Yahoo Inc. (NASDAQ:YHOO) Chief Executive Scott Thompson should have read the column I wrote in February 2009 headlined "Of all the indignities, don't get Minkowed."
The column went like this:
"Getting Minkowed begins when you learn that a guy named Barry Minkow has just shorted your stock, betting that information he has just uncovered can make it go down. Then you learn that Minkow has discovered those lies that you put on your resume.
"Now, your board has to face investors who are asking, 'Gee, if there's a lie on the resume, are there lies on the books, too?' Your immediate removal is the only good answer to this question. You've just been Minkowed."
Thompson is getting Minkowed by a powerful shareholder who wants him out for claiming a degree in computer science he does not have. Even Warren Buffett has joined in the Minkowing. "If you cannot trust the people you're working with, you have a problem," the Oracle of Omaha said, taking questions from reporters at his annual hoedown.
At least Thompson is getting Minkowed by respectable investors instead of by the master.
Minkow first went to prison for the carpet-cleaning company he built in the 1980s as a teenager, ZZZZ Best Co., which he'd grown into a publicly traded Ponzi scheme using Mob money. He is back in the pokey on fresher securities violations. But between federal convictions, he had a great run as a self-appointed fraud investigator, turning up falsehoods on executive bios.
I wrote a handful of columns on Minkow's efforts. His hit list included Patrick Avery, former president and chief operating officer of Denver's Intrepid Potash Inc. (NYSE:IPI); Vahid Manian, former senior vice president of global manufacturing operations for Irvine, Calif.-based Broadcom Corp. (NASDAQ:BRCM); and former MGM Mirage (NYSE:MGM) Chief Executive J. Terrence Lanni, a powerful figure in the gambling industry.
Not everyone added "former" to their titles after being Minkowed. In April 2009, for instance, Minkow discovered that Clarence Gooden, chief commercial officer at Jacksonville, Fla.-based CSX Corp. (NYSE:CSX), didn't have the bachelor of arts degree he claimed in his corporate biography. When I brought this to the attention of the company, it did not fire him. It subjected him to an internal sanction, which it declined to fully describe. Then it put out an official statement: "It is unacceptable for any employee -- no matter how valued or successful they are -- to provide, or fail to correct, inaccurate information."
When I wrote these stories, it was beside the point that they came to light thanks to a known criminal, who was shorting stocks as he went. What was more important was whether Minkow's claims were true.
Often, a misstated academic credential in an official corporate bio is at odds with a company's stated code of ethics or in violation of securities laws. Besides, if executives can simply lie about degrees, what's the point of anybody going to college? Just make one up like the boss did.
Yahoo's board has confirmed the misstatement in Thompson's bio and has said it is looking into how it occurred. Meantime, Thompson remains the target of activist hedge fund Third Point LLC, run by Dan Loeb. The firm, which owns about 6% of the Internet company, has been agitating for seats on Yahoo's board -- and then, well, well, well, look what we have here.
On Monday, Third Point made a legal demand for internal documents regarding Thompson's hiring in January. Third Point previously sent Yahoo's board a deadline of noon Monday to terminate Thompson, a former executive of eBay Inc's (NASDAQ:EBAY) PayPal unit. Third Point has now extended that deadline by five days.
The battle proves once again that a misstated resume is a hidden vulnerability waiting to be exploited by anyone looking to pick a fight. Why would smart executives leave themselves open like this? Did they really think they could publish an exaggerated resume for potentially millions of investors and fool them all?
This kind of corporate arrogance is what made Minkow's exploits so comical. I enjoyed turning him into a verb during his years between prison sentences. He was a known liar rooting out lies. Here's how I ended the column:
"'We look for skin of the truth stuffed with a lie," Minkow said.
"So executives with fake degrees, beware. You may soon be Minkowed."
Think how much trouble Thompson could be saving himself right now if he'd only taken the time to read this.
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at email@example.com or tellittoal.com)