Overstock chief says he has proof of plot

Attorneys for Gradient and Rocker declined to comment on the trio's allegations, saying that they hadn't seen the declarations — or even been served yet with the August lawsuit. Under California law, a plaintiff has as many as 60 days after filing a suit to serve it on defendants.

The former employees' version of events are likely to be disputed. For one, Anifantis alleges that Rocker was making requests of Gradient as early as 2003. Yet Rocker didn't become a client of Gradient until July 2004, according to people familiar with the matter. Gradient began putting out negative reports on Overstock in mid-2003, and one early report expressed concerns that ranged from Overstock's accounting practices to the independence of its board.

Anifantis and Ballash were discharged by Gradient last November. Arizona authorities later turned down a request by Anifantis for unemployment benefits, finding that he had been discharged for misconduct in trying to obtain a commission. The New York Post reported Monday that both men had been fired for violations of Gradient's corporate policy.

In a phone interview, Anifantis denied any misconduct. As for when Rocker became a Gradient client, he said, "Just because they don't have a paying relationship doesn't mean they don't have influence."

In a recent phone interview, Ballash said he was told that the discharge was for "malicious conduct" involving alleged failure to do his job and the alleged taking of company property. "But I think we were really asking too many questions" about Gradient's relationship with clients. Ballash denies any wrongdoing.