Live

Watch CBSN Live

Ex-Felon Turned Pastor Exposes Lying Corporate Executives

minkow.bmpBy the time he was 22, Barry Minkow had defrauded investors and Wall Street of over $200 million, was convicted on 57 counts of fraud, sentenced to 25 years in prison, and required to pay restitution of $26 million.

Today, at 42, Minkow is a church pastor who investigates fraudulent executives via the Fraud Discovery Institute, a company he cofounded. Is Karma bizarre, or what?

Two days ago, Minkow exposed Broadcom Senior Vice President of Global Manufacturing Vahid Manian for allegedly fabricating two degrees from UC Irvine. Manian's degrees were listed in SEC documents, a no-no according to the commission's rules. Yesterday, Broadcom unceremoniously terminated Manian who had been with the company since 1996 and earned over $3 million last year.

The same day, Minkow also blew the whistle on Microsemi CEO James Peterson for essentially the same thing: allegedly lying in SEC docs about two degrees from Brigham Young University. Yesterday, Peterson denied the allegations in a Microsemi press release, claiming that Minkow's background check was on a different James Peterson. Still, the company's stock has declined 38% in two days since the news hit.

Apparently, Minkow isn't doing this for purely karmic reasons or out of the goodness of his heart. He does sometimes short the stock of companies he's investigating. The practice is legal, if not overly opportunistic.

The big question, of course, is should boards terminate any executive who lies in SEC documents, or just the underperforming ones? Does anyone really care that they lied? Is shareholder exposure the only issue, as in the case of Microsemi's stock crashing, or is there something moral or ethical at stake here?

Let me put it another way: If you're on the board of Apple and Minkow comes along and finds that Steve Jobs lied in SEC documents, do you give him a thumbs up or a thumbs down? How about Google's CEO, Eric Schmidt? We already know the answer if it's Yahoo's Jerry Yang.

See my point? Are we morally and ethically flexible these days, depending on an executive's performance? Isn't this a slippery slope? In any case, shouldn't public companies run background checks on officers and directors to avoid this kind of exposure?

(Image of Barry Minkow by Denis Poroy, AP)

View CBS News In