February 27, 2006… Herb Greenberg is leaning forward on his stool. His arms are flapping and his eyes are popping. His face has gone hot-purple, stark against the red-blue television glow. It is six months since Patrick’s now-legendary “Miscreants’ Ball” presentation, and, Herb, the famous journalist, is live on CNBC. He is pretty sure there is a conspiracy. It is a conspiracy to get Herb. Yes, “What’s really going on is there’s a conspiracy. There’s another conspiracy, there is a conspiracy-the real conspiracy, if there is a conspiracy, is a conspiracy…it’s aaaall tied to the same thing, this whoooole concept of trying to make sure, make it so this guy [Herb] can’t do his job anymore.”
Sitting next to Herb, nodding in agreement, is Jim Cramer, host of “Mad Money.” This program is all that keeps CNBC out of the ratings quicksand, and it is easy to understand its appeal. Cramer is manifestly chimpanzee-like in both comportment and worldview–a fully arresting specimen of unsated mammalian appetition–a self-styled “journalist” who grunts and growls and snorts and says funny things like “Booyah!” while jumping up and down, smashing chairs, and telling people how to make shitloads of money gambling on the markets. Good TV!
It is impossible to overstate the effect that these characters have had on our public discourse. It is not just that they have propagated a style of “journalism” that sees short-term stock flipping (rather than long-term investment) as the holiest of all business endeavors. It is that close associates of Herb and Cramer have seized control of a vast swath of the American financial media. Indeed, if you have seen a negative story about a public company in recent years, the odds are greater than even that it was written by a friend-of-Cramer.
Many of Cramer’s friends are former employees of TheStreet.com, a financial news website substantially owned by Cramer. They have included the editor and top columnists for The Wall Street Journal “Money & Investing” section, top business writers for The New York Times, reporters at Fortune magazine and BusinessWeek, the editor of The New York Post business page, the editor of MSN Money, and others. Herb, a CNBC commentator and a star columnist for MarketWatch.com, was among the founding editors of TheStreet.com - “Murderers Row,” they called themselves.
I have analyzed well over a thousand stories written by this clique of journalists. The vast majority of them were sourced from a small group of short-sellers who are also friends of Cramer. Other popular sources for this group of journalists include convicted felons, mobsters, dubious private investigators, crooked lawyers, hired stock bashers, and gun-toting goons - most of whom are tied to the Cramer constellation of short-sellers.
Some of the stories written by these reporters are accurate enough. But many are not. The journalists misconstrue data with seemingly purposeful intent. They exaggerate and obfuscate. They publish innuendo or merely repeat, Deus Optimus Maximus, the words of their hedge fund and criminal friends.A single negative story by one of these reporter-thugs can send a company’s stock tumbling by more than 50% — pure profit for their hedge fund sources, who of course sell the company short (often right before the articles are published). Meanwhile, an overwhelming majority of the companies targeted by these journalists will also be the victims of phantom stock selling and other shenanigans. The journalists do not mention this in their stories, and in fact go out of their way to deny that phantom stock exists.
Anyone who says otherwise is subjected to a vicious media smear.
So it was that Patrick’s “Miscreants’ Ball” presentation provoked a
barrage of media coverage. Setting the tone was a next-day story in The
New York Post business section, written by Roddy Boyd and edited by Dan
Colarusso, formerly of TheStreet.com. The story was accompanied by a
large photograph that showed Patrick in a tight t-shirt, arms spread,
slightly bug-eyed. Hovering over his head, there was a big, multicolored
flying saucer.
Patrick Byrne “is not currently under any psychiatric care,” reported the Post, “and [a company spokesman confirmed] he was sober when he gave the presentation.”
* * * * * * * *
Patrick is unfazed. He works tirelessly, criss-crossing the nation, gathering evidence - telling all who will listen that the hobgoblins of finance and their snickering note-takers are destroying companies and putting the American financial system at risk. But these miscreants–they control the airwaves, they’ve seized control of the whole gosh darn media machine and the message they keep on delivering, unchallenged, over and over, is that Patrick Byrne is an incontrovertible psychopath. They say he’s a wacko. They say he’s a liar, too. And a creep. A menace. A crook, even! They says his company is the next Enron. Hell, they say, he’s got a nudie bar dancer running the place!
A nudie bar dancer? Yes, that’s what some journalists say. The story first appears in November, 2005, on a blog authored by Jeff Matthews, a former writer for TheStreet.com. Patrick has to go to great lengths to demonstrate that the story is false - that his vice president of marketing is not and never was a stripper. This, he says, is not to disparage the profession–he’s friends with a few “wigglers” and they’re all finer human beings than certain New York hedge fund managers and financial journalists.
Which, by February 2006, seems to me an awful lot like wisdom - a view supported, anyway, not only by the noble spirit and perspicacity of your average wiggler, but also by the spectacle that is unfolding live on CNBC.
Herb the famous journalist is yammering about a conspiracy - a conspiracy to get Herb. He is angry. He is perhaps also scared. He is downright hysterical because the government is investigating. This investigation will soon be derailed - the victim of cowardice and strange events - but for now, in February 2006, the Securities and Exchange Commission would like to know whether a financial research shop called Gradient Analytics conspired with short-selling hedge fund managers, including a man named David Rocker, to disseminate false information about public companies as part of a scheme to manipulate stock prices. The investigators believe that Jim Cramer and Herb are central to this conspiracy and have issued them both with subpoenas. TheStreet.com got a subpoena, too.
Herb thinks this is an outrage-a conspiracy to destroy Herb. He says he has no special relationship with Rocker or Gradient. Cramer says he’s never heard of Gradient and he’s met Rocker only once - in a grocery store.
So Herb and Cramer have commandeered the CNBC television network. For several days, the endless lead-ins: Coming Up Next: We’ll hear from Herb! Coming Up Next: Herb and Cramer tell the world that Patrick Byrne and his band of blogging freaks orchestrated the “whoooole” thing - the whole government investigation. Patrick Byrne is rich. He’s suspicious. He’s a menace. He orchestrated the “whoooole” investigation to silence the free press - the free press as epitomized by Herb and Cramer. Coming Up Next: It’s an outrage! Coming Up Next: It’s a conspiracy!
Coming Up Next: More on this conspiracy.
* * * * * * * *
Cramer, who is a sociopath, owns TheStreet.com with Marty Peretz, who is an aristocrat. Peretz is also the former editor of the New Republic magazine. He dabbles in high finance and Harvard professing, which has resulted in his entrusting a large portion of his family fortune to a close-knit group of hedge fund managers, several of whom were his students. For example, Cramer was his student. Then Cramer was destitute. He lived in a car with a loaded gun hidden under the seat. Eventually, though, Peretz gave Cramer some money to start a hedge fund, which Cramer managed with celebrated ruthlessness until he resolved to seek spiritual enlightenment as a TV news host.
Cramer had originally planned to run his hedge fund out of the offices of Ivan Boesky. Shortly before he was to move in, however, the feds busted Boesky for insider trading, making him one of the most famous criminals of the 1980s. (This is not necessarily to suggest that Boesky is the “Sith Lord” mentioned in Patrick’s “Miscreants Ball” presentation. Some people have wagered that Patrick was referring to Michael Milken, a business colleague of Boesky known as the “junk bond king,” who also went to prison in the 1980s. Patrick has since modified the analogy, saying that the crime has multiple masterminds - “like Al Qaeda”).
When Boesky went to prison, Cramer worked instead with hedge fund manager Michael Steinhardt. The media portrays Steinhardt as a financial wizard, a deep thinker and an all-around swell guy. The truth is, he’s a thug who perfected the concept of trading on privileged information, and pounded it into the heads of his employees. “What’s your edge!?” he’d shout, pacing his trading room floor. “What’s your fucking edge!?” After one of Steinhardt’s tirades, a top employee (and the godfather to Steinhardt’s children) had a heart attack. It is said that Steinhardt showed no remorse.
Indeed, Steinhardt has one of the most fearsome reputations on Wall Street. Which is perhaps unsurprising given that Steinhardt’s father, Sol “Red” Steinhardt, was a mobster once described by a Manhattan district attorney as the biggest Mafia fence in America. Steinhardt Sr. worked for the Genovese organized crime family, with goons like Meyer Lansky and Vinnie “Blue Eyes” Alo, before he was sentenced to a number of years in Sing-Sing prison.
By Steinhardt Jr.’s own account, the principal partners in his first hedge fund were the Genovese Mafia, Ivan Boesky, Marty Peretz (the aristocrat who funded Cramer), and a man named Marc Rich. Rich is closely connected to Ronald Greenwald, described in the authoritative book Red Mafiya as the man who, along with the Genovese family, brought the Russian Mob to America.
In 1983, Rich was indicted for trading illegally with Iran while Islamic revolutionaries were holding the American embassy hostage in Tehran. Along with his associate, “Pinky” Green, he fled to Switzerland. In 2001, Steinhardt, a big-time operator in Democratic circles, convinced Bill Clinton to give Rich a scandalous presidential pardon, but Rich remains in Switzerland to avoid paying his tax bill.
In the early 1990s, Steinhardt shut down his hedge fund after he was implicated in a scheme to corner the U.S. treasuries market - a horrendous infraction with serious implications for the U.S. economy.
So this is a rough crowd. Says one Wall Street trader: “It was the day the bad guys came to town — when Steinhardt and his people arrived.”
One of Steinhardt’s people is Jim Cramer. Another is Cramer’s wife, who was known as the “Trading Goddess” when she worked as Steinhardt’s head trader. Maria Bartiromo, a CNBC anchor known as the “Money Honey,” is married to the top partner in Steinhardt’s newest hedge fund. (A former employee of Cramer’s hedge fund has written that Cramer often fed tips to the Money Honey, trading ahead of her stories, and it is rumored that she recruited him to CNBC.)
And then there is David Rocker, the short-selling hedge fund manager believed to be scheming, along with Cramer and Herb, with Gradient Analytics, the financial research shop under SEC investigation in 2006.
Cramer says he’s met Rocker only once - apparently while squeezing the grapefruit at some grocery store. But the truth is, Cramer knows Rocker well. Rocker is a former employee of Steinhardt’s hedge fund. He worked there at the same time as the Trading Goddess.
And, until recently, Rocker was the largest outside shareholder in Cramer’s website, TheStreet.com. Cramer sometimes quotes the hedge fund manager on his television show, and once interviewed him live. Rocker is also a regular writer for TheStreet.com, where he bashes stocks that Cramer subsequently also bashes in multiple stories on both the website and CNBC.
In February 2006, the SEC is investigating Gradient Analytics for disseminating false information about public companies. The agency has affidavits from former employees who say that Gradient’s “independent research” is produced by recent University of Arizona graduates who know little to nothing about finance and essentially take dictation from hedge fund managers, including David Rocker.
One of these employees says that Herb conspired with Rocker to hold his negative stories (premised on Gradient’s false information) until Rocker could establish short positions. This is called front-running - a jailable offense. It is reasonable to suspect that Rocker had similar relationships with TheStreet.com (of which he has owned a substantial portion) and other media.
Not long before Cramer announced his SEC subpoenas, Rocker sold all of his shares in TheStreet.com. Cramer sold around $2 million of his own shares. If Cramer knew about the SEC investigation before he sold his shares, which was almost certainly the case, he was trading on insider information - another jailable offense.
But Cramer don’t know nothin’ about nothin’. And Herb thinks the SEC investigation is an outrage. So Herb and Cramer have commandeered CNBC. They are live on CNBC. Herb has jabbered something about a conspiracy - a conspiracy to get Herb.
And now Cramer is going to show us something.
He’s pulled out a big, red magic marker. Veins are popping, rope-like, from his bald cranium. And he’s snarling. Cramer is actually snarling while he uses the big red magic marker to scribble something on a piece of paper.
He holds the paper up to the camera.
It’s…it’s his government subpoena…Cramer has vandalized his government subpoena! On live TV… in big red letters…
It says, “BULL!”
Russian Mafia Conspiracy on Wall Street in Media and Government - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12- 13 - 14 - 15 - 16 - 17
