Here is a guy of whom I am tired of hearing about. The famous ZZZZ Best Ponzi scheme perpetrator whose subsequent rehabilitation as an anti-fraud expert has now gone full circle and ends with Barry Minkow libeling1 Lennar and causing havoc to their stock. Since this report says he is pleading guilty to the charges, nothing more need be said about him.
We’ve all known guys just like him on various scales of wrongdoing. They just can’t seem to walk a straight path.
Federal prosecutors charged former fraud investigator Barry Minkow with conspiracy to commit securities fraud by disseminating false information in 2009 about home-builder Lennar Corp., according to court documents filed Thursday in Miami federal court.
The complaint charges that Mr. Minkow, along with a person identified as Conspirator A and others, conspired to “artificially manipulate and depress Lennar’s stock” in an effort to pressure the builder to pay money allegedly owed to Conspirator A. The charge against Mr. Minkow comes with a maximum prison term of five years.
According to several people familiar with the investigation of the U.S. attorney’s office of the Southern District of Florida, Conspirator A is Nicolas Marsch, a California real-estate developer who has sued Lennar over losses related to a soured real-estate deal in Southern California. Mr. Marsch’s attorneys didn’t return calls seeking comment.
Mr. Marsch hired Mr. Minkow in late 2008 to assist him in litigation against Lennar, people familiar with the matter said. That resulted in a report released by Mr. Minkow on Jan. 9, 2009, that alleged widespread improprieties in Lennar’s financial reporting and business plan, according to the federal complaint.
After Mr. Minkow’s report was made public, Lennar’s stock price tumbled 30% and resulted in a loss of more than $500 million in market capitalization in just two days, according to the company.
The criminal complaint also says that Mr. Minkow abused his relationship with federal law-enforcement officials and induced them to open up an investigation into Lennar, and then used his knowledge of the investigation to bet against Lennar’s stock.
Mr. Minkow’s lawyer, Alvin Entin, said Thursday morning that Mr. Minkow plans to plead guilty next week to the charge.
1. This article is not meant to stir up a debate on insider trading. Whatever one may think of his activities, Minkow libeled Lennar and caused them great harm and monetary loss. Whether or not this should or shouldn’t be a crime rather than a civil matter is another subject.