Russian Mafia in bed with Wall Street, CEO says
By: Dan Treasure
Issue date: 3/5/08 Section: News
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Every day, thousands of Americans look to invest their money in stocks, and many of them go through brokers and traders to simplify the process.
Unfortunately, according to Overstock.com CEO Patrick Byrne, a majority of those purchasers will be victims of Wall Street's criminal tactics and will help line the pockets of corrupt brokers and lawyers. Byrne, a Utahn who founded Overstock.com, talked to a crowd in the Union on Monday about how New York financial media and law firms have teamed up with big-wig business elites to create massive amounts of profit at the cost of American consumers.
Byrne said when someone purchases a stock, there is a three-day stock settlement period during which a broker or a trader must provide a purchaser with that stock. However, through loopholes in the system, brokers and traders can legally not provide you with that stock almost indefinitely, giving the purchaser an IOU instead, Byrne said.
"It's my thesis that certain people have figured out how they can abuse that loophole, and flood the market...often in connivance with a broker dealer," he said.
Through this "flooding," the brokers can essentially issue the same stock to hundreds of people at no penalty. By increasing the supply of stocks, these dealers can dramatically drop the price according to the laws of supply and demand.
Byrne showed how the "cheating parties" make money off of a stock price dropping through a process called "naked short selling."
In brief, Byrne showed that "naked short selling" occurs when certain hedge funds and broker-dealers flood the market for a particular firm's stock with IOU's for that stock, cracking the market in it. If they ever have to make good on their IOU's it is at fraction of the original price, and they get to pocket the difference.
These methods are used to create huge profits, often killing the victimized corporation in the process, and leaving the purchaser high and dry, Byrne said.
In his efforts to stop this charade, Byrne filed a $3.5 billion lawsuit against Goldman Sachs, Morgan Stanley and nine other well-known brokers. Byrne said numerous publications, including the New York Post and Forbes magazine, have protested his "crusade," painting him as a crazed lunatic who is angry about Overstock.com's own stock price drop. Byrne said the Mafia has become a silent player in the Wall Street game.
"You don't have to dig very far into this before you get to organized crime," he said.
As an example of its involvement, Byrne told a story from a trip to the East Coast.
"About 15 months ago I was invited by a stranger into a greasy bar in Long Island," he said.
Claiming that he was Russian, the informant told him, "We have a message from Russia. We are about to kill you. We are about to kill if you if don't back down."
Additionally, Byrne remarked on how writer Mark Mitchell was threatened in New York and told to stay away from "the Irish guy," which Byrne believes was himself.
"I've been looking at this for two years, and I'm pretty much convinced this is the single biggest scandal in the history of American journalism," said Mitchell, a former financial writer for Time magazine.
Byrne posted the presentation to his website, www.deepcapture.com, along with a blog to document his "crusade" against Wall Street.
Editor's Note: Facts in this article have been altered to reflect the public record. A detailed correction will be printed in the March 6 edition of The Chronicle.
d.treasure@chronicle.utah.edu
Viewing Comments 1 - 10 of 49
lenofus
posted 3/05/08 @ 4:41 AM MST
I was a broker for 25 years. These people destroyed me, and my career. How about the rest of the country getting behind this brave man? He is "dead" right. (Continued…)
Lawrence
posted 3/05/08 @ 6:10 AM MST
I would give Mr. Byrne My Vote for President! We have TERRORIST running this Government! They say we are Fighting Al-Queda when in fact Al-Queda has already WON the WAR! They Control America just a different Cell! I an Disgusted to be an American. (Continued…)
SociallyConstructed
posted 3/05/08 @ 10:04 AM MST
Mr. Byrne may be out to save the world from the evils of Naked Short Sellers but in the process has forgoten about his own people. Start your humanitarian efforts within your own company- Pay your employees what they are worth and teach your upper management to manage, not react, and you might get somewhere Mr. (Continued…)
bornbrok
posted 3/05/08 @ 11:09 AM MST
Did you ever happen to notice how all the 'RUSSIAN' mobsters are jewish, and all the crooks on Wall Street are also jewish.
Thats who the problem is with - not russians, but jews. (Continued…)
guru2
posted 3/05/08 @ 11:12 AM MST
Naked Shorting is real. It has destroyed your country and financial system. The SEC are puppets for the criminals, REG SHO was a joke, The Grandfather Clause was a joke, when will The revolution begin!
It will begin with Dr. (Continued…)
SamE
posted 3/05/08 @ 11:15 AM MST
sociallyconstructed, can't the man do both? it is a common practice to try to direct the conversation away from the point when the point gets to close to the mark or the "Marx"? We need both social construction and business people who are aware that their business is dependent on the social contract. (Continued…)
tkalantzis
posted 3/05/08 @ 11:25 AM MST
Gary Weiss should be investigated for his ties with organized crime .
Byrne's exposing the scum .
William
posted 3/05/08 @ 11:32 AM MST
HAHA, I was JUST thinking the same thing. "Did you ever happen to notice how all the 'RUSSIAN' mobsters are jewish, and all the crooks on Wall Street are also jewish. (Continued…)
Kay
posted 3/05/08 @ 11:53 AM MST
William,,your correct...
watcher
posted 3/05/08 @ 12:35 PM MST
It looks like someone is trying hard to discredit Mr Byrne's message by writing comments that should imply that anti semites and conspiracy theory lunatic hilly billies are the only people being concerned about this. (Continued…)
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