Overstock.com CEO Patrick Byrne Loses 'Deep Capture' Libel Suit
|Defendant Mark Mitchell: "the truth was of no consequence"|
No libel suit victory is worth celebrating, not even the famous suits against the anti-Semite Henry Ford and the red-baiter Westbrook Pegler. The same goes for the C$1.2 million libel judgment just awarded against Overstock.com CEO Patrick Byrne and his minions for unleashing a campaign of lies.
While occasionally used to advance the cause of truth, as they were against Ford, Pegler and Byrne, more frequently libel suits are used to punish and harass reputable journalists. This is one of those rare cases when a libel suit was used against a corporate astrotufing site dedicating to spreading kooky conspiracy theories and Trumpesque smears.
In a scathing decision released on May 6, a Vancouver court found Byrne and his "Deep Capture" fake news venture had fabricated lurid accusations of criminal conduct against a Vancouver businessman named Aly Nazerali. The damage award consists mainly of punitive and aggravated damages, and the judge found that the conduct of Byrne and his minions was so egregious that he slapped a permanent injunction on the defendants.
|Judd Bagley after his forgery arrest|
I've written about Byrne quite a bit in the past because he was the very worst of Corporate America, from his bizarre stock-market conspiracy theories to his well-documented accounting games, which he countered by vicious personal attacks on critics and the media. He is a kind of small-bore Donald Trump, a "born on third base who thinks he hit a triple" kind of guy. Byrne lies so frequently and with such gusto that it's hard to say if he can distinguish fact from fiction. He is on indefinite leave from Overstock because of a Hepatitis C infection, a disease ordinarily caused by intravenous drug use—or, if you believe him, a wound sewn up by "barefoot doctor in China."
Byrne's main vehicle to attack his critics was "Deep Capture," a fake news website created by his public relations director, a convicted forger and drug addict named Judd Bagley. Joining Bagley was the right-wing conspiracy theorist Mark Mitchell, who was fired several years ago from Columbia Journalism Review. (Bagley went back on the Overstock payroll before the Nazerali articles were published. He was dismissed from the case, as was Overstock itself.)
Mitchell wrote the Nazerali articles and was the main architect of this fiasco. His strange behavior—more like a television detective than a journalist—was lambasted in the decision.
The 102-page judgment, which I've embedded at the bottom of this blog item, is worth reading for anyone who has followed the erratic career of this CEO, who lately has reinvented himself as a Bitcoin advocate. Long before this suit was filed, Byrne was noted for his rich fantasy life. Once he recounted how a gangster straight out of a film noir once sat down next to him at a bar and made threats out of the side of his mouth. He fancied himself "Wall Street's worst enemy," and he expended considerable effort finding journalists dumb enough to believe him (his only success outside Utah was Cade Metz of Wired).
Byrne also has political ambitions, once financed a failed school-choice initiative in Utah, is a major GOP donor and is almost single-handedly financing the Utah governor campaign of former Overstock chairman Jonathan Johnson. The latter has repaid the favor by calling the Nazerali suit "spurious."
As recounted in a November 2015 article in The Daily Beast, the articles made wild accusations. If true, you'd think Nazerali would be in Guantanamo, not Vancouver:
. . . Mitchell described Nazerali as a man in cahoots with “Osama Bin Laden’s favorite financier,” and said that he worked with a variety of criminal outfits around the globe, including La Cosa Nostra, the Colombian drug cartel, the Russian mafia, and various “jihadi terrorist groups” including al Qaeda’s Golden Chain. According to court documents, Deep Capture also accused Nazerali of “delivering weapons to war zones in Africa and to the mujahedeen in Afghanistan,” of orchestrating “small-time ‘pump and dump’ scams… [and] bust-outs, death spiral finance and naked short selling,” and of carrying out dirty work for “a Pakistani ISIS asset” who “works for the Iranian regime.”Nazerali was raked over the coals by Byrne's lawyers in days of pretrial examination. But at the trial the defendants did not put on a case, producing not a shred of evidence. The judge blasted Byrne & Co. for abusing pretrial discovery, saying:
The reasonable inference to draw is that they knew from the beginning of the trial that they could not justify the Articles’ false and extravagant language. Their approach to the defence of the action was an attempt to intimidate the plaintiff and to humiliate him into abandoning his lawsuit.In justifying the award of punitive damages, the judge pointed to the extreme malice shown by Byrne and Mitchell, "the overt animosity, even hatred of the plaintiff, expressed by Mr. Byrne," their "reckless indifference for the truth," their "reckless disregard for the reputation of non-parties." The decision singles out Mitchell's creepy attempt to blackmail Nazerali, contained in an email published in the decision.
Among the highlights, so to speak, of the decision:
• Byrne said to Nazerali during a deposition, in the presence of the court reporter and parties: "I know your kind, you are not the kind that does the dirty work themselves. You employ others to do your dirty work. I hate your kind of people."
• Mitchell emailed Byrne “this is going to be fun” and said, "I am open to changing the story if he can provide other verifiable information that would be valuable” and “I might even suggest that I will be willing to remove his name from the story altogether if he were to provide me with, say, trading records" on a "global terrorist."
• Mitchell added: “if Nazerali agrees, nothing lost, after he gives me the information I will just put him back in the story. Sleazy, but, well it is what it is”;
Sleazy is putting it mildly. The decision concluded:
Mitchell, Byrne and Deep Capture LLC engaged in a calculated and ruthless campaign to inflict as much damage on Mr. Nazerali's reputation as they could achieve. It is clear on the evidence that their intention was to conduct a vendetta in which the truth about Mr. Nazerali himself was of no consequence. Their mission was to expose what they conceive to be corrupt business practices damaging to the global economy. Mr. Nazerali became a convenient means to that end, even when he himself could not be demonstrated to be corrupt."The tortious misconduct of Mitchell, Byrne and Deep Capture LLC demonstrates an indecent and pitiless desire to wound," the decision continued.
The court imposed a permanent injunction on Mitchell, Byrne and Deep Capture, as well as Google, given the likelihood that they will seek to evade payment of the judgment, as well as their "apparent intention to inflict as much damage on the plaintiff." The judgment also provides for imposition of costs, which means that Nazerali can petition the court to award him his legal fees.
The verdict, while not in the megabucks frequently awarded in U.S. courts, is large, perhaps even a record, by Canadian and especially British Columbia standards. At the current rate of exchange it comes to about $925,000 (U.S.), which is well within the capacity of Byrne's trust fund. His father was the insurance mogul John J. Byrne.
Like I said, no libel verdict is worth celebrating, not even this one, brought by the victim of faux journalism written by a faux journalist in the pay of a deranged CEO. I hope that this one doesn't become weaponized against real journalists who have written real articles about bad people. If that happens, it will mean that Byrne, described a decade ago as a "menace" by Joe Nocera of the New York Times, has once again stuck it to the press.
Some previous posts on the libel suit; see also posts tagged "Deep Capture":
- Genesis of a libel: How Mark Mitchell turned a rehash into a nightmare
- Patrick Byrne defies court order
- Mark Mitchell botches CJR article