MIAMI – Lennar Corporation attorneys filed a lawsuit alleging libel, extortion and various criminal acts against San Diego pastor and ex-felon Barry Minkow and his company, Fraud Discovery, Inc.
By adding Minkow and his company to a pre-existing lawsuit filed against Nicolas Marsch III in Miami, Lennar is taking action to protect its investors and shareholders, company officials said in a press release.
Shares of Lennar Corp. tumbled as much as 28 percent Friday after a consumer group called the Fraud Discovery Institute Inc. accused the homebuilder of fraudulent business practices. But the stock began to recover after the company strongly denied all allegations.
Fraud Discovery Institute’s report included a claim that Lennar’s joint ventures were operated as Ponzi schemes, which is a type of scam that pays early investors profits from those who invest later.
Minkow, founded the institute after serving a sentence for fraud at his own former company ZZZZ Best Co.
Lennar, based in Miami, built homes in Stevenson Ranch and Saugus. It also owns 16 percent of LandSource Communities Development LLC, which owns The Newhall Land and Farming Co.
Newhall Land developed Valencia.
Shares of Lennar closed Friday at $9.15, down $2.27, or 19.9 percent. The shares had hit a low of $8.23 in the morning. Lennar shares have traded between $3.42 and $22.73 in the past 52 weeks.
The amended complaint, filed Tuesday in the 11th Judicial Circuit Court in Miami-Dade County, Florida, states that Minkow, an ex-felon who was convicted of white-collar fraud, has been operating as an agent for Marsch in connection with the ongoing lawsuit. The complaint charges Marsch with extortion and wrongful conduct in connection with litigation over two real estate developments in Southern California known as The Bridges and The Lakes at Rancho Santa Fe.
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