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Patrick Byrne Misses Golden Opportunity to Solicit Potential Auditors

Thumbnail image for patsy_byrne.jpgJust when we thought the hubbub around shareholder servant Patrick Byrne had gone on hiatus, we came across a post from Gary Weiss telling us that Patsy bailed on a CNN appearance for State of the Union with John King.
According to the website, “Patrick Byrne, Chairman & CEO of, looks at how consumer spending will fare this holiday season during a global recession.”

As Weiss notes:

Seriously, though, CNN’s bookers had no choice. What other CEO of any retail outlet bigger than a pushcart would be available during the busiest retailing weekend of the year? Byrne was scheduled to appear from studios in San Francisco, not Salt Lake City, where the corporate headquarters is located.
Here he was, while his company teetered on ruin, either flying into San Francisco for the chance to get his puss on national TV, or living it up on Telegraph Hill or wherever, far from his beleaguered and SEC-investigated company.

Apparently Byrne was late and dropped from the show. There is no transcript available for his appearance but if his smiling mug (hopefully posing on a Segway) made an appearance, by all means let us know.
In all likelihood, he was on the hunt for Friehling & Horowtiz’s San Fran office but an open plea on national television seems like a better way to find his company’s next auditor. Oh well. Next time!
“Economic Expert” Patrick Byrne Dumped by CNN [Gary Weiss]
More GC Coverage of Patrick Byrne/Grant Thornton saga:
Patrick Byrne: Noooo, Grant Thornton, You’re Lying
Grant Thornton: Patrick Byrne’s Pants Are on Fire

Grant Thornton: Patrick Byrne’s Pants Are on Fire

patsy_byrne.jpgWant more twists out of the asylum known as You got it. filed an amended 8-K yesterday — after the markets closed — that included a letter from GT to the SEC. The letter, in so many words, says that OSTK lied about GT’s knowledge about the hocus-pocus accounting irdinary, every day case of client and auditor going their separate ways, the auditors letter would basically say, “Yeah, we’re cool and we’re moving on.”
But in this case, since we’re dealing with Patrick “I’ll open this letter with Nietzsche” Byrne, we’ve got an auditor saying, “Um, yes, this is what happened. In CRAZY TOWN.”

To wit (our emphasis):

We disagree with the Company’s statement in paragraph 7 “that upon further consultation and review within the firm, Grant Thornton revised its earlier position” regarding the previously filed 2009 interim financial statements. This statement is not accurate. The Company brought the overpayment to a fulfillment partner to Grant Thornton’s attention in October. After additional discussions with the Company, the predecessor auditor and receipt of additional documentation from the Company we determined that the Company’s position as to the accounting treatment for the overpayment to a fulfillment partner was in error. Further the Company’s statement does not address the fact that the consultation noted in paragraph 5 was in relation to the ongoing incomplete review of the September 30, 2009 interim financial statements.

Hang in there, GT isn’t done:

We have also read Item 4.02 of Form 8-K of, Inc. (“the Company”) dated November 16, 2009 and disagree with the statements concerning our Firm contained therein. During the course of our incomplete review of the Company’s September 30, 2009 financial statements, we advised the Company that disclosure should be made to prevent future reliance on its March 31, 2009 and June 30, 2009 financial statements. We advised the company to make the disclosure because we became aware that material modifications should be made to the previously filed 2009 interim financial statements to conform with US GAAP. Such modifications are necessary due to the Company having reduced its cost of goods sold in the first quarter of 2009 by receipt of a refund of an overpayment to a fulfillment partner.

There you have it. Grant Thornton, in extremely diplomatic manner, is calling Patrick Byrne and liars.
Now after considering both the humble servant’s story and GT’s letter, our instinct tells us to go with GT. Obviously we’re partial to the servants of the capital markets but the other mitigating factor is, let’s see, Patrick Byrne is off his rocker.
Undiagnosed mental conditions aside, we wish we could give GT more credit for calling BS on a slimy client. Fact of the matter is, they were warned by Sam Antar back in March — when they took OSTK on as a client — that they were in for trouble:

I wish that I can wish you luck with your new client. However, I cannot wish you luck because you apparently ignored the basic “smell test” in evaluating as a potential client.

Apparently Grant Thornton, like your predecessor, PricewaterhouseCoopers, did not carefully examine false claims about’s financial performance, dating back almost ten years by CEO Patrick Byrne. You would have discovered that Byrne has no problem habitually lying to the investors, the news media and the public.

So as you can see, this is all very awk. In GT’s case, they were explicitly warned to stay the hell away from OSTK. And any auditor worth their salt would take one look at this company and get a feeling like their body was covered in centipedes.
As for Patsy and OSTK, well, as Gary Weiss notes, “Overstock will be tossed onto the pink sheet ant hill where it really, seriously folks, really belongs.” Indeed.
We asked for a show of hands yesterday on who you thought would roll the dice with Pat and Co. and so far KPMG has the lead which seems a tad ludicrous. But hey! We’re not one to argue with the voice of the people.
Voting remains open until the end of today, so check out the latest tally and throw support behind the next firm to get tangled in the Patrick Byrne web. We’ll continue to update you on this horror show as it develops.
Open Letter to the Securities and Exchange Commission Part 3: Lied About Grant Thornton and Concealed Error [White Collar Fraud/Sam Antar]
Grant Thornton to SEC: Lied [Gary Weiss]
Also see: The Auditor Disagrees With [Floyd Norris/NYT]
Overstock’s Fired Accounting Firm Says Overstock Is Lying [Silicon Alley Insider]