Overstock CEO Patrick Byrne resigns after ‘deep state’ controversy

Overstock.com Inc.’s Patrick Byrne finally gave his critics the flameout they’ve been predicting for years.

In a 1,600-word email statement in which he vowed to disappear “for some time,” Byrne, 56, resigned as chief executive and board member of Overstock, the online retailer he has led for 20 years.

In a series of public announcements in the last two weeks, the flamboyant entrepreneur cited entanglements with the “deep state” that included cooperating with law enforcement agents he called “Men in Black” with their “Clinton Investigation” and “Russia Investigation.” Byrne said he’d been romantically involved with Maria Butina, a Russian operative jailed for failing to register as a foreign agent. When it came to explaining how these confessions fit together and why they forced his resignation, Byrne has proved less than coherent.

“While I believe that I did what was necessary for the good of the country, for the good of the firm, I am in the sad position of having to sever ties with Overstock,” Byrne wrote in the Thursday statement.

Byrne’s bizarre comments — contained in Thursday’s statement, in an Aug. 12 release and a New York Times interview published Aug. 15 — come as little surprise to followers of his career. After all, this is the e-tail impresario and cryptocurrency and blockchain evangelist who espoused grassy-knoll theories about Wall Street and the evil — and unnamed — “Sith Lord” hedge fund manager who, he said, conspired to take him down.

He likened Overstock’s crypto ambitions to Jonas Salk’s polio vaccine and joked on a conference call in recent weeks about lending office space to the Securities and Exchange Commission amid an investigation into the company’s tZero blockchain push.

Byrne has talked about the dark underbelly of Wall Street, been spoofed in the tabloids with UFOs hovering over his head and accused journalists of performing sex for access. He launched Overstock in 1999 as a sort of internet garage sale.

His departure takes effect Thursday. He’ll be succeeded by director Jonathan Johnson on an interim basis. Johnson has been with the company for nearly 17 years and recently served as president of Overstock’s blockchain business, Medici Ventures.

Confused investors

Passages in Byrne’s Aug. 14 release bewildered investors and left some wondering about his stability. The statement quoted Byrne as saying the investigations were “less about law enforcement and more about political espionage.” He elaborated in the New York Times interview, saying he went public this month because of concern about the U.S. government’s prosecution of Butina, who is serving an 18-month prison sentence.

Butina is a self-styled Russian gun-rights activist who befriended senior officials from the National Rifle Assn. and Republican Party in the run-up to the 2016 election. Aspects of Byrne’s story remain fuzzy, but some of it can be fashioned from the New York Times’s account of its interview with him, Overstock’s statements and articles published on the website of a Fox News contributor named Sara Carter, which Byrne “confirmed.”

In those, Byrne is depicted as becoming involved with Butina after they met in 2015, growing suspicious of her as she pressed for information on Donald Trump and Hillary Clinton, notifying the FBI of their interactions, then coming to regret the handling of her prosecution.

Overstock shares surged as much as 18% in trading Thursday after the announcement. They later pared gains, closing up 8.3% at $21.12. That’s still down more than 15% since Overstock published Byrne’s statement Aug. 12.

Stock catalyst

Byrne’s exit “is a tremendous catalyst for the stock,” said D.A. Davidson’s Tom Forte, one of two Wall Street analysts covering Overstock. “I think the latest controversy was one too many.”

Overstock has been considering selling its online retail business and Byrne’s departure will probably accelerate that process, according to Forte, who is bullish on Overstock.

“I think his legacy will be the shareholder value created on the blockchain investments,” he said. “He saw the writing on the wall early on.”

For all his weird, inspired and ill-considered pronouncements, Byrne was done in not by something he said, but rather by his relationship with a Russian operative. How long he remains out of the public eye is one more mystery in his volatile life story.