Legal News

Uh, That Minkow Script: We Need to Rewrite the Final Act

By Ashby Jones

In our last post about former fraud investigator Barry Minkow, we envisioned a make-believe pitch meeting between a Hollywood exec and enterprising screenwriter trying to sell a movie about Minkow’s topsy-turvy life story.

Never happen, we surmised. Too unbelievable.

But several readers alerted us to the fact that such a movie was, yes, already in the works — and now stands in jeopardy due to Miknow’s latest trouble.

The film’s prospects didn’t improve at all on Thursday, when federal prosecutors did the long-expected and charged Minkow with conspiracy to commit securities fraud by allegedly disseminating false information in 2009 about home builder Lennar Corp. The court documents were filed Thursday in Miami federal court.

The complaint charges that 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 Minkow comes with a maximum prison term of five years.

Minkow’s lawyer, Alvin Entin, said Thursday morning that Minkow plans to plead guilty next week to the charge. Minkow couldn’t be reached for comment and his lawyer declined to make him available for an interview. “Barry knows what he’s doing,” Entin said. “He’s going forward, trying to get this episode behind him.”

If Minkow, 45 years old, does plead guilty, it will be the latest fall in his down-and-up career. In 1988, at age 21, Minkow was convicted of stock fraud in connection with the ZZZZ Best scandal, in which Minkow swindled investors out of tens of millions of dollars by persuading them to invest in his carpet-cleaning business, which was actually a Ponzi scheme. He spent seven years in prison.

When he emerged, he became a pastor at Community Bible Church in San Diego and founded the Fraud Discovery Institute, which worked with the Federal Bureau of Investigation and the Securities and Exchange Commission to uncover fraud a numerous companies.

Minkow had earned praise from the federal agencies as a fraud invesigator, but after the Lennar report was released, the home builder immediately sued Minkow for libel and extortion. Late last year, a Florida judge ruled in favor of Lennar, saying Minkow had in the course of the suit destroyed evidence and lied to his own lawyers, and sanctioned  Minkow.

Minkow resigned as a pastor at his church last week after announcing to church leadership that he would plead guilty to a federal crime related to the Lennar case.

Full post as published by Law Blog - WSJ.com on March 25, 2011 (boomark / email).