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Patrick Byrne out as Overstock head following ‘deep state’ comments

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Patrick Byrne, founder and CEO of Overstock.com, speaks during a ribbon-cutting ceremony for Overstock.com’s new Peace Coliseum office building in Midvale on Friday, Oct. 14, 2016.

Deseret News archives

MIDVALE — The man who launched online retailer Overstock.com two decades ago announced his retirement from the company Thursday following widespread fallout after public comments he made about his involvement in a government “deep state” conspiracy.

Patrick Byrne, who saw a market for liquidating excess retail inventory from other companies at deep discounts through an online platform in the late 1990s, leaves as CEO a firm that’s seen its stock on a roller-coaster ride in recent years.

Byrne made headlines last week after he released a statement responding to a blog post that detailed his involvement in the federal government’s investigation into the 2016 election.

He characterized himself as “the notorious ‘missing Chapter 1’ of the Russian investigation” and called the federal agents he claims to have assisted in three investigations as “the Men in Black.”

The issue appears to have also cost the company a chance at hosting Vice President Mike Pence during his visit to Utah.

Two sources told the Deseret News last week the vice president was originally scheduled to speak at Overstock’s Midvale headquarters, where the company is celebrating its 20th anniversary this week. But Byrne’s comments nixed that plan and the White House rescheduled Pence’s talk to Merit Medical.

In a statement released to media Thursday, Byrne referenced the public revelations and its impact on his decision to retire.

“In July I came forward to a small set of journalists regarding my involvement in certain government matters,” Byrne wrote. “Doing so was not my first choice, but I was reminded of the damage done to our nation for three years and felt my duty as a citizen precluded me from staying silent any longer. So, I came forward in as carefully and well-managed fashion as I could.

“Though patriotic Americans are writing me in support, my presence may affect and complicate all manner of business relationships, from insurability to strategic discussions regarding our retail business. Thus, while I believe that I did what was necessary for the good of the country, for the good of the firm, I am in the sad position of having to sever ties with Overstock, both as CEO and board member, effective Thursday Aug. 22.”

Following Byrne’s announcement, Overstock appointed Jonathan Johnson as interim CEO. Johnson has been with the company since nearly its inception serving in various roles, including general counsel and board chairman. For the past several years, Johnson has led Overstock’s blockchain-focused investment subsidiary, Medici Ventures. The company also announced Kamelia Aryafar will replace Byrne on the Overstock board of directors.

Allison Abraham, Overstock board chairwoman, said she and the board have full confidence in Johnson as he takes over the helm from Byrne.

“We respect and understand Patrick’s reasons for resigning and acknowledge his momentous achievement in taking Overstock from a startup 20 years ago to one of the nation’s leading online retailers and positioning it at the forefront of the blockchain revolution,” Abraham said in a statement. “We have full confidence in both Jonathan’s ability to lead the company, and Kamelia’s expertise and insights to help the board successfully lead Overstock into the coming months and years.”

Byrne also weighed in on Johnson and Aryafar taking over his former positions.

“Jonathan’s diverse and extensive experience here has prepared him well to successfully oversee both our retail and blockchain businesses,” Byrne said in a statement. “Kamelia is a brilliant machine learning scientist and ecommerce veteran who has already made great contributions to our science, engineering, and analytics by advancing data-driven technology. Her addition to the board will continue to propel Overstock forward in its visionary direction.”

Johnson had a brief foray into Utah politics, forcing Gov. Gary Herbert into a primary in the 2016 gubernatorial race after besting the incumbent at the state Republican convention. Johnson went on to lose to Herbert in the primary that year.

Byrne has been a long-time advocate for the potentials of both cryptocurrencies and the blockchain technology on which those systems are based. He has also been a staunch critic of stock market short-selling, including filing legal actions in the mid-2000s against Wall Street hedge funds and others for issues related to the practice of betting on a company’s stock value going down over time.

Following his comments about involvement in a government conspiracy, Overstock’s stock dropped nearly 40%t last week but has since been recovering.

This story will be updated.