Lennar: Ponzi Scheme?

Posted by Equity Private, Jan 09, 2009, 10:20am

This report is far more than a "he said, she said" argument between litigants. Instead, it connects the dots of the public record and other documents to prove that Lennar Corporation has a pattern of behavior over a sustained period of time of knowingly and willfully abusing the legal system to gain an unfair advantage over the less capitalized, smaller entities.

Uh oh.

Lennar Corporation (NYSE: LEN) treats their joint ventures exactly like a Ponzi scheme, pledging their older joint venture interests to leverage themselves into newer joint venture relationships despite operating agreements that prohibit this unauthorized movement of interests.

That's alleged Ponzi scheme #1 for today. Can we match, or even exceed, yesterday's trifecta again?

Update: JP Morgan issued this yesterday: "JPMorgan Thursday upgraded Lennar Corp to overweight from neutral."

Woops.

Lenn-ron (.pdf) [The Fraud Discovery Institute]

3Recommend this! 42Comments

Tags: Lennar

Comments

1

Posted by guest, Jan 09, 2009 10:24AM

I'm not doubting fraud at Lennar, but "The Fraud Discovery Institute?"

Seriously?

2

Posted by MarshallStack, Jan 09, 2009 10:29AM

They are lawyers.

Over the past 5 years, the Fraud Discovery Institute and Barry Minkow has uncovered and stopped over ONE BILLION DOLLARS in financial fraud. With experience on both sides of the law concerning financial fraud, FDI is uniquely positioned and qualified to help companies and individuals as it relates to maters of fraud.

First and foremost, fraud detection and prevention is more than a state of mind. Unless there is a perception of detection throughout an organization, fraud can and will frequently happen. Understanding what constitutes fraud (and how to prevent it) must start with training and mentoring at the highest levels of management to set an example for all stakeholders.

Once a fraud does occur, the costs in earnings, manpower, possibly hostile litigation, higher insurance premiums, and corporate credibility are hard to contain. FDI's proactive fraud detection and awareness program can save you time, money, embarrassment, and potential damages in a class-action lawsuit.

3

Posted by guest, Jan 09, 2009 10:33AM

@2 is that a paid ad?

4

Posted by guest, Jan 09, 2009 10:36AM

Barry Minkow? How's the music career? slow? I see you've branched out, nice.

5

Posted by guest, Jan 09, 2009 10:38AM

welcome to the era of financial mccarthyism. just been laid off by your ib? why not ponzi whistleblow? lost 58% in 2008 in your hedge fund investment? why not ponzi whistleblow!?

6

Posted by guest, Jan 09, 2009 10:38AM

Is a Ponzi label the new WMD?

7

Posted by guest, Jan 09, 2009 10:43AM

Ponzi label is the new black for 2009. Anna Wintour said so, bitches.

8

Posted by guest, Jan 09, 2009 10:44AM

Half of WS is a ponzi scheme.

Originate loan at par.

Sell loans into SPV at 105. Book $5 profit. Finance 90% of SPV.

Pool and sell 10 such SPV financings at 105. Book $5 profit. Finance 90% of SPV2.

Pool and sell 10 such SPV2 financings at 105. Book $5 profit. Finance 90% of SPV3.

It only ends when everyone stops lying to everyone else.

9

Posted by guest, Jan 09, 2009 10:45AM

http://www.frauddiscovery.net/privacy.html

"Barry Minkow almost always holds a position in securities reported on, or profiled by, FDI websites. Neither FDI nor Mr. Minkow will report when a position is initiated or covered. Each investor must make that decision based on his/her judgment of the market. We always insist that anyone who relies on our reports, independently corroborate our findings before making any decisions."

10

Posted by guest, Jan 09, 2009 10:47AM

Isn't the career path of most real estate moguls/groups similar to a Ponzi scheme in some respects? You buy a property and then use the equity in that to buy some more properties, then you use the equity in those to buy more and so on. This is why so many big guys like Macklowe and Broadway Partners flame out so spectacularly.

11

Posted by guest, Jan 09, 2009 10:48AM

@9 BM selling shit cakes, rather than shit cookies.

12

Posted by guest, Jan 09, 2009 10:49AM

However, in the case of Lennar Corporation, neither the Fraud Discovery Institute, Inc nor Barry Minkow are currently short the company stock or have purchased put options. The reason for this is simple and straightforward: There is a paying client in this case, and we wanted to prevent the possibility of diverting attention from the serious legal issues here to an “ex-con short seller.” Now Mr. Minkow will simply be the ex-con minus the “short seller.”

13

Posted by guest, Jan 09, 2009 10:49AM

ZZZZ Best...the original Ponzi

14

Posted by Suits, Jan 09, 2009 10:50AM

Not being Ponzi is the new killin' it.

15

Posted by guest, Jan 09, 2009 10:50AM

ZZZZ Best...the original Ponzi
http://en.wikipedia.org/wiki/Barry_Minkow

16

Posted by guest, Jan 09, 2009 10:53AM

@15
Figures you just have to spend 5 seconds looking.

17

Posted by guest, Jan 09, 2009 10:53AM

@7-- i thought orange is the new black for 2009.

we are going to be seeing a lot of famous people wearing orange jumpsuits this year.

18

Posted by guest, Jan 09, 2009 10:54AM

Thanks to Bernie, "Ponzi Scheme" is going to become the most over-used word of 2009 and it's going to become a favorite for short-sellers.

Sure, Wall Street is full of dubious practices, but leverage does not a Ponzi scheme make.

I don't doubt that LEN has a lot of shady stuff in those JV's - probably a lot of hidden leverage that should be on the balance sheets - but the likelihood of an outright Ponzi scheme is extremely unlikely.

Still the stock will likely go to zero and Minkow will make a bundle either through the short positions in his wife's account or the kickbacks he's getting from Greenwich.

19

Posted by guest, Jan 09, 2009 10:56AM

@3 I'm not the original poster, but I checked, and it's straight from FDI's Website, complete with the misspelling of "maters": http://www.frauddiscovery.net/company.html

Sounds a tad sketchy to me, though:
"With experience on both sides of the law concerning financial fraud, FDI is uniquely positioned and qualified to help companies and individuals as it relates to maters of fraud."

If they're going to include the rather unusual note that they have experience "on both sides of the law", one might hope they'd make it a little clearer that they only offer their services "to help companies and individuals" with fraud matters on ONE side of the law. Unless of course that's *not* their policy . . .

20

Posted by guest, Jan 09, 2009 10:58AM

today will forever be known as: the day dealbreaker discovered the colon

21

Posted by miami, Jan 09, 2009 10:59AM

How is using litigation to your Firm's best advantage a Ponzi scheme? It's been the American Way since Thomas Alva Edison and his lawyers, and bankers sued, hounded, harassed and ultimately drove Nikola Tesla and his superior patents into poverty. The guy discovered/invented radio, wireless energy, dynamo, AC power, X-rays and still died penniless.

22

Posted by guest, Jan 09, 2009 11:00AM

Just as the Panthers will beat the Giants, Charlotte rules Wall Street.

23

Posted by MarshallStack, Jan 09, 2009 11:01AM

And it was good: the colon; its usage; its cleansing; all of it.

24

Posted by guest, Jan 09, 2009 11:10AM

I thought a "Ponzi" was the machine-gun invented by the Israelis. Light weight, rapid fire in close quarter combat.

25

Posted by guest, Jan 09, 2009 11:12AM

This is pretty well laid out. Lennar is going to get hammered.

26

Posted by guest, Jan 09, 2009 11:12AM

@23 -

If you really want to hurt your parents, and you don't have the nerve to be a homosexual, the least you can do is go into the arts. But do not use semicolons. They are transvestite hermaphrodites, standing for absolutely nothing. All they do is show you've been to college.

-- Kurt Vonnegut

27

Posted by guest, Jan 09, 2009 11:14AM

Too ponzi....didn't read

28

Posted by guest, Jan 09, 2009 11:18AM

need more ponzi

29

Posted by guest, Jan 09, 2009 11:25AM

These Ponzis are making me thirsty

30

Posted by guest, Jan 09, 2009 11:26AM

"knowingly and willfully abusing the legal system to gain an unfair advantage over the less capitalized, smaller entities"

Wait -- that's a problem?

31

Posted by guest, Jan 09, 2009 11:29AM

Guess what?

I got a fever!

And the only prescription ... is more ponzi!

32

Posted by guest, Jan 09, 2009 11:29AM

Bartleby disagrees with Vonnegut. I agree with Bartleby. Vonnegut writes for easy digestion.

33

Posted by guest, Jan 09, 2009 11:31AM

@29 Nice!

34

Posted by guest, Jan 09, 2009 11:49AM

22: Giants beat the Panthers already, and will do so again. Charlotte is a joke, enjoy your 3 bars and Carrabas restaurant.

35

Posted by guest, Jan 09, 2009 11:57AM

@10

You've described leverage, not a Ponzi scheme. However, your last sentence is correct. And, you can add LEH, MER and BSC to that list too.

36

Posted by guest, Jan 09, 2009 12:09PM

@34 and our women that don't look like men

37

Posted by guest, Jan 09, 2009 12:40PM

@34
Panthers out played the Giants for four quarters. Giants got lucky.

38

Posted by guest, Jan 09, 2009 1:17PM

36 I wouldnt say that. It was a well fought game, evenly matched but GMEN won fair & square. not our fault Kasay choked and then in overtime you got punked

39

Posted by guest, Jan 09, 2009 1:18PM

36 I wouldnt say that. It was a well fought game, evenly matched but GMEN won fair & square. not our fault Kasay choked and then in overtime YALL got punked

40

Posted by guest, Jan 09, 2009 1:19PM

sorry for the double. had to add in the proper southern form of address

41

Posted by Garuda, Jan 09, 2009 1:38PM

"They are lawyers"

Well, some of them are. One of them is an ex-con. That would be Barry Mankiw himself.

They sentenced him to 25 years in prison, but he only served 7.

http://en.wikipedia.org/wiki/Barry_Minkow

But, of course, now he's a good guy...

42

Posted by Garuda, Jan 09, 2009 1:39PM

"They are lawyers"

Well, some of them are. One of them is an ex-con. That would be Barry Minkow himself.

They sentenced him to 25 years in prison, but he only served 7.

http://en.wikipedia.org/wiki/Barry_Minkow

But, of course, now he's a good guy...

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