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Patrick Byrne, Overstock C.E.O., Resigns After Disclosing Romance With Russian Agent Patrick Byrne, Overstock C.E.O., Resigns After Disclosing Romance With Russian Agent
(about 7 hours later)
Patrick Byrne resigned as chief executive of the online retailer Overstock.com on Thursday, saying he had no choice but to quit because of the attention stirred up by his public disclosure of a relationship with a woman accused of being a Russian agent. For two decades as the chief executive of the online retailer Overstock.com, Patrick Byrne has never been far from controversy.
Mr. Byrne said in a letter to shareholders that his continued presence at Overstock’s helm “may affect and complicate all manner of business relationships.” He posted elaborate theories on his personal website, railed against an unnamed Wall Street figure he named the Sith Lord and then, last week, delivered the most eyebrow-lifting tale of all. Mr. Byrne — operating on the advice, he said, of the Berkshire Hathaway chief executive Warren Buffett — disclosed that he had been in a romantic relationship with Maria Butina, a woman accused of being a Russian spy who tried to infiltrate circles of political power before the 2016 presidential election.
“Thus, while I believe that I did what was necessary for the good of the country, for the good of the firm,” he wrote, “I am in the sad position of having to sever ties with Overstock, both as C.E.O. and board member.” His statement, with its references to the “Deep State,” “Men in Black” and “political espionage,” sent his company’s shares sharply down and baffled investors. On Thursday, he resigned as Overstock’s chief executive and chairman, saying his continued presence was complicating the company’s business relationships.
Mr. Byrne’s relationship with the woman, Maria Butina, lasted three years, from 2015 to 2018, and eventually became romantic. It did not become widely known until last week, when Overstock took the unusual step of issuing a news release calling attention to it. The release was titled “Overstock.com C.E.O. Comments on Deep State, Withholds Further Comment.” Those relationships, he said in an interview, included the kind necessary to fulfill his plan to sell the online retailer.
That statement was a response to articles by Sara Carter, a journalist and Fox News contributor, about Mr. Byrne’s involvement in the federal inquiry into the 2016 presidential election. Mr. Byrne said he had been helping law enforcement agents — whom he referred to as “Men in Black” — with their “Clinton Investigation” and “Russia Investigation.” “My presence could — and likely would — be disruptive to strategic conversations that are occurring, one of which is with my most preferred suitor in the entire industry,” he told The New York Times. He declined to name that potential buyer.
Mr. Byrne said in a separate interview that he had met Ms. Butina at a libertarian convention in Las Vegas in 2015. Over the course of their relationship, he said, Ms. Butina spoke increasingly about meeting or seeking to meet people involved in the campaigns of Hillary Clinton, President Trump and others. That, he said, had made him wary. He eventually began communicating with the F.B.I. about his interactions with her. He also said his presence could lead to problems for the company as it tried to renew indemnification insurance for its directors and officers. “The fact that I am so controversial has never been appealing to them, but I know it is salt in the wound now,” he said.
Ms. Butina is serving an 18-month prison term after being accused by federal prosecutors of trying to infiltrate powerful political circles in the United States at the direction of the Russian government. She ultimately pleaded guilty to a lesser charge. At the start of his Overstock days, Mr. Byrne cast an aura as a model dot-com entrepreneur. In the early 2000s, he was at the head of the wave of retailers selling rugs, chairs and furniture online. More recently, he shifted again, to become a significant investor in companies working on blockchain technology, the concept that underpins cryptocurrencies like Bitcoin.
In his statement last week, Mr. Byrne said that his interactions with federal investigators had been “less about law enforcement and more about political espionage conducted against Hillary Clinton and Donald Trump.” But those maneuvers were overshadowed by the theories he promoted on his personal website, DeepCapture.com, and the highly combative approach he took against his critics.
In a separate news release on Thursday, Overstock said that Jonathan E. Johnson III had been named interim chief executive. The company’s shares were up more than 10 percent on Thursday after Mr. Byrne announced his resignation. In the 2000s, he railed against a person he called the Sith Lord, an unnamed Wall Street mastermind he believed was orchestrating a plot to take down the stock of his company. Then, last week put out his statement: “Overstock.com C.E.O. Comments on Deep State, Withholds Further Comment.”
This article will be updated. In it, Mr. Byrne said he had helped the F.B.I. with the “Clinton Investigation” and “Russia Investigation.” Those, he said, “turned out to be less about law enforcement and more about political espionage conducted against Hillary Clinton and Donald Trump.”
Although the statement did not mention her directly, it referred to what he described as a romantic relationship with Ms. Butina, who is serving an 18-month prison term after being accused by federal prosecutors of trying to infiltrate powerful political circles at the direction of the Russian government. She ultimately pleaded guilty to a lesser charge.
Mr. Byrne said he met Ms. Butina at a libertarian convention in Las Vegas in 2015. Over the course of their relationship, he said, she spoke increasingly about meeting or seeking to meet people involved in the presidential campaigns of Ms. Clinton, Mr. Trump and others. That, he said, had made him wary. He eventually began communicating with the F.B.I. about his interactions with her.
Mr. Byrne said he had released the statement because he realized that someone would uncover his involvement in the federal investigation if he did not reveal it himself. He decided to come forward after a conversation with his “Omaha rabbi” — a reference, he said, to Mr. Buffett.
Mr. Byrne grew close to Mr. Buffett through his father, John Byrne, who led GEICO’s financial turnaround in the late 1970s. Berkshire Hathaway invested in and later acquired the insurer. Mr. Buffett later tapped the younger Mr. Byrne to run another Berkshire Hathaway company that made uniforms for firefighters, police officers, nurses and others.
Mr. Byrne bought a little-known retailer in 1999 and transformed it into Overstock.com, buying up inventory from the many start-ups that went bankrupt in the dot-com bust. But shortly after the company went public in 2002, its stock plunged.
Mr. Byrne blamed a vast network of short sellers, which caused a family rift: His father eventually left the board, saying he could not support his son’s crusade against Wall Street.
In an infamous call with investors and journalists in 2005, the younger Mr. Byrne accused a “Miscreants Ball” of unscrupulous hedge funds, research firms, journalists and others who he believed were conspiring to ruin his company and turn a profit. This campaign, he added, was orchestrated by a shadowy figure named after a “Star Wars” villain. (Mr. Byrne and Overstock sued a hedge fund and research firm claiming they had colluded to denigrate the company. They reached a $5 million settlement with the hedge fund and an undisclosed settlement from the research firm, the company said at the time.)
Overstock survived the economic crisis of the late 2000s, but has struggled during a recent boom in online furniture sales, as competitors like Amazon.com, Wayfair and others emerged. At the same time, Mr. Byrne’s focus shifted away from the company’s core business and toward the next big idea: blockchain technology. Through an entity inside Overstock called Medici Ventures, Mr. Byrne and his team began to invest in a number of blockchain companies.
While Mr. Byrne is stepping away from Overstock, he remains deeply entwined with it. He continues to be its largest shareholder, holding 15 percent of the company, and has a significant personal investment in one of the blockchain technologies the company has invested in.
“They’ve invested in a lot of blockchain companies. It’s early-stage stuff,” said Allen Klee, an analyst at Maxim Group, an analyst who covers Overstock. “They’ve been losing money on it, but there could be two or three of them that might eventually hit it out of the ballpark.”
Mr. Byrne’s resignation sent the company’s stock up more than 8 percent. The company named Jonathan E. Johnson III as its interim chief executive. In an interview, Mr. Johnson said the resignation was entirely Mr. Byrne’s decision.
But Mr. Byrne’s departure leaves many big questions for Overstock.
“Now that he’s out of the picture, I think that will accelerate the sale of the retail side of the business,” said Tom Forte, an analyst at D.A. Davidson. Mr. Forte said its potential buyers could include Costco, Target and T.J. Maxx.
Mr. Byrne said he would continue to be involved in the company’s blockchain investments and perhaps a new business that will apply the blockchain to the market for electrical power. “But first I want to surf,” he said.
And Mr. Byrne has no plans to remain quiet. He said he intended to relaunch his website, DeepCapture.com, and “continue to speak to the world.”