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Conman/minister Minkow gets another five years

As minister, he fleeced parishioners, IRS

Barry Minkow in an '80s carpet-cleaning ad
Barry Minkow in an '80s carpet-cleaning ad

Barry Minkow, San Diego's most publicized man of the cloth, was sentenced today (April 28) to five years in prison for embezzling more than $3 million from parishioners of San Diego Community Bible Church. He is already serving a five-year sentence for securities fraud for his fraudulent attempt to knock down the stock of Lennar, the big builder. At the conclusion of that case, he was defrocked by the local church, which began an investigation of his thievery.

Minkow's story is one of the most bizarre of recent cozener history. In 1988, he was sentenced to 25 years in prison for running a complex Ponzi scheme as head of ZZZZ Best carpet cleaning. Almost all the company's revenue was fabricated. He only served seven and a half years because he supposedly found God — giving birth to the cynical aphorism, "born again until out again."

He became pastor of San Diego Community Bible Church. At the same time, he was running Fraud Discovery Institute and giving seminars in fraud detection for federal government agencies.

For Fraud Discovery Institute, he would expose a company's wrongdoing and then cash in by shorting (betting on a decline in) the stock. It was legal, because he disclosed his short position. He did some excellent research, such as exposing multi-level marketing companies Herbalife and Usana, which had ties to offshore tax havens.But when he tried to nail Lennar, he crossed the line and went back to prison. He served that time in a prison medical center, as a result of addiction problems for which he blamed his behavior.

In fleecing parishioners of his church, he talked a widower into making a $75,000 donation to a hospital in Sudan in honor of his late wife. But there was no hospital; Minkow pocketed the money. He admitted to stealing $300,000 from a widowed grandmother trying to raise her teenage grandmother. He did not report to the Internal Revenue Service the $3 million he stole from parishioners.

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Barry Minkow in an '80s carpet-cleaning ad
Barry Minkow in an '80s carpet-cleaning ad

Barry Minkow, San Diego's most publicized man of the cloth, was sentenced today (April 28) to five years in prison for embezzling more than $3 million from parishioners of San Diego Community Bible Church. He is already serving a five-year sentence for securities fraud for his fraudulent attempt to knock down the stock of Lennar, the big builder. At the conclusion of that case, he was defrocked by the local church, which began an investigation of his thievery.

Minkow's story is one of the most bizarre of recent cozener history. In 1988, he was sentenced to 25 years in prison for running a complex Ponzi scheme as head of ZZZZ Best carpet cleaning. Almost all the company's revenue was fabricated. He only served seven and a half years because he supposedly found God — giving birth to the cynical aphorism, "born again until out again."

He became pastor of San Diego Community Bible Church. At the same time, he was running Fraud Discovery Institute and giving seminars in fraud detection for federal government agencies.

For Fraud Discovery Institute, he would expose a company's wrongdoing and then cash in by shorting (betting on a decline in) the stock. It was legal, because he disclosed his short position. He did some excellent research, such as exposing multi-level marketing companies Herbalife and Usana, which had ties to offshore tax havens.But when he tried to nail Lennar, he crossed the line and went back to prison. He served that time in a prison medical center, as a result of addiction problems for which he blamed his behavior.

In fleecing parishioners of his church, he talked a widower into making a $75,000 donation to a hospital in Sudan in honor of his late wife. But there was no hospital; Minkow pocketed the money. He admitted to stealing $300,000 from a widowed grandmother trying to raise her teenage grandmother. He did not report to the Internal Revenue Service the $3 million he stole from parishioners.

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Comments
11

OOPS. Next to last sentence: the grandmother was trying to raise her teenage granddaughter. Best and mea culpa, Don Bauder

April 28, 2014

Only 5 years?

what happened to second offense sentencing guidelines ?

April 29, 2014

Murphyjunk: Good point. And this is Minkow's third such offense. Best, Don Bauder

April 29, 2014

The Obama Administration Justice Department and Attoney General Eric Holder...that's what happened.

April 29, 2014

JustWondering: I assume you are saying Obama and Holder changed sentencing guidelines. To be honest, I don't know about that, but it is worth checking. Best, Don Bauder

April 29, 2014

The United States Sentencing Commission, which is an independent agency in the judicial branch, establishes sentencing policies and practices for the federal courts, including guidelines to be consulted regarding the appropriate form and severity of punishment for offenders convicted of federal crimes. The AG's office has one designee on the panel, but it is a non-voting position.

April 29, 2014

danfogel: That is important information. Best, Don Bauder

April 29, 2014

From what I read, three-strikes laws (causing life sentences) generally involve only "serious or violent" crimes. So financial offenses like Minkow's do not qualify. Obama had nothing to do with it.

April 29, 2014

It's hard to know for sure, but I don't believe that murphyjunk was referring to the three strikes law. For federal sentencing guidelines, there is actual a manual that spells out the formula based on the type and severity of offense and an individuals criminal and I think there is actual a table of some sorts that is used to help determine the applicable sentence. I believe it was the late surfpuppy/johnnyvegas who wrote about it quite a while ago.

April 29, 2014

danfogel: Minkow got 25 years for a huge Ponzi scheme that was essentially a $100 million stock market swindle. (He got out in 7.5 years.) He pleaded guilty to conspiracy to commit securities fraud in the Lennar criminal case, and got five years. Then he got five years for fleecing the church at which he was head minister, and also fleecing parishioners. He used church money for his own expenses, diverted donations to himself, and embezzled church funds.

The 25 years, five years and another five years do not correlate, in my judgment. But I was not sitting in any of the courtrooms; sentencing guidelines may have come into play in each case. Best, Don Bauder

April 29, 2014

JustWondering and dwbat: In late April, the Justice Department laid out new clemency guidelines that should make thousands of drug offenders eligible for sentence reductions, according to Reuters and the Department of Justice. Inmates who were sentenced under laws that have since been changed, and have served at least 10 years of their sentences and are non-violent, may receive clemency from the president.

For example, a 2010 law lowered the terms for crack cocaine possession. Those sentenced under the old law would be eligible for clemency if they meet the other guidelines, such as no record of violence.

I do not know if these changes affected the sentencing of Minkow, who blames drug addiction for his problems. Frankly, I doubt it. The charges were all fraud-related, although it's possible the judge took addiction into account. Minkow is a very special kind of conman who, as I have said, should be a good study for psychiatrists.

These drug clemency initiatives are long overdue. Our prisons are packed because of excessively harsh drug sentences. The private companies that manage prisons push for the harsh sentences to boost their top and bottom lines. Best, Don Bauder

April 29, 2014

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