October 18, 2010
Fraudbuster Responds to Allegations
Barry Minkow says he is no longer betting against the stock of public companies.
Barry Minkow, the former ponzi scheme operator who is now a pastor in San Diego and private fraud investigator, has responded to Christianity Today regarding the claims made about him in LA Weekly.
The paper accused Minkow of:
- Missing a court hearing while instead relaxing at a Ritz Carlton and seeking the advice of an anti-aging doctor.
- Lying to a judge;
- Lying to the public about companies whose stock he was betting against;
- Lying to the court about having trading against companies he was investigating;
There are a number of other accusations the paper makes, but these are at the heart of its complaint that Minkow’s redemption story should no longer be considered valid and that he’s scheming once again.
In Minkow’s response to CT he says a number of items in the LA Weekly story are false, others are taken out of context, and others are true but now outdated.
Missing a court hearing. Minkow missed a court meeting, and his lawyers told the judge he had been in the emergency room. Instead, Minkow was at the doctor’s office. He provided to CT a letter from the doctor and the hospital showing that he had been seen by the doctor and hospital staff. The letter states that Minkow "suffered from an apparent food poisoning episode" on the night before the court hearing in Florida, which resulted in blood in his urine. Minkow says the food was from the Ritz Carlton he had stayed at in Los Angeles. "I was stuck in LA," Minkow said in an email, "trying to catch the red eye because my lawyers wanted a full day of preparation before the hearing. I had to be dropped somewhere and checked into the Ritz at Marina Del Rey because it is blocks away from the airport." The next day, his doctor wrote, "I am prohibiting him from flying anywhere over the next 48 hours." Minkow says that while his doctor does work at an anti-aging health facility, he was formerly an emergency room doctor. CT’s attempts to confirm with the doctor have not yet been successful.
Lying to the judge. At some point, while Minkow was sick from apparent food poisoning, he says he likely told his lawyers he was going to the emergency room. Instead, he ended up seeing his doctor. He says it was a simple mix up that the judge was told he was in the ER.
Lying to the public about companies whose stock Minkow bet against. Minkow says he has yet to be proven wrong in the cases he has brought to the FBI and SEC. In some cases, including one mentioned by LA Weekly, fraud perpetrators fled the country and stopped their crime, preventing a successful conclusion. While not every case has been an unambiguous win, Minkow says his record "certainly does not lead to the conclusion that it was all irrelevant and speculative." He says his work has forced companies to change their behavior and be more open to the public.
Lying to the court about his trading activities. Minkow says he was incorrect when he told a judge that he had not bet against the stock of a public company he was attacking. He says he had simply forgotten that he made an $1,100 trade that was open for just one day. He had provided the FBI with access to his trading account. "Why would I be so stupid" to lie? Minkow asked when he could so easily be found out. "If truth were told about that," he says, "it wouldn’t have been harmful."
Still, Minkow says that six months ago, he stopped the practice of betting against the stock of public companies. While a common and legal practice, he says it was becoming a distraction. He says he’s learning the difference between vital and important. "I’m passionate about uncovering fraud and passionate about Jesus. But I got distracted. My loyalties are to the gospel and the pulpit." He said he is returning to investigating smaller investment fraud cases instead of those of public companies, which require much more time. "That’s why we stopped doing it," he says. "Even before the article came out our behavior was changed."
Members of the board of Minkow’s church, Community Bible Church of San Diego, have expressed their ongoing support for Minkow to Christianity Today.