Why Does Whitney Tilson Associate With A Known Convicted Criminal?

Every now and then we here at SBSB get an email throwing someone under the bus. Lately, we have a source that is giving away the farm on the machinations of Whitney Tilson. We here at SBSB wish to thank this brave source.

In the latest email from our source, we were told to goggle the phrase; "paragon of integrity Whitney Tilson gets laryngitis" It sure did wet our collective whistles here at SBSB to read such a cryptic phrase. However, like Curious George we just needed to find out what this was all about and where, once we found what we were directed to google, what would it mean?

So we found what it is. A blog article over at Deepcapture entitled; "Paragon of Integrity Whitney Tilson Gets Laryngitis" written by Overstock.com CEO Patrick Byrne,  who happens to be leading the charge against naked short selling, back in April of 2011. Hmm, we must read this cracked the Crack Team. And we all did.

It seems that Whitney invited Patrick Byrne to speak to the 2nd Annual New York Value Investing Congress back in November of 2006. At the last minute, hedge funders Jim Chanos and David Einhorn (yes, that David Einhorn Mets fans!), that Byrne not be allowed to appear and naturally Whitney "caved and disinvited" Byrne. But why one might ask.

Now bear with me for a moment. Back in 2008, Whitney slammed Byrne, while defending Einhorn. But, Byrne and Deepcapture kept on chugging along. They soon began writing about Sam Antar, the former Crzay Eddie CFO and Barry Minkow, both "hardcore felons." But soon it became evident to Deepcapture that convicted felon Barry Minkow was working for Whitney Tilson, claiming to be doing Whitney's research.

As noted by Florida Judge Gill Freeman;

Fact No. 29: Minkow withheld documents he perceived to be harmful to his case. Among other things, the concealed documents demonstrate:

• that Minkow’s investigators questioned the accuracy of statements of fact he included in his report on Lennar;

• the perfunctory nature of Minkow research and investigation before he accused Lennar and its executives of operating like a ponzi scheme, giving its COO a disguised kickback, being a financial crime in progress, and other statements;”

Deepcapture soon learned that Whitney Tilson had paid $40,000. But as Deepcapture and Byrne asked, "to do what?" And, "What was Whitney paying Minkow for?" In March, 2011 Barry Minkow was arrested, and last week plea bargained his way down to another five years of jailhouse stew.

On March 17, 2011 Patrick Byrne wrote this on Deepcapture; 

Barry Minkow spent last week in plea negotiations regarding a federal indictment on which he is hoping to receive only 5 years, says his lawyer. (LA Weekly: Barry Minkow to plead guilty to insider trading).  In December, 2010, a Florida judge threw her proverbial book at Barry Minkow, and it glanced off Sam Antar, who had been paid Barry’s paymaster to the tune of $250,000, Barry had testified. In addition, the judge found as a matter of fact that Sam Antar destroyed documents necessary for her trial. Minkow also gave sown testimony that well-known New York hedge fund manager Whitney Tilson paid him $40,000: more on this below.

Sam Antar, generally not short of opinion, has suddenly developed laryngitis.

Barry Minkow and Sam Antar are two of the most remarkable swindlers in recent American history, each guilty of frauds measured in the hundreds of millions of dollars. Two decades ago their names gave off the same foul stench that Bernie Madoff’s does today.

Whitney Tilson is invited to explain to DeepCapture’s audience why he would join legendarily convicted financial criminal Sam Antar in making payments to also-legendarily convicted financial criminal  Barry Minkow, who now is pleading guilty to his 58th financial felony. (You know how to reach me, Whitney. DeepCapture will give you 250 words, with no editing. But we may provide commentary.   )

 Then on March20, 2011 Byrne emailed Whitney;

From: Patrick Byrne
Sent: Sunday, March 20, 2011 7:32 PM
To: ‘WTilson@T2PartnersLLC.com’
Cc: ‘feedback@tilsonfunds.com’
Subject: RE: Request for comment on news story

Dear Whitney,

While I am at it, I have two other questions:

1.       You wrote a story ( http://seekingalpha.com/article/80997-nyt-smears-david-einhorn-again ) in which you said:

L) All this is a bit unsatisfying for those who would want to regulate short sellers. But unfortunately, bad news is part of any financial system.

Davidoff is becoming more and more incoherent as he tries to wrap up this hatchet job of a post. He appears to be saying that because the market sometimes (he asserts) is a sucker for media hype (by, I assume, market manipulating short sellers?), there are people who want to regulate short sellers and prevent them from ever saying anything negative about any company. Other than Patrick Byrne, who are these people?

When you wrote this, did you really believe that I “want to regulate short sellers and prevent them from ever saying anything negative about any company.”

a.       If so, on what basis did you ascribe that belief to me?

b.      If not, why did you ascribe the belief to me?

2.       Do you consider Barry Minkow’s plea bargaining to a 5 federal-year prison term (per his lawyer: see Minkow in Plea Talks With U.S. Prosecutors Over Fraud Case, Lawyer Says) an  inappropriate attempt by the federal government to “regulate short sellers and prevent them from ever saying anything negative about a company”?

I look forward to the courtesy of your response. I trust 72 hours will be sufficient.

If you choose to respond on your own blog, I predict you will be so unconfident of your response that you will find a circumlocution to avoid mention of “DeepCapture” (just wanted to get that on the record now).

Very respectfully,

Patrick Byrne

Journalist, DeepCapture.com

Whitney has yet to answer, and as far as we know Whitney will not answer.  Why would Whitney Tilson be associating with people like Barry Manikow ?  Surely Whitney will be the first one calling for a teacher's head if that teacher so much was accused of passing gas in the incorrect manner, so why does Whitney get a free pass.

The Crack Team passed a resolution calling upon Whitney Tilson to explain himself to those of the United States of America and in particular to all those who have lost money due to Whitney alleged mismanagement. We also call upon the SEC, the FBI, and any and all law enforcement agencies to look into Whitney's dealings. Justice must be served. Not tomorrow, not next month, not next year, but now.

Oh, unlike Whitney we hear at SBSB are a bunch of teachers who leave financial stuff to the experts. If anyone would care to expand on the implications and ramifications of Whitney foibles reported here please do not hesitate to email.