Notorious Conman-Turned-Pastor Barry Minkow Sentenced to Five Years in Prison for Bilking Congregation of More Than $3 Million
|U.S. Attorney’s Office April 28, 2014|
SAN DIEGO—Former San Diego Community Bible Church Pastor Barry Minkow, a prolific fraudster whose crimes and claimed rehabilitation landed him on “60 Minutes” and the cover of Fortune Magazine, was sentenced today to five years in prison for embezzling more than $3 million from his own parishioners and then concealing the funds from the Internal Revenue Service.
Minkow, who pleaded guilty in January, has admitted that he tricked a widower into making a $75,000 donation for a hospital in Sudan to honor his wife after she died of cancer. Only there was no hospital, and Minkow pocketed the money. Minkow also admitted, among others things, that he stole $300,000 from a widowed grandmother who is trying to raise her teenage granddaughter.
“It doesn’t get much worse than that in the world of non-violent crime,” said U.S. District Judge Michael Anello in handing down the maximum sentence. The judge ordered that term to be served after Minkow completes the time he has left on his current prison term for another financial crime.
During the sentencing hearing today, the widower, Brett Wright, was one of eight victims who addressed the court, describing their suffering over Minkow’s betrayal. Wright recalled Minkow’s duplicity in comforting his family through his wife’s illness while plotting to steal the honorarium upon her death. “He was so adept at showing care and concern for our situation,” Wright told the court. “But it was all a lie.”
Minkow even sent Wright and his daughter bogus thank you e-mails purportedly from the charity. The message described the gift as worthy of “applause from heaven.” He signed the e-mail, “Love in Christ, Barry.” An e-mail forwarded by Minkow to Wright’s daughter said, “I believe we are honoring your mom’s heart directly helping the sick and needy in Darfur through this hospital construction.”
Minkow pleaded guilty in January to fraud charges, admitting to a litany of improper conduct spanning a decade, including opening unauthorized bank accounts on behalf of the church, forging signatures on the SDCBC checks, using funds drawn on legitimate church accounts for his personal benefit, and charging unauthorized personal expenses on church credit cards. Minkow also confessed to diverting SDCBC member donations for his own benefit and embezzling money intended as church donations.
“Barry Minkow is among the worst kind of predators,” said U.S. Attorney Laura Duffy. “He gained the affection and trust of his victims from the pulpit and then stole not only their money, but their faith in humanity, the clergy, the church, and themselves. This sentence will keep him from exploiting another victim for a while.”
FBI Special Agent in Charge Daphne Hearn commented, “Mr. Minkow violated the faith and trust of his congregation to unjustly enrich himself. The FBI is committed to pursuing those individuals who hide behind a facade of honesty and integrity, only to use their position to unlawfully enrich themselves.”
Erick Martinez, Special Agent in Charge for IRS-Criminal Investigation commented, “Barry Minkow skillfully operated as a predator, using his trusted position as pastor at San Diego Community Bible Church and Fraud Discovery Institute to fraudulently obtain over $3 million for his own benefit. His concealment of his diversion from the IRS, in an attempt to reduce his tax obligations, further displays his uncanny ability to deceitfully use every mechanism to line his own pockets. Today’s sentencing reinforces IRS-Criminal Investigation’s commitment to investigate those who will stop at nothing to perpetuate financial and tax crimes.”
Bilking money from SDCBC is just the latest fraud scheme perpetrated by Minkow. In December 1988, Minkow was convicted of running an elaborate Ponzi scheme related to his ZZZZ Best carpet cleaning enterprise, a NASDAQ-traded entity. In that case, Minkow bilked banks and investors of millions of dollars, for which he was sentenced to 25 years in prison. While incarcerated, Minkow became involved in the Christian ministry, and upon his release in 1995 after having served approximately seven-and-a-half years, he went to work at the Church at Rocky Peak in Chatsworth, California.
In 1997, SDCBC gave the defendant a second chance, a “do-over” of sorts. Soon thereafter, he founded the Fraud Discovery Institute (FDI), a for-profit entity that allegedly was aimed at the detection and prevention of fraudulent business practices. Through the work of FDI, Minkow soon garnered national media attention as a fraud detection expert, and his turn-around story was profiled on 60 Minutes in August 2006.
Yet even as he touted his redemption to gain the trust of parishioners, he began to steal money from the church and congregation. He used the money to found FDI and to fund what he hoped would be a Hollywood blockbuster movie about his life. He insisted that he star in the movie alongside Hollywood actors James Caan and Ving Rhames.
Even while working through FDI to detect fraud, Minkow was engaged in manipulating the stock prices of the companies he was investigating. Most prominently in 2009, Minkow released a report accusing major homebuilder Lennar of massive accounting irregularities and fraud. In the wake of this report, Lennar’s share price was sliced in half—from $11.57 a share to $6.55 a share. According to court records, unbeknownst to the public, Minkow shorted Lennar stock in advance of the issuance of his report. Based on these transactions, Minkow was charged with conspiracy to commit securities fraud, and on March 30, 2009, he pled guilty in Miami to conspiring to manipulate Lennar’s share price, for which he was sentenced to serve five years in prison and to pay $583.5 million in restitution to Lennar. Minkow is currently serving that sentence. The facts of the current case “show a professional con man expertly plying his craft in an effort to line his pockets with millions of dollars in order to fund his own Hollywood movie,” prosecutor Mark Pletcher wrote in a sentencing memo.
“The facts show a predator from the pulpit ravaging those widowers and elderly, among others, that he convinced to trust him most intimately. This crime went far beyond money and greed, ultimately consuming the congregants of SDCBC physically and emotionally.
“In pursuit of the personification of Barry Minkow, nothing was sacrosanct,” Pletcher wrote. “From counseling a grieving family and then stealing the $75,000 honorarium donated in the deceased’s memory, to preying on a single, elderly woman raising her granddaughter, defendant used every deceit imaginable to slowly bleed SDCBS as an institution and its congregants personally of every last dollar.”
A restitution hearing was set for May 19 at 11:30 a.m.
- Barry Minkow
- Age: 48
- Formerly of Poway, California
- Case Number: 14-CR00153
Conspiracy to commit mail fraud, wire fraud, bank fraud and to defraud the United States, in violation of Title 18, United States Code, Section 371
Maximum penalties: Five years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment
- Federal Bureau of Investigation
- IRS Criminal Investigations
Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.