Original subtitles

In this episode of American Greed, Barry Minko starts a business in high school.

If you work hard and you're honest, you'll do fantastic.

And he becomes a sensation on Wall Street. Barry Minko made his first

the time he was 19.

From teenage millionaire, he grows up to become a nationally known fraud

fighter. Even profiled by the likes of 60 Minutes. He searches public records,

employs private detectives, and goes undercover.

But all along, Barry Minko is pocketing millions in his own perfect scam.

We know fraud.

And you're just fraud.

He should know. Because Barry Minko acting as a fraud fighter is like having

thief guard the bank vault.

In the working class town of Reseda, California, just north of Hollywood, a

-year -old boy is about to prove that the American dream is alive and well.

His name is Barry Minko.

Diagnosed as hyperactive, he's skinny and awkward and desperate for

And so in 1982, when Minko is still in high school, he chooses an unlikely

ticket to fame and fortune.

carpet cleaning.

My name's Barry. Can I help you?

He borrows some money to buy a few machines, hire some friends, and working

of his garage, he opens Z -Best Carpet Cleaners.

We are licensed, bonded, and insured, and we guarantee all our work 100 % in

writing. He's savvy enough to know that he needs to do some marketing and

eventually hires Jerry Carr, who has just started her own PR firm.

When I first met Barry in the beginning, When he was this young boy, he wasn't

arrogant. In the very beginning, he was actually not even sure of himself.

Not long after Z -Best opens for business, Minko's story is featured on a

station. Since he got his business license about four months ago, he's

close to $10 ,000. Not bad when you're 16.

If you work hard and you're honest, you'll do fantastic.

But in truth, it's not that easy.

From the moment Barry started his carpet cleaning business, he was always,

always, always in the hole, always having a crisis coming up that he had to

deal with. And he would deal with it, one crisis after another crisis after

another crisis.

And he does that by stealing. He steals and then pawns his grandmother's

jewelry. He steals cashier's checks from a liquor store.

He rips off his insurance company, reporting a burglary that never

And then there is credit card fraud.

Robin Swanson gets a taste of that when she orders a $24 floral arrangement from

a flower shop Minko has just bought with a friend.

I gave them my credit card over the phone, and then a month later I got the

bill, and it said $601 and something, over $600.

And that was on top of the $24 charge for the flowers.

She calls the shop and is told to speak to Barry Minko. I called, and he

answered, and he was charming. You know, and he says, oh, my gosh, I'm so glad

you called because I saw that there was a mistake. I was just getting ready to

call you, and I'll put through a credit right away.

But no credit comes.

And because she trusted Minko, she has delayed reporting the error. Now she is

stuck with the charge.

So I called again.

Well, he was very abrupt this time. He wasn't very nice.

And he said, I can't talk to you right now.

That's because Barry Minko, in a short amount of time, has hit the big time in

many ways.

Pumping steroids and iron, he is no longer a scrawny kid by a lot.

Following the news stories about him, customers and investors come pouring in.

Minko is expanding his business.

The Z -Best vans are everywhere.

When he turns 19, he buys a big house and is driving a $60 ,000 Ferrari.

When I was in 10th grade, my two friends got two brand new trucks. I had a 1972

Buick, which we called the Bomb.

They still got the 83 trucks, and I got an 85 Ferrari.

Well, that's what he tells the public.

The truth is that Minko is in debt up to his ears. He is constantly bringing in

new investors and taking out new loans to make payments on old ones.

And that is called a Ponzi scheme.

It was always a Ponzi scheme for Barry. Even though Barry wouldn't have known

what a Ponzi scheme was if you had asked him at that time. It was a Ponzi

scheme. I'm Barry Minko, president of Z -Best Carbon Cleaning. Minko knows he

needs help.

And so he hires Mark Moores.

Moores is running his own company, matching investors to small businesses.

He wanted as much money as he could get his hands on, and he offered to pay me a

very, very nice commission for raising money for him.

Minko tells Moores that although the public face of Z -Best is the carpet

cleaning business, his real income is from insurance restoration work, fixing

buildings damaged by water or fire.

It has slowly escalated upward from a very modest start to maybe $20 ,000, $30

,000 jobs, to where now he was having a chance to do million -dollar, multi

-million -dollar jobs.

And he says the profit margins are huge.

Investors can expect to get their money back plus 50%. So an investor can go,

gee, I'm putting up a million and a half.

In four months, I get my million and a half back.

And I get $750 ,000 profit.

And they go, this is amazing. It's such a great deal.

Moore starts working for Minco, making sure new investors get their first

exactly as promised.

I would come back to the investor with a cashier's check for all the money he

invested plus all his profit.

And I go, here's your $2 .2 million.

And before I could walk out of the room, they would say, well, wait a minute,

Mark.

Do you have any other jobs that need to be done? Can I reinvest this?

And they do reinvest.

But still, the company is in serious financial trouble, weighed down by

of dollars of debt.

And then, salvation.

A small Wall Street firm offers to host a public offering of the best stuff.

There is just one problem.

Once a decision had been made to take the company public, Barry called me into

his office and said, I have a confession to make to you.

I said, what is it? He goes, one of the jobs that you've been trying so hard to

raise money for. He goes, one of them was a fake.

And I was, you know, stunned.

Mors later learned that it's not just one fake job.

Minko has been faking contracts for every single restoration job.

There has never been a real job.

Next on American Greed. Last week, I raised $15 million from the public.

How to con Wall Street before turning 21.

Terrific Tommy's here. We're going to clean your carpets. In the mid -1980s in

Los Angeles, a local carpet company, Z -Best, is taking its pitch to

I'm Bane. I'm Switch.

You want to know about our two -for -one offer?

The ads argue that Z -Best is different from others.

It's time you called us. I'm Barry Minko, president of Z -Best Carpet

Because it is honest.

The company is doing so well, Barry Minko is preparing for a public stock

offering. He is the picture of success.

You know, he was driving his Ferrari, I was driving my Porsche Turbo, and we

just looked like a couple of zany, yuppie bachelors. What was really

is we were chewing our fingernails down to our elbows.

praying that the public offering would come in and come in properly, and then

that that would solve all of our problems.

The problems are loans and lies.

For years, Minko has been telling investors and banks that in addition to

carpet cleaning business, he has contracts worth millions of dollars to

buildings damaged by water and fire.

But he does not have real contracts.

He has forged documents that look like lucrative contracts with a phony company

he created.

He uses the fake contracts to attract investors and get loans. And he always

needs new money to pay off old debts.

But now, Minko and Moores tell themselves that will change after the

offering.

There'll be more than enough money between the offering and the...

credit lines that we were assured we would get once the offering was done to

off everybody who was, to use Ponzi scheme words, upside down. We could pay

everybody and then just stick to the straight and narrow.

But it won't be easy.

Minkow first needs to maneuver his fraud through the financial scrutiny of

accountants on Wall Street.

No problem.

Mark Moores has it covered.

And so I started creating documents by the...

dozens, over time it was in the thousands, making those restoration jobs

like a complete portfolio.

Moores knows little about the contracts he needs to create, and he knows now

that his mistakes are obvious.

Here's the paperwork for a job in a 16 -story building in Sacramento.

But my favorite on this whole sheet has to do with this handwriting here. I was

asked by one of the auditors how many square yards of carpet were in this 16

18 -story building.

And I announced that there were 379 ,000 square yards of carpet.

If you do the math, that's about 3 .5 million square feet of carpet. And it

would take a building about 80 or 90 stories high to have all of that.

But no one catches the errors.

The phony paperwork makes it through.

The auditors have just one request.

They want to personally see that job in Sacramento.

On a hope and a prayer, Morris heads to Sacramento in search of a 16 -story

building to match the job on the phony contract.

We did find an 18 -story building that was virtually brand new.

And I thought, look, 16, 18 ago, we're close enough.

He tells the leasing agent he wants to rent a few floors, but he needs his

of directors to check out the space immediately, this Sunday, before he can

the lease.

He then slips the security guard some cash to pretend he recognizes Morris

he returns.

So sure enough, the next day when we came in, and he said, Hi, Mr. Morris,

to see you again, sir. How you doing? Guys did great work.

Just that silly song and dance.

really gave a lot of satisfaction to the people doing the due diligence.

It works.

In December, the public offering of Z -Best sells out, bringing in $15 million

in capital.

As the talk soars, Barry Minko is not only worth $100 million, he is now the

wonder boy of Wall Street. Barry Minko made his first million by the time he

19. Now his company is one of the hottest stocks on Wall Street.

At the time, he is the youngest person in American financial history to take a

company through a public stock offering. I raised $15 million from the public.

The city of Los Angeles declares a Barry Minko Day.

I remember being on that stage presenting Barry, and there was everyone

Everyone from USA Today to CNN, everybody.

He was the story, I think. I think he was the story in those days.

A few months later, Minkow is in negotiations to buy a large national

cleaning business.

And that unsophisticated boy in the garage is long gone.

We're on our way to being the General Motors of the carpet cleaning industry.

But Barry Minkow is about to meet his match.

In all his success, he has forgotten about Robin Swanson, which he has not

forgotten about him.

The wonder boy of Wall Street still owes her $600.

She and her husband, Bill, take their case to small claims court, and then

heads to Minkow's office to serve the papers.

A few guys in the parking lot approach him. He tells them he is looking for

Barry Minkow.

And this one guy says, well, I'm Minkow.

Do you know who I am? And I said, no.

He said, well, I'm Barry Menkau. And I said, well, good. Here's some papers for

you to show up in court. You owe me $600.

And he took the papers and he ripped them up, threw them on the ground, and

said, that's just chump change, punk. And one of the guys pulled me around and

took a swipe at me with his open hand and knocked my brand new sunglasses

off. And Barry Menkau stepped on them and crushed them.

And for Robin Swanson, Minko's rising celebrity status becomes even more

infuriating. It just made me mad.

So I called the L .A. Times and I said, you know, this guy's a crook and I can

prove it.

Days before his big deal is finalized, her story makes newspaper headlines.

Behind the whiz kid is a trail of false credit card billings.

It turns out Robin Swanson is not alone.

Minkow has stolen as much as $72 ,000 in false credit card charges.

An assistant U .S. attorney decides to look into his business.

Eight months later, he and his partners are indicted for conspiracy to commit

fraud.

I remember laying in bed and my son's dad coming up with the newspaper

and saying to me, you always wanted Barry on the front of the L .A. Times.

And the Daily News and the Herald Examiner.

Well, you just got your wish. The only problem is he's in handcuffs.

Mark Morris turned himself in immediately.

The first thing I can say to you is it was a tremendous set of fear what the

future is going to hold. And I'm going to be going to jail.

And relief.

Incredible, incredible relief.

This huge weight off my shoulders.

Moores pleads guilty to securities and bank fraud.

He is sentenced to eight years in federal prison.

And Minko?

He's interviewed on 60 Minutes and denies it all. He says that he was the

who was duped. The charges against him are all false.

No, I thought I knew what was going on, that everything was perfect.

A jury does not believe him.

He is convicted on 57 counts and sentenced to 25 years.

He thought the whole process was a joke and that it was a game for Barry. He was

just an arrogant young man that had no responsibility and a broken set of

values.

Next on American Greed, from prisoner to fraud fighter. Welcome to Fraud Biz,

making the American economy safe again for the American public.

But can Barry Minko sell himself as a changed man?

It is now 1995.

Barry Minkow has been granted an early release from federal prison for good

behavior. He is leaving the halfway house where he served his final months,

declaring his remorse.

Actions have consequences. There's no lasting meaning, contentment, or peace

a life that puts money above people.

Wait. What happened to the Barry Minkow we used to know?

People can change because God changes people.

Oh, he found God in prison.

He earns a degree from Jerry Falwell's Liberty University.

And soon he becomes a pastor at the San Diego Community Bible Church.

Father, I'm a sinner and I need a Savior.

Debbie Roller is a member.

As churchgoers, we believe you go to church for grace.

and Barry was really great about promoting grace in the church. And so he

given grace, and he taught us how to give grace.

Minko is so effective as a minister, the church grows ten times under his

leadership. I pray for the encouragement of grace, just like you showed it to me

when I didn't deserve it.

From the start.

He tells the congregation the details of his past.

We said we were doing these huge restoration contracts that we never did,

created 20 ,000 fraudulent documents with whiteout and copy machines.

And he is forgiven.

That was the old him, you know. So we look at him in a different light because

as churchgoers, that's what we're asked to do is to look at people in God's

eyes. At one point, a member of the church asks Minko to look into an

scheme. When Minko finds evidence of fraud that results in an indictment, he

discovers that a former fraudster can become a fraud fighter.

He starts a radio show.

This is Barry Minko. You're listening to Fraud Biz.

And a series of videos.

And he has a business, the Fraud Discovery Institute, that exposes

-dollar scams.

And he sometimes works as a source for the FBI. It was the Ponzi scheme and the

mutual fund that didn't exist.

As a result of his good deeds, Minkow is released from the requirements of his

restitution.

And once again, the news media is captivated by the story of Barry Minkow.

By 2005, he is back on 60 Minutes.

He searches public records, employs private detectives, and goes undercover.

In his media appearances, Minko says he is doing this work because he cares

deeply about investors losing money and stopping scams.

Every day I don't do something, somebody's pouring money into this deal.

But in time, Minko adds another motive, to make some money for Barry Minko.

By 2007, his Fraud Discovery Institute is taking on publicly traded companies,

like USANA Health Services.

He creates websites and videos to spread his allegations of fraud, even

interviewing victims.

Are you thinking some things to describe your experience with USANA?

Disappointment? Oh, yes.

So much disappointment.

Minko looks concerned, but he is also looking to make a profit.

What most people don't know is that before he releases his report, Minko

stock in USANA.

That means he is betting that the stock price will go down when the news media

reports his allegations.

Because of the persona that he cultivated, he had the ability to impact

views of a company.

So when Barry Minkow issued a public statement, he was often able to

use some very large microphones to get that information out. And those large

microphones allowed him to have a very real market impact.

Following Minko's report, USANA's stock price does go down. And because he has a

short position in USANA stock, the lower the stock falls, the more money he

makes. But he doesn't quit there.

His next move is to meet with the company executives and offer a

a price.

That's particularly telling to me because it identifies how strongly he

those fraud allegations.

truly believe those statements to be true, you would not be inclined to

those statements in exchange for compensation.

They lost money because they were doomed to fail and never knew it up front.

But reportedly, some companies do pay hundreds of thousands of dollars just to

get Barry Minko to stop talking.

Next on American Greed, Minko takes on a Fortune 500 company and levels very

serious allegations.

We know fraud.

And you're just fraud.

They don't know that clear across the country in California, another kind of

trouble is brewing.

It is instigated by this man, real estate developer Nicholas Marsh.

For nine years, he and Lennar develop a luxury home community called The

Bridges. Marsh has paid tens of millions of dollars on the project, but he

claims he is owed more, hundreds of millions of dollars more.

Stuart Miller is the CEO of Lennar, a company founded by his father.

By 2008, we are finding that we're being sued by Nick Marsh.

We can't quite put our finger on where this is coming from, except for the fact

that the economy is spiraling downward and Nick Marsh has run out of money.

His lawsuits are moving slowly.

And so in July, Marsh takes matters into his own hands.

He sends a four -page letter to Lenar's board, charging the company with

malfeasance, what he calls dirty little secrets.

And what is interesting is he says in the letter to our directors that unless,

unless the company resolves these matters to his satisfaction.

Very nebulous standard. To his satisfaction, he's going to reveal these

little secrets to the public and to the authorities.

This is a clear threat.

Lenar responds by suing Marsh for extortion. And that leads Marsh to bring

the biggest gun he can find,

Barry Minko.

In December, Minco and Marsh entered into an agreement.

Minco promises to launch an all -out expose on Lenar that will have a

devastating impact on their stock.

The idea was that they would publish false allegations against Lenar and

Lenar's business.

And the stock would crater and Lenar would submit to Marsh's demands.

In early December, Mark approved the plan, and in just one month's time,

allegedly exhaustive investigation of Lenar is good to go.

He contacts agents he knows at the FBI, and then he contacts reporters who trust

him, and also Wall Street analysts who cover Lenar's stock.

Barry used those relationships to promise a new story that would be coming

by 60 Minutes, an investigative news program, that would reveal that these

allegations were both under investigation and truthful.

Minko launches his attack on January 9th. He has a 30 -page report posted on

website named LenRon .com, equating Lenar to the Enron scandal.

And he posts a video on YouTube.

Hi, I'm Barry Minko, the co -founder of the Fraud Discovery Institute, and I'm

here to introduce our top ten red flags for fraud at Lenar Corporation.

He gets the immediate reaction he is looking for.

We've got to go to Diana Holick right now with breaking news from Washington,

Diana. Well, that's right, Mark. Lenar stock is moving lower today on an

Internet report from Barry Minko and the Fraud Discovery Institute. I remember

it distinctly.

Woke up on January 9th of 2009 and my daily routine, get ready for

work, I'm watching CNBC.

And part of the news is that there is unusual movement in Lenar stock

attributable to a press release by Barry Minkow. This catches

me completely by surprise.

With Lenar Corporation, we are forced.

to do what the victims may not have the money left to do or the will, and that

is stand up to them and say, we know fraud, and you're just fraud.

Almost immediately, Miller learns that Minkow is acting as a spokesperson for

Nicholas Marsh, and he knows that this is not about money anymore.

In terms of reputation, they say it takes a lifetime to build a reputation

minute to lose one, and this was one of those minutes where...

The rug of reputation was pulled out from under us. It was incumbent on us to

act in a way to preserve all that we'd built over all those years.

Homebuilder Lennar taking a big hit today on allegations of fraud.

The allegations were absurd.

That Lennar is a financial crime in progress, that it operates a Ponzi

I mean, Lennar has been in business for over half a century, one of the leading

home builders in the nation, a public company since the 70s.

So it made no sense.

The allegations that were made by Barry Minkow were in many instances flat out

false or misleading.

For instance.

An allegation that the Federal Bureau of Investigation was investigating that

Lennar was a Ponzi scheme may in fact have been true.

However, he omitted to mention the fact that the reason that the FBI was

investigating those allegations was because he himself had made those

allegations. And many of the allegations are a kind of wild conjecture.

Corporate fraud comes from an environment of fraud at the highest

We found a very interesting transaction with Mr. Jaffe, the chief operating

officer of Lenar Corporation.

One of the red flags that Barry put out there was that supposedly I had

improperly obtained a loan for my personal home.

And what we found, and that is contained in our report, is that Mr. Jaffe got a

loan from a Mr. Venere, and Mr. Venere is connected with Lenar and SunCal in

Kern County.

So he made up this story that makes no sense at all.

that somehow money went from A to B and B to C and then back to me through a

back door.

By late in the afternoon, there can be no doubt that Minko's plot is working.

Trading volume in Lennar stock options is more than 30 times what it is on a

normal day.

Finally, Miller tries to grab the microphone away from Barry Minko and

finger at Nicholas Marsh.

We have subsequently filed litigation in Florida against this litigant who has

been trying to extort money from the company.

But he cannot stop the slide.

In that first day, in stock price alone, I believe that what was lost was

approximately $350 million of shareholder value.

These are innocent people who lost money by being invested in Lenar Corporation.

And that was just the first day.

Minko keeps the blast up all week.

If you look at our stock activity through the next days, I think all told,

somewhere around a half a billion dollars of stock value was lost as a

response to the allegations made.

And what's in it for Barry Minko?

According to his agreement with Nicholas Marsh, he stands to take in as much as

$2 million.

And Minko needs that money to fund the biggest act of self -promotion one can

imagine. Up next, Minko goes Hollywood.

Your stock is worth over $100 million.

I'm done with you!

You don't have God.

I'll buy God.

Hear more stories about Z -Best Carpet Cleaners Fraud at cnbcprime .com slash

americangreed.

Feeling greedy?

Want more than your share of behind -the -scenes dirt? Follow us at

AmericanGreedTV on Twitter.

We'll be right back.

In 1987, Barry Minko makes a short video about his success as a carpet cleaner.

Now,

more than 25 years later, he is trying again to produce his own story.

This time, he is hoping for a blockbuster.

You are hereby ordered to serve a term of 25 years in jail.

It's a full -blown Hollywood production starring famous actors like James Caan

and also starring Barry Minko.

It will cost several million dollars, which may be a reason in 2009 Minko

Lenar Corporation to pay him to retract his allegations against the company.

But he is in for a fight.

On January 9th, 2009, when he attacked our reputation, we were never interested

in settling with him for one dollar.

It just wasn't going to happen.

But Minko and his partner, Nicholas Marsh, try.

At one point, Lennar's attorney, Dan Petruccelli, gets a call from Nick

attorney and suggests a meeting with Minko.

You have this perfunctory meeting.

where you talk about the accusations, he realizes the error of his ways, and he

then agrees to issue a retraction.

And when he issues the retraction, the stock will go back up. I said, I see.

And what are we supposed to do in return?

Well, you're supposed to give us money and Lennar stock.

Lennar stock?

Really?

Accepting Lenar stock in exchange for a retraction runs directly contrary to the

idea that Barry believed that Lenar was a Ponzi scheme. No one would accept

stock in a corporation if they truly believed that it was a fraud.

Petrocelli turns down the offer, and Minkow tries to negotiate for himself.

Sometime in April, Barry Minkow reached out to us to...

talk to us and have a discussion about settling in some way or maybe recasting

what he was saying towards something more truthful.

It is Easter weekend.

Pastor Minko is in Las Vegas shooting his movie.

Lennar Chief Operating Officer John Jaffe and Lennar's attorney Dan

meet him in his hotel room on Good Friday to show him box loads of

that prove his allegations wrong.

His response was, oh, wow, I didn't know that. Look at that.

Marsh never told me that. I didn't realize that. After doing that, we sit

with him and he says, well, you know what?

I'm ready to resolve this. I'm ready to make a retraction.

All it's going to take is $1 million.

That's all. Just give me $1 million.

The next day, he gets an email from Minkow.

He says he's sending it to me, not as the Barry Minkow that's attacking us,

as the Barry Minkow who's a pastor. And he apologizes for the personal.

And he's caused my family. The next day, Easter Sunday, Dan Petruccelli gets a

phone call from Barry Minkow's attorney saying, you know what?

You won't give us a million. How about 250?

We refer to that as the Easter discount.

Rejected again.

Minkow and Marsh get a new idea. As headlines across the country announce

expansion of a U .S. government probe into executives accused of dodging taxes

by putting money into offshore accounts.

He launched a release that suggested that myself and John Jaffe, our chief

operating officer, had offshore bank accounts.

He had no factual background, no factual basis for making the allegation. And

John Jaffe and myself never had an offshore bank account of any sort

in our lives.

But guess who does have secret bank accounts?

That's right.

It's Barry Minko.

Right here at his own church, the nationally renowned fraud fighter has

to his old tricks.

Forging documents so that he can embezzle millions of dollars from people

trust him implicitly.

Mr. Minko fraudulently opened bank accounts in the name of the church

anyone at the church knowing about it.

In all, he opens 12 secret accounts, allowing Minko to take any check made

available to the church and use that money for himself.

In some cases, Mr.

Minko would essentially steal the checks right from the offering plate.

And so members of his church think they are supporting the services the church

provides, but really funding Barry Minko's movie.

The money got siphoned off in cash.

To pay for the set, to pay for the actors, to pay for, you know, any number

these various things it takes to fund, by yourself, a Hollywood movie.

In one poignant exchange, Minko convinced his grieving husband to make a

,000 donation to a charity in Sudan in memory of his late husband. But the

never makes it to Africa.

Barry Minko steals it.

It shows he actually has no compassion for anyone.

It shows that he would steal money absolutely from anyone in any situation

mind. Next on American Read, watch Barry Minko self -destruct.

In any fraud case, you look for the lies and you follow the money.

In the case of Lenar Corporation.

For months, press releases from Barry Minko's Fraud Discovery Institute blast

the Lenar Corporation.

He claims they build with illegal Chinese drywall. They don't pay their

Lenar answers every charge, offering detailed reports on why the allegations

untrue. But Minko presses on. In March 2009, he checks in with the FBI agents

who received his report.

He reached out to those agents to try to confirm that there was, in fact, an

investigation instigated by his report.

The FBI confirms its investigation, and Minkow acknowledges that the information

they give him is non -public and that to trade Lennar's stock with that

information would be illegal.

It would be insider trading.

And then, three days later, Minkow buys 150 contracts for options on Lennar

stock, betting the stock price will fall.

He tried to conceal his trades by using other people to open accounts and to

engage in trades.

But it was, in its end, Barry's... egotism and his desire to control

the scheme that forced him to inject himself into the transactions and expose

his direct participation in those trades.

What Minko fails to remember is that stockbrokers record phone conversations

with their client and his calls on the deals are recorded.

He also didn't count on the tenacity of the FBI agents looking into his story.

In any fraud case, you look for the lies and you follow the money. And it's

following the money that led us to the trading accounts.

There may have been others, but the trade that is found from March 2009 is

enough to charge Minko with conspiracy to commit securities fraud.

In 2011, he was called in for a debriefing session with the Fed.

I believe the turning point.

During that session is one when we revealed that there was a recording of

his having executed trades.

And at that point, they asked for a recess. And it was after that that he

to plead guilty.

Minkow comes clean entirely, saying his allegations against Lennar and its

executives are false.

Nothing more than an attempt to extort money out of the company.

We didn't see it coming. We didn't know it was happening. And moment in time,

the entire circumstance had turned around.

From a years -long effort of listening to accusations,

diligencing them, and then responding, it was now over. It was game over.

Minko is sentenced to five years in prison and ordered to pay Lenar

$580 million in restitution.

Nicholas Marsh is not charged criminally. His tactic against Lenar

bundle.

Remember the original lawsuit he brought, saying Lenar him millions?

Every one of Marsh's accusations was found to be invalid.

And in fact, the...

The court determined that Marsh owed Lenar lots of money.

And when Lenar's extortion case against Marsh and Minkow goes to trial, a jury

awards compensatory and punitive damage against Marsh in the stunning amount of

$1 billion.

Many ask, did the system work?

And I have to give kind of a two -sided answer to that and say, on the one

hand, Barry Minkow's in jail.

Nick Marsh has a billion -dollar judgment against him.

And that would seem like vindication.

But the road to get there is very bumpy and very, very expensive.

In San Diego, at the Community Bible Church, as members learn that Minko was

lying in his stunt against Lenar, they look into the church's coffers.

That's when all the questions and all the stories.

started to come out. You know, I gave $75 ,000 for this. I gave this much

and it's not in my records, and it's not in their records.

For one of Minko's congregants, who prefers not to be identified, the news

Minko's wrongdoing is particularly devastating.

She has loaned him her life savings.

I feel terrible. I feel embarrassed.

It's stupid of me to allow him to do this to me.

Over many months, Minko positions himself well in her life, counseling her

daughters in times of need.

I thought, helping my children, and he was my pastor.

And as I always said, if you can't trust your pastor, who can you trust?

And then he moves in with a need of his own.

He came to me to borrow, I think first it was $150 ,000.

He said he had stocks, but he was not able to get them out at the time, so he

needed cash.

And this $150 ,000 was to go towards finishing the movie.

A month later, he's back.

He wants $100 ,000, another loan.

I really truly believed that I would get my money back. I mean, I'm not a

gambling person. Some people say, well, you were investing.

I said, no, it was a loan.

But now Minko is headed to jail, and he knows she will never see the money he

took from her.

I might lose my house. I was living pretty comfortably before he came along,

he's devastated my financial security.

When the final accounting is done, it's found that Minko embezzled $3 million

from the church over a 10 -year period.

He pleads guilty to bank, wire, and mail fraud.

At Minko's sentencing hearing, victims come forward to make sure the judge

understands the damage he has done.

He caused such a dissension.

Some people walked away from God, from church, family.

Barry Minko is sentenced to five years for the Lenar fraud, along with another

five years for the crime against his church.

In his letter to the court, Minko writes that his greed was not for money, but

for attention.

Perhaps it goes back to those early interviews in the garage in Reseda where

16 -year -old boy discovers the thrill of being in the spotlight.

And for the next 30 years, he was director and star of The Barry Minko

long -running series of dirty deeds.

Next, two -timing temptress horses around with city money. The total loss,

than $53 million.

Taking first place in U .S. fraud history.

American Greed, Scams, Scoundrels, and Suckers. Next, CNBC.

The fastest -growing cable network in primetime.

CNBC.