Russian Mafia in bed with Wall Street, CEO says       
Published
on Wednesday, March 05, 2008.

 Source: Daily Utah Chronicle
         
 

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" is a three-step
process. First, certain people (in this case journalists and lawyers in the
New York financial industry) receive word from brokers that a specific
corporation's stock prices are about to fall and are given a certain
number of shares for that company. Next, these reporters or lawyers
immediately sell those stocks at the high price. The brokerage dealers then
flood the market with IOUs, tanking the price. The lawyer or journalist
then buys back the same number of stocks sold, only this time at a
fraction of the cost. They then cut the brokers a percentage of the
profits gained.

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 his business partner, Mark
Mitchell, was assaulted in New York and told to stay away from author Gary
Weiss, a critic of Byrne's theory on "naked short selling." Weiss published
the book Born to Steal, which is about the Mafia's infiltration of
Wall Street since the 1990s.

"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 who is
involved in the lawsuit.

Byrne posted the presentation to his website, www.deepcapture.com,
along with a blog to document his "crusade" against Wall Street.



d.treasure@chronicle.utah.edu