Minister and Anti-Fraud Crusader Pleads Guilty to Fraud
Barry Minkow who is a convicted con man, a minister and anti-fraud crusader has entered into talks with prosecutors in Miami to plead guilty to insider trading of Lennar Corporation, according to an article in Investment news. After serving time in prison for fraud from 1988 to 1995, Mr. Minkow became a preacher and founded the Fraud Discovery Institute. His mission was to discover and expose corporate fraud, which led to resignations of executives at Microsemi Corporation and Intrepid Potash, Inc.
In 2009, Minkow issued a report alleging that Lennar operated joint ventures "like a Ponzi scheme", which resulted in a one day 20% drop in the Miami based homebuilder's shares. Lennar denied the allegations and sued him for extortion and reputational harm. In December 2010, Florida Judge Gill Freeman entered a default judgment against Minkow saying he had withheld key documents, discarded or destroyed evidence, concealed the identity of key witnesses and willfully violated court orders. Although Minkow has not been charged with insider trading but he is negotiating a deal to plead guilty to one count of "trading on information that wasn't otherwise public."
When he was 16, Minkow started a carpet cleaning business in Southern California which he took public and the value exceeded $211 million, according to a 1987 Wall Street Journal article. To make the business appear more successful, he prepared fake receipts that fooled auditors and investors. The failure of his scheme resulted in his conviction of 57 counts of fraud and conspiracy and he was sentenced to 25 years in prison. He served 7 years prior to being released in 1995.
The article said that Minkow resigned from the church where he began preaching after getting out of prison and the church said "Pastor Barry no longer considers himself above reproach as he has agreed to plead guilty to a criminal count related to the Lennar lawsuit."