Release and Short Selling
After Minkow's early release from prison in 1995, he went to work at the Church at Rocky Peak in Chatsworth, California as Director of the Bible Institute and Pastor of Evangelism.
In 1995, he wrote a first-hand account of the ZZZZ Best scam, Clean Sweep. All of the book's proceeds went toward repaying his victims. He believes that he will be paying the $26 million restitution bill for the rest of his life. His other substantial debt is a $7 million loan from Union Bank.
In 1997, he became pastor of Community Bible Church in San Diego. Soon after his arrival, a church member asked him to look into a money management firm in nearby Orange County. Suspecting something was amiss, Minkow alerted federal authorities, who discovered the firm was a $300 million pyramid scheme. This was the beginning of the Fraud Discovery Institute, a for-profit investigative firm. His original targets were penny stock companies, which are often havens for fraud. However, he soon attracted the attention of The Wall Street Journal and Bloomberg News. He also began appearing on Your World with Neil Cavuto as a fraud expert. Minkow first gained national attention when 60 Minutes aired a profile of him in August 2006. Several Wall Street investors liked what they saw, and sent him enough money to go after bigger targets. By Minkow's estimate, he has uncovered $1 billion worth of fraud over the years.
Minkow's recent motives have been brought into question by multiple news stories concluding that Minkow was shorting stock before he releases a report on a public company. According to the San Diego Union-Tribune, Minkow had engaged in this practice as early as 2006. Minkow's critics have denounced this practice as unethical, if not illegal. At least one critic has accused him of engaging in short and distort, a form of securities fraud which is a reversal of a pump and dump scheme. For instance, he falsely accused Herbalife's president of embellishing his resume, and made $50,000 after shorting Herbalife stock. Several FDI reports have proven to be false, yet Minkow continued to profit from his short sales position due to sharp decreases in the reported company's stock price immediately after releasing a new report. Minkow almost always holds a position in securities that he reports on. However, he has since stated that while his lawyers advised him this practice was legal, it was probably unethical.
Many companies have sued Minkow for making false accusations against them. However, most of the suits have gone nowhere since criticizing public companies is usually considered to be protected free speech. This has led many of Minkow's targets to settle out of court, paying him as much as $300,000 to stop his attacks on them.
Read more about this topic: Barry Minkow
Famous quotes containing the words release and, release, short and/or selling:
“We read poetry because the poets, like ourselves, have been haunted by the inescapable tyranny of time and death; have suffered the pain of loss, and the more wearing, continuous pain of frustration and failure; and have had moods of unlooked-for release and peace. They have known and watched in themselves and others.”
—Elizabeth Drew (1887–1965)
“The near touch of death may be a release into life; if only it will break the egoistic will, and release that other flow.”
—D.H. (David Herbert)
“Jealousy is never satisfied with anything short of an omniscience that would detect the subtlest fold of the heart.”
—George Eliot [Mary Ann (or Marian)
“By bourgeoisie is meant the class of modern capitalists, owners of the means of social production and employers of wage labor. By proletariat, the class of modern wage laborers who, having no means of production of their own, are reduced to selling their labor power in order to live.”
—Friedrich Engels (1820–1895)