Legal News

The Strange Life of Barry Minkow Takes Another Odd Turn

By Ashby Jones

Pitch Barry Minkow’s life story to anyone in Hollywood; We bet you’ll get laughed out of that pitch meeting.

Thing is, the sine-wave trajectory to Minkow’s life is nearly too strange to imagine. Rags to riches? Hardly. Try riches to rags to riches to rags.

The news, as delivered by the WSJ’s Robbie Whelan: “Minkow, a former Wall Street whiz kid who spent seven years in prison for stock fraud and later emerged to become a prominent financial-fraud investigator, will plead guilty to a single count of insider trading and could spend up to five years in prison, according to his attorney.”

That’s right: whiz kid-turned-fraudster-turned-good cop-turned-criminal. All packed into a short 44 years.

According to his lawyer, Alvin Entin, Minkow, had reached an “agreement in principle” with the U.S. attorney’s office for the Southern District of Florida and will plead guilty to one count of trading on nonpublic information.

Minkow bought about $20,000 in options contracts on the stock of Miami-based home builder Lennar Corp. in 2009, betting that the company’s stock price would fall, Entin said. He declined to characterize the nonpublic information that his client allegedly received, or to reveal its source.

Minkow and Lennar share more than a bit of history. In January 2009, Lennar sued Minkow for libel and extortion, saying that he made up and disseminated “false and defamatory statements about Lennar” after being hired by California real-estate developer Nicolas Marsch, who was at the time embroiled in several lawsuits with Lennar over soured real estate deals.

A Florida judge adjudicating the libel suit sanctioned Minkow after ruling in December that he had destroyed evidence and given false testimony.

The forthcoming plea deal isn’t related to the Lennar libel suit, according to Minkow’s attorney. Instead, it is the product of an investigation by federal prosecutors in Miami that Minkow was made aware of about a month ago.

“He’s not pleading guilty to having made up info, he’s not pleading guilty to extortion, and he’s not pleading guilty to having lied about Lennar,” Entin said.

Got it. It’s insider trading.

Full post as published by Law Blog - WSJ.com on March 16, 2011 (boomark / email).