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It is said that Bethany McLean has a system with gentlemen of a certain age. She has Midwestern looks, but a voice like red velvet –.and she stops at nothing for a peak behind the kimono. Downright cozy with Wall Street, a real life Media Mata Hari, she has beguiled many a CEO into giving her information that ended up in her stories - and also in the hands of her short-selling friends.

In October, 2005, she attended, uninvited, a Saturday lecture Patrick Byrne gave at the Columbia Business School, and asked him to a nearby restaurant. Later that day and several times the next, she left messages on the voicemail of a friend of Patrick’s in the mistaken belief that it was Patrick’s phone. That friend says, “She left Patrick her home and cell numbers and asked him to come over to her place for a drink, ‘even around midnight would be fine.’”

Patrick accepted an offer to meet her in a darkened bar under her apartment, where she mentioned, “I was briefly married, getting divorced.”

Patrick, who had been warned of Bethany’s system, declined her invitation to come by again, or call her at home. It was hard to believe that she would be so bold considering that she had previously published a story about Overstock, noting that “skeptics abound.”

Those “skeptics” again.

The skeptics, of course, were Rocker and the scoundrels at Gradient Analytics, then called Camelback Research Alliance. They suggested that Overstock’s growth paled in comparison to Amazon’s - neglecting again to note that Amazon had burned through $3.5 billion at the same stage of development. There is no evidence that Bethany did anything in this story other than regurgitate the misleading analysis of Rocker and Gradient - while portraying them as two separate entities in order to show that skeptics “abound.”

As if to more forcefully demonstrate her allegiance to these “miscreants,” Bethany had published another hatchet job for them - right after Patrick’s “Miscreants’ Ball” presentation. Patrick told the world that Gradient and Rocker were at the center of a massive financial crime, and a few days later, he opened Fortune magazine and saw the story - an attack on video game maker Take-two Interactive, quoting (as if they were offering analysis independent of each other) David Rocker and Gradient Analytics.

Then, in November 2005, shortly after Patrick did not call her at home (not even before midnight) Bethany published “Phantom Menace.” Rather than describe in detail the allegations that Patrick had leveled in his “Miscreants Ball” conference call, Bethany quoted Mark Cuban, the guy who financed her Enron documentary. She wrote: “As Mark Cuban, the billionaire investor, later wrote on his blog, ‘Never before in the history of Wall Street has a single conference call mentioned the following topics: miscreants, an unnamed Sith Lord he hopes the feds will bury under prison, gay bathhouses, whether he is gay, does cocaine, both or neither, and an obligatory ‘not that there is anything wrong with that,’ phone taps, phone lines misdirected to Mexico, arrested reporters, payoffs, conspiracies, crooks, egomaniacs, fools, paranoia, which newspapers are shills and for who, payoffs, money laundering, his Irish temper, false identities, threats, intimidation, and private investigators. All in 61 minutes.”

In addition to making it seem as if Patrick’s words had been blurted out by a sufferer of Tourette’s syndrome, Bethany went to lengths to ensure readers that Rocker had taken a “routine position” in Overstock. She noted that Gradient had published negative information about Overstock and argued (again without mentioning Gradient’s connection to Rocker, or alluding to any alternative point of view) that this information had merit. Moreover, she described the Easter Bunny as a wacky conspiracy theorist, suggested that phantom stock was not a real problem, and said that Patrick’s behavior was so “over the top” that he should be fired from Overstock.

Before she wrote this story, Bethany had three affidavits from former Gradient employees alleging that Gradient was in the business of producing false information for Rocker. One of those affidavits stated plainly that Gradient had colluded with at least one famous journalist–Herb Greenberg, a friend of Bethany–to illegally front-run media stories.

When Patrick asked if she had bothered to read these affidavits, Bethany said she didn’t see any reason why she should do so. “It would just open up a whole can of worms,” she told him, “and I’d have to get into whether they were telling the truth, or were just disgruntled ex-employees. I don’t want to get into that.”

Patrick then sent an email to Bethany, asking again whether she was going to write her story without reading those affidavits. Bethany now claimed to have read them, but said she wasn’t going to mention them - again, because she didn’t know if the former employees were disgruntled. She made no attempt to interview the employees or do any other reporting that would establish their credibility or lack thereof, so Patrick again inquired as to her unique understanding of what it meant to be a journalist.

Bethany’s emailed reply revealed the depths of her cynicism - the extent to which she views herself not as a detached and unbiased journalist, but rather as a battle-scarred warrior for the pillaging hedge funds that made her career.

She said she’d stick with her sources.

She said she’d do this because, “History is written by the victors.”

* * * * * * * *

There was one accurate paragraph in Bethany’s “Phantom Menace” story. It described some comments that Patrick made to Bethany and Gradient.

“In the fall of 2004, I wrote a FORTUNE story title “Is Overstock the Next Amazon?” After the piece came out, Byrne sent me an e-mail saying “Fair. And balanced.” Two days later he wrote another e-mail: ‘I actually thought it was crap…So why exactly did you become a reporter? Giving Goldman traders blowjobs didn’t work out?’ Around the same time, after Gradient released another report questioning board members’ independence, Byrne wrote to [Gradient's Donn Vickery]: “Donn, you make a living toadying to bully hedge funds…you deserve to be whipped, f-d, and driven from the land.”

Patrick responds, “I agree that the comments were a little salty. But Bethany knew that the email to Gradient had nothing to do with their ‘questioning a board members’ independence.’ I sent it because Gradient was derisive and personally disrespectful, over the telephone and then in print, to Gordon Macklin, a board member and a 78 year-old lifelong friend. This was crystal clear in my email, but Bethany’s strategically placed ellipsis obscured it.”

Classy! Previous EphBlog discussion here. That Patrick Byrne, the man behind Deep Capture, is the CEO of a $500 million company like Overstock is mind-boggling. But shorting Overstock is not the faint of heart.