Two corporations doing business in Irvine that are the subjects of a noteworthy/notorious whistleblower's fraud investigations have now apparently drawn the attention of the U.S. Securities and Exchange Commission.
The SEC is reviewing whether James Peterson, CEO of Irvine-based defense industry computer chip maker Microsemi Corp., misled investors when he denied making up his college degrees, reports Bloomberg. The same consumer group that outed Peterson now says it is cluing in the SEC to alleged wrongdoing across the country by Miami-based homebuilder Lennar Corp., which is the city of Irvine's partner in development of the future Great Park at the former El Toro Marine Corps Air Station.
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After the Fraud Discovery Institute Inc. (FDI) challenged
Peterson's claims of having received a bachelor's degree and MBA from
Brigham
Young University in Utah, Microsemi issued a Dec. 3 statement in which
Peterson “categorically”
denied misrepresenting his higher education. But on Thursday, Microsemi
conceded Peterson did not earn those degrees in announcing he would be
retained because of his “great value and strategic vision” and that he
would pay the company $100,000 and forgo another $680,000 in bonuses as
penance. That may not be enough to satisfy the hopefully ballsier,
post-Chris Cox SEC, which is considering whether Peterson's initial
denial misled investors.
The FDI, on behalf of a burned former Lennar business associate, has
been adding to an ever-increasing list of alleged fraud, banking
improprieties, poor workmanship, unusual loans and what the
whistleblower characterizes as a Bernie Madoff-worthy Ponzi scheme. Of
its Top 10 Red Flags for Fraud at Lennar Corporation, the FDI claims four were confirmed in Lennar's own recent SEC filings.
The FDI has come up with the cute little nickname “Lenn-ron” for what it claims to be an Enronesque scandal. That's not the only tie to the Texas company that victimized California electricity ratepayers at the height of the energy dergulation scandal that began this decade. Lennar has hired the lawyer who defended Enron in lawsuits as the FDI has been joined in contemplated legal action against the homebuilder by CAlifornians for Renewable Energy Inc. (CARE), the San Francisco-based consumer group that is currently in a federal appeals court trying to free up $71 billion in refunds for ratepayers stung by Enron
and others. The FDI and CARE are planning to file a civil suit against Lennar under
the federal RICO (Racketeer Influenced and Corrupt Organizations) Act.
“It was not a difficult decision, after reviewing the FDI 'Top 10 Red
Flags for Fraud,' to see that they had clearly established a pattern of
behavior by Lennar over a sustained period of time that impacted and
continues to impact Lennar's victims, the defenseless public all over
the USA,” said Michael Boyd, CARE's president, in a joint statement that included FDI co-founder Barry Minkow expressing his mutual respect for Boyd.
“Michael Boyd has been a man who has dedicated his life to fighting for
the underdog and usually against the well funded, bully enemy,” states Minkow. “If there was ever the perfect opponent
for him to take on, it would be Lennar Corporation who devastates
communities from Hutto, Texas, to Hunters Point in San Francisco.”
Lennar first came under CARE's scrutiny in 2006, when demolition work
for its planned 1,600-home community at Hunters Point, a former U.S.
Naval shipyard in San Francisco, repeatedly exposed a surrounding
low-income African-American community to toxic asbestos dust.
As previously reported here, Lennar is suing Minkow for alleged libel and extortion in spreading “false and scurrilous” claims. To defend himself, Minkow has hired Bay Area attorney Christopher Grell, who since 1987 has handled more than 1,000 asbestos cases involving Mesothelioma, Asbestosis and lung cancer on behalf of consumers and individuals against public and privately held corporations.
“As a consumer advocate, Lennar appeared on my radar last year through
the asbestos debacle where they were fined over $500,000 because of the
sequence of events that occurred at Hunters Point Shipyard,” Grell says in a statement. “My whole
career has been dedicated to protecting the consumer, and whether it is issues in San Francisco dealing with asbestos and
resulting in a fine, or Chinese dry wall in Florida or the expanding
soil of Glendale, Arizona and Hutto Texas, Lennar Corporation appears
to wreak havoc on consumers in a civil-racketeering fashion.”
Grell will follow up on several anonymous tips that have been left via a link on the www.lenn-ron.com
web site, which includes details on Forest Lawn's suit against Lennar for allegedly reneging on an earlier agreement to construct a cemetery near the Great Park.
After Minkow raised questions about Lennar's off-balance-sheet debt and a large personal loan taken out by its chief operating officer, Jonathan Jaffe of Laguna
Beach — at a time the home-builder had “announced it halted sales at Irvine's Central Park West and postponed construction of ATowntwo, both in Orange County” — Lennar's stock price plummeted 20 percent. Shares of Microsemi, which makes chips for the aerospace and defense
industries, have fallen 54 percent since the disclosures about Peterson's non-degrees.
Lennar, corporate America and the business press that serve them have reacted by turning the spotlight back on Minkow, who did a seven-year prison stint after being convicted of stock fraud involving his old carpet company from the 1980s, Zzzz Best. But he has apparently turned his life around, becoming a born-again Christian and
later the senior pastor at Community Bible Church in San Diego. While his FDI work has drawn praise from the FBI and other corporate watchdogs, his critics are quick to point out FDI is a for-profit enterprise.
It'll be interesting to see how Irvine city officials come down on Minkow should his investigation uncover other oddities involving Lennar and the Great Park. In announcing its partnership with FDI, CARE vice president Lynne Brown said, “We want to investigate Lennar and the politicians and government entities that aided and abetted them.”
Incidentally, Minkow made an earlier foray into corporate Irvine, exposing similar college-degree fibs by an executive at uber-slimed chip maker Broadcom Corp. That exec was later let go.
Gee, with all the time he's spending here, maybe Minkow should just buy a house in Irvine. They'll supposedly sell lots out by the Great Park. Someday.
OC Weekly Editor-in-Chief Matt Coker has been engaging, enraging and entertaining readers of newspapers, magazines and websites for decades. He spent the first 13 years of his career in journalism at daily newspapers before “graduating” to OC Weekly in 1995 as the alternative newsweekly’s first calendar editor.