UPDATE 1-Lennar shares drop after deal questioned on website

(Adds Lennar's, Minkow's response; share movement)

By Helen Chernikoff and Doris Frankel

NEW YORK, Jan 9 (Reuters) - Shares of Lennar Corp (LEN.N), the second-largest U.S. homebuilder, plummeted on Friday after a letter questioning a late 1990s transaction involving the company surfaced on the Internet.

The letter to the U.S. Securities and Exchange Commission, the FBI and Internal Revenue Service from California pastor Barry Minkow, who served time in jail for stock fraud, concerned a deal between Lennar and developer Briarwood Capital LLC to build a housing project and golf course in California.

It was posted on Minkow's website, frauddiscovery.net.

Lennar issued a statement saying that Minkow's accusations were "false and inflammatory" and that he was an agent of Nicolas Marsch III, whose civil litigation against Lennar was just dismissed by a California Superior Court judge.

Lennar, whose shares regained some of their losses after the statement, also said it was investigating possible wrongdoing by Marsch and Minkow and that they may have tried to illegally obtain information relating to Marsch's legal proceedings against Lennar.

Minkow responded by telling Reuters that his paying client in the case was Briarwood Capital.

He also said that he and his institute were not short Lennar shares and that they had not bought put options on Lennar.