Lennar denies making improper loan to executive

BOSTON (Reuters) - No. 2 U.S. homebuilder Lennar Corp said on Monday that its chief operating officer had not received a mortgage on his home from the company and denied treating its joint ventures like a "Ponzi scheme."

The statement came in response to accusations made last week by a man who had served time in prison for stock fraud but now investigates fraud. The accusations were made in a letter to the U.S. Securities and Exchange Commission.

Those charges pounded the Miami-based company's shares down 20 percent on Friday. The shares rose 10 cents to $9.25 on the New York Stock Exchange on Monday.

"While it is not Lennar's practice to respond to false and scurrilous allegations in the context of litigation, Lennar has a responsibility to its shareholders and the public to respond to their legitimate requires for information," the company said in a statement. "We intend to take appropriate action against the responsible parties."

Lennar denied the allegation by the Barry Minkow, a California pastor who now works for The Fraud Discovery Institute, that the builder had used its joint ventures as a "Ponzi scheme," using older ventures to fund new ones.

Ponzi schemes take their name from Charles Ponzi, who defrauded Boston-area investors of millions of dollars in such a phony investment scheme in the early 20th century. Disgraced financier Bernard Madoff admitted to colleagues late last month that he had been running such a scheme.

Minkow made his allegations on this Web site www.frauddiscovery.net.

Lennar has claimed that Minkow is working with a man who brought an unsuccessful civil suit against the company in California; Minkow has said he is working with real estate developer Briarwood Capital.

Like most U.S. homebuilders -- which are two years into a sharp downturn -- Lennar's shares are well off their 2005 highs. Over the past 12 months, they have lost 34 percent of their value, a steeper decline than the Dow Jones U.S. home construction index 's 10.6 percent decline.

(Reporting by Scott Malone, editing by Dave Zimmerman)