sec investigation

About the SEC “sprinkling holy water” on Overstock.com

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Wacky Patty ByrneLast week in the Overstock.com (NASDAQ:OSTK) earnings conference call, the company’s executives had the following to say about the SEC’s investigation of the company:

Patrick Byrne

So, is it fair to say that all these other issues that the knuckleheads keep on raising as issues, the SEC examiners, looked at and sprinkled holy water on?

David Chidester

Yeah, I mean they took a deep dive they do that every three years or so. And again they are very good to work with. It is not adversarial at all and we’ve got all the issues resolved and it’s nice to know that we could move forward.

Those statements by Patrick Byrne and David Chidester were a big no-no, for two main reasons. Continue reading

SEC Drops Informal Investigation into Usana Health Sciences

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Last week the Securities and Exchange Commission (SEC) informed Usana Health Sciences (NASDAQ: USNA) that it was closing its informal investigation into the company and taking no further action at this time. The pro-MLM camp has trumpeted this as a complete victory for Usana, proclaiming that the SEC basically said their business structure was completely legal and all was rosy at the company.

What does the letter from the SEC to Usana really mean? It means that the SEC is closing their investigation for now. Nothing more, and nothing less. Continue reading

A Nice Warmup for the SEC on Herbalife

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News on Herbalife (NYSE:HLF):

5:25PM Herbalife in its 10Q discloses SEC has issued a formal investigation (HLF) 39.35 +0.65 : The co says “on September 20, 2007, the Company was orally advised by the Los Angeles Regional Office of the SEC that the SEC had issued a formal order of investigation into the timing of trading in Herbalife securities by a former mid-level employee. Continue reading

An Excellent Analysis of the Demise of Usana

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An article today on SanDiegoReader.com does an excellent job of highlighting what’s been happening with the Usana case. As if I’d ever let you forget, I will remind you that Usana Health Sciences is being investigated by the Securities and Exchange Commission for violation of securities laws.

Their investigation was initiated based upon a lengthy report authored by Barry Minkow and Fraud Discovery Institute. Contributors to the investigation included me, Robert FitzPatrick, Jon Taylor, and Doug Brooks, to name a few.

Here’s a summary of the case, with the help of the article: Continue reading

Overstock.com and its phony earnings figures

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Patrick Byrne, CEO of Overstock.com O.coToday on the White Collar Fraud Blog, Sam Antar has the first part of a three part series on the inventory numbers at Overstock.com. It’s curious how Overstock’s inventory numbers always seem to create more questions than they answer.

Sam has some insight into this. As the former CFO of Crazy Eddie, a company that eventually folded after a massive fraud was uncovered, he says that one of the keys to perpetrating the fraud for as long as they did was deflecting attention away from suspicious items. Always put the focus back on the positive; keep everyone looking away from the negative.

In that vein, Overstock’s CEO Patrick Byrne (who is the target of a federal investigation) seems adept at doing exactly that. Unless, of course, a fraud investigator or investigative reporter is looking at his numbers. Continue reading