1. All DG Systems Are Go

If only Martha Stewart had been CEO of DG Systems ( DGIT). The folks at DG know exactly what to do with a chief executive found to have engaged in insider trading: nothing at all.

On Monday the board of the company -- which electronically distributes advertisements to broadcasters -- reaffirmed its support for Chairman and CEO Scott Ginsburg despite a wee little legal setback Ginsburg suffered last week.

That problem? Ginsburg, according to a three-judge appeals court, violated insider trading provisions of the Securities and Exchange Act. And, as a result of a jury's finding in a civil Securities and Exchange Commission case, Ginsburg should pay a $1 million fine and be enjoined from future violations of the securities laws and regulations.

DG's board, in its Monday reaction, went straight for the silver lining: "The Court of Appeals did not bar Mr. Ginsburg from serving as an officer or director of a public company," board members said in a statement. "The Board of Directors continues to believe that the Company is well served by Mr. Ginsburg's continued service as Chairman and CEO."

Yes. For all the crimes the founder of Martha Stewart Living Omnimedia ( MSO) committed in a cover-up, no one has actually yet decided whether her December 2001 ImClone ( IMCL) stock sale violated insider trading laws. On the other hand, Ginsburg -- back when he was CEO of a publicly traded company called Evergreen Media -- "breached his fiduciary duty to his company and to its shareholders on two separate occasions for the financial gain of his family members," the appeals court found. But the board of his current company still loves him -- shades of Michael Eisner's boardroom cheering section at Disney ( DIS).

We at the Five Dumbest Things Research Lab have been following this case for a little while now -- first when the board was expressing its support despite the jury's finding, and later when a judge vacated the jury's verdict .

When we heard the original verdict was vacated, we got all apologetic toward Ginsburg. But this week we read the appeals court decision, which recounts two incidents in which Ginsburg, through his privileged position, had advance word of impending hot deals potentially involving Evergreen, then leaked that information to his father or brother. Now we're a lot less charitable toward Ginsburg.

This week, DG's board unearthed a mandate for Ginsburg from December 2002, when 85% of voting stockholders (other than Ginsburg) voted in favor of his reappointment to the board. We note that the national mood, as it relates to CEOs' indiscretions, may have shifted since then. We also note that the Nasdaq is up nearly 50% from 2002's close, while DG's stock is right where it was back then. Given the charity that Ginsburg once showered on his relatives, we doubt that shareholders would be as charitable toward Ginsburg this time around.

2. Maybe This Is What They Mean by 'Double Your Money in Real Estate'

You want to make money in real estate? You don't want Donald Trump as a role model. No, you want John Rigas, the former Adelphia Communications CEO who's now on trial in New York City.

Misdeeds
Rigas doubles his money -- and sales

As we learned this week, Rigas -- facing charges of fraud and conspiracy -- had a sure-fire plan for maximizing dollars in real estate transactions: Sell the same property twice.

Charles Raptis, Rigas's former assistant, testified Tuesday that Rigas settled debts to Adelphia in 1994 by selling $14 million worth of property to the company, according to The Potter Leader-Enterprise . But Rigas never actually handed over to Adelphia deeds to $6 million of the property, Raptis said. And years later, Rigas resold three of those properties a second time to other parties. The second time around, apparently, he actually turned over the deeds.

Man. Over at Tyco International ( TYC), former CEO Mark Swartz said he never noticed that $12 million in compensation was never reported on his W-2. At Adelphia, John Rigas sold $6 million of real estate without ever handing over the real estate. You know, when we're careless about money, we lose it. When executives are careless about money, they make millions. Life just isn't fair.

3. The Notorious Joe

We at the research lab committed a grievous lapse in our coverage of Starbucks ( SBUX) last week. We must apologize.

Java 'n 'Joe'
Another cup of no

You may recall we were a tad skeptical about the caffeine retailer's ability to transform its coffeehouses into music stores. In fact, as evidence of Starbucks' record as a media distributor, we cited Starbucks' unsuccessful attempt to sell a print version of the online publication Slate.

Well, it turns out we were wrong. Starbucks didn't fail once in selling a magazine from its coffeehouses. No, it failed twice. As reader Gordon Barnes points out, back in 1999 Starbucks launched a quarterly magazine called Joe, with the tagline "Life is interesting. Discuss."

As far as we can tell, Joe lasted three issues before, um, grinding to a halt. We guess the target audience of coffee-swilling slackers wasn't as attractive to advertisers as Starbucks had hoped.

Anyway, we at the Five Dumbest Things Research Lab regret the omission.

4. Big, Hard Thoughts About Microsoft

The European Union isn't going to fix Microsoft ( MSFT). So maybe you can.

To us, the 497 million-euro fine imposed this week on Microsoft symbolizes everything that's wrong with the government's attempt to make Microsoft play nice. It comes five years, for example, after Sun Microsystems ( SUNW) filed its first complaint in Europe, according to the San Jose Mercury News. It will take years more for anyone in Europe to collect the money, after all the appeals. It represents a microscopic amount of Microsoft's revenue and cash on hand. And it leaves us no doubt that this whole battle will start up all over again the next time Microsoft seeks to get into a new line of business.

Which leads us to the latest in our sporadic series of reader contests.

Mister Hardball
Teaching Microsoft to play fair

Under the assumption that there is indeed a solution to Microsoft's perennial regulatory issues -- there is, after all, relative peace in Northern Ireleand -- we pose this question: How Do We Make Microsoft Play Fair? It's not Microsoft's fault that it has huge market power; the puzzle is, how do we let it enjoy its Bill-Gates-given advantages without crossing over the line into unfair, anti-competitive, antitrust-law-violating behavior?

Pretend you're king: What decree would you pass that would make Microsoft a good actor while making antitrust regulators happy everywhere? Send your suggestion to the research lab in care of george.mannes@thestreet.com .

Entries will be judged on the basis of brevity, wit and originality -- not necessarily feasibility. Anti-Microsoft diatribes and venomous comments about idiotic European bureaucrats will be ignored. The winning entry will receive an autographed copy of Jim Cramer's book You Got Screwed , plus the gratitude of a nation.

5. OFHEO. Me Say OFHEO. Daylight Come and Me Want to Go Home

Who says the Bush administration isn't creating enough jobs?

For evidence of employment growth in the U.S., you need look no further than the classified ads of The Wall Street Journal this week. That's where we discovered that the Office of Federal Housing Enterprise Oversight wants to fill over 30 jobs in its examination department. Hot dog! The jobs pay well -- they start at $73,500 a year -- and the ad says that OFHEO is "a fast growing, exciting agency."

Dream Job?
Don't bet the house on it

Or is it? OFHEO is, after all, the agency that's in charge of overseeing the government-sponsored mortgage buyers Fannie Mae ( FNM) and Freddie Mac ( FRE). As you might be aware, OFHEO did a lousy nonjob of uncovering accounting manipulation at Freddie Mac. We can't say people are too excited about the agency's performance.

It's also worth noting that legislators, dissatisfied with OFHEO's weak oversight of Fannie Mae and Freddie Mac, are entertaining the idea of scrapping OFHEO and replacing it with another agency. No word yet on whether fresh-faced employees at OFHEO would be retained at Son of OFHEO. So we're not so sure how much longer OFHEO will be "fast growing."

Our advice to applicants for the OFHEO positions: When you move to Washington to start working, follow the example of baseball managers when they take a new job: Don't be in a rush to buy your new home, no matter what Fannie Mae says about being the Champion of the American Dream. Given our sense of job security at OFHEO, odds are you're better off renting.
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