Barry and me
Wednesday, February 3, 2010 at 05:59AM By William Lobdell
How did I, a mainstream journalist, end up launching iBusiness Reporting with former con artist and ex-felon Barry Minkow?
And why did I help develop an online media platform that is uniquely funded by short selling the stock of companies it investigates and concludes have flawed or fraudulent business models?
The story starts in 2007. As a religion writer for the Los Angeles Times, I had written many investigative stories on religious institutions and figures that had fallen off the straight and narrow path, including the Catholic Church (its sex abuse scandal), corrupt televangelists, and many others.
One day, I noticed in a news account that Barry Minkow—the infamous Zzzz best guy—was senior pastor of Bible Community Church of San Diego. Seriously? It sounded like it could be an interesting story, especially if I could uncover a new con game he was running. I pictured fancy cars, mansions, and lavish spending. I pictured wrong.
I found out that Barry—as charismatic as you’d imagine—lives a middle-class life that he shares with his beautiful wife Lisa and two young children. He doesn’t handle the finances at his church and surrounds himself with a strong, independent church board. In his spare time, he operates the Fraud Discovery Institute, a corporation he founded to uncover fraud, which has earned a long string of kudos from law enforcement, investors and consumers.
As we spoke, Barry could tell that his Fraud Discovery Institute work—following paper trails, digging up public documents, talking to sources—intrigued me. He was doing the type of investigative digging that was disappearing from journalism as traditional media business models crumbled.
At one point, he joked that I should work with him. I didn’t see it as a joke; I thought it could be a real possibility. So I stopped my work on The Times’ story, wanting to avoid the appearance of a conflict of interest down the road.
As a young writer, my first editor, gruff and ham-fisted, drilled a little mantra into my head: “If your mother tells you she loves you, Lobdell, you better get a second source.”
After getting to know Barry, I spent the next two years checking his work and the 30 reports his Institute has issued since 2003. Law enforcement has shut down some 24 illegal Ponzi schemes based on evidence Barry collected. I don’t think many journalists could break so many blockbuster stories. Fraud expert Tracy Coenen has estimated that Barry has uncovered $1.8 billion in fraud. That’s a pretty nice public service.
In an era of dwindling oversight from governmental agencies and media, Barry has helped to level the playing field for investors and consumers. That’s not my opinion; it’s a fact.
I found it amusing and frustrating that the companies being investigated by the Fraud Discovery Institute usually attacked Barry’s work by calling him a con artist, ex-felon or worse. They almost never challenged his facts. Why? Because it’s easier to try and dismiss Barry’s reports by attacking his past.
He’s also labeled a short-seller—meaning he profits if a company’s stock goes down—as if that taints the evidence he has collected. Barry discloses he holds short positions in companies he’s investigated and found problematic. It’s the way his Fraud Discovery Institute is funded and is able to launch such ambitious investigations.
It is not the short sellers who are capitalizing on fraud perpetrated against the American public—as the companies investigated by Minkow have claimed—but rather, it’s the executives of these companies who typically “cash in” on stock incentives when a distorted picture of the company is portrayed and share prices rise.
We put our money and our reputations on the line with our stories. I believe that gives us as much credibility than any other media outlet currently in operation.
There are plenty of safeguards in place to make sure our stories are accurate and readers aren’t duped. First, we disclose how we are funded on our website’s home page so the reader can factor for bias. Second, we can be sued for libel if we intentionally or recklessly get something wrong. Third, we vow to promptly and prominently correct any factual errors in our work.
Finally, our business model will fall apart if we get the story wrong; we have to be right to survive.
I’ve always found it ironic that journalism purists refuse to give readers transparency that matters. For instance, wouldn’t it be helpful to know who in White House press corps voted for Barack Obama and who voted for John McCain? Or the environmental views of journalists covering real estate development? Or if the reporter covering abortion is pro-life or pro-choice?
Readers are left in the dark because, reporters and editors say, that information doesn’t color their reporting.
But honestly, does anyone outside of journalism believe that?
Here’s the rest of the Barry and me story. I left The Times in 2008 and spent much of last year publicizing my memoir, “Losing My Religion: How I Lost My Faith Reporting on Religion in America—and Found Unexpected Peace” (HarperCollins). Toward the end of my book tour, I found myself missing investigative journalism and asked the fully vetted Barry if he’d consider launching iBusiness Reporting. He loved the idea, and we started working seriously on the project in the fall.
I am proud to find a way, especially in this post-print journalism era, to do in-depth reporting again. It’s admittedly unorthodox: a journalist and a former con man team up to open an online news operation that’s funded by short selling.
But you know what? It might be just crazy enough to work.
Reader Comments (3)
Bill:
Congratulations. Remember Frank Abagnale? He ended up very rich working for banks on how to avoid check fraud.
Best of luck with this. It is very much needed.
Bob
Hi Bill.
Yes. It is just crazy enough to work.
Best of luck.
Daniel
There are a few omissions in Lobdell's bio which may add to the description as being a mainstream reporter, if a writer who covers religion can be mainstream. There is an article appearing in the Skepticfiles.org's entries by William Lobdell, editor-in-chief of Metropolitan Journal, entitled, "Best Political Erotica". and the following announcement August 4, 2008: "William Lobdell, a veteran investigative reporter/editor in the Orange County wings of the Los Angeles Times media empire until he took a buyout last month, launched LOBDELL'S OC today. Lobdell says his blog will focus on news and observations concerning OC, but his inaugural post provided dark, if noteworthy, comments about the state of print journalism." I suppose one can be an ivestigative reporter and be the Religion editor. Hard to investigate Christ. And I almost forgot a Google search of the Metropolitan Journal results in no "hits." But a mainstream reporter on the Skepticfiles??