June 26, 2006
Don't Invest In These Internet Scams
Long before I had heard of political blogs, I was an active participant in technology stock message boards. It wasn't radically different from commenting on blogs -- there were arguments and things I learned and trolls and smart helpful people. And within the friendly now-defunct board that I used to comment on, there was the same general sense of community that develops in many online communities where matters of import are discussed -- people trusted each other to give good-faith advice. On boards less civil than mine, you'd often see allegations that, say, Big_Money_Clown_316 was being paid off to pump TGLO stock, but I generally didn't believe that those kinds of things were going on. Sure, some scammers would buy stocks and tout them so that they could sell them higher, but how could somebody get paid by executives to influence us message-board rabble as we purchased our little 100-share positions?
Which brings me to the case of Jerome Armstrong. If the SEC allegations are right, and the SEC doesn't bring these things lightly, Jerome was the guy I didn't believe existed. Some excerpts:
8. On March 6, 2000 and after, Jerome Armstrong ("Armstrong") promoted BluePoint on the Raging Bull internet site, which carried hundreds of posts about BluePoint. Armstrong received undisclosed compensation from Markow and Goelo in return for his posts...
15. Armstrong, directly and indirectly, has engaged and, unless enjoined, will continue to engage in acts, practices and courses of business which constitute violations of the touting provisions of the federal securities laws, specifically, Section 17(b) of the Securities Act [15 U.S.C. §77q(b)]...
69. Markow and Goelo orchestrated a scheme to arrange for individuals, including Armstrong, to tout the BluePoint stock. Armstrong posted over eighty times on the BluePoint message board located on the Raging Bull website in the first three weeks. He praised BluePoint's investment value and encouraged traders who were having trouble getting their orders filled to keep trying. Armstrong never stated in his posts on the Internet that he was being compensated for making the postings. However, Goelo and Markow compensated Armstrong by transferring stock in three separate companies to Armstrong at below market prices during the relevant time period...
74. Armstrong made at least $20,000 from selling the shares of the three securities he received from Markow and Goelo.
What's scary here, for the purposes of netroots Democrats like you and me, isn't that Jerome broke the law. It's that gave bad advice to people who trusted him, in exchange for secret payments from outside parties that benefitted from his bad advice. And it was bad advice. Take a look at Bluepoint's chart, and note that Jerome was touting Bluepoint on the far left side of that chart, just when it first hit the market. That's a pretty disastrous investment. I don't know whether Jerome knew, or whether he cared, that the advice was bad. (I was no genius in those days, but I knew enough not to invest in companies that went public by a reverse merger into a shell, which is what Bluepoint seems to have done. It's a very bad sign when the only way a company can go public is by merging with another company that has nothing to its name but a ticker symbol.) Even if he was trying to give good advice and just screwed up massively, there's the fact that he was taking secret money for doing so.
Now Jerome -- whom Kos refers to as his 'blogfather' -- is working for Mark Warner's campaign. Kos is repeatedly hyping Warner. People in his community have a surprising regard for Warner -- a candidate whose moderation and antipathy to partisan slugging resemble Evan Bayh more than Russ Feingold. He's not even a serious opponent of the Iraq War, or supporter of withdrawal. He's opposed the Feingold censure resolution -- a cause dear to the hearts of many Kossacks -- and done so on almost Liebermanesque grounds.
Look, I want to distance myself from all the ridiculous smears from TNR. I think Kos is, in general, good for the party and the country -- his anti-Lieberman and anti-Cuellar crusades win big points from me. And I readily admit that my Edwards fandom puts a bit of an edge on my interest in this issue. (My sweet Johnny is out there supporting censure, opposing the Iraq War, running petition drives against Sammy Alito, expressing the core principles of the Democratic Party, and maintaining the highest favorability numbers of any Democratic contender. And Kos is talking up Warner?)
I'm not saying that Kos is getting paid off by the Warner campaign. (Though since Jerome has been on the getting end of these payments in the past, I wouldn't be surprised if he's interested in being on the giving side.) There's a simpler explanation. Maybe Kos is just another gullible Bluepoint investor who trusts and admires Jerome, and is buying an internet stock for a lot more than it's worth, on Jerome's recommendation. We ought to be suspicious of pro-Warner comments Kos makes in the future. You don't just have to beware the guy who's willing to mislead you for financial gain -- you have to beware the guy who listens to him.
[Note: if you're curious, the only thing resembling financial compensation that I've received for my online pro-Edwards efforts was when a friendly One America Committee staffer picked up the $7 for my lunch at a Thai restaurant. That divides out to about a nickel for every hour I've spent arguing for Edwards online. If you guys think I shouldn't have done this, I'll pick up the tab for him next time we eat.]
June 26, 2006 | Permalink
So, to be clear: if, at any future point, we find that some friend or family member of yours has been accused of something untoward, we can agreee that your credibility is shot, and that any accusation made against you is primae facie reasonable? I wonder how long it'll be before you regret that stance, and how many other people are willing to live under that sort of ethical regime.
Posted by: SomeCallMeTim | Jun 26, 2006 6:51:39 AM
It's going to be fun watching you distance yourself from Edwards once his credibility is shot--after all, it only takes one credible accusation against one person Edwards knows well. HRC has Webster Hubell, who knows who's in Little Johnny Edwards' closet?
Posted by: SomeCallMeTim | Jun 26, 2006 6:56:04 AM
Everyone among the establishment MSM is just plain slack-jawed, scratching their hairy primate heads and frothing at the mouth wondering how a loose collection of left-wing wackos in pajamas banging away at laptops from their parent’s basement can have such a profound effect on the political landscape. The reason the MSM fails to understand the power of online activism is that they have completely bought into the right-wing myth characterizing the driving force behind revolutionary movements in the U.S.
While the 60s were undoubtedly an apex of anti-war activism, the right wing has always taken the most extreme elements of this era, drug addled hippies, to characterize anti-war and liberal movements as fringe wackos who are out of touch with the mainstream. But these people were never more than good-hearted moral support for the organizers of the anti-war movement. The real backbone of these periods were the professors, lawyers, professional activists, artists, etc. who published magazines, organized agitations, wrote heartfelt music, etc. These people were smart, motivated, politically savvy, and clever enough to develop some clout.
In contemporary politics, bloggers are the modern extension of one of the major power sources behind the 1960s antiwar efforts. With the ability to reach millions every single day, there is little doubt that we are a force to be reckoned with. There is little doubt that bloggers pose a major threat to both the establishment media and the existing political gatekeepers.
If we were really an irrelevant fringe outside of the mainstream, then wouldn’t it be best to simply ignore us?
The Hindsight Factor
))( _) (_)(_)( _)( _) (_)(_)(_ )( _)(_)(_)( _)( _
Posted by: urthwalker | Jun 26, 2006 8:20:14 AM
Kos is repeatedly hyping Warner. People in his community have a surprising regard for Warner -- a candidate whose moderation and antipathy to partisan slugging resemble Evan Bayh more than Russ Feingold.
Markos Moulitsas is famously non-ideological. He doesn't care much about how far to the left a Democrat is; he doesn't even care all that much about how antiwar they are (the only real issue that separates his views from much of the DLC's). He cares about whether they'll win. This is why he can't stand Democrats like Joe Lieberman and Al From: not because of their policy positions, but for their habit of attacking the rest of the party. He's allergic to Hillary because the way she holds herself back undermines her own electability. Warner, on the other hand, became attractive to Kos mainly on electability grounds as the popular former governor of a winnable Southern state who got his left-of-center lieutenant governor elected (and generated a lot of positive buzz in the process). Beyond that, as a governor he can change his position on Iraq (as he's been doing) without having a voting record that locks him into one position or the other (see Hillary Clinton and John Kerry). That's exactly the kind of electable-on-paper candidate Markos often supports.
And let me echo SCMT's surprise. Do you really want to open the door for the kind of baseless smear-by-association game you're blithely passing on here considering it can be used on just about any blogger or pundit out there? You've been plugging Edwards with nigh-religious fervor here for quite some time. Has anyone you've known - any friends, any relatives, any decently friendly acquaintances or coworkers - worked for Edwards in any capacity? Volunteered for him? Met him on occasion? Is it okay for me to speculate that you've been co-opted by invisible cronyism into becoming a de facto Edwards agent, writing post after post in his defense, even to the point of attacking Kos for supporting his most prominent Southern rival?
Posted by: Iron Lungfish | Jun 26, 2006 9:10:40 AM
Mark Warner, whatever his merits, is a fairly known commodity. Comparing him to a flimsy pumped-and-dumped equity from the dot-com bubble era is lousy, though on a par with the rest of this incredibly ill-considered blog post.
Posted by: kth | Jun 26, 2006 9:32:15 AM
This is a good post. The disturbing part is that Kos is defending Armstrong, even though he pleaded guilty to these very serious allegations.
Posted by: American Hawk | Jun 26, 2006 10:15:39 AM
Neil -- I understand your disgust with Armsrong's past activities promoting dodgy stocks, and I understand you thinking he therefore shouldn't be a political authority or candidate picker for the rest of us. It's your right to say so.
What I don't understand about the scandal is how easily people -- including you -- make the leap from Armstrong's sketchiness in a former career to Armstrong and Kos "selling" their services to politicians, to Mark Warner specifically, in some sort of racket by which they're secretly or in-kind paid off to promote a candidacy and discourage others from promoting different candidacies while hiding behind an independent "grassroots" facade. There's just no evidence of that anywhere; Zengerle's stuff is embarassingly weak. And to believe it's all a cynical game to make money off Democrats means to discount Kos and Armstrong's many other positions and advocacy (not to mention Kos' willingness to take risks like pissing off his own community with his positions, to let supporters of other candidates write on the frontpage, etc. etc.).
Blogger conflicts of interest are inevitable -- there's a lot of money in electing Democrats and some of it will trickle down. Nor is everyone who makes an effective progressive blogger likely to be squeaky clean. And even those who are squeaky clean aren't necessarily safe. At some point, the Edwards campaign might offer you a paid job; if you take it, should we assume everything else you did was like interning and financially rather than sincerely motivated? This is a very slippery slope.
The "scoop" here, from Suellentrop, is the Armstrong may have bad ethics, may have been a mercenary asshole in the past. That's a real issue, though he deserves a chance to defend himself once he legally can. But the connection to Kos, then Warner, is built on little more than coincidence and guilt by association. That's pretty smelly, and pretty risky, to me.
Posted by: Laura | Jun 26, 2006 10:23:58 AM
I don't have a dog in the original fight. I'm grateful Kos' organizing efforts, but lukewarm at best about most of the stuff I see at his site. Meanwhile, I've come to loathe TNR over the years; the hilarious new coinage of 'blogofascism' seems perfectly in character for that rag.
With all that out of the way, I say it's perfectly reasonable for Mr. Klein to make the points that he does here. Association with a guy known for sleazy dealing always raises questions, and it should. I don't claim that the magnitude of the possible offenses are similar at all, but c'mon -- we can't get all breathless about Abramoff-Norquist links (which absolutely deserve close, critical scrutiny), and then simply shrug off Klein's questions. Progressives are gonna shoot themselves in the foot that way....
Posted by: sglover | Jun 26, 2006 10:35:56 AM
No, Neil, with your history of supporting Edwards, this post was not a good idea. Should have slipped me a few bucks and I would have written it in comments. I'm really cheap.
Atrios warned of the upcoming blog wars. For the good of the party and country we must avoid this fratricidal character assassination and unite early behind a compromise candidate, one with foreign policy experience and a history of bipartisanship.
(This comment paid for by the Joe Biden for President Campaign Committee)
Posted by: bob mcmanus | Jun 26, 2006 10:38:17 AM
Kos supports a moderate southern ex-governor for president! Stop the presses! There must be a scandal here!
I think that Edwards is overrated as a candidate, and someone doesn't need to be bribed to believe it to be so. Warner's bonafides as a front-runner candidate are so blindingly obvious that I don't think there needs to be any back-room dealings between Kos and Jermone to explain Kos's boosterism of him. Besides, who was Kos's first choice for president last time? A moderate rural governor.
Now, Jerome, on the other hand-- that's a different matter. He does bring a certain amount of taint to the Warner campaign (though, frankly, one presumes people nailed by the SEC in these pump-and-dump scandals do need to make a living after they've paid their debt to society), and one is free to mock Jerome's credibility any chance one gets.
Posted by: Constantine | Jun 26, 2006 10:54:43 AM
I had a lot to say, but Laura ( see above) said it better.
Posted by: Marv Toler | Jun 26, 2006 11:00:54 AM
we can't get all breathless about Abramoff-Norquist links (which absolutely deserve close, critical scrutiny), and then simply shrug off Klein's questions
The only reason we can't shrug off Klein's questions is because Klein hasn't asked any. The post was written by Neil. As to the rest--what, precisely, is the ante before we go hog-wild on investigations? Are you telling us to be more circumspect in criticizing the Republicans for the litany of investigations that occurred during Clinton's terms? Gawd knows he had plenty of sleazy friends (e.g., Hubbell).
Posted by: SomeCallMeTim | Jun 26, 2006 11:03:54 AM
Look, I don't think we should just plug up our ears to anything Kos says about Warner. This is purely an argument for caution. My conclusion, as you see, is a mild one. "Be suspicious." Good arguments are good arguments, and if we can verify the premises of a pro-Warner argument from Kos, we should accept it. But if we can't, we should regard it with a little more suspicion than we'd regard the same argument from somebody who wasn't associated with Armstrong.
What freaks me out is the exact nature of Jerome's offense -- giving bad advice to people in exchange for money. Jerome has in the past been willing to do that. Kos will listen to Jerome's advice, perhaps more than he'd listen to the advice of any other blogger in the world. Their relationship is a very strong one. As I said, I don't think Kos is an independently corrupt agent here. But it seems very likely to me that Armstrong has talked up Warner to him in some kind of overblown way.
I'll just say this to Tim: If it comes out in the future that I started supporting Edwards right after a person with a history of giving bad advice for money, whose advice I listen to, started working for him, you ought to regard any non-independently verifiable things I say about Edwards with some extra suspicion.
Posted by: Neil the Ethical Werewolf | Jun 26, 2006 11:08:35 AM
The only reason we can't shrug off Klein's questions is because Klein hasn't asked any. The post was written by Neil.
Yeah, yeah, I noticed my mistake after I posted. So shooy me.
As to the rest--what, precisely, is the ante before we go hog-wild on investigations? Are you telling us to be more circumspect in criticizing the Republicans for the litany of investigations that occurred during Clinton's terms? Gawd knows he had plenty of sleazy friends (e.g., Hubbell).
WTF? All I'm saying is that we shouldn't shoot the messenger and ignore his message, because we think the latter might reflect badly on "our team".
Posted by: sglover | Jun 26, 2006 11:19:00 AM
But it seems very likely to me that Armstrong has talked up Warner to him in some kind of overblown way.
Why? Does Kos's support of Warner seem so unlikely to you that it must be the result of a malign influence? In what way is Warner extraordinary as a Kos favorite?
If it comes out in the future that I started supporting Edwards right after a person with a history of giving bad advice for money, whose advice I listen to, started working for him
And what about any other contact you or people you know have had with Edwards? Influence doesn't end with money, and you've been plugging Edwards much harder than Kos has plugged Warner. You want to tell me that no one you know has any significant connection to Edwards or his organization at all?
Posted by: Iron Lungfish | Jun 26, 2006 11:22:42 AM
(Wingnut here --- just so that's clear.)
The distinction of Markos as 'duped friend' rather than "co-conspirator" is interesting, but for those seeking to evaluate the utility of HIS guidance, not too important.
Posted by: The Commissar | Jun 26, 2006 11:23:46 AM
You want to tell me that no one you know has any significant connection to Edwards or his organization at all?
To my knowledge, that's true. Or at least -- no one I knew before I started supporting him in 2004. Recently, I've interacted with with some staffers from the One America Committee, mostly in connection with Edwards' blog, but that's been a consequence of my Edwards support, not a cause of it.
Posted by: Neil the Ethical Werewolf | Jun 26, 2006 11:30:32 AM
I really have lost a great deal of respect for you on this. I don't think anyone can read you in the same way after this.
You deny being paid by Edwards do you? Markos denies pay for play. Jerome denies having engaged in pay for play with Markos.
Who should believe you as opposed to believing them?
Finally, do you realize the poll results you link to show Warner going from 14 to 10 over the time period that raised your eyebrows.
A slimy idiot is what you are portraying here.
Despicable. Did you check with Ezra before you chose to post this? The site does bear his name.
Posted by: Armando | Jun 26, 2006 11:34:58 AM
SGlover wrote "With all that out of the way, I say it's perfectly reasonable for Mr. Klein to make the points that he does here. Association with a guy known for sleazy dealing always raises questions, and it should."
Well, I agree. Obviously "Mr. Klein" did not write this. Mr. Neil did.
And Ezra's association with Mr. Neil raises questions. Ugly ones. Exra penned a nice piece on Edwards the other day. Was Mr. Neil's unsavory influence the cause?
Just a despicable piece.
Posted by: Armando | Jun 26, 2006 11:38:21 AM
Recently, I've interacted with with some staffers from the One America Committee, mostly in connection with Edwards' blog, but that's been a consequence of my Edwards support, not a cause of it.
So you expect us to trust that your support of Edwards predates your friends and acquaintances in the Edwards campaign, but you also expect us to suspect Moulitsas because his support of Warner couldn't possibly have arisen before Warner hired Armstrong? By your standards, shouldn't I also be suspicious of you and the possibility that you're just another gullible Bluepoint investor who trusts and admires your friends in the Edwards campaign, and is buying an internet stock for a lot more than it's worth on their recommendation?
Posted by: Iron Lungfish | Jun 26, 2006 11:42:34 AM
You live in a fnatasy world. You write "I'll just say this to Tim: If it comes out in the future that I started supporting Edwards right after a person with a history of giving bad advice for money, whose advice I listen to, started working for him, you ought to regard any non-independently verifiable things I say about Edwards with some extra suspicion."
Guess what Neil? You don't get to decide how people react to the crap you just wrote.
Your slimy post reflects on you and on Ezra. It shows you to be a person of low integrity who trafficks in bullshit innuendo.
I know what I think I you after this. I think you are a piece of crap.
And I don't need to wait to see what comes out in the future. I just read the crap you are capable of.
Posted by: Armando | Jun 26, 2006 11:42:43 AM
Why the limitations? Your basic claim is that Markos has a friend and partner who is alleged to have done something shady (knowingly offered bad advice for money, as that seems important to you ) prior to knowing him, and therefore Markos is suspect.
Which, unless I'm missing something, means that as long as I can find a lawyer with whom Edwards worked (or Edwards himself) who was sued for malpractice (there's a place you'll see allegations of knowingly offering bad advice for money) and who settled the case, then it's reasonable to be suspicious of anything Edwards says. Or at least any new position he takes. Like on Iraq.
At a minimum, could someone alleging the Great Warner Sellout please build a case of some sort? As far as I know, the Daily Kos has archives. Pull together all of the negative things he said about Warner prior to Armstrong's hiring, show the change in position post-Armstrong hiring, and then compare it to the relative stability of his position on other candidates or issues. For all I know, there's something to see there. But, as it stands now, it's all pure smear: Kos has a relationship with someone who is alleged to have done something bad, so Kos must be treated as suspect.
And who doesn't evaluate Kos's arguments on the merits, anyway?
Posted by: SomeCallMeTim | Jun 26, 2006 11:44:52 AM
The distinction of Markos as 'duped friend' rather than "co-conspirator" is interesting,
Well, I don't see where the "duped" part is coming in here. There's no indication that Kos was duped by or conspired with Jerome under any circumstances. The best I can come up with here is that people seem to be saying, "Kos likes Warner, and I don't know why. It must be because of Jerome. Jerome is unsavory, so there must be something sketchy going on between Kos and Jerome." That seems to be a rather shallow line of reasoning.
Posted by: Constantine | Jun 26, 2006 11:46:05 AM
Specifically, Ezra wrote this piece - http://www.prospect.org/weblog/2006/06/post_652.html#002903.
Was Mr. Neil's unsavory influence behind Ezra's use of TAPPED to forward Mr. Neil's agenda?
Obviously not. Only a slimy idiot would make that type of argument - someone like Mr. Neil.
Posted by: Armando | Jun 26, 2006 11:47:50 AM
Armando, are there SEC allegations against me for giving people bad advice in exchange for payments from third parties? That's a difference between the two situations.
As I've detailed in an email to you, mentioned in my post, and clarified above, I don't think Kos has sone anything dishonest.
Posted by: Neil the Ethical Werewolf | Jun 26, 2006 11:52:03 AM
The comments to this entry are closed.