To Catch A Thief, Would You Trust An Ex-Thief?

Categories: News
minkow.jpgLast Friday, a part-time Floridian named Barry Minkow (right) made a post on a website, Lenn-ron.com, that contained explosive allegations against Lennar Homes, a publicly-owned, Miami-based corporation that is one of the biggest homebuilders in the state. Minkow held back nothing, saying that Lennar "treats their joint ventures exactly like a Ponzi scheme"; that the developer took part in "commercially repugnant tactics" when it backed out of plans to build a mortuary; and that the company engaged in a "pattern of behavior" that constituted fraud. He said that the company skimped by using drywall imported from China. And he questioned whether the company's chief operating officer's home loan disguised kickbacks. When the allegations hit, Lennar's stock price took a whopping 20 percent dive.

The crazy thing is that Minkow is himself a convicted fraudster. The rest of the story, plus a video of Minkow, after the jump.

Minkow spent seven years behind bars for launching a supposed carpet-cleaning business called ZZZZ Best, which  defrauded investors of $100 million.  While in prison, Minkow found God, and after being released he became pastor of a church in San Diego. He also used his knowledge of con artist tactics to help found the "Fraud Discovery Institute." Now he goes after fraudsters with evangelical zeal.

While Minkow has helped investigators uncover a number of scams, he also sometimes profits from their downfall -- like when he investigated Herbalife and found that its president had misstated his education. Naturally, Herbalife's stock price fell when that news got out; Minkow earned a windfall because he had planned a short-sell of the stock in advance. (In other words, he had placed a bet that it was going to fall.) 

Separately, Lennar has been suing a guy named Nicholas Marsch III, alleging that Marsch meddled in a California real estate deal and ended up costing the company $50 million. Marsch turned around and hired Minkow to dig up dirt on Lennar --- and ta-da, here we are.  

Yesterday Lennar added Minkow and his Fraud Discovery Institute to its lawsuit against Marsch, accusing the men of libel and extortion. Back in July, the lawsuit alleges, Marsch had sent a letter to Lennar's board members (including UM president Donna Shalala and Yale professor Jeffrey Sonnenfeld), threatening to release dirty news about Lennar unless Lennar paid up.  In December, someone posed as the loan officer for Lennar's Chief Operating Officer Jonathan Jaffe, called Jaffe's bank, and tried to get confidential information about his mortgage transactions.   

It's not clear whether Minkow entered a short sale to profit from Lennar's downfall, and a representative of the Securities and Exchange Commission tells New Times that there is no way to find out through public records.  Contacted by Bloomberg News after he was named in the lawsuit, Minkow dared, "Bring it."

Here's Minkow, laying out his case:

  

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