Barry Minkow now owes more money than he ever dreamed of bagging in a Ponzi scheme.
Miami-based home builder Lennar Corp. (NYSE:LEN) has won a $584 million judgment against the felon-turned-church-pastor-turned-felon-again after he admitted to Lennar's civil allegations of defamation and extortion. The interest on this enormous debt will accrue at "the legal rate," according to the judgment filed in a state court in Miami.
This means Minkow will be racking up millions of dollars in debt every year while he likely counts pennies from a prison job.
Minkow will be sentenced on July 7 after pleading guilty to a federal charge manipulating Lennar's stock. He faces about five years.
When he's released, the interest will still be mounting. No matter what he makes when he gets out, he could easily live long enough to become a billionaire in reverse--or at least on paper, as the real billionaires like to say.
Minkow claimed a net worth of $90 million when was running ZZZZ Best Co., a publicly traded carpet cleaning company, in the 1980s. Back then, this kind of loot got him on "Oprah" as a wunderkind of Wall Street. But ZZZZ Best turned out to be a Ponzi scheme. And Minkow went to prison, at age 23, for nearly eight years.
It was "ZZZZ Best of times and ZZZZ Worst of times," Barron's' Alan Abelson remarked with Dickensian flair in a 1987 column.
After doing his time, Minkow embarked on an amazing transformative journey.
He earned a master's degree in divinity from Jerry Falwell's Liberty University. He became pastor of Community Bible Church in San Diego, Calif. He also became a fraud investigator, establishing the "Fraud Discovery Institute," where he uncovered instances of deceit at publicly traded companies. He was an informant for the Federal Bureau of Investigation, a tipster to journalists, and he generally appeared to be doing God's work for more than a decade.
It was a great run for a recidivist criminal. He was pretty far along on a movie about his life called "Minkow." But since his indictment earlier this year, it needs a new ending, and maybe a new title. Like maybe, "Lennar."
The story went went wrong when Minkow became a hired gun for California developer Nicolas Marsch, who had several ongoing business disputes with the homebuilder.
"In and around November 2008, the Minkow Defendants entered into an agreement with the Marsch Defendants to extort Lennar," the judgment reads, and "agreed to manipulate the public securities markets."
In January 2009, Minkow broadcast accusations likening Lennar to Enron and calling it a "financial crime in progress." Amid intense worries about the homebuilding industry in the mortgage meltdown, this was not difficult to believe. Lennar's stock plunged more than 20%. But Minkow has since stipulated in court that his statements were false and malicious.
Licked by Lennar, Minkow is now living in a rural town in Tennessee, biding his time before sentencing.
He lists himself on his LinkedIn profile as a researcher for Christopher Grell, an Oakland, Calif., attorney specializing in product liability. Having a job will help him at sentencing and eventually at parole. Grell did not return a phone call seeking comment. Minkow declined to comment, too.
On another front, San Diego's KGTV 10 News reported on Tuesday that it talked to some members of Minkow's former church. It quoted, among others, an unnamed woman who said Minkow ministered to her family and then asked her for money. The station quoted her as saying she gave Minkow $300,000, which was to be used toward editing his movie.
Unfortunately, a little indictment got in the way of a good show. So add that to Minkow's tab, too.
The court said Minkow's damage to Lennar tallied "at least $583,573,600." That's a pretty big number, even to a company with a market capitalization of more than $3 billion.
It shows Minkow is still a wunderkind of Wall Street. If only Oprah would do one more show.
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at email@example.com or tellittoal.com)