  The optically variable source SDSS J124602.54+011318.8 first appears in Sloan
Digital Sky Survey (SDSS) data as a bright point source with nonstellar colors.
Subsequent SDSS imaging and spectroscopy showed that the point source declined
or disappeared, revealing an underlying host galaxy at redshift 0.385. Based on
these properties, the source was suggested to be a candidate ``orphan
afterglow'': a moderately beamed optical transient, associated with a gamma-ray
burst (GRB) whose highly beamed radiation cone does not include our line of
sight. We present new imaging and spectroscopic observations of this source.
When combined with a careful re-analysis of archival optical and radio data,
the observations prove that SDSS J124602.54+011318.8 is in fact an unusual
radio-loud AGN, probably in the BL Lac class. The object displays strong
photometric variability on time scales of weeks to years, including several
bright flares, similar to the one initially reported. The SDSS observations are
therefore almost certainly not related to a GRB. The optical spectrum of this
object dramatically changes in correlation with its optical brightness. At the
bright phase, weak, narrow oxygen emission lines and probably a broader
H$\alpha$ line are superposed on a blue continuum. As the flux decreases, the
spectrum becomes dominated by the host galaxy light, with emerging stellar
absorption lines, while both the narrow and broad emission lines have larger
equivalent widths. We briefly discuss the implications of this discovery on the
study of AGNs and other optically variable or transient phenomena.
