When self-style fraud buster Barry Minkow accused Lennar (LEN) of being a Ponzi scheme, we had some immediate suspicions. Minkow, who was working and paid on behalf of an angry Lennar partners, presented the case in a bizarre manner, and the evidence he presented was far from clear.
Now an analyst from Citi is coming to the same conclusion after looking at the issue in further depth:
AP: Josh Levin of Citi Investment Research said in a client note that his talks with both industry sources and Minkow have led him to believe that the claims against Lennar are “unfounded.”
“Minkow has shared much of his evidence with us, and we have yet to see anything resembling the proverbial smoking gun. We are very much inclined to believe it does not exist,” he wrote.
Near-term catalysts include a possible favourable settlement in its lawsuit against Minkow and the Fraud Discovery Institute; the likelihood of increased meetings with investors and more detailed joint venture disclosures, Levin added.
That sounds pretty bad for Minkow. Even when presenting his evidence directly to Levin he can’t explain the charge. No wonder we were confused.
Shares of the homebuilder are up 15%.