Minkow admits guilt in U.S. scam aimed at Lennar

Reuters News
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Posted: Mar 30, 2011 7:39 PM
Minkow admits guilt in U.S. scam aimed at Lennar

MIAMI (Reuters) - Barry Minkow, an ex-convict and Wall Street con artist who went on to win the trust of federal law enforcement officials, pleaded guilty on Wednesday to conspiracy to commit securities fraud in a case involving leading U.S. homebuilder Lennar Corp.

In a plea agreement filed in a Miami federal court, Minkow admitted to spreading lies about Lennar that caused its stock price to plummet in January 2009.

The losses to Miami-based Lennar were estimated in the plea agreement to total $583.6 million.

Minkow, who traded in Lennar shares for his personal benefit once the stock plunged, was thought to face a stiff prison sentence if convicted as a repeat offender. But his plea agreement indicated he is unlikely to serve more than five years behind bars.

Minkow, who already served seven years in prison after his conviction in a stock fraud case in 1988, was due to be sentenced on June 16.

In a tradeoff for leniency, Minkow agreed to help federal prosecutors investigate fellow conspirators in the fraud.

"All the individuals responsible for this illegal conduct should be brought to justice. Lying, conspiring and manipulating the securities markets to extort money cannot be tolerated," said Daniel Petrocelli, a Lennar Corp lawyer.

Minkow, 44, grabbed the public spotlight in 1988 when he was convicted of swindling investors out of tens of millions of dollars in a Ponzi scheme case involving his carpet-cleaning business. He founded the business, ZZZZ Best Carpet Cleaning, when he was just 16 and was once hailed as a boy wonder of Wall Street.

He claimed to have reformed over the years and had gone on to work with the FBI and other law enforcement agencies to root out fraud and build cases against white-collar criminals. But that was before Wednesday's plea deal.

(Reporting by Tom Brown; Editing by Gary Hill)