Fooling Some of the People All of the Time, a Long Short (And Now Complete) Story, Updated With New David Einhorn (best classic books of all time .TXT) 📖

AT&T, my long-distance provider. It denied me access—someone had already created an online account. I asked my wife, Cheryl, about it. Nope, it wasn’t her. Since we hadn’t opened the account, someone else did. Whoever that “someone” was had obtained access to our entire calling history.

“Wow. I’m amazed that somebody would actually do this,” I told Carruthers. I doubted anyone wanted to know how many times my wife calls her sister.

A couple of days later, Greenberg told me that Charles Gunther, a research analyst with Farmhouse Equity Research, who issued a report with a “Sell” rating on Allied, also had his records taken. I asked others at Greenlight and other people I knew to check. I found that Ed Rowley, who had been quite involved in the Allied matter working with Steve Bruce of our public relations firm Abernathy McGregor, had his cell phone records taken the same way. During my testimony, the SEC had asked me to identify Rowley and his role. In all likelihood, Allied complained about him. Brickman said that he already paid his phone bills online, so it wasn’t possible for someone else to open an account for him, but said his bank notified him that someone had accessed his bank records using his Social Security number. I had never spoken with Gunther, but knew that Brickman had. The only thing connecting Greenberg, Gunther, Carruthers, Rowley, and me was Allied Capital. Equally indicative was the fact that none of Greenberg’s sources on other topics reported phone records being taken.

Why might Allied want our records? First, the company alleged various conspiracies among short-sellers, class-action lawyers, the media (in particular Greenberg), and Allied’s former CEO, Gladstone. Additionally, I believe Allied was surprised at how much information we were able to gather about its investments and wondered whether it had a leak from the inside. Finally, Allied might have been looking for information about our personal lives so it might extort us or intimidate us into silence.

Was this what Walton meant when he promised shareholders at Allied’s annual meeting in May 2004, “We are also going to work to expose the market manipulation activity whenever it occurs, and we’re looking at every option available to us to protect the company and your shareholder value?”

Cheryl called AT&T. She learned that on December 7, 2003, a woman calling as “Cheryl Einhorn” used Cheryl’s Social Security number to open an online billing account for our home phone. The records were sent to up4repo@aol.com. AT&T noted that they received a “bounce-back message” from that e-mail account on May 28, 2004.

Greenberg had already called his local FBI office in San Diego. The rest of us reported the incident to the agent assigned to Greenberg’s case. It took the FBI a long time to make progress. The agent, Tedd Lindsey, was enthusiastic and diligent, but he needed to subpoena each of the phone companies for the records. It took seemingly forever to receive responses and compile the information. Eventually, Greenberg became frustrated by the lack of progress. He decided to write an article about the experience. In a February 2005 column, he wrote, “The only thing any of these people appear to have in common—me included—is that they’ve all been snooping around Allied Capital,” referring to the other people whose records were stolen.

In this column, Greenberg said that someone opened his online phone account on July 8, 2004. Greenberg wrote that it happened only “six hours (coincidence of coincidences) after I wrote a piece headlined, ‘Is Allied Capital’s Dividend Vulnerable?’ The piece quoted Farmhouse Equity Research analyst Charles Gunther, who had initiated coverage of Allied with a ‘sell.’”

Greenberg also wrote that he had no evidence that Allied was involved. However, he wrote, “Joan Sweeney, Allied’s chief operating officer—and normally its chief spokesperson—didn’t return two calls I placed to her in recent weeks, even though she was in the office both times. The most recent call, last week, included a voicemail with an explanation of what had happened and several questions. It was followed by an e-mail.” Greenberg expected this to become a national story. It didn’t. The media did not take interest in a story about one of their own being spied on by a subject of critical articles.

Meanwhile, David Armstrong from The Wall Street Journal tried to re-engage us. But this time we chose not to help—too much water under the bridge. As mentioned previously, he had ambushed us in January 2003 before publishing the news that we would be investigated; failed to write an article a few months later after spending hours with us (possibly because he couldn’t bash us); and ambushed us again the night before he wrote that the SEC was investigating Allied, but focused the article on short-sellers rather than the investigation. Now, he asked about someone’s hiring Kroll to investigate Allied. We wanted no part of him.

Armstrong also contacted Carruthers for his article. His firm, Eastbourne Capital, was also wary of Armstrong and would accept questions only in writing. Armstrong’s questions made Carruthers suspicious. In particular, he was bothered by a question about his relationship with a former BLX employee, who had become his key source. Shortly after Carruthers noticed that his phone records had been taken, the former BLX employee, who until that time had a pleasant relationship with Carruthers, called and was extremely angry with Carruthers. Plainly, BLX got to him. But how did BLX know he was talking to Carruthers? How did Armstrong know to ask about this relationship? Someone had stolen Carruthers’ phone records. Things were getting curiouser and curiouser.

Armstrong also was strangely suspicious about Brickman’s communications with Gunther. Brickman decided to engage him, despite the evidence of Armstrong’s bias. Not only did Brickman believe he was right, he thought he could convince others. Not only does he think it, he’s done it: I believe he convinced Houck to change his mind and approach Allied about the SBA loan parking. Now, Brickman took on Armstrong.

That made Brickman the subject of a front-page article in The