What? Barry Minkow busts ANOTHER fraud???

Noooo… It can’t be. After all, didn’t he used to be a criminal? Isn’t he just a liar who is trying to bring down squeaky clean vitamin companies so he can make zillions of dollars for himself?

Well, that’s what his “fan club” would have you believe.

Yet here we have another huge fraud uncovered thanks to Barry’s hard work. Only $39 million stolen this time, but who’s counting?

According to the article in the Wall Street Journal:

Federal authorities arrested Richard M. Harkless, the former head of MX Factors LLC, and charged him with operating a Ponzi scheme that bilked investors out of more than $39 million.

Authorities said that from 2000 to 2003, MX Factors, of Riverside, Calif., pretended to make short-term secured loans to government contractors and others. According to an indictment handed up by a federal grand jury in Los Angles, the company sought out investors by promising astronomical returns — in some cases, 12% in 60 days, equivalent to a 99% annual return.

Initially, authorities said, the company made good on its promises, and investors sent in more than $55 million. In reality, MX made few loans, and instead paid early investors out of the principal contributed by later ones, prosecutors said. They said more than $5 million was used to fish for crabs in Mexico, and that much of the rest was taken by MX and associates — Mr. Harkless, Daniel Berardi, Thomas Hawkesworth, and Randall W. Harding.

MX collapsed in 2003, after the California Department of Corporations ordered it shut down as an illegal Ponzi scheme. The Securities and Exchange Commission sued Harkless and MX in 2004, putting the business into a receivership. Investors have received about eight cents on the dollar so far.

Messrs. Berardi, Hawkesworth, and Harding pleaded guilty to fraud and other charges and are currently in prison. Mr. Harkless fled to Mexico in 2004 and became a fugitive, authorities say. In his absence, a court ordered him to pay back more than $42 million.

And regarding Barry’s work:

Authorities credited a San Diego private investigator, Barry Minkow, with identifying MX Factors as a Ponzi scheme and helping to pursue Mr. Harkless. Mr. Minkow originally brought MX to the government’s attention in 2003, said Timothy France, a U.S. postal inspector. Mr. Minkow arranged for surveillance of Mr. Harkless in Mexico, Mr. France said, “since we as law enforcement cannot really go down into Mexico.” A tip from Mr. Minkow led indirectly to Mr. Harkless’s discovery in Arizona, Mr. France said.

I wonder if the criminals are taking notes yet?

Related posts:

1. Yet Another Succesful Fraud Investigation, Courtesy of Barry Minkow
2. Barry Minkow Busts Another Fraudster
3. Score another successful fraud discovery for Barry Minkow
4. Barry Minkow on CBS’s 60 Minutes
5. Barry Minkow Fraud Busting: Pacific Wealth Management