THE HEIST

In early 2007, Lennar Corporation, a Miami-based homebuilder, and its’ key executives were desperate to keep the company afloat during one of the sharpest downturns since the depression. Housing and mortgage markets were in full collapse. Bankruptcy was all but certain.These executives had a dirty little secret. Just as a whistleblower in the Lennar executive suite disclosed, they had been concealing massive debt positions and other undisclosed obligations from the SEC, FBI, shareholders, and financial analysts. Just like Enron. And, like Enron, exposure of these hidden off-balance sheet obligations would have most likely resulted in the collapse of Lennar and a one-way ticket to federal prison for the executives.

This was an existential crisis for the company, and something had to be done. CEO Stuart Miller, COO Jon Jaffe, and CIO Emile Haddad came up with an audacious scheme. The plan they came up with was to swindle CalPERS – America’s largest pension fund – and a loan syndicate organized by a division of Barclays Bank. The swindle involved using “old-school” real estate loan fraud techniques. Inflated appraisals, misleading financial projections, fabricated purchase agreements, and grossly misstating the borrowers’ financial condition. All wrapped up in elaborate meticulously-prepared presentation documents that were completely false.

None of this was out of character for the Lennar executives. According to lawsuits filed by the FDIC and numerous other plaintiffs, loan fraud was a Lennar specialty. And it turned out that choosing CalPERS – and its’ over two million dues-paying members – as the victim – was more than likely not a random choice. The CEO of CalPERS had been running a pay-to-play scheme right under the noses of CalPERS administration. He went to prison for doing that.

But the Lennar executives successfully pulled off this outrageous crime.This is the story of this incredible heist.