It Takes One To Know One

Former Con Artist Goes Undercover To Expose Possible Scam

(CBS)  Since then, Minkow has helped law enforcement expose 11 suspected scams. He’s even gone undercover for the FBI wearing a wire. The biggest case involved Financial Advisory Consultants run by James Lewis, who’s charged with bilking investors out of $300 million in retirement money.

"I took one look at him and it was like a flashback. I could just look in his eyes and know he had 80 balls juggling in the air," says Minkow. "Phone calls were starting to come in. You have that look. And unless you've been a perpetrator about to be exposed, you don't know what that look is. And I could just tell in his eyes."

But despite all the help he’s given to law enforcement, working with Minkow can be a frustrating experience.

"The problem with Barry was that he is a bull in a china shop. He expects us federal investigators to immediately jump on it, and start running with it, and have this thing shut down and prosecuted within a couple weeks. You just can't do that," says France. "First of all, the information that I'm getting is from Barry Minkow. So I have to re-verify everything he has done already."

Does France trust Minkow? "Trust, but verify," says France.

Minkow is much less interested in prosecuting frauds than he is exposing them while they’re still going on. He searches public records, employs private detectives, and goes undercover to perform the kind of due diligence most investors don’t know how to do.

"The problem that I have, the minute that I get the call is here's what happens. I get a probable cause, and all of the sudden in my mind, the clock ticks," says Minkow. "And I know that every day I don't do something, somebody's pouring money into this deal. And they're gonna end up feeling like I made people feel back in the 1980s. And that clock is just ticking in my head. I gotta shut this down."

Minkow adds: "It's a race against time."

While we're researching this story, Minkow received a tip about a Texas couple, Debby and Eric Berry. They control two Dallas-based companies called Genesis Capital Management and Genesis Alliance, which bankroll a non-profit organization called the Nehemiah Fund. It promises a 100 percent matching grant to churches willing to put a minimum of $500,000 into a bank account controlled by a representative of the Berrys.

"Genesis Capital, Genesis Alliance and the Nehemiah Fund is what I believe a financial crime in progress," says Minkow.

What makes him so convinced that it's a crime in progress?

"All the red flags, every one of them," says Minkow. "No accountability from the Berrys. They just are one-man shows. The untenable business model: Normally and regularly people who are in the grant business don't ask for your money first before they double it."

Minkow decided to go undercover and apply for a matching grant. Wearing a hidden camera provided by 60 Minutes, which was concealed in a pair of glasses, and carrying a phony bank statement prepared by the FBI stating his church had in excess of $2 million, he met the Berrys in a Dallas restaurant. One of the first things he asked was how much money was in the fund.

Minkow: What can I say without being misrepresenting to my elder board?

Debby Berry: Tens of millions.

The Berrys told Minkow the money for the matching grants comes from a commercial venture they control called Genesis Capital Management, which they claim pays out a return of 300 percent on investments totaling more than $1 billion.

Eric Berry: Ethanol plants, dairies, apartment complexes, resort hotels…

Minkow: You’re in all that stuff?

Eric Berry: Different stuff, yeah.

Minkow: Amazing.

Minkow searched the public records but was unable to turn up assets or holdings consistent with the Berrys’ claims. He did find outstanding tax liens against the Berrys totaling more than $240,000, and discovered they were operating out of three small rooms in a Dallas office park.

"They give you 3-to-1 your money back if they're in a business with you commercially – 1-to-1 if you're a non-profit," says Minkow. "They claim to have $1.5 billion, and they operate out of 900 square feet where they share a secretary with everybody on the floor? I mean, I have a church and our budget's like $1.8 million. It takes like eight elders and 17 employees to run $1.8 million. How the more $1.5 billion? It's just misrepresentation after misrepresentation."

To get an independent evaluation of the Berrys' operation, 60 Minutes went to Sean Delaney a former assistant attorney general in New York state, and an expert in charity frauds. We gave him Minkow’s report, and transcripts of all the taped conversations.

"It has the indicia of a Ponzi scheme. And yes, it appears to be in its early stages," says Delaney.

"What's your general impression of the work that Barry Minkow has done on this?" asks Kroft.

"For someone who does not have the tools of a law enforcement agency at his disposal, Mr. Minkow does quite thorough work. I was impressed with his report," says Delaney.

"If you had money with the Berrys right now, knowing what you know, would you call up the Berrys and say, 'I want my money back?'" asks Kroft.

"I'd demand my money back in writing," says Delaney. "And I'd hire myself a good lawyer."

The Berrys have not been charged with any crimes. They declined 60 Minutes' requests for an interview, and for copies of their latest financial statements. But since Minkow issued his report, the FBI, the Texas attorney general and the Montana auditor’s office have all begun investigations.

Minkow sees uncovering fraud as an extension of his ministry. But he wants everyone to know it’s not easy.

"One report is wrong, I'm done. And, when you're Barry Minkow and you say something is a fraud, get law enforcement involved, blow the whistle, and you're wrong, it's over. Over! It’s called one and done," says Minkow.

He’s now helped authorities uncover far more fraud than he ever perpetrated. And as a result, Judge Dikran Tevrizian, who originally sentenced Minkow to 25-years, released him from the terms of his probation.

"He has done some good things. He's uncovered several hundreds of million dollars worth of frauds. And I give him credit for that," says Tevrizian, who's heard from federal authorities that Minkow has helped in various investigations. "Not only the federal agencies, local agencies, but the insurance industry in uncovering lots of frauds that have been committed."

And Minkow has not lost his flair for self-promotion. He’s written a book called "Cleaning Up," and his agent is negotiating with several production companies to film his life story.

"What do you want?" asks Kroft. "What are you looking for?"

"I want everybody whose ever failed to know that they can come back from failure," says Minkow. "You can take what you used to use for evil and manipulative reasons and to hurt people, and use those same talents and abilities to help them. And I believe people can change!"