ERICOPOLY

Perhaps he should be asking Valeant about what their consolidated licensed pharmacist has to say instead of being concerned that short sellers have talked to him. It seems more concerning that Valean't apparently hasn't done the same.

It has been asked "at what point does the strategy change". Well, it changed several years ago when they bought JNJ, WFC, KFT, and I think USB -- I forget. At that time they said they were switching to a strategy of buying high quality businesses for the long term. Said that they've finally learned it makes sense and mentioned taxes as well. Since then they've invested in Blackberry among other things and I think they've sold every one of those aforementioned high quality "hold for the long term" investments. Sorry to be talking like such a bitch, but it's something I've noticed.

It says "pre 10/6" in the tweet that you quoted above. Reitz' attorney was writing about the suspected fraud in July. They would have said "pre 7/x" if they meant to imply that the shorts planted ideas in Reitz' mind.

Like if the short sellers asked him for details of his fraud suspicions and he and his attorney said "we cannot comment due to the lawsuit". That would constitute "communications" so what would be the implications of that? I find it highly unlikely that the short sellers wouldn't try to contact Reitz and his attorney. It's not like you're getting any information about his allegations from VRX investor relations, so why not give Reitz a try? It would also constitute a deeper investigation into Reitz's allegations than Valeant itself had attempted, if Reitz is correct in saying that nobody ever responded to his fraud allegations. I agree, though I think the Twitter user is implying that R&O was influenced by short sellers before the R&O filed suit. Regardless, I agree that if I was short the stock, I'd attempt to contact Reitz and his lawyer for any info possible. "Hey Reitz, rumor has it your license is being used fraudulently. Just thought you should know!". That could be a pre-lawsuit communication. Reitz could then write letters to his masters who choose to completely ignore the letters. This silence confirms the rumors and now he's scared shitless. All possible. Curious though why the masters ignore him.

Like if the short sellers asked him for details of his fraud suspicions and he and his attorney said "we cannot comment due to the lawsuit". That would constitute "communications" so what would be the implications of that? I find it highly unlikely that the short sellers wouldn't try to contact Reitz and his attorney. It's not like you're getting any information about his allegations from VRX investor relations, so why not give Reitz a try? It would also constitute a deeper investigation into Reitz's allegations than Valeant itself had attempted, if Reitz is correct in saying that nobody ever responded to his fraud allegations.

It was a long running joke with him -- a few of his close buddies would say "ahboooot" and all would laugh. Could be a mix of the Croatian influence.

It depends on whether economic control translates into legal liability. However, that's not really the boogeyman that most are worried about. It is fallout and the concomitant impact on revenue and profits that is more important. (And any regulatory and/or witch hunt tail risk.) Isn't it the case that you are not protected from liability if you knew about a fraud and continued to do business with the known fraudulent entity? You become an accessory to the crime or a facilitator at some point. So it depends not just on the economic control argument, but also on knowledge too. Like if a pharmacist reports a suspected fraud to you but you don't investigate and thus have no evidence of a fraud, you can keep on operating your alleged fraudulent companies that you hold purchase options on. But if you looked into the pharmacists' claims and found damning evidence, then you'd have to shut down the fraud and miss out on the ongoing profits. I'm not a lawyer by the way, just my understanding and using common sense. Possibly the law could hold you responsible for your negligence -- surely if whistleblowers are reporting that they are suspecting a fraud and you completely ignore them, you are negligent. When ignoring them works towards your economic gain, it looks especially awkward. Maybe a lawyer can offer a comment.

I'm originally from Hamilton and knew someone who worked for Microsoft. Was his name Charles (Chuck) by chance? Of course, if the answer is yes, then I'm feeding in the Canadian stereotype that we all know each other. ;D First name Robert, last name is a Croatian name. Further information, he always says "I don't know what you're talking aboot" when he really means to say "I don't know what you are talking about". I'm sure that will narrow it down!

Good suggestions, thanks all. One "small world" anecdote from that Microsoft job is that I met a great guy from Canada (Hamilton, Ontario) working there on the stress team alongside me in 1998 and for several years after that. He was hired in 1998 (or 1999). When I quit the company roughly 10 years after meeting him, he was surprised and I told him about the FFH options. He had personally met Prem! It turns out that the year before we hired him, he had interned for Northbridge and helped them write some underwriting code. Isn't that crazy? What are the chances. Up until that point I had no idea he worked there.

1) One of the things that Reitz said is that they never responded to his suggestion that widespread fraud was taking place. Never! 2) We also know that they've portrayed him as a liar because of some sideshow dispute over whether he knew what Valeant is. 3) First you completely ignore his claims, then you discredit him so as to make it reasonable that you would have ignored his fraud claims (even though the fraud claims came first well before the nonpayment and the emails). 4) You operate a network of pharmacies in a limited liability structure and you as such will not be liable for any frauds that you were unaware of. The cash making machine is still intact until the day you learn that fraud is taking place. 5) I believe the way it works is you would begin to be liable if you continue to operate the Philador structure after discovering evidence of a fraud. So refer back to step 1 and read this in a loop a few time. Remember that Reitz is a pharmacist with a license, not a disreputable call girl.

That's not how things are done in Canada. And let's leave Canada out of it. Valeant is an American pharma with a Canadian address of convenience. The CEO is not even at headquarters. His office is in New Jersey. I'm frankly getting annoyed from reading all the newspapers talking about Canada's Valeant. You missed the joke. this morning there were some "that's not what happens in Canada" comments. They were saying that in Canada you conduct a full trial before throwing a guy like Pearson under the bus. So I'm saying let's do the same for Reitz! Too many have thrown him under the bus without an investigation. He is a convicted liar of Valeant's show trial and so I'm saying he needs equal time.

The reason why I don't dismiss Reitz over this superficial "lie" is that the man is a licensed pharmacist in California at age 64. I think it's worth hearing what he has to say. Who fed you this story about him "lying" over 60+ emails from Valeant? Did you fact check that with Reitz or are you accepting Valeants show trial of Reitz? How the fuck could Reitz have known for sure that Valeant was consolidated with Philador given that the relationship was held through a secret option relationship? So when he says he's never heard of Valeant after getting so many emails from them, doesn't it seem more likely that he is quoted out of context in order to be made to look like a liar so you guys would gobble it down hook, line and sinker? Maybe Reitz was really saying "i don't understand what Valeant's ties are to Philidor which is where the checks normally go" I'd like to hear Reitz side of the story rather than hear the interpretation of it from Valeant -- i don't need the show-trial version of what Reitz meant -- i need to hear Reitz rebuttal. Is this how things are done in Canada?

Wally Weitz backs up the *dump* truck... http://finance.yahoo.com/news/value-investor-wally-weitz-sells-203424264.html

That's why I'm not taking it as proof that he is lying -- it makes no sense. I'm looking for a plausible story. Here is what we know: Reitz' lawyer wrote a letter saying that he would stop paying because doing so further implicates himself in a widespread fraud. That's why he stopped paying -- he told them in writing that he would stop paying. And he told them why. We've seen that letter written by his lawyer. This is fact. Then we have Valeant telling shareholders that they keep sending him a collection notice and he won't pay them. He's already told you why he won't pay you. Why don't you look into his claims instead of acting like an insane person trying to collect from a guy who doesn't want any part of your purported crime?

Ackman dismissed Reitz for superficial reasons. He said for example that Reitz was caught in a lie over his knowledge of who owned him. There are multiple reasons to lie. For example, if you were Reitz and you knew you had done bad shit for a while and then grew a conscience when your "everyone does this bad shit in this industry" ratioanalizing wears off (due to the scale that the malfeasance had grown to), then perhaps you'd start lying your way of it by pretending to have had no knowledge at all. So some lame part of your story is detected to be a lie. That doesn't mean that you are lying about the existence of fraud, it likely confirms the existence of fraud which is why you have started lying... only you got a small detail of your narrative wrong. You are lying because you are scared. Why are you scared? Eric, why do you think Reitz is so credible? He said he had never heard of Valeant in his lawsuit, Peason said "From January to July of this year, Valeant sent email invoices to R&O approximately 75 times and R&O consistently received and paid these invoices." Very easy to prove that emails were sent, so why would Pearson lie about that? Is it not possible that Valeant investigated his claims of fraud and determined there was no fraud? Nobody has proven any fraud happened yet. All we have is this guy who has been proven to be a liar saying there was fraud. Is it unusual for a person involved in a crime to have lies in his story?

Several people have already stated that cutting corners and bad ethics are standard, that there is a toxic culture in the industry... ... then why is it so easy for you guys (and Ackman) to not take Reitz seriously? Isn't it the kind of toxic environment ripe for breeding a widespread fraud? So why dismiss him?

Ackman dismissed Reitz for superficial reasons. He said for example that Reitz was caught in a lie over his knowledge of who owned him. There are multiple reasons to lie. For example, if you were Reitz and you knew you had done bad shit for a while and then grew a conscience when your "everyone does this bad shit in this industry" ratioanalizing wears off (due to the scale that the malfeasance had grown to), then perhaps you'd start lying your way of it by pretending to have had no knowledge at all. So some lame part of your story is detected to be a lie. That doesn't mean that you are lying about the existence of fraud, it likely confirms the existence of fraud which is why you have started lying... only you got a small detail of your narrative wrong. You are lying because you are scared. Why are you scared?

The limited liability... I raised the point because it incentivizes them TO NOT INVESTIGATE fraud allegations. Stick fingers in ear and loudly say "LAH LAH LAH LAH LAH LAH LAH LAH LAH LAH". Meanwhile keep Philador network doors open and continue to rake in the money, knowing that your ass if covered if there is fraud. But if you investigate and find fraud, you have to shut down the Philador network. So it's best to concoct a story that you think Reitz is a just a bad debt that needs to be collected on, because the other option means you might not hit your growth targets due to the risk of finding evidence of fraud. So it's not necessarily that Pearson is likely guilty of knowing about a fraud and covering it up, but rather perhaps more likely that he'd use every tool in the shed to not investigate a fraud.

I didn't say it was set up that way to be a master plan to commit fraud. It however was set up that way.... ... and the California pharmacist is panicked over widespread fraud and lawyered up and Pearson didn't tell shareholders... and he didn't investigate.... even though this California pharmacy is critical to their being able to sell product through California... And it's not rational to question Pearson's story until their show trial is completed!

What does the phrase "trail of breadcrumbs" suggest to you? therefore... why ask me if I'm sure Pearson planned the whole thing... What we do know, however, is once a secret network of pharmacies was uncovered along with a $69m receivables dispute with R&O, we were told it was "just a standard collections dispute". Days later every partner of Philador severs ties and the thing has to be unwound. All because of some jerk named Andrew Left with a reputation of pumping and dumping? Yeah right... And meanwhile there really is a guy who is terrified of losing his license due to what is going down in the Philador network, and this doesn't prompt an investigation from Pearson? I mean, why would you NOT investigate fraud claims? Don't ask, don't tell? Instead, keep it rolling along as long as possible because we're confident we have no recourse? Look, if Pearson does launch an investigation based on Reitz' accusations, then he might have to shut the whole thing down. But if he tries to bury it as "standard collections" and keep the train rolling, then he keeps on raking in the dough. But you'd only risk that if you were confident that you had no legal recourse. On their slide deck the part about limited liability is listed as one of the benefits to the options structure.

Reitz name is on the California license. He's the one who is going to hang. Pearson set things up so there was a veil of separation. One guy refuses to keep going for mortal fear of being the one left holding the bag... ... the other guy without his name on the license and a mile of legal firewall in between wants to keep the show rolling along. So you guys think Reitz is easy to ignore. WTF?

It's also fascinating to see "rational" people dismiss Reitz' allegations out of hand while standing behind Pearson. What happened to giving people a fair trial for Reitz claims before finding Reitz guilty of bullshitting ;) Who is looking right past his fraud accusations and dismiss them without a trial, meanwhile asserting that people like myself are unjust to question Pearson's version without a proper investigation? :-X :-X :-X Reitz has "boots on the ground" and so far he's showing a sense of panic that he might be losing his license or worse over what's going on in the trenches. His pretending not to know about who really owned him only makes him look even more panicked if you ask me. Through the trail of breadcrumbs, Reitz seems to have left a couple of breadcrumbs to show that he is critically concerned about being implicated in a widespread fraud. Through the trail of breadcrumbs, Pearson seems to go out of his way to keep what Reitz is actually saying from reaching shareholders.

Authorities move a little slower than the internet. Or they did nothing illegal. That's still equally likely in my opinion. And those findings were uncovered by what investigation?

Innocent UNTIL proven guilty is important for the legal system. However I think shareholders don't need to put up with lies even if it's legal to do so.

Those photos on the top of the third page are amusing at least.