When he started Barron’s in 1921, Clarence Barron had just exposed Charles Ponzi as a fraud. Ponzi filed a $5 million libel suit against Barron, but wound up in jail. A century later, things at Barron’s are pretty much the same.
Hyped CBD Stocks Need to Chill
Barron’s, 8 April 2019
Health claims for the cannabis ingredient CBD were widespread, but untested. Hucksters claimed it could cure cancer. After Congress legalized the non-intoxicating stuff in late 2018, cannabis stock promoters had a new dream to sell. I explained why CBD was unlikely to become a lucrative business. Soon, the U.S. Food and Drug Administration explained why CBD couldn’t be added to food and drink.
How a Russian Bank Secretly Moved Billions Around the World
Barron’s Online, 8 March 2019
Ruben Vardanyan built Russia’s biggest investment bank, Troika, with a reputation for Western-style honesty. As part of a global investigation coordinated by the not-for-profit OCCRP, I showed how his Troika bank moved billions around the world through obscure East European banks. That’s how $100 million went through an account in the name of New York rabbi Yaakov Dov Bleich.
Barron’s, 18 February 2019
Barred from the American stock market, U.S. marijuana companies rushed to Canada to sell stock. While still illegal under federal law, pot was clearly going to become big in the states that allowed it. The American companies’ stocks were cheaper than those of their Canadian counterparts, but none had shown they could make a profit and some had worrisome red flags. It was too soon to buy in…and by year end, most of the stocks were trading below their debut price.
Myriad Genetics’ Stock Battles Depression
Barron’s, 11 February 2019
After losing its patent monopoly on a cancer gene test, Myriad figured it could offset the resulting competition with a test to show which drug might work against an individual’s depression. When the new test failed its clinical trial’s pre-specified objective, Myriad persisted in trying to market it. The U.S. Food and Drug Administration subsequently objected.
Troubled Insurer AmTrust to Delist Preferred Stock
Barron’s, 28 January 2019
AmTrust was still Wall Street’s fastest-growing insurance company when Barron’s began exposing the underwriting and accounting flaws that would make it the decade’s biggest insurance stock disaster. When managers took it private by buying out public owners of its common stock, AmTrust had promised to protect holders of its $1 billion in preferred stock. They didn’t.
Russian Lawyer in Trump Tower Meeting Is Charged in Money Laundering Case
Barron’s Online, 8 January 2019
Natalia Veselnitskaya convened the Trump Tower meeting with Trump campaign officials because she wanted the future president to do something about a money laundering case that resulted from my reporting.
One of America’s Richest Marijuana Companies Has Deep Russian Roots
Barron’s, 21 November 2018
America’s biggest pot company was started by two fellows who made their fortunes in Russia’s chaotic transition to capitalism.
The Biggest Bank in Denmark Just Admitted to Laundering Billions of Dollars in Russian Money
Barron’s Online, 19 September 2018
Danske Bank, the biggest in Denmark, admitted that one of its units laundered $200 billion. Its internal investigation found that it had ignored the first clue — an query from me when I had been researching an article ten years before.
Congress’ Failed Stock Market Experiment Cost Investors $900 Million
14 September 2018
A few congressmen bullied the Securities and Exchange Commission into running a stock market experiment that enriched penny stock brokers at the public’s expense — to the tune of $900 million — before it was quietly shut down. Even the SEC had advised against the unwise experiment.
SEC Charges Against Phillip Frost Might Just Be the Tip of the Iceberg
Barron’s, 10 September 2018
The U.S. Securities and Exchange Commission filed stock manipulation charges against a group I’d covered for years. The group’s mastermind, Barry Honig, settled the charges by agreeing to a bar from dealing in penny stocks. Miami philanthropist and billionaire Phil Frost had been Honig’s longtime backer.
Mednax Shares at Risk in Hospital Fights
Barron’s, 20 June 2018
When Charlotte, N.C., hospitals wanted to switch away from the anesthesiology practices managed by Mednax, the company bought billboards and newspaper ads to scare patients away from the hospitals’ operating rooms.
Does Crowdfunding Work in Venture Capital?
Barron’s Online, 16 May 2018
Nope. But pennystock hucksters got Congress to open the door with Reg A+.
Net Element’s Amazing Cast
Barron’s Online, 28 April 2018
This tiny Nasdaq stock controlled by a Kazakh oligarch Kenges Rakishev is a window on Rakishev’s ties to to actor James Caan and the longtime stock market fraudster Murray Huberfeld.
A Budding Industry
Barron’s, 2 April 2018
Before the Canadian pot stock bubble inflated, this Barron’s cover story warned investors to be wary.
Harley-Davidson: Uneasy Rider
Barron’s, 25 February 2017
A deserved icon of American manufacturing, Harley has been selling to a shrinking demographic group of middle-aged white guys. Falling prices for used motorbikes are a drag on the company’s policy against discounting its new bikes. Harley’s captive lending unit shows the strain of finding qualified buyers.
The Mystery Stock That’s Up 15-Fold This Year
Barron’s, 24 December 2016
The third-biggest gainer on Nasdaq in 2016 was the tiny Wins Finance Holdings from the northern Chinese province of Shanxi. Its 1,400% rise put a $3.8 billion value on a company that reported $12 million in earnings. Most of that gain resulted from low-volume odd-lot trades. Wins’ investors had included the controversial New York financier Brad Reifler, as well as a Hong Kong outfit named Freeman FinTech that was in hot water with Hong Kong regulators.
A Chinese Infrastructure Deal Sits on Shaky Ground
Barron’s, 19 November 2016
Wuhan-based Yangtze River Development crowed that it had secured $1 billion in financing from a U.S. entrepreneur named George Wight Jr. His websites showed impressive holdings in real estate, cruise liners, polo and suborbital space travel. My story pointed out that he didn’t own most of the assets whose pictures he’d pasted on his website, including a yacht that had been scrapped the year before by its true owners. “I’m very sad to hear that,” said Wight, when I’d asked about the scrapped yacht. “That was a great ship.”
Badger Daylighting Shares Could Tumble More Than 30%
Barron’s, 29 October 2016
The numbers reported by this Canadian ditch-digging service didn’t add up. After seeing my questions, Badger’s CFO backed out of an interview he’d scheduled with me, citing their quiet period. When I later asked him why he’d hosted a factory tour for big money investors, during Badger’s quiet period, he said: “They weren’t asking me the questions you were asking me!”
The Next Drug War: Pharmacy-Benefit Managers Under Fire
Barron’s, 25 July 2016
Pharmacy Benefit Managers hold themselves out as a defense against soaring drug prices. The giant PBMs like Express Scripts and the Caremark unit of CVS play a more ambiguous role in the prices we pay, with conflicts that the U.S. Dept. of Justice began to examine after my article.
Take Out a Loan, but Don’t Buy the Stocks
Barron’s, 8 June 2015
Online lending sites like Lending Club and On Deck Capital were expected to challenge the traditional banks. I found problem loans within these high-flying lenders. Within months, the peer-to-peer lenders tanked.
Is AmTrust Stock Worth the Premium?
Barron’s, 23 April 2015
A second look at AmTrust Financial Services. The shares peaked at $36, before falling to $13.
The Little Guy Wins!
Barron’s, 2 March 2015
Michael Lewis’s best-seller Flash Boys claimed retail investors were getting ripped off by high-frequency traders. Using some novel techniques from statistics and reproducible research –which I called ‘preplication’– I disproved that bit of populist fear-mongering, while pointing out ways that stockbrokers’ reporting needed improvement. The U.S. Securities and Exchange Commission took note of my story and plans to expand the disclosures required of brokers and market makers. The Commission invited me down to give a talk about my findings.
Trouble on the Farm
Barron’s, 29 September 2014
Corn prices had fallen by two-thirds, but Wall Street still assumed that suppliers of farm machinery and fertilizer wouldn’t feel the pain that farmers were suffering. The downturn proved deeper than investors expected.
Shining a Light on SunEdison’s Growth Strategy
Barron’s, 5 May 2014
We explained our discomfort with the aggressive tax and financial strategies of solar developer SunEdison, whose $20 shares were favorites of many smart hedge funds. Two years later, it sought bankruptcy protection.
An Insurer’s Feat: Turning Losses Into Gains
Barron’s, 8 February 2014
My first story about AmTrust Financial Services. They tried to persuade us that their accounting was kosher, by showing me an apples-to-oranges comparison of their net costs to gross revenues. At the end of 2016, a new auditor made AmTrust restate five years’ of financial reporting to revise downward their previously-reported profits by $310 million.
Too Close for Comfort?
Barron’s, 19 October 2013
Charities that help patients with the co-payments for $100,000 drugs sound like they’re doing God’s work, until you discover that most of he donations funding charities like The Chronic Disease Fund come from the drugmakers themselves. Those donattions make a round trip back into the pockets of companies like Questcor Pharmaceuticals and ensure that patients will fill prescriptions that stick government programs like Medicare with the tab for drugs that can cost 100-times the price of generic alternatives. After my story, drugmakers like Questcor and benefits managers like Express Scripts announced inquiries by the U.S. Justice Department.
The High Price of Digging Up Dirt in China
Barron’s, 28 September 2013
In the U.S., you run the risk of getting sued if you dig up unflattering facts about a public company. In China, you can end up jailed, if the company has government connections. The PRC has been systematically blinding investors who attempt to independently verify the claims of China’s businesspeople– even in cases like I described in this story, where the jailed stock analyst Kun Huang was Canadian and the publicly-held owner of the Henan province silver mine Silvercorp Metals was a Canadian company with a New York stock listing.
From Moscow to Manhattan, the Long Way
Barron’s, 14 September 2013
No one was more surprised than I, when federal prosecutors in Manhattan filed a civil forfeiture case to seize New York properties that I’d discovered a year earlier, when I contributed reporting to stories by Novaya Gazeta and the Organized Crime and Corruption Reporting Project on the laundering of money stolen from Russia’s treasury in the famous tax scam uncovered by Sergei Magnitsky.
How Long Can Green Mountain Stay Hot?
Barron’s, 3 August 2013
The promoter of Keurig single-serve coffee products scalded those sour investors who thought its shares overpriced. Green Mountain’s growth finally topped out after a patent expiration allowed others to sell coffee pods compatible with Keurig machines.
Barron’s, 10 June 2013
The business press gave entrepreneur Elon Musk so much fawning publicity that he hung up on me when I asked him how his electric car maker Tesla Motors planned to make batteries cheaply enough to sell a car at half the price of their $90,000 Model S. His pique surprised me, since my question derived from reports by Tesla’s biggest fans and bankers at Morgan Stanley. I obviously didn’t get what Tesla’s about, because the stock doubled after our skeptical cover story.
Vegas Magic Act: Making Russians’ Money Disappear
Barron’s, 1 April 2013
We alert Russian-speaking investors around the world to Vassili Oxenuk’s trail of unhappy customers. The Las Vegas-based Oxenuk charmed prospective clients with his impressive resume from Russia’s science academies and intelligence services. But when they wanted a return on their investment — or of their investment — they told Barron’s and US regulators that Oxenuk revealed another face…and an extensive gun collection.
Where Beauty Is Skin Deep
Barron’s, 14 May 2012
The multi-level sales networks Herbalife and NuSkin move their overpriced product by convincing sales recruits that they’ll get rich by recruiting other recruits. Barron’s showed how both companies understated their recruits’ overwhelming rates of failure. I visited Latino neighborhoods where women even borrowed their Herbalife startup cash from the Nobel-winning anti-poverty program Grameen. Investors abandoned this $10 billion-plus industry when hedge fund managers David Einhorn and Bill Ackman questioned whether the multi-level arrangement was really just a pyramid scheme.
How Hedge Funds Got Hooked in a Ponzi Scheme
Barron’s, 27 February 2012
Fort Lauderdale-based Ponzi schemer Scott Rothstein mulcted the savvy New York hedge funds operated by gents familiar to readers of Barron’s: David Bodner and Murray Huberfeld. [See “Unholy Gains,” 30 October 2000; and “Let’s Make a Deal” 26 June 2000]
How a Putin Aide Gained $119 Million
Barron’s, 5 December 2011
Vladmir Putin’s right-hand man, Igor Shuvalov, had charge of Russia’s economy, trade and privatization programs. Offshore banking records show that while Shuvalov was doing all that, he was a dab hand at making over $100 million through dealings with the billionaires who benefited from his decisions — including Facebook financier Alisher Usmanov, the wealthiest man in Russia. That country’s last-remaining independent paper Novaya Gazeta called the saga the top corruption story of 2011.
The Trouble at Fairholme
Barron’s, 24 October 2011
Moments after I contacted the famous mutual fund Fairholme Fund to ask about Charlie Fernandez’s business history and influence over Fairholme founder Bruce R. Berkowitz, Fernandez resigned as the fund’s co-manager. During Fernandez’s tenure, Fairholme’s performance foundered. This story won the Society of Business Editors and Writers’ 2011 investigative award for a magazine.
Hitting the Switch on New Circuit Breakers
Barron’s, 15 August 2011
More evidence that the U.S. Securities and Exchange Commission is run by lawyers with insufficient knowledge of finance. I know the type. Thirty years ago I arrived at Barron’s with a law degree and few math skills.
Stock market rules seem to be drafted by lawyers of the SEC and Wall Street interests, without benefit of the powerful data analytics used for decades by statistics-capable financial types. Folks with science and engineering competence are snapped up by hedge funds, but not the government.
To show how much information regulators were ignoring, Barron’s funded Yale researchers Mike Kane and Casey King in their backtest of the SEC’s pending proposal for single stock “circuit breakers” – rules designed to prevent repeats of the May 2010 Flash Crash. Mike and Casey studied how the proposal might’ve impacted each of the 24 billion trades reported in U.S. markets in the prior three years. They cranked through the equivalent of 8,000 hours of processing in just a week, thanks to Mike’s parallel implementation of the open-source statistics software R, which he ran simultaneously across 60 processors in the Amazon cloud. My co-author and intern Lisa Stryjewski, a Rice University grad student in statistics, created beautiful charts, also using R.
The study results showed shortcomings in the proposed rules. Influenced by our story – or not — the SEC ended up modifying the circuit breaker rules. The SEC could do such analyses itself.
Crime and Punishment in Putin’s Russia
Barron’s, 18 April 2011
Sergei Magnitsky discovered and reported Russia’s biggest tax fraud, but that country’s corrupt officials rewarded his whistleblowing by delivering him into the hands of the dirty cops he’d alleged were members of a crime ring that stole $230 million from the Russian people. Magnitsky died after a beating by his jailers. For their scam, the crooks had used stolen corporate identities of the Western-backed hedge fund Hermitage Capital, whose chief Bill Browder has crusaded ever since against corruption in Russia.
Barron’s helped make the Magnitsky affair into something that Western governments couldn’t ignore, by showing how millions of dollars went through Credit Suisse accounts for the benefit of Moscow tax officials. Switzerland started a money laundering inquiry. The U.S. and Europe adopted sanctions against a list of officials who’d victimized Magnitsky and Hermitage. In Russia, sadly, those officials have been protected from prosecution and even promoted. Most recently, Russia responded to the Magnitsky List sanctions by halting the adoption of Russian orphans by Americans and banning Russian visits by the U.S. officials involved in the trial of arms dealer Viktor Bout. Bizarre.
Five years after the crimes against Magnitsky and Hermitage, this affair refuses to leave the front pages – to the dismay of a Russian government public relations campaign targeting Western investors. In late 2012, the original source of my story’s Credit Suisse bank records, Alexander Pereplinichny, died mysteriously near his mansion in the suburbs of London.
Beware This Chinese Export
Barron’s, 30 August 2010
This project with my colleague Leslie Norton exposed the network of stock promoters, investment bankers and hedge funds that were arranging for Chinese companies to list some $50 billion worth of shares on U.S. exchanges — through a dubious maneuver known as a “reverse takeover.” Helped by Yohan Chalabi, of Zurich’s technology university ETH, we used the open source software R to perform an “event study” that showed these stocks performed worse than advertised.
The story’s impact was vast. Dozens of these stocks were delisted as frauds. Regulators tightened rules on reverse takeovers. An SEC task force disbarred auditors in the US and initiated cases against every Chinese affiliate of the Big Four accounting firms. The U.S. and China are at diplomatic loggerheads over our government’s demand that China help protect American investors from China-based frauds. For better or worse, the China reverse takeover phenomenon ended. Winner of the Society of Business Editors and Writers’ 2010 investigative award for a magazine.
Great Science, Not-So-Great Math
Barron’s 26 June 2010
Auxilium had convincing evidence of the effectiveness of its treatment for a crippling hand disease sometimes known as the Viking Disease. But the med school professor behind the treatment seemed to talk out of both sides of his mouth, when it came to estimating the size of the product’s market. He’d claimed the disease was unmeasurably rare, when seeking a lucrative orphan drug designation from the Food and Drug Administration — according to filings obtained under the Freedom of Information Act. But to investors and The New England Journal of Medicine, the professor claimed there were millions of patients. The NEJM hadn’t done a great job of checking those footnotes. When the product’s sales were counted, it turns out the disease really was rare.
Aiding the Drug Cartels
Barron’s, 22 March 2010
Prosecutors in Miami announced $160 million in penalties against Wachovia Bank, the largest penalty ever obtained under federal anti-money-laundering laws. The denouement of my year-earlier Barron’s story [“Blowing the Whistle — and Paying the Price,” 9 March 2009].
Leveraging Up To Learn
Barron’s, 9 November 2009
The $25 billion for-profit college business was near its peak of profitability and market valuation when our cover story showed the industry’s economics were unsustainable. Boiler room recruiters nabbed students who might otherwise have attended community college at a fraction of the price charged by chains like ITT Educational Services. We combined anecdotes and data that showed the returns to this kind of education didn’t support graduates’ heavy debt burdens. The industry enrolled 10% of U.S. students, but nabbed 25% of federal aid. After making off with their profits, these schools have left taxpayers holding the bag when their students default on billions in federally-guaranteed loans. Even bankruptcy won’t let students escape these debts.
The group’s stocks had outperformed the market by more than ten-fold, in the years leading up to our story. The for-profit boom wasn’t a private sector triumph, just corporate welfare. The federal government tightened regulations. Prospective students got wise. Enrollments tumbled and so did the stocks.
OptionsXpress: Out of the Money?
Barron’s, 28 September 2009
While other journalists sought options trading advice from George Fontanills, I went to his firm’s seminars and then dug up his financial statements and courthouse records to show he was a charlatan trawling for customers on behalf of the publicly-traded broker OptionsXpress. Charles Schwab & Co acquired OptionsXpress, sometime after my story, and discovered that the options company had misrepresented its trading business. The SEC disbarred OptionsXpress’ financial chief.
Nightfall Comes to Solar Land
Barron’s, 30 March 2009
Solar energy stocks like First Solar and Energy Conversion Devices were the market’s hottest growth sector. We showed these companies’ profits were the result of a temporary shortage in refined silicon. As silicon prices plunged – to the benefit of consumers and polar bears – First Solar shares dropped from about 150 to 12, while Energy Conversion went from 15 to a penny.
Blowing the Whistle — and Paying the Price
Barron’s, 9 March 2009, 875 words
Wachovia Bank’s London compliance officer Martin Woods thought the bank had hired him to guard against money laundering, but his internal probes angered bosses of the lucrative Miami branch. Turns out he’d found money being washed for Mexico’s drug cartels and North Korean arms smugglers. Wachovia later settled a U.S. money-laundering investigation [see “Aiding the Drug Cartels,” Barron’s, 22 March 2010].
Cramer’s Star Outshines His Stock Picks
Barron’s, 9 February 2009
So we gave the stock picks of CNBC‘s Jim Cramer a second chance to beat the market, by studying his recommendations in the period since our August 2007 analysis. This time we used a statistical service that had been launched by a Wharton grad who’d been inspired by our earlier “event study”. The network had hired a new public relations chap, a guy with a background in political invective, not investing Cramer would not consent to an interview, said CNBC, because he didn’t consider me a journalist.
Again, Cramer’s picks failed to beat the market.
Barron’s, 28 July 2008
My surgeon used Intuitive Surgical’s robot to cut out my prostate cancer. It worked great, but in this cover story I did my best to objectively assess the high-priced stock’s prospects. I thought Intuitive might stumble as robotic surgery beyond urology to other surgeries. For a moment, I was right. On a quarter’s disappointment, the stock tumbled from 350 to 100 — but sales growth recovered and the shares later brushed 575. I guess I’m not so smart after all.
A Money Manager’s Ultimate Fight Game
Barron’s, 2 June 2008
Brazilian martial-arts fight Ismail Wallid was no match for the stock market sharpies surrounding Florian Homm, a hedge fund celebrity who disappeared after his fund’s purported $2.1 billion worth of shares collapsed. Wallid had hoped to raise money for a fight promotion business, but wound up with nothing by the time Homm’s pals finished with him. We laid bare the game played by Homm and team of traders who the Securities and Exchange Commission subsequently charged with stealing about $100 million through the self-dealing and market manipulation we’d exposed. Homm reappeared in late 2012, promoting a memoir in which he claims that he’s found religion and changed his ways. In March 2013, the FBI caught him while he was touring the Uffizi Gallery in Florence.
Timminco Generates More Heat Than Light
Barron’s, 21 April 2008
This story was an expose trifecta. While Canadian media groveled at the feet of money manager Eric Sprott, I showed how his firm’s pending initial offering (stock number one) was propped up by his outsize bet on Timminco (stock number two), a refiner whose silicon technology we showed to be bunk while also warning that Timminco insiders were sneaking money off the table through a related company listed in Amsterdam (stock number three).
Like every good Barron’s story, we alerted readers when it would still do them good. Timminco had been the year’s best performing stock on the Toronto Exchange, and together the three stocks were valued well over $1 billion. In 2012, a Canada paper published a lengthy investigation of the mess – long after Timminco and its public investors were bust.
The Strange Case of ParkerVision
Barron’s, 3 December 2007
Jeffrey L. Parker enriched himself and somehow kept ParkerVision stock afloat for 20 years, by promising breakthroughs in wireless technology. The stock even got recommended by a member of the annual Barron’s round table of investing wizards. Our story told how Parker got called out by a real tech-breakthrough guy, Jeff Farmwald, and Farmwald’s wife Barb Paldus.
Barron’s, 20 August 2007
We tested every stock pick that Jim Cramer had made on his CNBC show Mad Money, using his own database record of his recommendations. Turned out that the only reliable way to beat the market with Cramer’s picks was to bet against them – that is, by shorting his Buy recommendations. And why did stocks move in the days before he featured them on air? Our state-of-the-art statistics analysis used the open source software known as R, with custom coding by statistical finance pioneer Pat Burns(www.burns-stat.com).
My study was inspired by the earlier work of finance researcher Joseph Engleberg. We each found that Cramer and CNBC were bad sports about having his performance measured, as I later recounted the in the December 2007 R Journal. Disgracefully for a news organization, CNBC retaliated against our truth telling by banning Barron’s journalists from its shows. That cost one colleague his regular gig as a CNBC commentator, even though he’d had no involvement in our Cramer story.
Ignoring an Inconvenient Truth
Barron’s, 21 May 2007
After Asian business media tapped Loretta Fredy Bush as the “entrepreneur of the year,” her Xinhua Finance Media business started buying up respected US advisory firms like Glass Lewis. Immediately after I asked Xinhua Finance about its involvement with controversial banker Shelly Singhal, they announced his resignation. A couple of years later, federal prosecutors brought fraud cases against Singhal and Bush.
Paying the PIPER at SulphCo
Barron’s, 5 February 2007
After my year earlier story about SulphCo, [“A Crank Case?” 23 January 2006] its shares slid from 20 to 2. Business Week’s Gene Marcial could have found what I had: SulphCo founder Rudolph W. Gunnerman boasted phony Ph.D.s from overseas diploma mills; former associates said Gunnerman claimed to have invented the laser and spoke of being Hitler’s son. SulphCo’s board accused him of insider trading and fired him at a meeting where he tried to have them arrested for trespassing. Sulphco liquidated itself in a Chapter 7 bankruptcy proceeding.
The Inner Workings of InnerWorkings
Barron’s, 15 January 2007
One of my best columns, thanks to Dr. Seuss. The venture capital genius behind Innerworkings would later spawn Groupon. But this column showed Eric Lefkofsky’s vulgar contempt for public investors, in emails I found from an earlier venture. “Lets get funky. Lets announce everything. Lets be WILDLY positive in our forecasts,” wrote Lefkofsky, even as that early venture was falling apart. “If we get whacked on the ride down — who gives a sh*t. Is it going to worse than today? is our market cap going to fall to 200N, 100M who the f**k cares.”
Disappointed Groupon investors can’t say Barron’s didn’t warn them.
The Corn Conundrum
Barron’s, 7 August 2006
At the top of the ethanol industry’s multi-billion dollar bubble, we showed how corn supplies and prices would pinch profits for the distilleries that Archer Daniels Midland and other investors were giddily funding. Ethanol raised food prices in a hungry world, was of debatable benefit to the environment, and proved a disappointing business despite fat government subsidies.
A Crank Case?
Barron’s, 23 January 2006
SulphCo was one of the many puzzling stocks touted by Business Week columnist Gene Marcial during his decades there. With Marcial’s help, SulphCo quadrupled to a billion-dollar market value amid excitement over its ultrasound process for turning low-grade crude oil into high-priced, clean-burning stuff. Marcial’s “stock analyst” source turned out to work in a Jersey comic book store.
Mood Swing: Cyberonics’ device for depression is facing a big test; Failure could clobber the stock
Barron’s, 31 May 2004
We showed how clinical studies were inconclusive about the effectiveness of Cyberonics’ implantable device for treating depression. After our story, a panel of Food & Drug Administration advisers sided with FDA scientists in recommending against approval of what would be the first FDA-sanctioned psychiatric device. Cyberonics’ unrelenting chief executive then lobbied the FDA’s boss, who overruled his own experts and granted approval.
Scientific criticism of Cyberonics’ data grew and Medicare refused coverage of the poorly-tested device. Doctors and patients never took it up. Cyberonics’ chief exec resigned in disgrace, amid an options inquiry.
Making Healthy Profits In Home Health Care
Barron’s, 21 November 2005
Home health care provider Amedisys reported its industry’s highest profits, yet produced inferior treatment outcomes for its patients. I analyzed Medicare’s home health data with the open source software products MySQL and R. Using open source, I was able to send all my data and analytical scripts to Amedisys’s statistician for a data version of the standard “confrontation interview” in which an investigative journalist shares her evidence with the story’s subject and seeks comment. In a conference call, I walked Amedisys through an exact replication of my analysis. This should be a standard of practice for stats-based investigations.
I was early. Amedisys shares doubled to 64 in the three years following my story, to value the company at over $1 billion. Then the stock cascaded to 10 amid multiple federal investigations into whether the company billed Medicare for unnecessary patient visits. In 2014, with the shares around 14 bucks apiece, the company agreed to pay $300 million to settle allegations that its government bills had violated the False Claims Act.
Curb Your Cravings For This Stock
Barron’s, 7 November 2005
Hythiam‘s treatments for alcohol, cocaine and methamphetamine addiction had pending patents, but no good clinical evidence of effectiveness. That didn’t stop the outfit from selling stock and franchises for addiction treatment centers, after placing shares with some showbiz celebrities. Another load of questionable goods from LA-based financier Terren Peizer.
Tech Trader: Did AtheroGenics Hype Its Test Results?
Barron’s, 4 October 2004
The company sent its market value up 60%, to $1.5 billion, claiming that interim test results showed AtheroGenics’ drug could reverse atherosclerosis. A famous Cleveland Clinic cardiologist lent credibility. Turns out that AtheroGenics had omitted the data of patients with unfavorable outcomes, after prior researcher’s analysis didn’t meet the company’s expectations. When the final analysis appeared years later, the drug showed no effect.
Burning Questions: Nasdaq-listed Life Energy has made big claims for its incinerator business; Are they valid?
Barron’s, 15 March 2004
Why was Albert Reynolds, a former Irish prime minister nominated for the Nobel Peace Prize, chairing this US-listed “clean energy” fraud? One of Reynolds’ partners in the deal was a fellow who London investigators described as a money launderer for the Cali drug cartel. That fellow got a justice of Ireland’s High Court to consider barring publication of this supposedly libelous story. Unfortunately for their censorship attempt, the story appeared in Barron’s Online before any court hearing. After the story had run, no one challenged its truth.
Tech Trader: On the Internet, a Second Act
Barron’s, 28 July 2003
Before Youtube became commonplace, Michael S. Wachs supplied hundreds of financial websites with his video interviews of CEOs who paid for publicity from the firm CEOcast. We noted that Wachs had been barred from the banking and investment industries after stealing $20 million in 1996 from his employers at Chase Manhattan. In a kind of Glass-Steagall defense, Wachs told me that investors could trust CEOcast, because his fraud had involved banking, not stocks. He also denied that he controlled CEOcast. But in a later story, I showed his filings in a court dispute over the outfit’s ownership in which he attested the firm was his and bragged of earning millions of year for promoting stocks with CEOcast.
Pill Pusher: Drug maker Biovail sparks controversy by paying doctors to write prescriptions
Barron’s, 21 July 2003
Biovail offered doctors $1,000 to write 15 prescriptions for its new drug. After publicity about its business practices, the company sued traders it accused of spreading lies about the company and its CEO Eugene Melnyk. He convinced CBS’s 60 Minutescorrespondent Leslie Stahl that Biovail was suffering from a shortsellers’ conspiracy. But after the crash of a delivery truck foiled Biovail’s attempt to cover up a sales shortfall, Melnyk and the company were sued by U.S. and Canadian regulators. Melnyk paid a million dollar settlement and agreed to a bar against serving as an executive of any public Canadian company. Biovail paid a hefty sum to settle its suit against the stock market traders.
Full-Priced Goods: Kohl’s has charmed Wall Street and Main, but the company’s growth may start to slow
Barron’s, 12 August 2002
I calculated that this growth investor favorite was juicing revenues by extending credit unwisely to its shoppers. A Wall Street Journal columnist disputed my thesis, but graciously conceded his error later when Kohl’s growth tumbled.
Tech Trader: Dirty Tricks in the Land of Generic Drugs
Barron’s, 11 March 2002
To test rumors that Andrx applied for generic drug approvals before it even knew how to make the drugs, used the open source statistics software R. Over a sleepless 24 hours, I tabulated a thousand FDA filings on 812 generic drugs (a process that I couldn’t automate). My statistics showed that Andrx drug applications were indeed industry outliers. A more traditional journalism approach would’ve been to search out an expert, who would have supplied me with a less-informed ersatz opinion The FDA penalized Andrx and after the stock fell from 70 to 7, the company got acquired.
Idiot that I am, I forgot to talk about this story when I gave a speech the next week to show other journalists how they should use statistics.
Now Hear This: Wall Street’s research stinks; Here’s how to fix it
Barron’s, 2 December 2002
New York Attorney General Eliot Spitzer squeezed big settlements out of Wall Street’s investment banks because their stock analysts touted the banks’ underwriting. The settlements didn’t make research any better. In this cover story, I suggested research methods that had proven effective in scientific and engineering research. Many of these methods are in wide use today. My story may not have been the cause, but it was correct. One development that it did inspire was the VisibleAlpha venture launched by Wall Street firms in 2017.
Unholy Gains: When stock promoters cross paths with religious charities, investors had best be on guard
Barron’s, 30 October 2000
The story led to the world’s first high court ruling on where jurisdiction lies for an Internet libel case.
We showed how U.S. stocks were being pumped by accounts held in the name of some famous religious charities. The charities’ accounts turned out to be under the control of the stocks’ promoters — gentlemen like the Australian business celebrity “Diamond” Joe Gutnick, who was also in the process of raising $800 million for a hedge fund with the help of Chase Bank. When I called Australian regulators to ask about what I was seeing here in U.S. government records, the Aussie counterpart to our FBI sent over investigators to follow up on the clues.
Turns out that their investigation was very real and even had a code name: Operation Flange. They also gave me a handsome plaque for opening up a new avenue in what was a major ongoing investigation in Australia. Their police pursued the leads until they hit a stone wall in Israel, where that country’s police refused to cooperate by showing where the money had gone.
Gutnick’s libel suit never disputed what we’d reported on his stock market activities. Instead, he complained that our story called him a money launderer. It hadn’t and I haven’t. Australia turned out to be even more backward than its Commonwealth peers in bringing libel law out of the 19th century. As plaintiff in a Melbourne court, Gutnick got to put words in our mouths and that court prevented us from defending ourselves. We appealed to Australia’s High Court and then The United Nations Commissioner for Human Rights, to no avail. My UN appeal was captioned “Alpert vs. Australia” and my experience only slightly less absurd than The Simpson’s episode “Bart vs. Australia.”
Even with out hands tied behind our backs, we might have succeeded in defending out story’s truth at trial, if Australia’s government investigators had released me from protecting their identities. But they didn’t, so Dow Jones sacrificed itself to Australian injustice to maintain the secrecy of the Australian government’s money-laundering investigation. The little plaque I got from the investigators was cold comfort.
Facing a trial that would cost millions and allow no defense, Dow Jones settled for less than we knew Gutnick had spent litigating. We agreed to a statement saying that we hadn’t said he was a money launderer. Which we hadn’t and don’t.
When Newmont Mining later bought a Gutnick gold venture, it found itself on the hook for hundreds of millions in gold hedges that had gone bad after Gutnick used them to pull cash from the business. A Gutnick nickel mining venture wound up insolvent.
A decade later, Gutnick beguiled a cooperative of farmers in India into backing a phosphate mining venture. When it never bore fruit, they sued and an Australian judge found that Gutnick had tried to dodge liability by putting assets in the hands of his brother-in-law. In 2019, Australia’s regulators liquidated Gutnick’s public company after concluding that he had been draining its cash for his personal benefit.
If Australian law supported honest journalism, the country could’ve saved itself twenty years of tsooris.
Let’s Make a Deal: Who are the real winners when ailing U.S. companies merge with Israeli tech start-ups?
Barron’s, 26 June 2000
If my October 2000 story featuring Joe Gutnick was The Lord of the Rings, then this story (with colleague Jacqueline Doherty) was The Hobbit. We described how some Israeli companies reverse-merged their way onto the U.S. stock markets with help from Murray Huberfeld and David Bodner. The pair’s hedge fund later got stung by Ponzi scheme Scott Rothstein. A publicity-mad New York rabbi lent them the imprimatur of his religious organization.
Barron’s, 13 March 2000
One of the few times I subbed for Alan Abelson’s Up and Down Wall Street column. I showed how dot.com stocks funded by a famous venture firm had plumped each others’ financial results by transacting among themselves, often without even expending cash. A rival publication offered me a job after seeing this story, but I was having too much fun at Barron’s.
Dead Men Do Talk: What a murder victim told Barron’s about skulduggery on Wall Street
Barron’s, 8 November 1999
Two of my sources were executed gangland style. The murders remain unsolved.
The Company She Keeps: The crowd around Ivana’s latest business venture makes Donald look sweet
Barron’s, 1 November 1999
I called the Russian gangster on his cell phone and asked if he was outside my source’s door making threats. Nice as you please, the gangster said it was just a misunderstanding. Days later, the source was murdered in an execution-style slaying that police haven’t solved [See “Dead Men Do Talk,” 8 November 1999].
Pacific Overtures: Can undersea cable live up to Wall Street’s expectations?
Barron’s, 6 September 1999
Ocean-spanning fiber optic cables were making the Internet possible, but accounting tricks made it possible for fiber owners Pacific Gateway and Global Crossing to seem more profitable than they were. Wall Street helped them raise billions of dollars, based on hopeful projections for transmission pricing. But fiber capacity became a glut, and this story showed that transmission pricing was falling far below what these companies claimed. In angry letters, each company said we’d gotten our story wrong. Within a couple of years, they were both in bankruptcy.
Data Mining: Seitel boosts profits by writing down costs slowly
Barron’s, 14 June 1999
An exemplary Barron’s accounting expose. Seitel boosted its reported profits by unjustifiably stretching out its amortization of the cost of its seismic data library, in exactly the same way that some Hollywood studios cushioned profits by claiming implausibly long economic lives for their movie libraries. In its letter disputing our story, Seitel still had trouble with numbers — claiming positive cash flow when the numbers showed it negative. Three years later, Seitel was in bankruptcy court.
One Internet Supernova, Log On America, Seems to Be Dancing With Some Dubious Characters
Barron’s, 3 May 1999
Ray Dirks became deservedly famous for winning an insider trading case with a ruling by the U.S. Supreme Court that confirmed that an investor can trade on his own research. Then Dirks went on to a career of promoting sketchy stocks like Log On America, a Rhode Island-based Internet service. Even after we reported that the company was advised by the coke-abusing penny stock broker Wayne Robbins, Log On America got a plug from Business Week’s Gene Marcial. The company wound up bankrupt.
Ivana Get Rich: The Donald’s ex gets mixed up with some questionable characters
Barron’s, 7 December 1998
Donald Trump’s ex-wife Ivana launched a cable channel whose backers turned out to be some scary stock market operators.
Rotten at the COHR? California firm’s employees say hospitals were cheated
Barron’s, 20 April 1998
This public company had been launched by non-profit hospitals as a way to trim the cost of keeping medical equipment in working order. It ended up stealing from them, as Barron’s showed with a trove of whistle blower’s records.
Stuck In a Suitcase: By reaching for growth, Samsonite irks its customers
Barron’s, 12 January 1998
Samsonite’s hardside suitcases were the only luggage my family liked, when I was a kid. But by 1996, the business had foundered. Richard Nicolosi vowed to make the beleaguered company into “the Cinderella Story of 1997.” He was a protégé of “Chainsaw Al” Dunlap, the false-savior of Sunbeam. Samsonite fared no better than Sunbeam. Thanks to my longtime source Mark Roberts, boss of the research boutique Off Wall Street Consulting Group, our readers learned about Nicolosi’s destructive business and accounting tactics before the shares tumbled from 36 to 1.
Buyer, Beware! Dizzying deals raise question about California’s fast-growing Osicom Technologies
Barron’s, 25 August 1997
Barry Witz and Parvinder Chadha told the investing public that their company Osicom would the rival network industry leader Cisco. But their tech company’s stock was controlled by mysterious offshore shells whose owner of record had once been described by British police as a money launderer for the Cali drug cartel. The Cali-linked chap turned up in a later story “Burning Questions,” (15 March 2004), in partnership with Ireland’s former prime minister.
Chadha and Osicom sued Dow Jones, the publisher of Barron’s, for libel in a London court. They may have hoped to benefit from Britain’s pro-plaintiff libel law, but the British courts tossed out their case. A couple of years later, Manhattan prosecutors got guilty pleas from a ring of stock swindlers who’d been involved with Osicom and other stocks. A corrupt English judge also got snared for his money laundering activities on behalf of the gang. Chadha was never charged with wrongdoing. A few years later, Barry Witz pled guilty to the federal felony of stock fraud for his part in mafia-backed pump-and-dump schemes in the 1990s.
Exciting Drugs: Investors are hot about impotence treatments; Will new techniques cool their ardor?
Barron’s, 24 February 1997
Even with my casual knowledge of biostatistics, I noticed that a New England Journal of Medicine report on Vivus‘s impotence treatment had tried to obscure the treatment’s mediocre outcomes. Questioning the researcher, I learned that Vivus had censored his data. Our story also noted that this company’s awkward treatment was about to be overtaken by easy-to-use pills like Viagra. Vivus shares fell from 37 bucks to 2, losing a billion in market value. Fortunately, the company had already raised a pile of money and survived long enough to return a decade later with a weight loss drug.
Cure for the Common Cold? As Quiqley shares soar, questions arise About medical studies, shady associates
Barron’s, 13 January 1997
Shares of Quigley shot from pennies to $31 apiece after a researcher at the renowned Cleveland Clinic said the zinc lozenges cured colds. Howard Stern and Rush Limbaugh announced themselves Quigley suckers, along with the medical correspondent at ABC’s 20/20. We showed that the company had been promoted by a gang of mobbed-up, convicted stock swindlers. Then a more rigorous study in the Journal of the American Medical Association found the stuff had no effect. It also turned out that the Cleveland Clinic doc had undisclosed stockholdings in Quigley.
Heavy Breathers: Lower oxygen reimbursements would Have home-care firms gasping
Barron’s, 2 September 1996
As with drugs, Medicare was paying outrageous markups on the gas tanks delivered by home oxygen companies. The industry’s lobby had successfully fended off federal agency attempts to trim the $30 billion industry’s prices by 40%.
Getting Doctors To Work for You — Physicians are selling their practices; Should we be buying?
Barron’s, 26 August 1996
A multi-billion dollar business fad of the 1990s involved rolling up medical practices into national networks. But profits for many of these public companies came from the wrong places – such as overcharging Medicare for chemo drugs. And from a public investor’s perspective, the doctors were selling out at the wrong times and for the wrong reasons.
Following my story, these physician practice management companies proved themselves disastrous businesses.
Hooked on Drugs: Why do insurers pay such outrageous Prices for pharmaceuticals?
Barron’s, 10 June 1996
My earlier story on the healthcare industry’s “Average Wholesale Price” conspiracy had focused on the scheme’s profitability for publicly-held cancer treatment companies [see “Painful Profit,” 26 February 1996]. In this piece, I showed how drug companies benefited from the AWP scheme.
The federal government and many states filed False Claims Act cases against some 40 drug companies in the years after these stories. A federal investigator later told me that my AWP articles were the first pages of the information packet given to every new hire in these prosecutions. These cases recovered billions of dollars for state and federal health insurance programs.
Wellcare Management Group: Conflicting Accounts
Barron’s, 18 March 1996
Hollywood has it backwards: private investigators usually work for the bad guys. In this case, the Kroll detectives were working on behalf of the health insurer Wellcare to intimidate a whistleblowing doctor who’d found that Wellcare was padding its profits with phony transactions. Then as auditors followed up on our story, the CEO’s records vanished in a mysterious burglary. Within a month, Wellcare dumped him and admitted its books had been cooked. The shares unraveled.
In a spooky epilogue, the company’s Florida subsidiary later resurfaced as a public company. Come 2009, that incarnation of Wellcare admitted to defrauding Medicaid out of hundreds of millions of dollars.
Painful Profit: Cancer-treatment firms may soon See their plump margins slashed
Barron’s, 26 February 1996
The first of a series that probably had the biggest impact on public savings and healthcare of any I’ve done. Drug companies battled for market share among pharmacies and doctors by posting fake price lists which allowed the healthcare providers to overbill public and private insurers. One manufacturer sold a chemotherapy drug for $7.50 but reported the “Average Wholesale Price” to Medicare as $740. Medicare then reimbursed oncologists for the drug at the $740 AWP.
Medical industry cynics said that AWP didn’t mean “average wholesale price,” but rather “ ain’t what’s paid.”
Baby Superstore: Growing Pains
Barron’s, 23 October 1995
We loved taking our toddlers to Baby Superstore, where they’d romp on climbing toys while we bought diapers. But I noticed that inventory was piling higher and higher on the display palettes. Turning to the company’s financials, I calculated that inventory per-square foot was rising faster than sales per-square foot, in one of my best analytically-based stories. Barron’s readers would have been able to get out of the stock before sales tumbled.
Hard Knocks: Graduates of Future Vision Currency-trading school get pummeled
Barron’s, 31 July 1995
Hard-working taxi drivers and other hopefuls paid thousands of bucks to learn currency trading from the frauds at Future Vision. The instructors’ track records were phony. Future Vision got shut down by state regulators.
I also discovered a wider scandal in the commodity industry. Futures regulators allowed commodity investment promoters to advertise the hypothetical profits that their trading techniques would purportedly yield. The advertised profits had no basis in reality.
Only Skin Deep? — Scientists Are Skeptical Of Organogenesis’s Claims
Barron’s , 8 August 1988
The MIT professor and his stock promoter pal challenged me to name the body part that can be transplanted without triggering an immune system rejection. I had done my homework before visiting Organogenesis, so I correctly answered, “Corneas.” The company’s test-tube-grown skin had been dubbed “the Fountain of Youth” by the ABC news show 20/20, but my questions about its science were good enough that the professor rushed to sell $1 million worth of stock between my visit and the publication of my story.
We warned the medical world and Wall Street about Organogenesis’s sloppy science in 1988, but the company kept raising money and disappointing partners like Novartis for 15 more years before finally filing for bankruptcy. Its lab-grown skin grafts never achieved meaningful sales.
Scientists and Stock Pushers — They Make Strange and Embarassing Bedfellows
Barron’s, 21 March 1988
My brush with greatness, collaborating with comic writer Joe Queenan when he drew a Barron’s paycheck alongside hacks like me. We showed that Rockefeller University researchers had hopped into bed with a crew of mobbed-up, politically-connected promoters. These promoters were hyping stocks alongside some Gambinos, Genoveses, and Luccheses. New York’s attorney general halted this Tammany Hall stock scam.
Better Than Alchemy — How Goldcor, Once a Penny Stock, Hit Pay Dirt
Barron’s, 22 February 1988
A Florida evangelist and a disbarred Utah stock swindler teamed up in this elaborate con. Prospective investors were flown on Learjets to Costa Rica to see a Goldcor plant extracting gold from the black sand of that country’s beaches.
Armed guards flanked a display of gold nuggets at investor meetings where an Oklahoma brokerage firm said Goldcor stock would go to $150. But the company never produced the $533 billion worth of gold promised by some corrupt newsletter writers who claimed to be part of a secret society in Liechtenstein. Goldcor’s Costa Rican plant was a sham, manned by actors.
After we exposed the bunch, Goldcor shares fell from 17 bucks to 12 cents, erasing several hundred million dollars in stock market value. The Securities and Exchange Commission halted the scheme and in 1992 got a settlement from the Boca Raton-based publisher of newsletters who’d touted the scam, Joel S. Nadel. The Oklahoma brokerage closed, insolvent. And the evangelist was found shot in the back of his head. Police never determined if it was suicide or murder.
Seminal Hype — A Report on a Med-Tech Conference
Barron’s, 22 June 1987
“I WISH D.H. Blair didn’t have to take the leading role in curing the major problems,” sighed Morty Davis, chairman of D.H. Blair & Co. Davis retired before Manhattan District Attorney Robert Morgenthau busted D.H. Blair in the late ‘90s, convicting its executives of manipulating hundreds of millions worth of shares in companies claiming ersatz cures for cancer and AIDS.
Competition for Cheyenne — Rivals Crowd Into a Software Niche Picker’s Niches
Barron’s, 11 May 1987
For a software outfit, Cheyenne had bizarre owners. In a Long Island courthouse I found records showing that the partnership controlling this public company included the mobbed-up boss of the Teamsters union, Jackie Presser.
The Abracadabra Man — Part III — Step Right Up and See Him Turn Pennies Into Millions
Barron’s, 16 March 1987
My colleague Rhonda Brammer let me help her with some of the reporting in this exhaustive series. Rhonda’s expose sent stock fraudster Henry Lorin to federal prison, along with executives of a 75-year old brokerage firm called Haas Securities who’d been manipulating nearly $1 billion worth of stocks. When Haas stopped supporting shares of TS Industries, for instance, the stock fell from $30 to pennies.