Con man gets prison for San Diego church fraud

AP News
Posted: Apr 28, 2014 8:57 PM

SAN DIEGO (AP) — A former pastor and notorious con man was sentenced to five years in federal prison Monday for stealing $3.5 million from his San Diego church and its members, a tale of betrayal that a judge said made the three-time felon one of the worst white-collar criminals.

Barry Minkow, 48, was ordered to do the time after completing a sentence for an unrelated scam that cost homebuilder Lennar Corp. some $580 million in lost stock value.

Minkow was a famous millionaire as a teenager in the 1980s for founding the ZZZZ Best carpet cleaning company, which became embroiled in a $100 million fraud. He went to prison, was released in 1995 and two years later became pastor of San Diego Community Bible Church.

Minkow "used every mechanism available to steal money" from the church from 2001 to 2011, taking more than $1.3 million in donation checks, forging signatures on checks and taking out unauthorized loans in the church's name, prosecutors said. The courtroom was full of current and former church members, some sharing emotional stories with the judge as Minkow stared ahead and turned his chair occasionally to whisper to his attorney.

Minkow stole $1.7 million and obtained $1.9 million in loans that are unlikely to be repaid, prosecutors said. Patricia Kuebitz said she lent Minkow nearly $300,000, drawing on her inheritance and a home equity line, and is now deeply in debt and fearful of losing her home as she raises a 15-year-old granddaughter.

"My trust in all people has been shaken," Kuebitz told the judge.

Brett Wright, whose daughter was married by Minkow, said his former pastor stole a $75,000 donation that was intended to build a hospital in Darfur, Sudan. He made the donation in honor of his wife, who died of cancer.

"I feel sorry for you, Barry," Wright said, turning to Minkow as he walked away from the podium.

Minkow avoided eye contact with his former congregants and could barely be heard in court when he declined U.S. District Judge Michael Anello's invitation to speak. In a two-page, handwritten letter to the judge, he apologized and asked for leniency to reunite with his wife and 11-year-old twin boys.

"There is not a day that goes by that I don't regret the damage I have caused my former church," Minkow wrote. "The only people that were hurt worse than the church by my actions was my own family."

Minkow's attorney, Mark Adams, recommended a prison sentence of 41 months to account for helping federal investigators uncover other frauds and for his behavior in federal prison, which includes completing a doctorate degree in conflict resolution and counseling other inmates on returning to civilian life. Several inmates in Lexington, Ky., wrote the judge about how Minkow inspired and encouraged them.

The judge agreed with prosecutors that Minkow deserved the maximum sentence of five years for conspiracy to commit mail fraud, wire fraud, bank fraud and defraud the federal government for taxes.

"In one sense, it doesn't get much worse in the world of nonviolent, white-collar crime," Anello said.

Minkow has between nine and 21 months remaining on a five-year sentence for securities fraud conspiracy. In 2009, he used his high-profile status and access to national media to issue false press releases claiming Lennar was beset by faulty accounting, misappropriation of corporate funds and other wrongdoing.

"Barry Minkow is among the worst kind of predators," said Laura Duffy, the U.S. attorney in San Diego. "He gained the affection and trust of his victims from the pulpit and then stole not only their money, but their faith in humanity, the clergy, the church, and themselves. This sentence will keep him from exploiting another victim for a while."

At age 21, Minkow became the youngest person at the time in U.S. history to take a company public and became very wealthy on paper. ZZZZ Best turned out to be involved in a fraud scheme in which investors poured $100 million into fake fire and water restoration projects.

Minkow played himself in an unreleased movie about his life that also stars James Caan, Ving Rhames and Talia Shire, said Bruce Caulk, the film's director, who attended the sentencing. The film, which was shot before the frauds against Lennar and the church were uncovered, will need a new ending, he said.

"It's a redemption story gone wrong," said Caulk, adding that Minkow is ineligible to receive movie proceeds.

Minkow faces a restitution hearing on May 19.