How we've responded to BeachMint's most recent demands

By Sarah Lacy , written on July 16, 2013

From The News Desk

I wanted to update readers on the situation between PandoDaily and BeachMint. First off, it is still unfolding. We have uncovered some new leads on information that we are in the process of investigating.

In the mean time, we have had a bizarre series of conversations with a man named Lanny Davis over the last few days. Despite the fact that he asked that the conversation be off the record, he and BeachMint have leaked the details of our conversations to the LA Times. We had a feeling this might happen so we insisted on much of the conversation being captured in emails.

Since Davis himself has violated the agreement that we talk off the record, we are considering that agreement null and void.

In short, he took pains to say he was a lawyer but not contacting us in a legal manner. They demanded that we correct two facts:

  • That the founders had not been ousted as of yet
  • That the $20 million had not been returned of yet
I explained that we'd already corrected these two facts, per the company's denials. We then received this email outlining the company demands and giving us a less than 24 hour deadline to comply. It was unclear what the repercussions of missing that arbitrary deadline might be.
Dear Sarah;

I appreciated our candid conversation today about the two false statements published in PandoDaily on July 2, 2013 in a story reported and by-lined by Michael Carney.

These two false assertions of fact, contained in the headline and repeated in substance in the text of the article, were:

1. BeachMint board ousts founders.

2. Company returns $20 million to investors.

Both of these statements were false on July 2 and remain false today.

During our conversation, you did not deny they were false. Nor did you deny that your reporter, Mr. Carney, ever attempted to verify either or both statements by calling anyone at BeachMint or any members of their board of directors. (I told you my opinion that Mr. Carney's failure to call to verify is a violation of a fundamental rule of responsible journalism as well as a fundamental rule of basic fairness.)

On July 3, in an article headlined as an "update," after 10 paragraphs you acknowledge only that it "seems" that Messers. Berdakin and Berman are "still employed at Beachmint" and that "no capital has been returned, yet."

This is not a retraction and correction of the false statements published.

Therefore, on behalf of BeachMint (copied on this email are Messrs. Berman and Berdakin who have authorized my contact with you and this email), I request immediately that you publish the following:

------------------------- "Correction and Retraction

The following statements contained in a July 2, 2013, article about BeachMint were false:

1. BeachMint board ousts founders. 2. Company returns $20 million to investors.

We apologize for this mistake as well as the failure of the reporter, Mr. Michael Carney, to attempt to call BeachMint or any member of its board of directors to obtain a confirmation or denial of the assertions and for the failure of the Editor-in-Chief to insist on such verification before publication." -------------------------

I would like to discuss with you what, if anything, would lead you to delay in the publication of the above.

To repeat, I respectfully suggest that to protect the journalistic reputation of PandoDaily, which you indicated in your personal announcement statement when PandoDaily was first launched, this retraction and correction and apology is in your and PandoDaily's interests. I believe your readers and your employees and your investors would agree.

It is also important to mitigate further harm to the reputation and brand of BeachMint and the morale of its employees that you publish this "Correction and Retraction" immediately.

I will call you shortly -- or you can call me -- to discuss when I can advise BeachMint that you have agreed to publish this statement or something virtually identical.

Time is of the essence

Thank you for your prompt consideration.


Lanny J. Davis Here's what I responded, cc'ing several of BeachMint's investors and the founders:


I wanted to respond by email because, frankly, this thread has gotten weirder as the day has gone on. Further, your earlier email did not accurately reflect the substance and spirt of our earlier call.

For example, by saying I did not "deny" certain things in our call you are implying I agreed with your assertions. I do not. What I very clearly said was that I was not going to confirm to you who we did or didn't speak to for our story. We have many anonymous sources close to the company and confirming the identity of those sources would be a violation of our agreement with them. Declining to confirm the names of people we spoke with is absolutely not the same as confirming that we did not speak to anyone. Hopefully you understand the distinction.

Rather than playing any further rhetorical games let me be absolutely clear of my position, and the position of PandoDaily. I have cc'd Beachmint's investors, founders, and Greg Steiner to ensure that my statements do not again get misinterpreted.

1. We stand by our Beachmint stories, as currently published on Pandodaily. We had six reliable sources before we went to press with the original story, and in subsequent conversations those sources have stood by what they told us at the time. What remains unclear is how the publication of our story may have changed those facts. As I've said repeatedly, I would welcome the opportunity to discuss the story with the founders or the board. Until we are able to understand the difference between what six separate, solid sources (and others since publication) told us about Beachmint  and what the founders have subsequently claimed, there is nothing more we can add to, or remove from, the story as published.

In terms of the founders' status at the company, in our most recent update, we wrote...

"At this point, I can say with certainty that our reporting was not “100% false,” but — as with most breaking news– it appears not to be 100% accurate. We apologize for any facts we got wrong. Specifically, it seems that Berdakin and Berman are still employed at Beachmint and that no capital has been returned, yet. This could obviously change, and we’ll continue to investigate to find out what the truth is and why so many well placed people close to the company believed with certainty last night that the founders to be ousted and $20 million in capital was getting returned."

This is clearly noted and linked to in the headline and first graph of the original story.

When we spoke earlier, I asked why this wasn't sufficient. The only reason you gave me was that you objected to the word "seems." We chose that word because our only confirmation was from the founders, speaking second hand to other blogs. They have so far refused to speak to us directly. However, as I said on the phone, I'm happy to take you at your word as a representative of the company and delete the word "seems."

In terms of the issue of returning capital, in our original story we did not say this had happened, only that it will happen. In the opening graph we wrote:

"Additionally, we’ve been told that $20 million will be returned to investors."

As of today, our sources still tell us this is true and we have no reason to doubt them. Even the company isn't denying that it will happen: All of the objections I've seen including yours is that it hasn't happened *yet.* Again, Michael and I are more than happy to speak with the company and ask them about specific issues our sources have raised, and write a new story to reflect any new facts that come to light. So far, that offer has been declined.

Our only interest is in reporting the truth, based on the best available information. Again, what is on the site now reflects what our sources have told us, the specific denials Beachmint has made, and what we believe to be true. When new facts have come to light, we have updated the story swiftly and clearly, and we will continue to do so.

2. You mentioned there is a "deadline" for us to retract/update our story. I am unclear what that means, but I want to make clear that the only deadlines that we operate on are our own, in the interests of delivering the most accurate information we can to our readers. What's more, I would never -- under any circumstances-- publish what someone else wrote under my byline as you request in your email.

3. You took pains to open our conversation this morning by saying you were a lawyer not acting in a legal capacity. Your subsequent communications increasingly sound like a precursor to legal action. In the interests of transparency, we have a strict policy of publishing in full any legal threats made against us or our reporters --- including any or all emails which constitute a precursor to legal action. Please let me know as soon as possible if you are acting as a legal advisor to the company so I can share this thread with our readers.

As I said, I find this whole approach highly unusual. I have had a long career covering startups and I have never had a founder demand a retraction through a hired third party, nor have I had founders publicly complain that we did not speak to them, while repeatedly refusing to speak to us.

We are as determined as I hope you are that the full, correct story about Beachmint's current status can be made public. Beachmint's founders have my direct contact information, and I would welcome the opportunity to discuss the story with them at any time. They can be assured a fair hearing including, of course, a more detailed correction of our original story if one is shown to be warranted.

In the meantime, we'll continue pursuing this story, to our own usual urgent deadline, with or without Beachmint's assistance. I'm not sure there's anything else I can usefully add at this time, especially until you clarify the capacity in which you are acting for Beachmint.

The next thing we heard was from a reporter from the LA Times asking us to confirm that we'd spoken with Davis and the details of the back and forth.

Our position is clearly iterated above, and I repeated it to the LA Times. I'll let readers judge whether or not we are acting fairly and in good faith to do right by them.