Direct Sales and MLM

Barry Minkow - Busted

By
Kevin Thompson

< src="https://dev-thompson-burton-wpms.pantheonsite.io/wpmlm/wp-content/uploads/2011/01/263649949_7e68212099-300x231.jpg" alt="" width="300" height="231" class="alignleft size-medium wp-image-151" />Barry Minkow, a character with an interesting history involving a road from white collar crime to Christian minister, was recently judged responsible for tens of millions of dollars in attorney and investigative fees. Lennar Corp, a publicly traded company, alleged in a Florida court that Minkow extorted them for money and fraudulently spread false and malicious lies in an effort to diminish the stock value in furtherance of a stock shorting scheme. And after Minkow reported about Lennar's "criminal activity," he purchased the stock of the "fraudulent business" after it dropped 20%! This seems to be Barry Minkow's mode of operation, as it's happened several times before. But this time, Minkow angered the wrong company. The story can be found here. Amongst all of the anti-MLM detractors, Minkow was by far the dirtiest and most disruptive. Minkow operates the "Fraud Discovery Institute," which was purportedly created to expose white collar criminals. However, on multiple occasions, Barry Minkow would fraudulently short the stock of these companies days before releasing his reports. In the case with USANA, a well-known and publicly traded direct sales company, Minkow along with several other investors, shorted the USANA stock prior to releasing a scathing report alleging USANA to be a pyramid scheme. The report led to an eventual SEC investigation; however, the investigation was soon dropped once the SEC learned of Minkow's financial interest in the matter. Minkow's reputation as a fraud reporter is greatly diminishing as multiple courts across the country are methodically getting to the bottom of his antics. As the judge in the Lennar case said, "Minkow's misconduct has been pervasive, intentional and committed to gain unfair advantage over plaintiffs and to deceive this court." As the saying goes, "When you mess with a bull, be prepared to get the horns." With Minkow attacking so many large, publicly trade companies while double-dipping via shorting stock, it was only a matter of time before a company would land a knockout punch.

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Author Kevin Thompson is one of the most sought after MLM Attorney in the country. He owns and operates The Law Office of Kevin Thompson and specializes in providing legal services for startup direct sales organizations. Kevin Thompson has extensive experience in the direct sales space and helps entrepreneurs launch their businesses on secure legal footing. He can be reached from his website here.

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