Shares of Lennar Corp. (NYSE:LEN) continued trading lower Monday in the wake of allegations from a convicted-felon-turned-watchdog that the company was engaged in an elaborate Ponzi scheme.

Lennar stock was down 8.4% at $8.38 late afternoon Monday after shares tanked on Friday, losing as much as 28% of their value before closing down 20% at $9.15 after the allegations were posted on the Internet. By Wednesday, the stock had sunk to $7.95 amid a deep selloff in the broader market.

Barry Minkow, who rose to infamy in the 1980s as a youngster who parlayed a money-losing cleaning business he ran out of his garage into a publicly held company called ZZZZ Best that fleeced both investors and institutional Wall Street (see "Wonder Boy," by Daniel Akst, Scribners, 1990), alleged on Friday, Jan. 9 through an organization called the Fraud Discovery Institute that Lennar was "treating its joint ventures exactly like a Ponzi scheme."

Lennar shares were down despite several analyst research notes that questioned the validity of the allegations and an unusually comprehensive statement issued by the company Monday morning refuting Minkow's allegations one-by-one. The company said in the statement that "we intend to take appropriate action against the responsible parties."

J.P. Morgan home building analyst Michael Rehaut put out two notes on Monday, both reiterating his "overweight" rating on Lennar shares and one stating, "the accusations made by Barry Minkow and his company Fraud Discovery Institute (FDI) are likely without merit."

Josh Levin at Citi Investment Research put out a similar note on Friday, stating, "Our gut reaction is that the allegations are likely less than credible. The document itself strikes us as somewhat less than professional in its tone and content. Also, while in our past discussions with various land developers around the country those developers have described LEN's management as tough and shrewd negotiators, we have never once heard any allegations that LEN's management was dishonest in its business dealings."

On Friday, Lennar put out a statement questioning the credibility and veracity of the allegations. It said, "Today convicted felon Barry Minkow, acting as an agent for a disgruntled litigant, Nicolas Marsch III, posted false and inflammatory accusations concerning Lennar. Marsch's civil litigation against Lennar was just dismissed by a California Superior Court judge. This Internet posting was hurriedly made only after evidence surfaced this week in litigation that Marsch and Minkow may have attempted to illegally obtain information relating to Marsch's legal proceedings against Lennar. Lennar continues to investigate acts of wrongdoing by Marsch and Minkow."

On Jan. 13, Lennar added Minkow to an ongoing libel suit it has been pursuing against Marsch, according to press reports.