by Brian Mahany
We have been closely following the saga of Barry Minkow, former convicted fraudster who allegedly found God and become a pastor. Unfortunately, Minkow will probably soon be doing most of his worship in a prison chapel. The feds say he committed yet another fraud.
According to a report published in the LA Weekly, Minkow served 7 years in prison in the 1980s after being convicted of running a Ponzi scheme. That scheme allegedly defrauded investors out of $100 million. Court records say Minkow was convicted of 57 counts of securities fraud.
The LA Weekly says that after his release, Minkow found religion, became senior pastor at the Community Bible Church and even began helping the FBI working as a “fraud buster.”
Mr. Minkow was apparently leading a double life. While tending to his parishioners in California, Minkow was issuing reports across the nation critical of major American companies. Minkow would publicly criticize a company while shorting its stock. His reports would cause the stock price to fall thereby earning him a nice profit.
Short sellers make their profit by borrowing stock from a third party at market price and promising to pay for the loan at a future date. The borrower then sells the stock at the market price and hopes to repurchase the stock in the future at a lower price. Rather that hope the market price would drop on its own, Minkow helped things out a bit.
Somewhere along the way, Minkow decided to take on home building giant Lennar Corp. and Medifast, Inc. Both companies were not amused by Minkow’s unsubstantiated allegations and sued him for a number of things including libel and extortion. Lennar says that Minkow’s false reports and media attacks caused their stock price to drop by 20%. Medifast claims their stock loss was 45%.
In one of the cases, a state court judge found that Minkow gave false testimony, withheld documents, destroyed evidence and “willfully violated” court orders.
Now, if media reports are true, Minkow is being charged criminally for his unsubstantiated media attacks. His church says he has resigned as pastor and will be pleading guilty to federal charges.
If his last sentence is any indication of the future, Minkow will have plenty of time to truly find God. In the mean time, we continue to pray for his many victims.
Today’s markets are truly complicated. Fraud comes in all sizes and shapes. Stockbrokers, lawyer, business owners and even pastors can commit fraud. If you are the victim of any type fraud, give us a call. Our asset recovery lawyers have helped people and businesses from Maine to Hawaii. We welcome the opportunity to help with fraud, FINRA arbitrations, stockbroker claims and just about any other type of fraud case.
Call Brian Mahany directly at (414) 704-6731 for a no obligation, no nonsense evaluation of your case. Offices in Milwaukee, Wisconsin; Detroit, Michigan and Portland, Maine. Services provided anywhere in the U.S.