Patrick Byrne is many things: The CEO of Overstock.com; The son of former GEICO CEO John J. Byrne; The world’s leading Naked Short Selling conspiratorialist; One of the all-time great practitioners of Issuer Retaliation; A leading voice in teaching the public what a “Cookie Jar Reserve” is, and on and on.
Aside from his other hobbies, Byrne is a self-described Libertarian. And judging from his attitudes toward his customers and investors, Byrne is a shining example of why Libertarianism is a muddled and often evil ideology.
Byrne – who has led Overstock.com to two SEC investigations (the second ongoing) – has now sailed his retail giant into another lawsuit, this one from seven California counties that accuse Overstock.com of fraudulent pricing claims.
Yesterday, the district attorneys of now seven California counties sued Overstock for $15 million, claiming fraudulent pricing practices. The counties had offered to settle with Overstock for as little as $7.5 million, but Overstock refused. … The allegations in California allege one of the oldest consumer scams in the books:
“Beginning no later than January 1, 2006, Overstock routinely and systematically made untrue and misleading comparative advertising claims about the prices of its products,” the civil complaint states. “Overstock used various misleading measures to inflate the comparative prices, and thus artificially increase the discounts it claimed to be offering consumers.”
And with just a few minutes of research, Weiss was able to see the fraudulent pricing practice for himself:
Just for the heck of it I checked out Overstock’s price for the paperback editing of Andrew Sorkin’s Too Big to Fail. The price at Overstock is $11.06 and the search page for the book fraudulently says “compare at $20.55″ and “you save 46%.”
The lawsuit is the latest calamity to strike Byrne and Overstock.com. Aside from the ongoing SEC investigation, and the questions being asked about why Byrne dumped $3 million in OSTK stock before the price dove, Overstock.com’s latest quarterly earnings report was pure fiasco. From crook-turned-whistleblower Sam Antar:
Overstock.com (NASDAQ: OSTK) finally held its scheduled conference call with analysts to discuss the company’s dismal third quarter earnings report which was released last Friday. On that day, Overstock.com stunned investors and reported a Q3 2010 $3.381 million loss or a loss of $0.15 per share compared to a Q3 2009 reported loss of $1.379 million or a loss of $0.06 per share. It was the second consecutive quarter that Overstock.com failed to meet Wall Street analysts’ consensus expectations for earnings. However, instead of facing the music, Overstock.com CEO Patrick Byrne was absent from the call.
While it’s easy to point out that Byrne has decimated Overstock.com’s reputation and finances due to his own mismanagement, his embrace of Libertarianism is not to be overlooked. Because the lawsuit, investigations and attacks on business reporters don’t just point to managerial incompetence. They also point to a “Libertarian” ideology favored by many rich CEOs. And that ideology can be summed up neatly – The rules just do not apply to them.