Barry Minkow’s short trip from ex-felon to current-felon

Barry Minkow’s sudden return from ex-felon to current-felon has come as a surprise to some, but not to the Deep Capture team; for we have, over nearly four years, sought to raise awareness of Minkow’s place in a much broader, criminal stock manipulation ecosystem.

It’s been a tough few weeks for Barry Minkow, as Patrick Byrne has done a fine job chronicling recently. Minkow’s sudden return from ex-felon to current-felon has come as a surprise to some, but not to the Deep Capture team; for we have, over nearly four years, sought to raise awareness of Minkow’s place in a much broader, criminal stock manipulation ecosystem.

Those who need to get caught up will appreciate the following review, with some additional information thrown in for color.

Following his release from prison for stock manipulation, Minkow created the Fraud Discovery Institute (FDI), which, according to a disclaimer on the FDI website, was originally funded by fees collected in return for “various training sessions as well as public speaking engagements.”

FDI’s ostensibly altruistic motivation persisted until spring of 2007. At that time, verbiage was added to the company disclaimer revealing two additional sources of revenue: “short positions” and “third party payers.” This was Minkow’s subtle disclosure of the fact that he would subsequently be paying the bills by means of the profits derived from trading (in this case, short-selling) ahead of FDI’s attacks on public companies, and that these attacks would be financed by third parties who felt Minkow’s motives, one must presume, were aligned with their own.

This evolution in FDI’s incentive structure – from karmic to economic – was a fateful one for Minkow, as it marks the beginning of his march down a path that by all appearances leads to prison. Given its significance, it will be the primary emphasis of the remainder of this piece.

We now know that the change to FDI’s disclaimer was timed in accordance with its publication of an attack on USANA (NASDAQ:USNA), a publicly traded company in whose stock Minkow had previously purchased hundreds of put options, anticipating they would increase in value as the company’s stock fell (that is, buying a put against a company’s stock is just one way to bet that its price is going to fall).

How Minkow came to target USANA is both instructive and well-documented, thanks to the testimony Minkow gave when deposed in the defamation suit USANA brought in response to the attack (though it’s since been equally well-documented that being under oath is by no means a guarantee Minkow will tell the truth).

According to Minkow, one summer day in 2006, entirely without warning, fellow convicted stock manipulator Sam Antar called to announce that he would be sending Minkow $100,000 – no strings attached. Together with $150,000 sent in the months to follow, Antar handed Minkow $250,000 of the nearly $300,000 used to finance the USANA attack.

This payment is interesting for myriad reasons, two of which follow:

First, Minkow currently finds himself in a familiar role as defendant in a defamation suit borne of one of FDI’s more recent attacks – this time against public company Lennar. A source familiar with the lawsuit tells me that in his deposition in the case, Sam Antar testified that the $250,000 he gave Minkow bought Antar access to Minkow’s operation, and that Antar paid it anticipating that he would eventually create a comparable business based on the FDI model. Strikingly, the source also reveals that Antar went out of his way, under oath, to express hatred toward his then-wife Robin Antar, whose personal bankroll was without doubt the actual source of the funds, assuming they did in fact originate anywhere near Sam.

Second, arguing against the possibility that the money was indeed Antar’s is the fact that public records reveal that within months of Antar’s $250,000 gifts, the State of New York issued a warrant for unpaid taxes against him in the amount of $473.15. That tax debt remains unpaid to this day.

In his subsequent divorce from Robin, Sam was unable to cover the cost of his own attorney, and was forced to beg the former Mrs. Antar to pay for both hers and his. Additionally, Antar’s remaining $60,000 SEC-ordered fine (brought about by his involvement in the Crazy Eddie stock scam) appears to remain unpaid. Finally, a 2008 civil judgment ordering Antar to repay a $200,000 debt to real estate financier Morris Cohen has been actively ignored by Antar.

Point being: the $250,000 Antar gave Minkow both financed the USANA attack and bought Antar access to FDI’s operations. What’s less clear is the origin of the money, given the amount of evidence indicating Antar himself has a net worth well below zero.

According to Minkow, he and Antar first agreed to collaborate on the USANA attack in October of 2006.

Interestingly, that’s the same month in which Gary Weiss, an outspoken defender of illegal, manipulative short selling, went out of his way to introduce Antar to the readers of his blog. The occasion was a comment Antar made on a column penned by Herb Greenberg, yet another defender of illegal short selling and the man who would, just days before FDI’s USANA attack, announce to the world that Minkow and Antar had recently joined him for lunch.

From that day on, the blogs operated by Weiss and Antar operated in close synch with one another and both made effusive praise of Minkow a consistent element in their writing.

FDI’s USANA attack was published in February of 2007 but remained largely unnoticed until March 15, when the Wall Street Journal wrote about it.

One month later, a clear anti-USANA PR offensive was launched by FDI.

Within the space of three days, Gary Weiss again made a special effort to introduce his readers to blogging accountant Tracy Coenen, a recent addition to the FDI team. Together, Antar, Weiss and Coenen carefully coordinated their blog subject matter and cross linking, in order to achieve maximum visibility on search engines, all the while heaping thick praise on Minkow’s efforts.

Two more events coincided with this mid-April PR blitz: class action securities attorney Howard Sirota (operating anonymously) became a frequent and rabidly anti-USANA participant in online discussions of the company’s stock. Sirota, as it turns out, is a close friend of Sam Antar’s and has represented the late Anthony Bruan, who is significant in that he contributed $10,000 toward the financing of FDI’s USANA attack.

Clearly, Antar brought both Sirota and Bruan into the picture — Sirota likely with an eye toward leading a shareholder class action suit against USANA, and Bruan hoping to make a quick few bucks shorting the stock.

When his true identity was publicly revealed by me in June of 2007, Sirota defended his several months’ worth of anonymous attacks on USANA and at the same time revealed that he had also bought put options in the stock, anticipating it would fall in response to Minkow’s actions.

In his deposition in the case, Minkow testified that Sam Antar had similarly either sold shares of USANA short or had invested in speculative put options.
Perhaps most significantly, the middle of April 2007 saw a dramatic and sustained surge in delivery failures of USANA shares, which is generally a result of a concerted effort to illegally depress the price of the stock.

In other words, FDI’s mid-April anti-USANA PR blitz appears to have been timed to coincide with a manipulative trading scheme intended to apply significant, artificial downward pressure on USANA’s share price.

Furthermore, this effort involved Sam Antar, Tracy Coenen, Gary Weiss, Howard Sirota, and of course, Barry Minkow.

In the years that have followed, Weiss, Coenen, Antar and Minkow have grown quite close and effusive in their affection for one another. Coenen, who knows nothing about corporate finance, has even joined Weiss in defending illegal, manipulative short selling and attacking companies victimized by the practice.

Antar, for his part, revealed under oath that he was paid $30,000 by Minkow for his support of FDI’s attack on Lennar (though he promises to pay it all back).

Tracy Coenen testified that she was paid $50,000 by FDI for her work on the same project. Gary Weiss has yet to be asked what he got for his trouble, but in light of the phrase he used in the inaugural post on his own blog – “only a fool writes for free” – we can surmise there was something in it for him, too.

To top it all off, Tracy Coenen got Minkow, Antar and Weiss each to pen an enthusiastically positive review of a book related to accounting fraud she published during this period (and while Minkow’s review remains indelibly printed inside the book, Tracy’s had the good sense to remove that one from her website).

We can also surmise that Minkow was beyond pleased with Weiss’s support for FDI’s efforts, given the fact that Minkow tends to cite a post from Weiss’s blog, verbatim and in toto, when explaining away the lawsuit USANA brought in response to FDI’s attack. (As an aside, that particular post by Weiss ends as follows: “Congratulations, Barry, and keep up the good work.”)

Notably, Minkow has been subjected to substantial criticism by the judge overseeing the Lennar suit – in which Minkow is the primary defendant – for, among other things, the destruction of evidence. This includes email communication from Minkow to Antar and Coenen. Most significantly, these same emails have also been deleted by Antar and Coenen – strongly suggesting a conspiracy by these three not only to defraud, but to cover-up.

Thus far, only Minkow has been held to account for these dark deeds, but the gears of justice grind fine yet slow, and the eventual inclusion of — at the very least — Antar and Coenen seems inevitable.

  1. Patrick…

    As always, thanks from a battered Dendreon long term investor, for shining the light. Keep your powerder dry.


    1. Snow, the flakes can fall and nothing happens for a long time. Us activists can protest naked shorting and nothing happens for a long time.

      But then that last, tiny snowflake falls and there is a paradigm shift and an avalanche of change.

      An avalanche is caused by one snow flake.

      Everyone knows right down to my mail man, that the parasites of society that think they run our democracy are about to be peeled away the way you peel off a band aid. The seething anger is about to send the parasitic old men and their secret societies running for the hills.

      Their privately controlled central banking / DTCC cartels will be replaced by something rational where the middle class makes money for a change.

      Wake up and see what is going on.

      Ever notice how quick governments that try to make their stock market and money creation serve the public interest are overturned?

      People are waking up to the scam.

  2. Who died and let these guys become “Forensic Accountants? And is’nt it strange that both Sam Antar and Barry Minkow both went after their “prey” companies using the same pretext of accounting fraud. Sam was doing same with Overstock no? Did he find anything of substance? Are the Feds still investigating OSTK because of such? And now that they are aware of these shennanigans should they not call it off? Also is’nt this the same method that Jim Chanos and Bethany Mclean used to “Out Enron? Also that David Einhorn is going against Allied Waste and other Companies for accounting fraud? If their were only a pattern.

    1. Actually,

      I am a little taken aback by this article. So, Barry is going to cooperate on a federal probe to go after “conspirator A” a San Diego developer named Nicolas Marsh? What about the crooked hedge funds that are the ones truly behind Barry’s scheme with Antar? My guess, is that this tactic of going after the developer (who probably has nothing to do with the short selling scheme) is going to throw the Feds off the trail of the real Shyster’s back in New York. I would not be surprised if Barry has a nice multi million dollar check waiting for him in a numbered account when he gets out of the country club prison. taking one for the team, if you will. Amazing

  3. You guys are missing CNBC going after Berkshires Sokol who is as guilty as sin of insider trading. This is stuff money can’t buy. Whose says money can’t buy coverage (positive).

  4. Hey, You guys are missing CNBC going after Berkshires Sokol who is as guilty as sin of insider trading. This is stuff money can’t buy. Whose says money can’t buy coverage (positive).

  5. Get Tracey on sworn in and the stand. With her pride she will talk herself right into trouble.
    If that won’t work offer her money to blab. Blabbing for cash seems to be the TC MO.

    1. It seems like she is too low on the totem pole to know anything of value. Just one of those pawns you hit really hard to make an example out of.

      Frankly she doesn’t seem intelligent enough to have picked up anything worthwhile to exchange with the Feds.

  6. Minkow fleeced his own flock in skimming the offering plate and bad investment advice…on top of running another ponzi scheme with credit cards and advising which trades to do…’ll all be out soon!!!

  7. Really Judd Bagley ought to be very careful as he’s been harassing critics of OSTK for sometime. He often stalks his critics and tries to defame them by sending them inflammatory e-mails under the guise of being a friend of the recipient. He’s been thrown off Facebook for stalking children and is on the verge of being indicted for his role in Overstock’s accounting fraud and harassment of it’s critics.

    Judd Bagley claims that his most prized possession is a mug from his kid that says “World’s Greatest Dad”. He will soon have to explain to his daughter what he does for a living and why the “World’s Greatest Dad” is behind bars.

    1. The scum are feeling the heat, so they turn to the ad hominem attack, the only argument for the feeble mind.

  8. You guys notice that these comedians/miscreants can always predict and accuse whoever attacks them using similiar methods that they use to “Investigate” others but they never can for tell when each other is going to plead guilty or go to jail. So I will make a prediction right now. Most if not all of the miscreants will be exposed and indicted way before Judd Baagley ever will (on any trumped up charges I might add.)Hows that? Greenoveralls any comments now?

  9. Greenday is Gary Weiss, and he’s not very happy that Judd got him thrown off Wikipedia three times.

  10. Oopsy:

    As of Sept. 30, the SEC was owed $657 million in fines and “disgorgement” — the surrender of ill-gotten gains — but the agency expected that $575 million of that would go uncollected.

  11. The drama kings and queens

    Shallow adults acting like teenagers getting pubic hair.  Sickening. 

    Lie,lie again, instruct the puppets how to cover the lies.
    What a cluster f–k. 
    What happens when the money tit drys up? 

  12. Its unbelievable how manipulative and sneeky these people are! This article really proves it. Thanks and great post!

    Mason Adams|

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