Barry Minkow, the former 80s whiz kid/fraudster turned pastor/fraud buster and Fox News commentator, is in hot water for making false charges of fraud against Lennar. In the closing hours of 2010, a Florida judge ordered Minkow to reimburse Lennar for the legal fees it incurred ferreting out many of the lies he told before and during the trial. Well, things just got a whole lot worse. Late on Thursday, federal prosecutors in Miami filed a criminal complaint charging Minkow with conspiracy to commit securities fraud. Minkow is charged with helping extort Lennar by driving down its stock price and illegally trading on knowledge of a pending criminal investigation into Lennar. Both the Miami Herald and the LA Times report that Minkow is going to plead guilty.
How'd this come about? Well, Minkow has been known to short the stock of companies on which his Fraud Discovery Institute reports. He initially denied shorting Lennar stock before issuing his report on the company, but was forced to recant when confronted with trading records. Now it turns out Lennar was the target of a criminal investigation based on Minkow being considered a trusted source at the time. After Minkow found out the investigation was underway, he shorted Lennar stock even though he knew he was barred from doing so.
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