Alert #188: 8/11/2011

Barry Minkow Hit with $584 Million Judgment
Five Year Prison Sentence  
Anti-MLM Critics Complicit in Fraudulent Scheme

Barry Minkow – Beneath the Iceberg

For those of you who are new to the profession of network marketing, or are experienced veterans who’ve been stranded on a deserted island the last four years, Barry Minkow started a fraudulent carpet cleaning and restoration company back in the 1980s called ZZZZ Best (pronounced Zee Best), went to prison for over seven years, found God, emerged from the Englewood Federal Correctional Institution corrected, and then turned from being a perpetrator of fraud to an investigator and exposer of it. Then, in 2006, another supposed ex-stock-fraud-felon-turned-good by the name of Sam Antar (his fraudulent company was called Crazy Eddie) paid Minkow $250,000 – $150,000 to attack Usana Health Sciences, and another $100,000 allegedly because Sam just admired Barry and wanted to give him a gift. Usana is publicly traded so, of course, both Sam and Barry bought put options on Usana right before Minkow published his 86 page Usana smear report so they could profit from the resulting drop in Usana’s share price – which plummeted 15% the day Minkow’s report went public. After banking $61,000 on his Usana puts, and watching how the media indubitably promoted his attack, and seeing how vulnerable a public M.L.M. company, or at least their stock value, was to bad publicity, he decided to try the same bash-n-cash scheme on Herbalife, PrePaid Legal, and Medifast. Each time Minkow would hire M.L.M. critics Robert FitzPatrick, who claims to be an “expert” on pyramid schemes, and Tracy Coenen, who claims to be a “forensic” CPA and “certified fraud examiner”, to assist him in the production of his stock price pounding propaganda.

Then he tried the same scheme on Lennar.

Lennar is the second largest home builder in the United States, with $3.1 billion in revenue last year. Lennar is also not an M.L.M. company, thus not nearly as vulnerable to prolonged attacks on their credibility. So, Lennar sued Minkow and his “Fraud Discovery Institute” accusing him of libel and stock fraud, and theydid not settle. And they won, thus the $584 million judgment. Along the way Minkow was also prosecuted on criminal charges that included insider trading and extortion. He lost, thus the five year prison sentence.

At one time, while Minkow was still actively bashing-and-cashing, I began the development of a website designed to expose Minkow as not having been reformed, and as still being guilty of fraudulent activity as far back as March of 2007. To that end I registered the domain name, playing off one of Barry’s favorate catch phrases, “You have to look below the iceberg”. Had anyone paid attention they would have clearly saw that what Minkow did to Lennar he had been doing to several other companies (including other non-M.L.M. companies, such as InterOil). Since Minkow’s sentencing a local news station in San Diego has uncovered other fraudulent schemes involving the church where he was the pastor and several of its parishioners (one claiming to have lost over $300,000 she lent to Minkow). All of this harm to so many of his victims, not to mention the almost $2.9 billion in losses suffered by innocent shareholder of those companies Minkow attacked, might have been avoided had fraud investigators, or at least commentators, turned their magnifying glasses around on Minkow himself rather than Minkow’s victims. Tracy Coenen, Robert FitzPatrick, Jon Taylor, Sam Antar, Gary Weiss, Michael Webster, Wesley Serra, Steve Rotolante, and so many others gratuitously and unconditionally supported and promoted Minkow’s activities every step of the way. Major news media, with far greater investigative resources that I have, incontrovertibly reported Minkow’s accusations to the public, often times interviewing Minkow personally and imparting greater credibility to him as a “reformed fraud buster”., Hugh Hewitt’s radio show, Neil Cavuto’s television show, Bloomberg, Reuters, CNN, CBS News, Fox news, and The Wall Street Journal, among others, all portrayed Minkow as a redeemed and trusted authority on recognizing and exposing fraud, which added substantially more weight to Minkow’s stock pounding hammer. Again, these are investigators who are CPAs, have post-graduate law and financial degrees, or who are trained and certified “fraud examiners”, and who, like Coenen and FitzPatrick, workeddirectly with Minkow. And all that I uncovered, with nothing more than my Associates Degree, my telephone, and Google, was always available and easily discoverable the entire time – years before it was recently uncovered in a Florida courtroom.

So that’s why I went ahead and completed, even though the heat on Minkow has pretty much melted his. It’s now more a testament to the selfish ignorance and/or gross incompetence of those who assisted Minkow and supported his agenda.

For the record, there were two groups of people who did know all along what Minkow was really up to. One are those who read, Judd Bagley’s investigative blog. The others are called MarketWave Alert subscribers!

Len Clements
Founder & CEO
MarketWave, Inc.

P.S. Please don’t forget, my (completely free) training series begins this Thursday, August 11th, at 5:30 pm PST (8:30 pm EST). Call 712-432-1000, 569-864-201#.


About Len Clements

Based in Las Vegas and Founder and CEO of MarketWave, Inc., Len Clements provides consulting, training & expert witness services for the network marketing industry. Since 1989, he has been a top producer, trainer, and consultant for multiple network marketing companies. As a well-respected icon in the MLM industry today, Len conducts Inside Network Marketing seminars throughout the world and is the author of several best-selling books and audio tapes including Inside Network Marketing (Random House), Case Closed, The Whole Truth About Network Marketing and The Coming Network Marketing Boom.