Fooling Some of the People All of the Time, a Long Short (And Now Complete) Story, Updated With New by David Einhorn (tohfa e dulha read online TXT) 📕

At the meeting, I tried to draw their attention to the pattern of abuse. BLX made many of the loans to Vietnamese-Americans. “There are forty-five loans to Nguyen at a particular address in Biloxi,” Kupperbusch said. “One of the things I have run into is that Vietnamese families often live on their boats and their address is the pier. They all use the same address. The SBA is very familiar with Na Nguyen. She had an insurance company there also. She is one of the few who are bilingual, and since the shrimpers may be out for a month at a time, when the lenders need to contact the boat operators, she is the intermediary.” Kupperbusch said the SBA officer he talked to said they don’t believe the Vietnamese fleet is one business, but rather a cluster of families. However, Kupperbusch acknowledged that there were multiple loans that went to the same Social Security number. He said he believed “that this was a good, solid allegation that may lead to criminal fraud.”

The meeting lasted for about an hour and a half. After it was over, the lead Justice Department lawyer walked me to the elevator and said that the SBA was pushing back hard against our complaint in a manner she’s never seen from a government agency. I asked her if the pushback was potentially corrupt. She said she didn’t think so, but the SBA sees itself as a “lender-friendly” agency.

Then she reminded me that the SBA was actually her client, but she was clearly bothered by its pushback.

As I left, she said, “As a taxpayer, this boils my blood.”

Mine, too.

In early September 2006, we received news that the Justice Department declined to intervene in our whistle-blower suit. It didn’t say why. I speculated that the SBA “pushback” had won the day. Although we were frustrated by this decision, we believed that the evidence was overwhelming that BLX violated the False Claims Act and caused tens of millions of dollars in damages to taxpayers. So we decided to continue the suit on our own.

The complaint was unsealed a few weeks later, and the judge ordered us to serve it on the defendants by the end of the year. Ordinarily, the statute gives 120 days, but the judge said that it had been on her time clock since 2005 and she wanted more progress. Our lawyers prepared an amended complaint, and with leniency from the judge, we filed and served it in January 2007 on the defendants Business Loan Express LLC, Robert Tannenhauser, Matthew McGee, George Harrigan, and (John) Does 1–100. Actually, it was hard to serve it on Tannenhauser. He avoided the process servers for several days and failed to meet them, even though he agreed on the phone several times to do so. Then, he took off on a vacation to Indonesia.

CHAPTER 24

A Naked Attack

On August 11, 2005, Patrick Byrne, the CEO of the Internet retailer Overstock.com, called Greenlight to speak with me. I was out of the office at a meeting, so the call was passed to Alexandra Jennings, our analyst who covered Overstock, although we had been out of the stock for months by then. We briefly held a small short position in Overstock that we closed out at a profit in January 2005.

When Jennings heard she had a call from Byrne, her antennae went up. About an hour before, Overstock had issued a press release announcing it was suing Rocker Partners LLP, a hedge fund that was short Overstock, and Gradient Analytics, an independent research boutique that published critical research about Overstock. Overstock claimed there was an improper relationship between the two. The announcement said there would be a conference call and Webcast the next day to discuss the suit.

Byrne introduced himself and asked for me. Jennings told him I was out of the office for the day.

“Do you follow us?” Byrne asked.

“I do.”

She didn’t elaborate, and Byrne seemed to stumble, waiting for her to say more, but she was too smart for that.

“Ahh, okay, well, just let David know I called. And he can call my cell if he has anything to talk about.”

“All right, I certainly will,” she said, and hung up.

That was an odd way to put it, saying if I had anything to talk about with him that I should call. He called me, so he obviously had something on his mind. If I had anything to ask Byrne, I would have called him myself.

He and Jennings spoke for only thirty seconds. Jennings had researched Overstock, including doing some “comparison shopping” on the site and building a spreadsheet, where she modeled Overstock’s performance. She performed financial analysis, including comparing the stock value of Overstock, which was a large number, with Overstock’s profits, a negative number. The spreadsheet also identified rising customer acquisition costs, which is not good. But she didn’t tell Byrne any of that.

I probably would have called him back, but I didn’t have a chance that day, and after hearing about the conference call the next morning, I decided to steer clear of him. So I never did call him.

But I did decide to listen to the conference call and could not believe what I heard. Byrne went on a bizarre tirade. He made a flurry of charges against so many people and organizations that it would be funny except it was really sad, because he actually meant it and some folks actually thought he was right.

“Even hardened denizens of Wall Street were shocked by a conference call that Patrick Byrne, the CEO of the retailer Overstock.com, held on August 12,” Fortune reported. “‘I want to get something off my chest,’ Byrne announced. Then he launched into a rant about a ‘Miscreants Ball’ in which he mentioned hedge funds, journalists, investigators, trial lawyers, the SEC, and even Eliot Spitzer.”

This book shows that this is the opposite of how it works. Nobody has cooperated with Greenlight.

According to Byrne, the conspiracy is