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October 15, 2010
Fraudbuster Busted?
LA Weekly reports that Barry Minkow is still having trouble with truth telling.
Barry Minkow, the former con man turned pastor turn fraud investigator turned Wall Street watch dog, is once again under the heat of the Los Angeles press. It was the investigative journalism of a couple of reporters who tore down the curtains of Minkow’s 1980s stock market swindle. Now, LA Weekly claims that “court records going back nearly two years show that Minkow is again not to be trusted. ... A Miami judge in one of those cases says Minkow has no credibility, that he ‘will lie, plain and simple.’ ”
I wrote about Minkow for CT in 2006. At the time, he had uncovered roughly a billion dollars of fraud, much of it being perpetrated against Christians. And much of it was ongoing. In the Bernie-Madoff-type schemes he was uncovering, the scheme was still ongoing. People hadn’t yet lost money, and no one had called the police. Minkow heard about these scams, saw his fingerprints on them, and investigated the deals while turning his findings over to the police. They, in turn, appreciated his work and highly recommended him.
Minkow was making a comeback, but he always knew that patience with an ex-con ran thin. “One and done,” he said, knowing that one screw up would cost him years of trust rebuilt.
Beth Barrett's LA Weekly piece suggests Minkow should now be considered done. The heart of their accusation is the way he has characterized a handful of companies. In the press and through his own publicity, Minkow claims that diet supplement company Herbalife, homebuilder Lennar, and other businesses are operating frauds or ponzi schemes.
But, the Weekly says, Minkow is lying in order to profit by betting against the companies’ stock. Minkow has been upfront about the fact that his Fraud Discovery Institute makes its money by betting against the stock prices of the companies it investigates. Minkow isn’t alone. Other organizations do the same. As long as Minkow isn’t lying about the companies he bets against, it’s perfectly legal.
But LA Weekly says he is lying. After Lennar sued Minkow for his public statements about the company, a judge said, ""There is no evidence of fraud or diversion of funds to other projects." And Barrett explains, "The judge's decision meant that damaging allegations made public by Minkow on Marsch's [his client] behalf in January 2009 had been weighed in a court of law and found to have no basis in fact."
Among other things, the lawsuit also found that although Minkow testified under oath that "he'd never bet against Lennar's stock by buying put options before leveling allegations against the company ... Minkow was forced to admit that he had indeed shorted Lennar's stock, twice." (Note: Technically, buying put options and shorting the stock are two different, unique ways of making money off a falling stock price.)
The court records show that Minkow also made other false claims during the trial. He also lied on more than one occasion about his absences from the proceedings. The paper reports:
On Aug. 2, the day Minkow was to travel from Los Angeles to Miami to testify in Lennar's lawsuit, he told the court he'd missed a red-eye flight because he had been hospitalized in an emergency room for assorted ailments, including nausea, anxiety, kidney stones, food poisoning and a migraine.
When the judge ordered him to produce hospital records, Minkow was forced to concede that he had lied. Under oath, Minkow admitted that he had not visited the ER but instead stayed at the Ritz-Carlton in Marina del Rey and sought treatment the next day from an anti-aging doctor in San Diego.
Judge Freeman said that Minkow "seems to have absolutely no sense of responsibility for telling the truth," and had exhibited "misfeasance and fraudulent conduct."
"The truth is whatever he decides is important to the moment," Freeman said.
The piece then goes on to blame the rest of the media industry’s complicity in Barry Minkow’s fake comeback from convict. Oddly, it neglects to mention former Los Angeles Times religion reporter William Lobdell, who went to work with Minkow, writing about the companies he investigated.
The story is painful to read, especially to me, as I got to know Minkow well when writing about him. It was clear that the desire to be a recognized success was still a powerful motivator for him. But he was also incredibly honest about his failings and eagerly erected support from friends and church members to help him where he was weak.
It’s also clear that Minkow has gotten quite carried away in his side gig profiting from his investigation of public companies while pastoring a church. He’s lied to a judge, and while maybe he has not defrauded investors again, he has caused a significant loss of money based upon his making untrue statements. He may be sanctioned by the Securities and Exchange Commission. I’m hopeful Minkow and his accountability partners can reign him in. According to this LA Weekly piece, his demons still have some power. He could be a fantastic pastor because he's a gifted man. I pray those gifts will be directed toward kingdom building.
Update: Minkow has responded.
Rob Moll is a Christianity Today editor at large.
Comments
Ms. Barrett made many claims in her article. Interestingly though, she didn't get the name of his church right. Please tell me you did not base your article solely on her "research." Please tell me you independently verified her claims prior to publicly criticizing a fellow Christian.
Posted By: Doug | October 15, 2010 10:22 AM
Mr. Olson, I hope you are not defending Mr. Minkow based on the fact that Ms. Barrett got the name of Minkow's church incorrect. She should have been more careful on that. However, she quotes court documentation in showing that Mr. Minkow has chosen to be dishonest, and in fact lied under oath in his quest for recognition and riches.
Mr. Moll, you make the statement, "maybe he has not defrauded investors again". However, the fact that he knowingly published information about publicly traded companies that was proven to be fraudelent and false, thereby profiting from that information and causing others to lose money surely speaks to the fact that investors were defrauded. Those people that invested in companies he "bashed" lost money so that he and others working with him could profit. That is defrauding investors.
It is sad that this has again happened. The Church has been made to look bad by someone pretending to look good. I hope Mr. Minkow gets help this time, and turns away from this. He needs to stay away from doing anything with publicly traded stocks as far as investigating and offering investment advice.
Posted By: Angelo | October 15, 2010 12:46 PM
One sin weighs as much as the next. Who can cast any stones? The church has been made to look bad by people pretending to be good for a very long time, and by various groups and denominations, right down to single individuals.
Posted By: Jorge | October 16, 2010 11:23 AM
"He could be a fantastic pastor because he's a gifted man." God uses are weaknesses and obedience to honor Him, not necessarily our gifts.
Posted By: Ann | October 16, 2010 4:43 PM
I wish that people who post would back up what they are saying with Scripture. What many accept as simple fact is often untrue. Where in the Bible does it say that "all sin is the same"? It is a fact that any one sin can send us to hell if we are not believers. But nowhere does it say "all sins are the same". Those two things do not follow logically.
Jesus Himself said that all sins are not the same. The Bible should be our source, not commonly held misbeliefs.
In just one example, Jesus says in Matt 5:19 "Anyone who breaks one of the least of these commandments and teaches others to do the same will be called least in the kingdom of heaven, but whoever practices and teaches these commands will be called great in the kingdom of heaven."
In John 19:11 "Jesus answered, "You would have no power over me if it were not given to you from above. Therefore the one who handed me over to you is guilty of a greater sin."
The Bible says that there are degrees of punishments for those who end up in the lake of fire, and degrees of reward for those who go to heaven, such as in crowns. In the Old Testament, which was a Theocracy, God had the death penalty for some sins, but certainly not for all sins. So, God of course, certainly recognizes a difference between a murderer of 10 people versus someone who lies and says they like your shirt and they actually do not like it. So yes, either sin, in and of itself, would send one to hell, but God sees the lie as lesser than the murdering of people.
Posted By: Barbara | October 16, 2010 7:11 PM
Ann- Read Romans 3 for the answer to your question.
Posted By: AP | October 16, 2010 8:05 PM
Sorry Ann - I meant Barbara...
Posted By: ap | October 16, 2010 8:07 PM
Rob-
I agree with Jorge's comment regarding God using weaknesses and obedience to honor him. It's a shame that the reality of internet rumor mongering and so-called "news" can be so damaging... I didn't see interview with Barry in your story to play counterpoint to the LA article your name. That's not fair, and certainly doesn't give Barry a chance to have his say. In his case, I'm certain that he would admit his mistakes. He's very candid about them each weekend in his sermons, completely open about them in person, and no- he's not perfect, and he doesn't tend to pretend to be. As someone who has been in his church for years, I can say yes - he is a good pastor.
Posted By: Brendan | October 16, 2010 11:17 PM
Romans is my favorite book in the Bible and my favorite chapter is Romans 9, but they are all great.If you can specify where you think it contradicts anything I wrote (if you do), that would be helpful. I clearly said all have sinned, we would all be damned if not for the sacrifice of Jesus on the cross for those who believe. The Bible also says that not all sins are equal in weight. They are equal in damning us, but not equally "bad". Jesus says it, I believe it. I don't know of any theologians who differ from what I wrote either.
There are MANY websites to explain this more clearly if the words of Jesus are unclear to you. Perhaps this website will help:
http://www.gracecentered.com/are_all_sins_equal.htm
"In 1 Corinthians 6:18, Paul says, "Flee from sexual immorality. All other sins a man commits are outside his body, but he who sins sexually sins against his own body." The Holy Spirit inspired Paul to express that sexual sin is different from other sins. Because the sin is against the human body, Christians commit the sin against the dwelling place of the Holy Spirit. Paul said, "All other sins are outside the body." This distinguishes sexual sin from coveting, for example, because coveting is a sin done outside the human body.
Jesus suggested that some sins are worse than others when he told the Pharisees they were straining at a gnat (something little, but still bad) but swallowed a camel (something bigger and worse). "Woe to you, teachers of the law and Pharisees, you hypocrites! You give a tenth of your spices--mint, dill and cummin. But you have neglected the more important matters of the law--justice, mercy and faithfulness. You should have practiced the latter, without neglecting the former. You blind guides! You strain out a gnat but swallow a camel" (Matthew 23: 23 – 24).The words, “the more important matters of the law,” clearly point out that all commands, though each needing to be followed with the same enthusiasm, are not of equal significance. The statement, “You strain out a gnat but swallow a camel” is also applied in the same way. “Gnat” implies small sins, while “camel” refers to larger ones. Remember Jesus’ words to Pilate? He said, “The one who handed me over to you is guilty of a greater sin" (John 19:11). The phrase, "GREATER SIN," is there in black and white. Pilate tried to release Jesus because he could see He had done nothing wrong. Jerusalem’s religious leaders should have known better. Jesus should have been welcomed as the one who fulfilled the prophecies, but the crowd amazed Pilate by demanding the death of the innocent Jesus. Jesus made it clear that those who should have known better held greater guilt. Jesus “came to that which was his own, but his own did not receive him” (John 1:11). Pilate’s sin did not compete with theirs. As is true in the case of the Jews, who should have known better than Pilate, where God grants loving blessings and rare opportunities, He also demands greater responsibility. One who knew his master’s will but didn’t fulfill it will suffer more than one who didn’t know (Luke 12:47,48).
In Matthew 7:3 Jesus mocks someone who struggles with great sin but takes it upon himself to "fix" another person who commits a less serious sin. "Why do you look at the speck of sawdust in your brother's eye and pay no attention to the plank in your own eye?" Basically Jesus is saying that those who commit and struggle with worse sins ought not to "nit pick" those with lesser struggles. Clearly, Jesus used an example of two things not equal in size or severity to each other when he compared a "speck of sawdust" and a "plank." Some sins simply bring harsher consequences than others and reveal a heart that is farther separated from God. John told us that anyone who hates his brother is a murderer. God’s law convicts me for even thinking about killing the neighbor whose weed poison destroys my wife’s roses. But if my sin remains a thought and I don’t actually kill him, he is still alive. I have demonstrated restraint by resisting the desires of my temporary rage. That’s something that should separate Christians from the world. Our desires may sometimes be similar to those in the world, but Christians should try to do what is right by listening to the Holy Spirit rather than our egos or hormones. In the case of my neighbor, I would be wrong to say, “Thinking about it is just as bad as actually killing him.” Likewise, I obviously shouldn’t say, “I’ve already thought it, I might as well murder him.”
God bless and have a great Sunday.
Posted By: Barbara | October 16, 2010 11:33 PM
There's a TON more to the Minkow story than whats simply in the article. Anyone who comes at this with half a brain and common sense will see that Barry Minkow is a liar and self promoter. I have research the stocks he's attacked and there is NO DOUBT that he lied and extorted (or at least tried to) from these companies. NO DOUBT ABOUT IT!
It amazes me at how STUPID some Christian are and how easily manipulated they can be by other "so called" believer's like Minkow. NO DOUBT Jesus is Lord and NO DOUBT he is the way, the truth and the life. It's unfortunate that Jesus's followers don't use their brains and simply fall for anything. Minkow knew that and that is why he's a Christian Pastor. Once a conman always a conman sure fits Minkow and his other Ex-Con Spiritual Mentor Sam Antar (Minkow called his Ex-Con Jewish friend Antar his Spiritual Advisor in a deposition). By the way, Sam's wife is suing him and has a restraining order out against him. What a great spiritual mentor!
By their fruits you'll know them and Minkow's fruits STINK! Like I said there is a TON more to the Minkow story and the article doen't even scratch the surface.
Posted By: The Gov | October 20, 2010 4:08 PM
i support and believe in Barry. Barry is a great minister. he is also very human. i enjoy his sermons and learn a great deal from him and these sermons. he is an asset to our church and to the lives he touches daily. My heartfelt prayers go out for him and his family during this time and as Christians i hope you all do the same
God Bless
Posted By: lisa devita | January 4, 2011 2:02 PM
Lisa - The Bible warns of wolves in sheep's clothing and by ones fruit you'll know them. Just because the guy can preach well, doesn't mean he's a good person or Pastor.
There is A TON of evidence proving Minkow's guilt. Lennar has shown SO MUCH proof that the judge won't even give Minkow a jury trial. Medifast Corporation is also suing Minkow. They are also going to prove what a low life deceiving liar your Pastor is.
Posted By: The Gov | January 6, 2011 5:00 PM
Here's the link: http://www.laweekly.com/2011-01-06/news/...
Here are some quotes from the article....
A Miami judge has ruled that former Los Angeles con man Barry Minkow lied, concealed material witnesses and destroyed or discarded key evidence in the libel and extortion lawsuit filed against him by home-building giant Lennar Corp. By doing so, Minkow has forfeited his right to defend himself in the case, the court said.
The emerging scandal is expected to be the focus this year of a court hearing in which a judge will decide how much Minkow owes Lennar — a possibly ruinous price tag approaching hundreds of millions of dollars.
The default and "terminating sanctions" Freeman imposed against Minkow are "highly unusual" and limited to egregious cases, says John Nockleby, a professor of law and director of the civil justice program at Loyola Law School. "It's a big deal."
But last summer, Judge Freeman declared that Minkow has no credibility and "will lie, plain and simple."
In the 1980s, Minkow was a brilliant young L.A. scammer who built an elaborate Ponzi scheme by lying to reporters, federal regulators and even Oprah Winfrey. He eventually duped investors out of as much as $100 million.
ALL FACTS!!
Posted By: The Gov | January 11, 2011 1:12 PM