Barry Minkow Must Pay|Lennar $583 Million

MIAMI (CN) – Barry Minkow owes homebuilder Lennar Corp. more than $583 million after pleading guilty to extorting and defaming the company to hurt its stock price, a state judge ruled.

     Lennar, headquartered in Miami, and Lennar Homes of California sued Minkow and his San Diego-based Fraud Discovery Institute for defamation, deceptive and unfair trade, civil conspiracy and civil remedies for criminal practices.
     Lennar also sued Nicolas Marsch III and his company, Briarwood Capital LLC.
     In the “Stipulated Facts” section in Miami-Dade County Judge Gill Freeman’s 8-page Stipulated Final Judgment, Freeman wrote: “In or around November 2008, the Minkow defendants entered into an agreement with the Marsch defendants to extort Lennar. The Minkow defendants and the Marsch defendants agreed to manipulate the public securities markets to harm the Lennar plaintiffs’ business and reputation in an effort to force the Lennar plaintiffs to pay millions of dollars to the Marsch and Minkow defendants.”
     These machinations came after Marsch had clashed with Lennar over business deals.
     Freeman describes some of the press releases, Internet statements and a video, all with “false content,” which Minkow and his company released “at the Marsch defendants’ directions.”
     Among Minkow’s statements were “an express effort to associate the Lennar plaintiffs with Enron Corporation, a company famously accused of illegal accounting,” Freeman wrote.
     Minkow also “falsely accused the Lennar plaintiffs of being a ‘financial crime in progress,’ of being a ‘fraud,’ of ‘conceal[ing] debt’ and ‘misallocat[ing] or misappropriate[ing] funds between joint ventures,’ and of being plagued by ‘an environment of fraud at the highest levels,'” Judge Freeman wrote. (Brackets in the judge’s order.)
     “By spreading these false statements, the Minkow defendants intended to severely and fraudulently manipulate the public market for Lennar Corporation’s publicly trade securities, in addition to damaging the Lennar plaintiffs’ business operations and reputation. The plan worked.”
     Freeman found that “As a direct and immediate consequence” of Minkow’s and his Fraud Discovery Institute’s actions, “Lennar Corporation was damaged at least $583,573,600.”
     The court issued a default judgment against Minkow on Dec. 27, 2010, and Minkow does not contest any part of it, Freeman wrote.
     Federal prosecutors filed a criminal information against Minkow on March 24 this year, alleging conspiracy to commit securities fraud, and “broadcast(ing) false and misleading statements about Lennar.” Minkow pleaded guilty to the information on March 30. He will be sentenced on July 7.
     Minkow was jailed for 8 years in the 1990s, after creating the ZZZZ Best carpet-cleaning company, a Ponzi scheme that he promoted, among other places, on “The Oprah Winfrey Show.”
     Once released, he earned a master’s degree, became a pastor, and founded the Fraud Discovery Institute, allegedly to investigate corporate fraud. He also spoke at schools on ethics.

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