But in late 2008, after failing to settle with Lennar, Mr. Marsch hired Mr. Minkow to investigate the company.

WSJ: Guilty Plea Ends Tale of Redemption

Mr. Marsch hasn't been charged with a crime, and his attorneys said he hasn't been contacted by federal investigators.

WSJ: Guilty Plea Ends Tale of Redemption

But by mid-2008, Mr. Marsch said in an interview, he was becoming desperate.

WSJ: Guilty Plea Ends Tale of Redemption

"I'm not in the extortion business, " Mr. Marsch said.

WSJ: Guilty Plea Ends Tale of Redemption

According to email messages between Mr. Marsch, Mr. Minkow, and attorneys for both sides, reviewed by The Wall Street Journal, Mr. Marsch's lawyers repeatedly offered to meet with Lennar's lawyers to settle.

WSJ: Guilty Plea Ends Tale of Redemption

Facing steep legal bills, he sent a letter to Lennar's board of directors, accusing the company of "disgraceful" conduct and warning that he was prepared to air "dirty little secrets" about Lennar executives, Mr. Marsch says.

WSJ: Guilty Plea Ends Tale of Redemption

Lennar sued Mr. Marsch for defamation.

WSJ: Guilty Plea Ends Tale of Redemption

"By that time I was so frustrated I'd do just about anything to get these guys to stop calling me names, " Mr. Marsch said in an interview last week, referring to his ongoing legal battle with Lennar which he said frustrated him.

WSJ: Guilty Plea Ends Tale of Redemption

An attorney for Mr. Marsch confirmed that at one point Mr. Marsch did hire Mr. Minkow's firm to obtain information about wrongdoing at the company, but also said that the findings detailed in Mr. Minkow's report were protected speech covered by a litigation privilege, and that Lennar's libel suit was frivolous.

WSJ: Minkow to Plead Guilty in Lennar Insider-Trading Case