By Hillel Aron
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By David Futch
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By Jill Stewart
By Dennis Romero
But neither the Journal nor any other publication dug into Minkow's activities to see whether the supposedly redeemed character whose image they had helped burnish could still be trusted.
Marsch's lawsuit against Lennar went to trial in the spring in San Diego. It concluded last month with a 48-page ruling against Marsch by California Superior Court Judge William R. Nevitt Jr. The judge wrote that Marsch's claims that he was defrauded by Lennar "did not withstand close scrutiny and cross-examination. Ultimately, Mr. Marsch was thoroughly impeached with his own testimony, documents and the testimony of other witnesses."
Nevitt wrote on 22 different occasions that Marsch's testimony and statements were "not credible." Although Marsch sought more than $400 million in damages from Lennar, he did not get a dime and was ordered to pay $12 million in counterclaims.
"There is no evidence of fraud or diversion of funds to other projects," Nevitt wrote.
The judge's decision meant that damaging allegations made public by Minkow on Marsch's behalf in January 2009 had been weighed in a court of law and found to have no basis in fact. But none of the major media organizations that had rushed to disclose details of Minkow's charges against Lennar 18 months ago reported on Nevitt's ruling.
Mark Sustana, Lennar's general counsel, said in a statement to the Weekly this week: "The media rehabilitated Mr. Minkow's image after his imprisonment for fraud, but have shown no interest in investigating his behavior or even reading publicly available court records. This neglect has enabled Mr. Minkow to malign the reputations of U.S. businesses like ours without any showing of proof."
Determined to clear the company's name, Lennar has continued to pursue its libel-and-extortion lawsuit against Minkow and Marsch. Unreported by the media were revelations that came tumbling out through the court record. Some examples:
— Minkow hired a private investigator to look into Lennar with regard to one of his 10 red flags. When the investigator, Paul Palladino, said he found no evidence to prove any wrongdoing, he warned Minkow against going public with an accusation.
Palladino said he was told it was too late. "I was very upset, to put it mildly," that Minkow went forward with the allegations, Palladino said in a deposition.
— Minkow had said under oath that he'd never bet against Lennar's stock by buying put options before leveling allegations against the company.
After being confronted with trading records, Minkow was forced to admit that he had indeed shorted Lennar's stock, twice. The first time was about a month before he issued his FDI report on the company.
— Another investigator hired by Minkow, Terry Gilbeau, said he had hired a "foreign investigator" to look into the private banking records of Lennar executives and that the investigator had found evidence of wrongdoing.
But when pressed by Lennar, Gilbeau said he could not remember the name of the investigator. As for the evidence, Gilbeau had ostensibly written it on the back of a Starbucks napkin and sent the information to Minkow.
When Lennar demanded e-mails and documents from Gilbeau's computer, Gilbeau said it had crashed and he had abandoned it in a San Diego hotel room.
— At one point, Minkow claimed he had untraceable e-mails from an anonymous whistle-blower inside Lennar, alleging improper behavior by company executives — including a document purported to be a confidential company memo. Challenged by Lennar attorneys about the authenticity of the e-mail, Minkow produced still more anonymous e-mails.
The memo turned out to be a fraud.
— Minkow's FDI uses the offices of the San Diego Community Church, where he is senior pastor, to conduct business; uses church employees to perform investigative tasks; and even uses church money to fund his for-profit enterprise. Indeed, the records show that Minkow sent at least $3,000 from the church's PayPal account to an FDI consultant.
— On Aug. 2, the day Minkow was to travel from Los Angeles to Miami to testify in Lennar's lawsuit, he told the court he'd missed a red-eye flight because he had been hospitalized in an emergency room for assorted ailments, including nausea, anxiety, kidney stones, food poisoning and a migraine.
When the judge ordered him to produce hospital records, Minkow was forced to concede that he had lied. Under oath, Minkow admitted that he had not visited the ER but instead stayed at the Ritz-Carlton in Marina del Rey and sought treatment the next day from an anti-aging doctor in San Diego.
Judge Freeman said that Minkow "seems to have absolutely no sense of responsibility for telling the truth," and had exhibited "misfeasance and fraudulent conduct."
"The truth is whatever he decides is important to the moment," Freeman said.
In an interview with the Weekly, Minkow blamed his conduct on a serious health problem that prevented him from traveling to Florida to testify in person.
A judge calling Barry Minkow a liar in open court should be enough to raise any journalist's curiosity. But that has not been the case.
Some newspapers have written brief stories reporting that companies Minkow has challenged are fighting back. But no news organization has undertaken a thorough examination of his claims.