More Overstock Pretexting?
Yesterday, I get the following email from someone who used the name of Enrique Alvarez, and an email address forwarder “Sendero8@latinmail.com.”
Subject: bullish boycott strategy
Your boycott call will probably go down as the real turning point for Overstock. It’s been nothing but profits ever since.
Do me a favor and demand a boycott of some of the companies in my portfolio ;).
I replied to what turns out to be a bogus email address words to the effect of:
“How do you equate 2 years of restated phony earnings, an SEC investigation, and a revelation of NYS tax fraud into profits? Your definition of nothing but profits is a bit odd.”
When I got back to the office, a quick search reveals that the email I received is very similar to a message board post by paid OSTK pretexter Judd Bagley on InvestorVillage:
OSTK msg # 39452 3/31/2010 5:02:18 PM
By: De Daumier-SmithRe: The “O” reports… beats by .10. PPS zooming.
You OSTK shareholders really ought to ask Barry Ritholtz to call for a boycott of the company every Q4.
http://www.investorvillage.com/smbd.asp?mb=3532&mn=39452&pt=msg&mid=8799979
So whether this was Bagley himself engaging in his typical pretexting/cyber-fraud.false identity or just another Overstock parrot is irrelevant. What is fascinating to me is that somehow, these people somehow equate accounting fraud into positive earnings.
Tweet
Facebook
Reddit
Digg this!
May 5th, 2010 at 9:46 am
From the Overstock 10-Q
page 17:
Problems with Marin County criminal investigation may cost the company $8.5 million (they say $8.5 million in one place and $7.5 million in another place).
On April 15, 2008, the Company received a letter from the Office of the District Attorney of Marin County, California, stating that the District Attorneys of Marin and four other counties in Northern California have begun an investigation into the way the Company advertises products for sale, together with an administrative subpoena seeking related information and documents. The subpoena requests a range of documents, including documents relating to pricing methodologies, definitions of core and partner product, as well as other site-defined terms, and the methods of internal and external pricing of products, as well as documents related to the pricing of a list of product items identified in the subpoena. The Company has responded to the subpoena and has engaged in resolution discussions with these authorities. In January 2010, attorneys for the Company received correspondence from the Office of the District Attorney of County of Santa Clara in which the same offices of the various district attorneys made a collective proposal to resolve the dispute by the Company’s payment of $8.5 million. In March 2010, the Company received correspondence from the Office of the District Attorney of the County of Monterey in which the respective offices of the various district attorneys have made a collective proposal to resolve the dispute by the Company’s payment of $7.5 million in penalties and reimbursement. The Company disagrees with the proposal and continues to discuss this matter with the authorities involved. The Company believes that it follows industry advertising practices and intends to continue to cooperate with the investigation.
10-Q page 19:
SEC Investigation Continues
The Company has received a notice from the Securities and Exchange Commission (“SEC”) stating that the SEC is conducting an investigation concerning the Company’s previously-announced financial restatements of 2006 and 2008 and other matters. The subpoena accompanying the notice covers documents related to the restatements and also to the Company’s billings to its partners in the fourth quarter of 2008 and related collections, and its accounting for and implementation of software relating to its accounting for customer refunds and credits, including offsets to partners, and related matters. The Company has been and will continue cooperating fully with the investigation.
10-Q page 38 & 39: Can you trust Overstock.com’s numbers after three restatements in four years? Every single initial financial report from 1999 to Q3 2009 violated GAAP. The company has not resolves any material weaknesses in internal controls.
Main point:
Based on this evaluation, the Chief Executive Officer (principal executive officer) and Senior Vice President, Finance (principal financial officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Quarterly Report on Form 10-Q due to the following material weaknesses:
· We lacked a sufficient number of accounting professionals with the necessary knowledge, experience and training to adequately account for and perform adequate supervisory reviews of significant transactions that resulted in misapplications of GAAP.
ITEM 4.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are properly recorded, processed, summarized and reported within the time periods required by the Commission’s rules and forms.
We carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer (principal executive officer) and Senior Vice President, Finance (principal financial officer), of the effectiveness of the design and operation of these disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of March 31, 2010. Based on this evaluation, the Chief Executive Officer (principal executive officer) and Senior Vice President, Finance (principal financial officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Quarterly Report on Form 10-Q due to the following material weaknesses:
· We lacked a sufficient number of accounting professionals with the necessary knowledge, experience and training to adequately account for and perform adequate supervisory reviews of significant transactions that resulted in
38
Table of Contents
misapplications of GAAP.
· Information technology program change and program development controls were inadequately designed to prevent changes in our accounting systems which led to the failure to appropriately capture and process data.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the first quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
As of March 31, 2010, we had not remediated the material weaknesses. We have done and/or initiated the following actions:
· We have and are continuing to hire additional accounting professionals with the necessary knowledge and experience to properly account for significant transactions.
· We have reorganized our accounting and financial reporting department to improve supervisory review.
· We are hiring additional experienced and qualified professionals for our internal audit department.
· We have reorganized our supply chain department to provide comprehensive oversight over our returns process and partner billing accuracy.
· We are reviewing the systems and controls in place to appropriately capture amounts to be paid to fulfillment partners or deducted from partner payments.
· We are enhancing our information systems testing to improve the completeness and accuracy of data provided by our information systems.
· We have engaged a consulting firm to evaluate our information systems for improvement opportunities.
May 5th, 2010 at 11:47 am
“What is fascinating to me is that somehow, these people somehow equate accounting fraud into positive earnings.”
May be they are trying to become a TBTF bank and they are learning their accounting nuances? Sorry could not help it…
May 5th, 2010 at 12:35 pm
Robespierre Says:
May 5th, 2010 at 11:47 am
“What is fascinating to me is that somehow, these people somehow equate accounting fraud into positive earnings.”
May be they are trying to become a TBTF bank and they are learning their accounting nuances? Sorry could not help it…
I had the exact same thought. You sure can type fast.
May 5th, 2010 at 3:08 pm
These guys are typical Nasdaq douchebags. Why do you bother with them ? They are run of the mill assholes.
May 5th, 2010 at 3:26 pm
I hate it when cheaters win, but it happens all the time. :(
May 9th, 2010 at 6:57 am
There is a statistically excellent chance your e-mailer is Bagley. He is bi-lingual and has spent an extended amount of time in Latin America. Several of his nom de blog have been Spanish in the past.
I believe one of his tracking software scams in the past was done with a Spanish name too.
Keep up the good work. You matter, so they care.