Lennar CEO responds to Barry Minkow and Fraud Discovery Institute

Early today, Barry Minkow and Fraud Discovery Institute released a report on Lennar Corporation (NYSE:LEN), highlighting what the authors believe to be ten red flags of fraud at the company. Lennar’s stock was hit hard by the news.

It didn’t take long for Lennar’s CEO Stuart Miller to speak out against the allegations. About all he was able to do, however, is try to discredit the messenger. Lennar didn’t have any substantive response to any of the allegations, they simply highlighted Barry’s well-known criminal past and referred to Nicolas Marsch (Barry’s client) as a “disgruntled litigant.”

But I suppose that if I invested $37.5 million into a project with Lennar that turned out to be one of the company’s most successful residential developments ever, and then Lennar refused to pay me anything (not any profits, not a return of the original investment), I’d be a little disgruntled too.

Take a look at Stuart Miller responding in this video on the CNBC site. Does he look like a man who is confident in the company’s innocence? Or does he look nervous and evasive? And how do you like his statement that the company has too many joint ventures (around 300 at one time) to be able to provide any information about them to the SEC and investors? Does that give you confidence in the company’s financial statements?

Because I’d like to believe that they have to gather information about these joint ventures in order to produce accurate financial statements, and with today’s technology, I’m quite sure Lennar could provide information if management chose to do so.

3 thoughts on “Lennar CEO responds to Barry Minkow and Fraud Discovery Institute”

  1. I was disappointed that Lennar’s CEO didn’t address the $5,000,000 back door loan to their CFO. To me, that was the biggest red flag that Minkow raised. Everything else seemed to be obsfucation. If he would have had an answer to this, I could have bought into the JV are too hard to track argument, but by not even mentioning it in his interview, it makes me wonder what else could be going on underneath the surface. As far as their trying to argue that Barry is an ex-con with a client who has an axe to grind, I say so what. I don’t really care who leaks info, as long as the facts line up. Instead of trying to cast doubt on the source, I would have like to have seen him provide more disclosure on why they seem to have stopped paying out on their JV deals. Either way, until they resolve these questions, they’re stock is going to be toast. There are too many other good investments out there, to fool around with a company that could be sitting on an atomic bomb. It may not be fair to Lennar if they turn out to be legit, but without providing more information to the investment community, it makes it hard to blindly trust them.

  2. Whatever has happened to”innocent until proven guilty” Mr Miller came right out to voice the allegations against him and his company,he could have gone under a rock and hide,but he is addressing his accusers that speaks to me.Listen I have no dealings Mr. Miller but it’s common sense people like Mr.Barry have a hidden agenda and is out to ruin a man and his company because of jealousy.

  3. Crystal – I’d encourage you to read the other articles on this site about Lennar. Miller has been proven a liar, while all of the factual things Barry has uncovered still stand as proven facts.

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