By Tom Brown and Manuel Rueda
MIAMI (Reuters) - Barry Minkow, a Wall Street swindler and ex-convict who went on to reinvent himself as an anti-fraud crusader, was sent back to jail for five years on Thursday for a stock-manipulation scam.
Minkow, 45, was also ordered by U.S. District Judge Patricia Seitz to pay $583.6 million in restitution to homebuilder Lennar Corp, after being convicted for spreading lies about the Miami-based company that caused its stock price to plummet in January 2009.
Prosecutors said the former carpet cleaning entrepreneur, once hailed as a Wall Street wonder boy, used the misinformation to trade in Lennar shares for personal benefit. They also say he abused his relationship as a collaborator with the FBI.
Minkow, who already served seven years in prison after his conviction in a stock fraud case in 1988, had faced a sentence potentially totaling more than 20 years for his role in the Lennar case.
But as part of a plea bargain, and in a tradeoff for a lower sentence, he agreed to help federal prosecutors investigate fellow conspirators in the Lennar scam.
His defense lawyer, Alvin Entin, made an emotional plea for additional leniency, citing his cooperation with authorities.
"His hubris caused his problem," Entin said, comparing Minkow to the Greek mythological figure Icarus.
"He tried to fly too high on wings of wax," Entin said.
But Judge Seitz appeared unconvinced that Minkow had learned his lesson.
"What guarantee do I have that he's not going to slip off, he's so bigger than life that when he slips off it has a major impact on society," she said.
Minkow, wearing a light pink long-sleeved shirt and a grey tie, gave monosyllabic answers to the judge and declined to speak when given the opportunity.
He did laugh briefly when the judge stumbled over the ordered restitution amount, mistakenly saying "billions" instead of "millions".
Minkow founded ZZZZ Best Carpet Cleaning as a teenager and was just 21 when he was first convicted of multiple counts of securities and mail fraud in a federal case in New York. He was found to have swindled investors out of tens of millions of dollars in a Ponzi scheme case involving ZZZZ.
He claimed to have reformed over the years, after his release from prison, 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.
Minkow had even set up a company, Fraud Discovery Institute Inc, to project his new persona as an anti-fraud crusader.
Minkow was also held in high esteem by members of the Community Bible Church in San Diego, California, where he worked as a pastor.
"Minkow has built a life on appearing to be a giving person, while working to illegally enrich himself," prosecutors said in a court filing prior to the sentencing, in which they urged no further reduction in his punishment.
"His family, religious community and the investing public have been deceived and defrauded by his selfish, immoral and illegal behavior," the prosecutors said.
Daniel Petrocelli, counsel for Lennar, issued a statement after the sentencing that praised the U.S. Attorney and FBI for their efforts in prosecuting the case.
"We expect that the other individuals responsible for the illegal attack on Lennar's stock and shareholders will soon be brought to justice," he added.
The case is United States of America v. Barry Minkow, U.S. District Court, Southern District of Florida, No. 11-20209.
(Writing by Tom Brown and Pascal Fletcher; editing by Matthew Lewis and Tim Dobbyn)