Barry Jay Minkow (born March 22, 1966) is a former American businessman, a priest, and a convicted criminal. While still in high school, he founded ZZZZ Best (pronounced "Zee Best"), which appeared to be a very successful carpet cleaning and restoration company. However, it is actually a front to attract investment for the large Ponzi scheme. It collapsed in 1987, harming investors and lenders $ 100 million - one of the biggest investment scams ever committed by one person, as well as one of the largest accounting frauds in history. This scheme is often used as a case study of accounting fraud.
After being released from prison, Minkow became a pastor and investigator of fraud in San Diego, and talked to the school about ethics. It all ended in 2011, when he claimed to help deliberately lower Lennar's homebuilder's share price and was ordered back to jail for five years. Three years later he claimed to cheat his own church and was sentenced to five years in prison. As a result of his crimes, he has to pay a total $ 612 million compensation - the amount he is likely to spend the rest of his life.
Video Barry Minkow
Start of ZZZZ Best
Minkow was born in Inglewood, California to a Jewish family, and grew up in the Los Angeles Reseda area. When he was nine, his mother gave him a job as a telemarketer with a carpet cleaning business where he worked. At age 15, while a second-year student at Cleveland High School, Minkow started ZZZZ Best in his parents' garage with three employees and four phones. In the early days, he had to rely on friends to drive him to work because he did not have a driver's license.
At first, Minkow struggled to meet the basic costs. Two banks close their business accounts because California law does not allow minors to sign binding contracts, including checks. He is also plagued by customer complaints and payment demands from suppliers. Sometimes, he finds it difficult even to meet his salary. Faced with a lack of operating capital, he finances his business through examining kiting, stealing and selling his grandmother's jewelry, doing staging at his office, and charging fake credit card fees.
Soon after, Minkow branched into the "insurance recovery business". With the help of Tom Padgett, an insurance claim adjuster, Minkow faked many documents claiming that ZZZZ Best was involved in several restoration projects for the Padgett company. Padgett and Minkow formed a fake company, Interstate Appraisal Services, which verified the details of this restoration to the Minkow bankers. Flush with loans from these banks, Minkow expands ZZZZ Best in Southern California.
While most Ponzi schemes are based on non-existent businesses, the ZZZZ Best carpet cleaning division is real and wins high marks for its quality. However, the insurance recovery division, which ultimately accounts for 86% of the company's revenue, is false. Minkow raised money by factoring his receivables for contracted work, as well as floating funds through several banks under a complex checking scheme.
After graduating from high school in 1985, Minkow devoted all his time to ZZZZ Best. In short, he got a loan from Jack Catain, a Los Angeles businessman who has links to organized crime. Catain later sued Minkow for not paying his share of the company's profits, but Minkow claimed Catain was a loan shark. The lawsuit was still in court at the time of Catain's death in 1987. Other organized crime figures emerged as Minkow's advisers, which scared the employees. For example, the main shareholder, Maurice Rind, has been convicted of securities fraud in 1976. Minkow is also a business partner with Robert Viggiano, a convicted and costly jeweler.
Maps Barry Minkow
Become public
At the suggestion of a friend, Minkow took a public company in January 1986, gathering a place on NASDAQ. Accountants who audit the company before going public do not visit the insurance recovery site itself. If he does, he will find that they are mailboxes located throughout the San Fernando Valley. Minkow retains 53 percent of the flower controller, making him an instant millionaire on paper. Going to the public seems to offer him a way to cover his fraudulent activities. Under securities laws at the time, he had to retain his private stock for two years. He planned to sell one million shares to the public in January 1988, believing this would give him enough money to pay everyone and is completely legitimate.
To get more financing, Minkow was persuaded to raise $ 15 million in capital through ZZZZ Best's initial public offering. When the accountant wanted to check the company's operations, Minkow borrowed a fake office for the "Interstate Appraisal Services" tour and used an incomplete building to present fake restoration work. Mark Morze, ZZZZ Best's financial consultant, tricked accountants who were sent to do the necessary due diligence by falsifying thousands of documents. Public offerings closed in December and Minkow became the youngest person to lead a company through an IPO in American financial history.
Minkow launches a massive television advertising campaign depicting ZZZZ Best as a carpet cleaner that can be trusted by Southern California. He owns Ferrari and BMW, and buys a house in the wealthy Woodland Valley community. He has ambitions to make the company a "General Motors carpet cleaning industry."
The company's Chief Financial Officer, Charles Arrington, is accused of spending $ 91,000 on fraud charges against his florist business customers. When the Feshbach brothers, a pair of short sellers, learned that Minkow was still standing behind Arrington, they investigated further and found ZZZZ Best's $ 7 million contract to clean the carpet in Sacramento is probably a fraud. The Feshbachs and other short-sellers start taking positions, anticipating that the company's shares will fall. In addition, none of the four directors outside the company has experience running a public company.
Downfall
In February 1987, ZZZZ Best traded at $ 18 per share on NASDAQ, valuing the company at $ 280 million. The company now has 1,030 employees with offices in California, Arizona and Nevada. Pink Minkow worth $ 100 million. He seems to be the ultimate American success story.
However, the company still faces a severe shortage of cash flow from paying investors to non-existent restoration projects. Minkow needed another cash injection and thought he had it when he heard that KeyServ, the official carpet cleaner for Sears, was sold by his British parents. Drexel Burnham Lambert offered to finance the deal with the placement of private junk bonds. Minkow thought that the Sears KeyServ business would give ZZZZ enough cash to end the Ponzi scheme sooner than planned.
Although KeyServ doubled the size of the Minkow company, the two companies agreed on a $ 25 million deal in which ZZZZ Best would be a surviving company. This merger will make Minkow the president and chairman of the board of the largest independent carpet-cleaning company in the country. Even when the merging process with KeyServ begins, Minkow has an ambition to become stronger. He has already made plans to collect $ 700-800 million to buy ServiceMaster in a cruel takeover. He also had plans to expand to England. Outside the carpet cleaning, he has started an initial discussion to buy Seattle Mariners from Major League Baseball.
Then, almost as fast as ZZZZ Best went up, it fell due to credit card fraud a few years earlier. Minkow has blamed fraudulent charges on unscrupulous contractors and other employees, and paid back most of the victims. However, he has not paid back a housewife who has been overcharged for several hundred dollars. Minkow ignored her request to pay her back. The woman tracked down some other people who had been tricked by Minkow and gave a diary of her findings to the Los Angeles Times. The Times later wrote a story revealing that Minkow had spent $ 72,000 in fraudulent credit card charges in 1984 and 1985. The story, which runs only a few days before the KeyServ merger was to close, sent ZZZZ Stockfall Falls best 28 percent.
Within a few hours after the cuts, ZZZZ Best banks called their loans or threatened to do so. Drexel suspends closure until it can investigate further. Later that day at a press conference, a reporter blew up another bomb. He has evidence that the Sacramento project does not even exist. More seriously, he found that ZZZZ Best did not have the contractor license required for large-scale restoration work. To appease a nervous investor, Minkow issued a press release to broadcast profits and earnings records, but did so without telling Ernst & Whinney (now part of Ernst & Young;), the company responsible for auditing the company before the KeyServ deal. The press release also implies that Drexel has cleared ZZZZ. The best of all mistakes, stop the short term. However, Drexel suddenly withdrew from the deal a few days later, causing the stock price to fall again. Drexel's withdrawal stops the deal only four to seven days before closing.
The day after this press release, Ernst & amp; Whinney found out that Minkow had written several checks to support the validity of a non-existent contract. Many of them have been written to a colleague who later tells Ernst & amp; Officer Whinney about fraud. Minkow denied knowing the man, but shortly after the examination was found, Ernst & amp; Whinney discovers that Minkow has cut two checks to him for unrelated issues. When Minkow can not explain the check, Ernst & amp; Whinney resigned as his company's auditor. However, it did not inform the SEC of his suspicion until a month later.
On July 2, Minkow suddenly resigned for "health reasons." At the moment, its stock has fallen to $ 3.50 per share - a 81 percent drop from a February high. It turned out that on June 27, an independent ZZZZ Best law firm persisted to investigate allegations of errors that asked for an address for all the company's restoration work. Minkow knew he could not produce them, prompting him to resign six days later. Later, he reportedly told a board member that the insurance recovery business had been a hoax from the beginning.
ZZZZ Best's new board conducts internal investigations that largely justify fraudulent allegations. On July 6, he sued Minkow, alleging that he had escaped with $ 23 million in corporate funds. The company claims that its assets have been drained to the point that it is forced into Chapter 11 bankruptcy. Two days later, the Los Angeles Police Department stormed the ZZZZ Best headquarters and Minkow's home, and found evidence that the company was used to launder drug gains for organized crime.
Conviction and prison
Minkow and 10 other ZZZZ insiders were indicted by Los Angeles federal jury in January 1988 about 54 allegations of extortion, securities fraud, money laundering, embezzlement, letter fraud, tax evasion, and bank fraud. The indictment accuses Minkow of laughing at banks and multimillion dollar investors while systematically draining his company's assets. It also accused Minkow of setting up a dummy company, writing fake invoices and doing tours from a recognized recovery site. The prosecutor estimates that as much as 90 percent of the company's earnings are fraudulent. On June 16, the prosecutor won the indictment accusing Minkow of credit card fraud and two additional fraudulent letters.
While Minkow claims to manipulate the company's shares, he claims that he was forced to turn the company into a Ponzi scheme under pressure from organized crime figures who secretly controlled his company, a story he later admitted was wrong. On December 14, he was found guilty of all charges. On March 27, 1989, he was sentenced to 25 years in prison. He was also placed on a five-year probation and ordered to pay $ 26 million in damages. In punishing him, US District Court Judge Dickran Tevrizian described Minkow as a man without conscience. He rejected Minkow's request for a less severe punishment as a "joke" and a "slap on the wrist" for someone who had manipulated the financial system. The SEC later forbade him from ever serving as an officer or director of a public company again. He served under seven and a half years, most of them in the Federal Penitentiary, Englewood.
While in prison, Minkow has become a reborn Christian. During his detention, he became involved in Christian ministry, completing his course through Liberty University's Life Learning School.
Release
After Minkow was released from prison in 1995, he worked as Pastor Evangelism at the Church at Rocky Peak in Chatsworth, California. He also became director of the Church Bible Institute.
In 1995, he wrote the first-hand account of ZZZZ Best scam, Clean Sweep. All the proceeds of the book went to pay back the victim. Another substantial debt is a $ 7 million loan from Union Bank.
In 1997, he became pastor of the Community Bible Church in San Diego. Soon after his arrival, a church member asked him to find a money management company in nearby Orange County. Suspicious of what was wrong, Minkow warned federal authorities, who found the firm to be a $ 300 million pyramid scheme. This was the start of the Fraud Discovery Institute, a non-profit investigation firm (which eventually became a fraud itself). The original target was a penny stock company, often held captive for fraud. However, he soon attracted the attention of The Wall Street Journal and Bloomberg News. He also started appearing on Your World with Neil Cavuto as a fraud expert. Minkow first gained national attention when 60 Minutes aired his profile in August 2006. Some Wall Street investors liked what they saw, and sent him enough money to pursue a larger target. Minkow claims to have discovered a $ 1 billion fraud over the years.
Short Inventory
Minkow's motives are questioned by some news which concludes that Minkow is in short supply before he releases a report on a public company. According to San Diego Union-Tribune, Minkow has been involved in this practice in early 2006. Minkow critics have denounced this practice as unethical, if not illegal. At least one critic accused him of involvement in short and distorting, a form of securities fraud which is a reversal of the pump scheme and disposal. For example, he accused Herbalife of a "laundry list" of problems, and Minkow has "properly revealed that the Herbalife president has increased rà © rÃÆ'  © rà ©  © ©" Herbalife paid Minkow $ 300,000, after which Minkow issued a press release that stripped all charges and disputes against Herbalife, and removed all allegations from its website. In addition, Minkow earns $ 50,000 from Herbalife's stock shortings. Minkow continued to make a profit from its short sales position due to the sharp decline in the company's stock price reported immediately after the release of a new report.
On February 20, 2007, Minkow distributed a 500-page report to officials at the US Securities and Exchange Commission (SEC), the Federal Bureau of Investigation (FBI), and the Internal Revenue Service (IRS) accusing USANA of operating an illegal pyramid scheme. USANA replied with home clothes against Minkow and his company claimed defamation and stock manipulation.
On the day the Minkow report was released, USANA shares had been trading at $ 61.19 but in August the share price had fallen to less than $ 35. Minkow admitted he was clearing USANA shares, hoping to profit from a fall in stock prices. However, in connection with the USANA lawsuit, news columnist Herb Greenberg commented that criticism of Minkow "is a group of malarkey, he has the right to publish his research, as long as people know his position [on the exchange]." Minkow has revealed in a report that he is betting to get the stock down. USANA dropped a libel suit and in March 2008 US District Judge Tena Campbell dismissed four of the five claims filed by USANA against the ruling Minkow that USANA's claims violate California's anti-SLAPP law for prosecuting Minkow for fair criticism. and that USANA does not show a reasonable probability of winning over those claims. The judge also cited two instances where USANA failed to refute Minkow's claim that their products were too expensive and did not have better quality than other low-cost brands. The remainder of stock manipulation expense was completed in July 2008 when USANA and Minkow reached an undisclosed resolution, including the removal of all USANA related material from the Fraud Discovery Institute website, related Chinese websites, and from YouTube. Minkow also agrees to never trade in USANA shares again. Separately from the settlement, the company paid $ 142,510 in lawyer fees to Minkow and his agency under orders from federal Judge Samuel Alba. Court documents show that USANA never pursues others whom they suspect as part of alleged stock manipulation or they do not ask for an order, their only way out in this case.
Minkow almost always holds the position in the securities he reports. However, he has since declared that while his lawyers advised him that this practice is legitimate, it may not be ethical. Several companies have sued Minkow for making false allegations against them, most of which have been settled out of court.
Lennar
In 2009, Minkow issued a report accusing Lennar's major developers of massive fraud. Minkow claims that the irregularities in Lennar's accounting for external debt are evidence of the enormous Ponzi scheme. Minkow accused Lennar of not disclosing enough information about this to his shareholders, and also claiming a Lennar executive took a fraudulent private loan. In the accompanying YouTube video, Minkow denounces Lennar as a "financial crime in process" and "corporate bullies." Lennar shares tumbled following Minkow's report. From January 9 (when Minkow first made his allegations) until January 22, Lennar's stock fell from $ 11.57 per share to just $ 6.55. Minkow issued a report after being contacted by Nicholas Marsch, a San Diego developer who has filed two lawsuits against Lennar for fraud. Indeed, the language of the resonant FDI report used in Marsch archives. One of Marsch's clothing was quickly discarded; others ended with Marsch having to pay Lennar $ 12 million in retaliation claims.
Lennar responded by adding Minkow as the defendant in a libel suit and fighting extortion against Marsch. Minkow initially did not care, because he had won earlier in similar cases on the basis of freedom of speech. According to court records, Minkow has shortened Lennar's shares, buying an option worth $ 20,000 in bets that the stock will fall. Even more seriously, he also bought Lennar shares after his FDI report, believing the stock would rebound after a dramatic decline. Minkow initially denied doing this, only forced to withdraw when faced with a trade record. Minkow also forged documents that proclaimed an error on Lennar's part, and lied about having to go to the emergency room the night before he was scheduled to testify. He also continued the report even after the private investigator he had leased for the case could not prove Marsch's claim. In an unrelated development, it was also revealed that Minkow operated FDI out of his church office and even used church money to fund it - something that could potentially jeopardize the church's tax-free status.
On December 27, 2010, Florida Circuit Court Judge Gill Freeman issued a termination sanction against Minkow in response to a move by Lennar. Freeman discovered that Minkow repeatedly lied under oath, destroyed or held evidence, hid witnesses, and deliberately tried to "cover up his mistakes." According to Freeman, Minkow even lied to his own lawyer about his behavior. Freeman decides that Minkow has committed a terrible "fraud in court" to allow the case to continue further to the detriment of justice. In his view, there is "no short cure from the standard" that is appropriate for Minkow's lies. He ordered Minkow to pay Lennar back for the legal expenses he incurred while extracting his lies. According to jurists, it is very rare for a judge to impose sanctions, because they are reserved for a terrible mistake and have the effect of plucking the plaintiff's right to defend himself. Previously, Freeman was so angry by Minkow's behavior that he called him a liar in an open court, rarely a judge. Lennar estimates that his lawyers and investigators spend hundreds of millions of dollars to reveal Minkow's lies.
Insider's guilty plea
On March 16, 2011, Minkow announced through her lawyer that she pleaded guilty to one allegation of insider trading. According to his lawyer, Minkow has purchased his Lennar option using "non-public information." The petition, separate from a civil suit, came a month after Minkow learned that he was the subject of a criminal investigation. Minkow claimed not to know at the time that he broke the law. The SEC has examined Minkow's trading practices. The same day, Minkow resigned as senior pastor of the Community Bible Church, saying in a letter to his congregation that since he is no longer "over blemish," he feels that he "no longer qualifies to become a minister." Six weeks earlier, $ 50,000 in cash and checks had been stolen from the church during the robbery. Although unsolved, it is considered suspicious because Minkow recognizes the history of staging theft to raise insurance money.
The nature of "nonpublic information" became clear a week later, when a federal prosecutor in Miami filed criminal information that charged Minkow with one conspiracy charge for securities fraud. Prosecutors alleged that Minkow and Marsch (listed as conspirators not represented in the complaint) conspired to extort money from Lennar by lowering the stock. The complaint also revealed that Minkow had sent his allegations to the FBI, the SEC and the IRS, and that the three institutions found that his claim was credible enough to open a formal criminal investigation into Lennar's practice. Minkow then uses the secret knowledge of the investigation for Lennar's short share, though he knows he is forbidden to do so. Minkow chose to plead guilty to conspiracy charges rather than face charges of securities fraud and market manipulation, which could send him to life imprisonment.
On March 30, 2011, Minkow pleaded guilty before Judge Patricia A. Seitz. Minkow's lawyer, Alvin Entin, admitted that his client was acting carelessly, but "deceived and harnessed" by Marsch. He faces a maximum sentence of five years in jail, fine and fine of $ 350,000 and $ 500 million in damages. However, he has agreed to cooperate with the government in his investigation of Marsch.
The Los Angeles Times acquired a copy of the plea agreement, in which Minkow confessed to issuing his FDI report on Lennar on Marsch's orders. According to the agreement, Marsch offers Minkow to withdraw his report if Lennar pays it in cash and stock. He also said that Minkow's report triggered a bear attack while temporarily reducing Lennar's market capitalization by $ 583 million. Minkow faces a minimum sentence of 30 years in prison if his case is heard.
In a pre-penalty evaluation conducted on May 10, 2011, Minkow was diagnosed by Drs. Michael Brannon as having antisocial personality disorder, narcissistic personality disorder, hyperactivity disorder attention deficit, anxiety disorder, opioid dependence, abuse of anabolic steroids, and migraine headaches..
On June 16, Freeman ordered Minkow to pay Lennar $ 584 million in damages - roughly the amount lost from the company due to a bear attack. Freeman's decision states that Minkow and Marsch have entered a conspiracy to destroy Lennar's stock in November 2008. With interest, the bill could easily approach a billion dollars - far more than he stole in ZZZZ Best scam.
On July 6, it emerged that officials with the Bible Church Community accused Minkow of running the Fraud Discovery Institute with church funds, applying for credit cards on behalf of church members and leading his group into bad investments. Church officials have made claims as part of a secret pre-vonis report. When Minkow's lawyer, Alvin Entin, gets the words of the letter, he asks and is given two weeks to review the allegations and respond to them. This pushed Minkow's penalty back to July 21st. This is the second time Minkow's sentence has been postponed; it was originally scheduled for June 16 but was postponed until July 6th.
On July 21, Seitz sentenced Minkow to five years in prison. In imposing a sentence, Seitz says that Minkow has "no moral compass saying 'Stop.'" Seitz also ordered him to pay Lennar $ 583.5 million in damages - the amount that had been imposed a month earlier in a civil case. Seitz has recommended that Minkow serve his sentence at Federal Jail, Montgomery in Montgomery, Alabama. However, on September 20, he was ordered to begin his sentence at the Federal Medical Center, Lexington in Lexington, Kentucky.
On penalties and interviews with the media, Minkow claims that he committed securities fraud because he became addicted to his migraine headache drug Oxycontin.
Guilty plea guilty in church
On June 14, 2011; KGTV in San Diego interviewed several members of the former Minkow church, who said Minkow tricked them. One woman said Minkow asked her for $ 300,000, supposedly to help finance the film about her redemption.
On January 22, 2014, Minkow pleaded guilty to counting a conspiracy to commit bank fraud, wire fraud, letter fraud and to defraud the federal government. He admitted embezzling more than $ 3 million in donations to the Community Bible Church from 2001 to 2011. He opened unauthorized bank accounts purportedly on behalf of the church, forged signatures on church examinations, transferred money from legitimate church accounts for his personal use, and accusing unauthorized persons. spending on church credit cards. He also hides $ 890,000 in revenue and $ 250,000 in taxes from the IRS. Among his victims was a widower who gave $ 75,000 to fund a hospital that was supposed to be in Sudan in honor of his wife after he died of cancer, and a woman who gave Minkow $ 300,000 who was supposed to go to help raise his teenage grandson.
On April 28, 2014, Judge Michael M. Anello sentenced Minkow to five years in jail, the maximum possible penalty under his defense bid. It must be served after Minkow finishes his sentence for securities fraud. While Minkow's lawyer demanded a 41-month sentence, Anello felt he had to impose a maximum for what he called "a disgusting and unforgivable crime." On June 2, Minkow reached an agreement with a federal prosecutor who asked him to pay $ 3.4 million in damages. This would potentially be a damaging amount to Minkow, on top of the restitution he still owes Lennar, Union Bank, and ZZZZ Best victim. Previously, he said that the $ 26 million restitution for ZZZZ Best scam alone was large enough that he would write a compensation check for ZZZZ Best victims for the rest of his life. As a result of his latest sentence, Minkow's earliest release date is now June 6, 2019.
Movie adaptation
Before his confidence in 2011, production began in a film detailing the life and redemption of Barry Minkow. Movies featuring Mark Hamill, Justin Baldoni, Talia Shire, and Ving Rhames were funded in part by Minkow's requested donations from his congregation. Minkow insisted on playing a middle-aged version of himself in the movie. After his arrest, the film's release was canceled and work began at the new end. The movie - titled Con Man from its original title Minkow - was finally released in March 2018.
References
![Barry Minkow (March 22, 1966)[1] is a former American businessman ...](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_tAG_2NunlaoFbg-WDwUwKvz1WcqQjWf6EumlWCyHyapSWZwjs8_C6FadkRXCfm_2FZbamQIb2pWKhEw1t1Dlg4kTYl_7i3AGWl0zY8JJWXSf0mPSQVOId4sOXxJY_v48LiEOjXpInQ-g=s0-d "Barry Minkow (March 22, 1966)[1] is a former American businessman ...")
Further reading
- Minkow, Barry, Clean Sweep: Inside Story from Zzzz Best Scam... One of Wall Street's Biggest Scams , ISBN 0-7852-7916-4
- Minkow's biography on the Fraud Discovery Institute website (Archived: site closed)
- 60 Minute segment in Minkow August 27, 2006
External links
- Inmate information from the United States Bureau of Prisons
- Fraud Fraud Website (archived)
- https://nypost.com/2013/09/25/ponzi-schemer-barry-minkow-facing-third-strike/
- Fortune Magazine: Barry Minkow: All-American fraudsters
Source of the article : Wikipedia
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