Public builder Lennar yesterday sued Barry Minkow, a convicted white-collar criminal turned corporate crusader, charging that Minkow has engaged in “libel, extortion, and various criminal acts” against the Miami-based builder.
Minkow, who is affiliated with the Fraud Discovery Institute, last week made multiple accusations of fraud against Lennar. Among the allegations: improper business practices regarding Lennar’s joint ventures, particularly with the now-bankrupt LandSource and questionable borrowing by Lennar COO Jon Jaffe.
Lennar responded publicly to the charges Monday and legally yesterday. In documents filed with Miami-Dade County Circuit Court, the public builder responds strongly to Minkow’s charges, which it says “arise out of Defendants’ illegal attempts to extort money from Lennar.” As such, Lennar has added Minkow to its ongoing lawsuit against Nicholas Marsch II, with whom Lennar has been fighting over two real estate developments in Southern California. According to Lennar, the two men are connected: Marsch allegedly hired Minkow to help end the legal fight with Lennar using whatever means possible.
According to court documents, that included last week’s “10 Red Flags” release by Minkow, which Lennar says affected the company’s stock price dramatically.
“As a direct and immediate consequence of Defendants’ broad public dissemination of the January 9, 2009, press release and the content of the ‘lenn-ron’ website, together with the Defendants’ continuing other statements to the media and investment community, Lennar Corporation’s stock plunged more than 20 percent, falling from $11.42 at the previous day’s close to a low of $8.23. By the end of trading on January 9, the stock had recovered slightly to $9.15—but more than $364 million in market capitalization had been lost in an unprecedented trading of more than 58 million shares of Lennar Corporation,” the complaint states.
Lennar estimates that it has lost at least $100 million in actual damages as a result of the allegations and is asking for three times that, plus attorney's fees, from Minkow and Marsch in the court filing.
Alison Rice is senior editor, online, at BUILDER magazine.
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