Chalk up another problem for Overstock.com (NASDAQ: OSTK), the failing online retailer run by the wacky CEO Patrick Byrne. Yet this law enforcement investigation doesn't appear to come with any "celebration" by Byrne.

Byrne is usually proud of the company's failures, but the announcement of the latest law enforcement investigation was buried deep in a press release about the latest set of quarterly losses: On April 15, 2008, we received a letter from the Office of the District Attorney of Marin County, California, stating that the District Attorneys of Marin and four other counties in California have begun an investigation into the way we advertise products for sale, together with an administrative subpoena seeking related information and documents. We follow industry advertising practices and we intend to respond fully to the subpoena and cooperate with the investigation.

This investigation is in addition to the ongoing investigation by the SEC, as well as the litigation between Overstock and Gradient Analytics. Gradient sharply criticized Overstock in its research reports and Byrne and company cried that the reports were not true. (Oddly enough, the company still has not turned a profit several years later, and is still a horrible investment.)

Note to Patrick Byrne: Those who have bad things to say about Overstock, its business model, its operations, and its never-ending financial losses aren't necessarily short sellers who are trying to profit off bad news. Many of them are realists who have figured out how awful your company is. Sorry, but sometimes the truth hurts.

Tracy L. Coenen, CPA, MBA, CFE, performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Some nasty things have been said about Gradient Analytics, even resulting an SEC investigation of the firm that was dropped in short order.

But as Herb Greenberg points out in his latest column (subscription required), the research firm has about as stellar a track record as you will find, having been among the first to raise questions about accounting at Krispy Kreme Doughuts (NASDAQ: KKD), Children's Place (NASDAQ: PLCE), and Biovail (NYSE: BVF).

Now, in a report available free on the firm's website (a must-read if you are even thinking about buying financials), Gradient wonders about the accounting at Washington Mutual (NYSE: WM), Citigroup (NYSE: C), Wachovia (NYSE: WB), Wells Fargo (NYSE: WFC) and, my personal (least) favorite, Countrywide Financial (NYSE: CFC).

According to Gradient's report, the financial statements of these firms raise serious questions with respect losses being hidden on assets that are being held to maturity (essentially failing to take appropriate writedowns), shifting loans into "assets held for maturity" to avoid taking writedowns, the use of "not necessarily fair market values," off-balance sheet arrangements, and the concealing of the "after-effects of aggressive gain-on-sale accounting."