Update: Minkow's attorney weighs in. See jump.

By Beth Barrett

Federal prosecutors have struck an agreement with Barry Minkow to plead guilty to criminal insider trading for actions that damaged the stock price of one of the nation's largest home building companies two years ago, sources familiar with the case told the Weekly.

Minkow, the supposedly reformed Los Angeles con man, intends to plead guilty, according to a statement issued by his San Diego-area church. Neither Minkow nor his attorney have returned calls the Weekly placed to them just after 6 p.m.

Update: Neither Minkow nor his attorney Alvin Entin have returned calls from the

Weekly. But Entin told Bloomberg this morning that, “Barry is looking

forward to getting this behind him and on with the rest of his life.” Minkow

faces a maximum five-year sentence under the proposed deal in which he would

plead guilty to a single count, Bloomberg reported.

The one-time business whiz kid served seven years in prison after his conviction in the mid 1980s of running a Ponzi scheme that defrauded investors in his ZZZZ Best carpet cleaning company of as much as $100 million.

After his release from prison, Minkow announced that he had undergone a religious conversion. He became senior pastor of the Community Bible Church in Mira Mesa and began working as a fraud buster, aiding the FBI and other organizations.

In recent years, however, Minkow began issuing reports critical of major American companies, including Lennar Corp., the home building giant.

In most if not all cases, Minkow would take a “short' position on a company's stock before issuing his report. His reports usually sent stock prices lower, which meant Minkow profited by short selling the stock.

But Lennar proved to be a formidable adversary. After Minkow issued a report laced with unsubstantiated allegations against the company and its executives, Lennar filed libel and extortion lawsuit against Minkow in Miami. Minkow's report had sent Lennar's stock price tumbling $500 million in two days–the equivalent of 20 percent of its value.,

Lennar sought to use the lawsuit to force Minkow to verify his allegations. But Florida State Court Judge Gill Freeman threw out Minkow's defense in the case, finding that Minkow gave false testimony, withheld documents, destroyed evidence, concealed the identity of key witnesses, willfully violated court orders and tried to “cloud his misconduct.”

Freeman ordered Minkow to pay sanctions, estimated to run into the millions of dollars.

Until Tuesday, however, the public knew nothing about a pending criminal case against Minkow. His church disclosed it in a letter to parishioners.

The letter, signed by church elders, said:

“Today Barry resigned as our senior pastor as he is no longer qualified to be a pastor. Pastor Barry no longer considers himself above reproach as he has agreed to plead guilty to a criminal count related to the Lennar lawsuit.”

The letter asked parishioners to pray for Minkow and his wife and sons.

The federal case against Minkow stems from a report he wrote about Lennar on behalf of Nicholas Marsch III, a former business partner of Lennar's who had a falling out and was suing the company–an effort that was ultimately unsuccessful. As Marsh continued to press his litigation in late 2008, he hired Minkow to look into Lennar. Minkow responded by recommending “an all out blitzkrieg” against the company.

Minkow wrote that a cascade of bad publicity could force Lennar to settle the lawsuit brought by Marsh. Minkow issued his scathing report against Lennar in January 2009.

The letter from Minkow's church elders Tuesday made no mention of a burglary at the church earlier this year in which Minkow claimed thieves stole $50,000. The burglary remains unsolved.

The break-in is quite similar to phony burglaries Minkow has said he staged in the 1980s to collect insurance money when he was short on cash.

For further reading please see:

Barry Minkow 2.0 by Beth Barrett

Barry Minkow Destroyed Evidence and Lied, Judge Says, by Beth Barrett

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