Overstock CEO resigns after his ‘deep state’ comments sparked stock selloff

Posted at 8:16 PM, Aug 22, 2019

The outspoken CEO of online home goods retailer resigned Thursday, days after he issued a press release entitled “Comments on Deep State” that claimed he helped the FBI carry out “political espionage.”

The strange post from longtime Overstock chief Patrick Byrne triggered a steep decline in Overstock’s stock price last week. The company’s stock price later recovered, and it surged more than 10% Thursday on news of Byrne’s exit.

In a letter Byrne issued Thursday, he stated that he is “already far too controversial to serve as CEO” and chose to step away after 20 years so that his presence wouldn’t affect Overstock’s business.

Byrne had said in an August 12 press release that he helped the FBI’s “‘Clinton Investigation’ and the ‘Russian Investigation'” — “operating under the belief that I was helping legitimate law enforcement efforts.” He also claimed he “put the pieces” together in mid-2018 and realized the investigations amounted to “political espionage” against the 2016 US presidential candidates. Byrne said he decided to speak to journalists about his involvement this summer after discussing it with his rabbi.

“Coming forward publicly about my involvement in other matters was hardly my first choice,” Byrne wrote in the letter about his resignation. “I now plan on leaving things to the esteemed Department of Justice (which I have doubtless already angered enough by going public) and disappearing for some time.”

The phrase “Deep State” is used to suggest there is an architecture of government that operates outside the democratic system. President Donald Trump and his supporters have also used the phrase to reference conspiracy theories that claim insidious actors are attempting to undermine his presidency.

Byrne recently admitted in a series of interviews that he had an intimate relationship with accused Russian agent Maria Butina, which lasted from 2015 to 2018, and ultimately assisted law enforcement in their investigation of her.

Prosecutors accused Butina of trying to make inroads with prominent political groups, including the National Rifle Association, to promote Russian interests. She pleaded guilty to a lesser count of failing to register as a foreign agent and is serving 18 months in prison.

Byrne publicly revealed the details of his relationship with Butina in media interviews last week. He told the New York Times he had hoped to draw attention to what he saw as problems in the way law enforcement handled Butina’s case.

Butina’s attorney, Robert Driscoll, said of Byrne’s resignation, “I wish him well. I think he raised issues worthy of investigation, at risk to his career, as has become apparent.”

Byrne had shared information concerning the early days of the Russia investigation in a meeting earlier this year with Justice Department officials, a US official said, confirming his account in last week’s statement.

Justice officials found aspects of Byrne’s story to be believable in part because he shared operational details that were not widely known, the US official said. The official would not say who Byrne met with and what specifically was discussed.

Overstock scheduled a call with investors Monday to discuss its leadership changes.

“We respect and understand Patrick’s reasons for resigning and acknowledge his momentous achievement in taking Overstock from a startup twenty years ago to one of the nation’s leading online retailers and positioning it at the forefront of the blockchain revolution,” Allison Abraham, the chair of Overstock’s board, said in a statement.

Overstock is broadly known as an e-commerce site for snagging furniture, decor and appliances on the cheap. But for months Byrne has worked to turn Overstock into a venture focused on blockchain, the technology behind cryptocurrencies like bitcoin.

The company still plans to aggressively pursue blockchain business opportunities. Jonathan Johnson, the president of Overstock-owned blockchain company Medici Ventures, will serve as interim CEO.

“I am confident Overstock’s future — both in retail and blockchain — is bright,” Johnson sad in a statement.

Byrne praised his replacement, saying Johnson “is the exact opposite of me in many respects” and he has “no doubt that may be welcome in some quarters.”