Shares of Miami-based Lennar Corp. went on a wild ride on Friday after infamous San Diego investor Barry Minkow made a series of accusations against the homebuilder, whose operations largely are run out of Aliso Viejo.
Shares of the Lennar fell as much as 28% after a Web site run by San Diego’s Barry Minkow, cofounder of the Fraud Discovery Institute Inc., posted a list of “multiple alleged fraudulent activities” against Lennar.
The site includes an accusation that the builder “treats their joint ventures exactly like a Ponzi scheme,” and that executives in Orange County received improper home loans.
Lennar’s stock rebounded after the company released a statement saying that Minkow’s accusations were “false and inflammatory.”
Lennar’s stock, which also felt the effects of a grim earnings report by Los Angeles-based KB Home, was down about 10% near the close of trading Friday on a market value of $1.6 billion.
Minkow’s Fraud Discovery Institute describes itself as a consumer advocate group. It has made life difficult for OC companies in the past.
Minkow gained local notoriety here late last year when he released a background check on Jim Peterson, chief executive of Irvine chipmaker Microsemi Corp.
The backround check alleged Peterson didn’t hold degrees from Brigham Young as claimed on his official biography. Shares of Microsemi fell some 40% on the news before rebounding.
Minkow made similar allegations against an executive at Irvine-based Broadcom Corp. The executive was let go from the chipmaker.
Critics note that the investment strategy of Minkow is to short stocks and profit when they fall.
Minkow’s carpet cleaning company, ZZZZ Best, collapsed in 1987, costing investors an estimated $100 million. He was convicted of fraud and several other offenses.
Lennar said Friday that Minkow was acting as an agent of “disgruntled litigant” Nicolas Marsch III, whose lawsuit against Lennar was recently dismissed by a California Superior Court judge.
