International Law

Is Barry Minkow Aiming Low?

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Michael Hitzik, writing at the LA Times, questions Barry Minkow's methodology,who has targeted USANA, then Herbalife and lately Lennar.

"The most curious aspect of Minkow's style as a fraud investigator is his selection of targets.

He goes after investment scams almost too small to register on the radar. Or companies like Herbalife, which has faced regulatory actions over its marketing of health supplements, not the gold standard of consumer goods.

Lennar is in a business that generates lots of lawsuits, but that's what the courts are for."

Tracy Coenen has an excellent list of some of the frauds that Minkow has uncovered, twenty one in all.

But, I think Michael is wrong for a different reason. Minkow strikes me as a very intuitive person, almost mercurial. There is no systemic Minkow plan which uncovers fraud; he sees what he sees, hears what he hears, and reacts instantly.

Michael goes on, and suggests:

"Surely there are bigger fish for Minkow to fry, given the historic financial crash of the last year. Instead of blithely comparing his targets to Bernie Madoff, let's see him uncover the next Bernie Madoff.

He's got the smarts and moxie to do it, and that might give him true redemption."

Again, for some people Minkow will never gain true redemption, something that I think Barry accepts.  But to suggest that Minkow, or any other con turned reformer, needs to find the next Madoff to gain redemption is just mistaken.

Minkow, like any fraud investigator, responds to complaints - early in the complaint stream than the regulators to be sure.

But in the Madoff Fraud, there were no investor complaints.

It is unique in the annals of Ponzi schemes for there not to be single investor complaint.

In the film, the Shawshank Redemption, Morgan Freeman's character, who is in prison for murder, poignantly reflects on the question whether he has been rehabilitated after some forty years in jail. He says that he doesn't know what "rehabilitated" means anymore, but that there isn't a day goes by that he wishes he didn't kill that boy."

I suspect that there isn't a day goes by that Minkow wishes that he had been just a little less impulsive some twenty years ago.

Full post as published by Misleading Advertising Law on January 20, 2009 (boomark / email).