Barry Minkow pleads guilty in securities fraud case

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Barry Minkow, who billed himself as a reformed con man, pleaded guilty to a federal charge of conspiring to manipulate the stock of homebuilder Lennar Corp.

Minkow, 45, served seven years in federal prison for defrauding investors in the ZZZZ Best carpet cleaning fraud he engineered as a San Fernando Valley teenager. He had become a minister and FBI tipster.

He entered his plea in a Miami federal court Wednesday to one count that carries a maximum prison sentence of five years. Minkow also agreed to cooperate with an ongoing federal investigation into a dispute between Lennar and a San Diego real-estate developer referred to in court filings as Conspirator A.


The developer, identified by attorneys in the case as Nicolas Marsch III, had partnered with Lennar on a master-planned golf community known as the Bridges at Rancho Santa Fe, which resulted in years of bitter litigation. Marsch hired Minkow to spread false allegations about Lennar through Minkow’s Fraud Discovery Institute, according to filings by prosecutors.

After Minkow’s reports and a YouTube video critical of the project knocked more than $500 million off Lennar’s stock market value, Marsch’s representatives allegedly proposed that Lennar make payments of cash and stock, after which Minkow would retract his accusations.

“My client was deluded and taken advantage of, said Minkow’s lawyer, Alvin Entin, at the plea hearing. “That he acted recklessly, we don’t dispute at all.”

Marsch previously issued a statement denying wrongdoing; his lawyer declined additional comment Wednesday.

Lennar Chief Executive Stuart Miller said in a statement that the company would cooperate with the ongoing investigation.

“Many innocent people were hurt as a result of the criminal activity by Mr. Minkow and his conspirators,” Miller said.


“All individuals responsible for this illegal conduct must be brought to justice,” Lennar attorney Daniel Petrocelli of Los Angeles said in a statement. “Conspiring, lying and manipulating the securities markets to extort money cannot be tolerated.”

Minkow remained free on bail with sentencing set for June 16 before U.S. District Judge Patricia A. Seitz in Miami.

Bloomberg News contributed to this story.