Barry Minkow, Fraudbuster and pastor of San Diego's Community Bible Church, has been busy since the stock market began its decline a year ago last October. Last year, Minkow called Herbalife a fraud–essentially a multi-level marketing business that sold nearly all of its products to its sales people.
Now, Minkow has turned his sights on Lennar, a homebuilder with Ponzi scheme-like activities operating under joint ventures. The company, Minkow says, "has a pattern of behavior over a sustained period of time of knowingly and willfully abusing the legal system to gain an unfair advantage over the less capitalized, smaller entities."
After the letter from Minkow's Fraud Discovery Institute hit the web, Lennar shares fell 20 percent, prompting the company to sue Minkow.
It should be noted that Minkow's work tends to be profitable. Lennar alledges that one of its former partners hired "Minkow and his company to use any means available, including fraud, identity theft and manipulation of securities markets, to wrongfully and falsely harm Lennar's business and reputation." And Minkow shorted (profiting from a decline in shares) Herbalife's stock while calling it a fraud.
Having run his own scam, Minkow knows how they operate. But since his release from prison, he's stuck to the straight and narrow. "We don't put out false information," he says of the Fraud Discovery Institute.
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