Posted by: Chris Palmeri on January 09, 2009
Home building giant Lennar Corp. is finding itself in a war of words with Barry Minkow, the former stock swindler who now runs an entity called the Fraud Discovery Institute devoted to uncovering fraud at other companies. Minkow’s site released a 30 page report and Youtube video his morning suggesting that Lennar is a “Ponzi scheme” and a “financial crime in progress.” Minkow even operates a standalone site called “Lenn-ron”—a play on Enron— that dishes dirt on the nation’s second largest builder.
By mid-day Lennar issued its own press release and called Minkow “an agent for a disgruntled ligitant, Nicholas Marsch III,” who’s case, Lennar says, was recently dimmissed by a Califorina judge. The case dates back to a deal Lennar had with the San Diego developer Marsch in the late 90s. Marsch says he never saw any profit from the successful project. Minkow fully admits in the video he was engaged by Marsch whom he calls “our client.”
Lennar further says Marsch and Minkow may have illegally tried to obtain information about the proceedings and that the company is investigating.
Lennar stock fell 22% today.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.