEC!

    Note: Bold print and italics added by me.

    This blog has exposed other Overstock.com financial reporting irregularities in the past.

    For example, I discovered that from Q2 2007 to Q3 2008, Overstock.com improperly used a non-compliant EBITDA (Earnings before interest, taxes, depreciation, and amortization) in violation of Securities and Exchange Commission Regulation G governing non-GAAP financial measures. Overstock.com improperly reconciled EBITDA to operating income, rather than net income and improperly excluded stock-based compensation expense from its non-compliant EBITDA. As a result of violating SEC Regulation G, Overstock.com materially overstated its financial performance from Q2 2008 to Q2 2008.

    In late 2007, I notified Overstock.com and the SEC of the company's violation of Regulation G. However the company stubbornly refused to comply with Regulation G and report a compliant EBITDA until it filed its Q3 2008 10-Q report with the SEC (Details here).

    More recently, I discovered that Overstock.com violated Generally Accepted Accounting Principles (GAAP) by using accounting errors arising in previous reporting periods to improperly and materially overstate reported income in later accounting periods (Q4 2008 and Q1 2009 so far) in violation of Statement of Accounting Standards No. 154 (Details here). I notified Overstock.com and the SEC of the company's GAAP violation. So far, Overstock.com has failed to comply with GAAP and the SEC cannot comment about the issue as per their policy. In the mean time, let's see if Overstock.com stubbornly digs itself into a deeper hole when its reports Q2 2009 financial results.

    To be continued....

    Written by:

    Sam E. Antar

    Disclosure:

    I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other family members mastermind one of the largest securities frauds uncovered during the 1980s. I pleaded guilty to three felonies.

    I have no position in Overstock.com securities, long or short. My research on Overstock.com is a freebie for securities regulators to help me try to get into heaven for my past sins, though I doubt I can ever make up for my past evil acts.

    Other information:

    List of White Collar Fraud Blog Posts (date order)

    Media Reaction to my Blog

    Jul 13 11:57 AM | Link | Comment!
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