Shares of Lennar Corp. fell as much as 28 percent in New York trading after Barry Minkow’s Fraud Discovery Institute alleged that the company operates joint ventures “like a Ponzi scheme.” Lennar denied the allegations. Minkow posted his accusations today on a Web site called lenn-ron.com. The company has failed to disclose material transactions, Minkow said on the site. These allegations come on the heels of Bernard Madoff’s $50 billion Ponzi scheme, Joseph S. Forte, $50 million scheme, and India’s Satyam debacle.
“These are false allegations,” Lennar Chief Financial Officer Bruce Gross said in an interview. He declined to be more specific and said the company will issue a statement later today.
If you recall, Minkow served more than seven years in prison, from 1988 to 1995, after being convicted of fraud while running a company called ZZZZ Best Co. According the company’s web site, it investigates what it suspects to be corporate fraud, according to the Web site. In a video posted on his Web site, Minkow said Lennar is “a financial crime in progress and they have a pattern of behavior that is an environment that is hurting the little guy.”
Minkow accused Lennar of concealing debt off its books and misappropriating funds between joint ventures. Lennar’s approach is “sue me if you want to get paid,” Minkow said. Minkow said in an interview today his report was “based on the public record of multiple claims against Lennar in like situations for breach and fraud.” Source: Bloomberg
Filed under: Barry Minkow, Bernard Madoff, Lennar, Minkow Fraud Discovery Institute, Satyam
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