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Barry Minkow - Wikipedia, the free encyclopedia
Barry Minkow (born March 17, 1967) is an American religious leader and ex-convict. ... Minkow, Barry, Clean Sweep:The Inside Story of the Zzzz Best Scam...
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Barry Minkow
Unlike most white-collar criminals, Barry Minkow did not receive a slap on the ... Barry is married to Lisa and has twin sons, Robert Irwin Minkow and Dylan Gene ...
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Barry Minkow: Definition from Answers.com
ZZZZ Best A company owned by Barry Minkow in the 1980s. ... Minkow, Barry, Clean Sweep:The Inside Story of the Zzzz Best Scam...
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Barry Minkow: From Con to Christ
So, how do you recognize a fraudulent scheme when you see one? Barry ... Barry Minkow says the answer rests in understanding the psychology of fraud, a ...
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Barry Minkow (born March 17 1967) is an United States religious leader and ex-convict.

As a young teenager Minkow was a fraudulent entrepreneur who managed to present the front of a successful businessman for a number of years during the 1980s. He was convicted of fraud and sentenced to 25 years in prison, but served only seven years. During his time in prison, Minkow became involved in Christian ministry, which continued after his probationary release from prison in April 1995.

Today he is senior pastor of the Community Bible Church in San Diego, California, having renounced his felonious acts. Minkow is recognized as an expert on fraud, and speaks on the subject to university students and the business community in an effort to prevent fraud.

Beginnings of Zzzz Best Minkow was raised in a Jewish family in a modest house in Reseda, Los Angeles, California, a neighborhood in the San Fernando Valley. He learned his business manners from his mother's job as a telemarketer. At the age of 16—while still in high school—he started his own carpet cleaning company, "Zzzz Best", in his parents' garage. In its first four years, the company grew from a home carpet cleaning service with a few employees into a company with 1,400 employees that specialized in "insurance restoration" cleaning. One of the first contracts Zzzz Best received was from the Genovese Mafia family. His frequent television commercials in the Los Angeles market during 1986 and 1987 featured Minkow in a business suit, confidently extolling the superiority of Zzzz Best.

Minkow formed dozens of business contacts. One of his contacts was Tom Padgett of "Interstate Appraisal Services", an insurance claims adjuster who appeared to get large restoration contracts. Minkow was presented as a business success story in magazines and TV shows. Los Angeles, California mayor Tom Bradley (politician) declared a Barry Minkow Day. Minkow gave lectures at business schools, owned a Ferrari Testarossa sportscar, and bought a mansion in Woodland Hills, California.

Behind the scenes, however, Minkow's company was little more than a front to attract investment for a Ponzi scheme. Zzzz Best did not clean anywhere near as many carpets as claimed. It generated a fraudulent paper trail to fool potential investors. Interstate Appraisal Services was formed as a separate company to support this fraud. Minkow raised money by factoring (finance) his accounts receivable for work under contract. He hired reputable accountants and lawyers to boost his image. Upon indictment, he claimed that he had intended to form a legitimate business empire and pay back everything before he could be found out.

Going public In the spring of 1986, Zzzz Best became a public company listed on NASDAQ. Minkow's financial consultant, Mark Morze, felt going public would allow Zzzz Best access to the money it needed to repay its individual investors and leave enough for the company to expand. At the time, Minkow was the youngest person to initial public offering in American financial history. He retained a 52% controlling interest, making him an instant multi-millionaire on paper (his stake was worth over $100 million).

When accountants wanted to inspect Zzzz Best's operations, Minkow borrowed fake offices for a tour of "Interstate Appraisal Services" and used an incomplete building to present a fake restoration job. He used $2 million to complete the building in twenty days.

There were signs of problems, but investors chose to ignore them. Soon after the company went public, the Los Angeles Times reported that it had run up $72,000 in fraudulent credit card charges in 1984 and 1985. Additionally, the company's chief financial officer owned a florist business, and that company was accused of having stolen over $92,000 by charging flowers to customers' credit cards without authorization. Minkow blamed the overcharges on unscrupulous subcontractors and another employee, and paid back most of the victims. Additionally, Zzzz Best's four outside directors had no experience running a publicly-traded company. Short (finance), including the Feshbach brothers, took positions betting that Zzzz Best's stock would fall.

Magazines and TV shows did not bother to check his background. Investigations by the U.S. Securities and Exchange Commission, the FBI, two accounting firms and various individual investigators found nothing. Minkow bribed a security guard to give him access to a newly constructed building in Sacramento, California so that he could present it to his auditors as a wreck that Zzzz Best had recently finished restoring. The accountant who audited the company before it went public didn't visit the insurance restoration sites himself.

Downfall In the spring of 1987, Zzzz Best was about to buy rival carpet cleaning company KeyServe from Sears for $80 million, which would have made Minkow president and chairman of the largest publicly-traded carpet cleaning company in the country. Morze later said that Minkow had plans to buy ServiceMaster's carpet-cleaning business for $800 million. At the time, Zzzz Best' stock was worth $18 (USD) a share on NASDAQ, valuing the company at more than $280 million.

Then, almost as rapidly as it rose, Zzzz Best came unraveled. One of the victims of the fraudulent credit card charges was a homemaker who had been overcharged a few hundred dollars, and had been one of the few people Minkow didn't pay back. She never forgot what happened, and tracked down others who had been bilked by Minkow. The woman's diary became the basis of a Los Angeles Times article that revealed Minkow had been responsible for the fraudulent charges. The story, which ran only days before Minkow was due to close on the KeyServe purchase, caused a small brokerage to short Zzzz Best's stock, sending its price down 28%. To calm nervous investors, Minkow issued a press release touting record profits and revenues--but did so without notifying Ernst & Whinney (now part of Ernst & Young), the firm responsible for auditing the company prior to the KeyServe deal.

The day after this bold press release, Ernst & Whinney discovered that Minkow had written several checks to support the validity of the nonexistent contracts. Many of them had been written to an associate who later informed the firm about the fraud. Minkow denied knowing the individual, but shortly after the checks were discovered, Ernst & Whinney resigned as Zzzz Best's auditor. In addition, members of the press had been researching the company, and communicating with short-sellers who had done their own research. These investigations indicated that most of the company's contracts didn't exist. Another Times story spurred FBI investigation of Minkow's link to the Genovese crime family and white separatist movements.

Minkow resigned as president and chairman on July 4. Three days later, the company's new management sued Minkow and several of his colleagues for embezzlement company funds. Minkow's embezzlement had so depleted the company's funds that it was forced into bankruptcy. A week later, the Los Angeles Police Department raided Minkow's home and Zzzz Best offices and uncovered evidence that Zzzz Best was being used to money laundering from the sale of narcotics.

Conviction and prison Minkow and eleven other Zzzz Best insiders were indicted in 1988#January on 54 counts of securities fraud, embezzlement and other offenses. He was found guilty and sentenced to 25 years in prison. He served just under seven and a half years, most of them at Englewood Federal Prison in Jefferson County, Colorado. During his early prison stay in San Pedro, California before his trial, Minkow became a Christian. He earned Bachelor of Arts and Master of Arts degrees in Church Ministries (with an emphasis on Theology and Christian apologetics) from Liberty University. In 1996 he earned a Master of Divinity degree from Liberty.

Release and religion After Minkow's early release from prison in 1995, he went to work at the Church at Rocky Peak in Chatsworth, California as Director of the Bible Institute and Pastor of Evangelism.

Since 1997 he has served as the senior pastor of San Diego's Community Bible Church.

Minkow also holds an executive position at the Fraud Discovery Institute in San Diego, which he helped found. In this capacity, he posed as a potential investor in order to uncover an investment scheme run by pastor Steve O. Cooper of Nu-Way Christian Ministries Inc. of San Diego. Cooper and his wife had been promising investors returns of 3% a month; Minkow passed the information to authorities, and the NuWayCorp investment firm scheme was shut down by regulators in August 2005. He has similarly investigated Derek Turner's Turning International Ltd. scam in the Bahamas, Rainmaker Managed Living, MX Factors, and others.

Restitution The original judgment on behalf of investors and lenders against Minkow was dismissed in 2002 by U.S. District Court judge Dickran Tevrizian, Minkow's judge at his 1987 sentencing. His probation was also cut short as of the fall of 2002. Currently the former convict's outstanding monetary debt remains with Union Bank of California, with :wikt:principal and interest totalling around $19 million (USD) as of 2004. Minkow pays up to 30% of his $68,500 yearly salary to the bank. Additionally, it has been said that the great majority of his speaker's fees go to pay this debt. Minkow and his wife Lisa live with two adopted Guatemalan children in north San Diego County, California.

References

• Minkow, Barry, Clean Sweep:The Inside Story of the Zzzz Best Scam... One of Wall Street's Biggest Frauds, ISBN 0-7852-7916-4
• Minkow biography at Community Bible Church web site
• Minkow biography at Fraud Discovery Institute web site
• "Insights Reap Redemption For a White-Collar Criminal", Wall Street Journal, (date)
• California regulators shut down pastor's investment firm, Associated Press, 19 August 2005
• Desist and Refrain Order issued to Steve O. Cooper, Sr., Peggy Sue Cooper, Michael E. Stevenson, M.E. Stevenson, Inc., Department of Corrections of the State of California, OAH No. L-2006010092
• 60 Minutes segment on Minkow August 27 2006