The latest Ponzi allegation: Home builder Lennar. Barry Minkow, the ex-felon turned fraud fighter that you’ve probably seen on CNBC, has come out with allegations that homebuilder Lennar is a Ponzi scheme, or a gigantic financial crime in progress.
He’s set up a new site, Lenn-ron.com, to detail the allegations. The company, which has dismissed the allegations as nonsense, is down about 20% in early trading. Clearly, any allegation like this right now is explosive stuff. Few companies are above suspicion, especially not one in the troubled home-building sector.
The claim basically boils down to the idea that Lennar would engaged in JVs with various smaller home developers, and then rip them off, taking advantage of their larger size and ability to fight court battles. Minkow, who is apparently working for one of the ripped-off developers (which might just have an axe to grind over a deal gone bad) says there’s a patter of this all across the country, and he vows to produce more interviews with ex-employees and partners of the company. There’s a lot of stuff in here about mysterious wire transfers, and incestuous loans but we’ll approach this with a big ol’ heap of scepticism for now.
Even the video, with Minkow in a big yellow shirt jumping around a lot doesn’t exactly scream seriousness. It’s more redolent of a late-night infomercial. It’s also worth noting that not all frauds are Ponzis, even white-collar frauds — but right now, it’s easy to get attention by throwing around the P-word.
The document is below, and here’s Minkow’s video, which he posted on YouTube, summarizing the complaint.
The detailed allegations are here.