Barry Minkow

Barry Jay Minkow (born March 17, 1967) is a former businessman, pastor and convicted felon.

While still in high school, he founded ZZZZ Best (pronounced Zee Best), which appeared to be

an immensely successful carpet-cleaning and restoration company. However, it was actually a

front to attract investment for a massive Ponzi scheme. It collapsed in 1987, costing investors

and lenders $100 million—one of the largest investment frauds ever perpetrated by a single

person, as well as one of the largest accounting frauds in history. The scheme is often used as a

case study of accounting fraud.

After being released from jail, Minkow became a preacher and a fraud investigator, and spoke at

schools about ethics. This all came to an end in 2011, when he admitted to helping deliberately

drive down the stock price of homebuilder Lennar and was ordered back to prison.

At first, Minkow struggled to meet basic expenses. Two banks closed his business account

because California law didn't allow minors to sign binding contracts, including checks. He was

also plagued by customer complaints and demands for payment from suppliers. At times, he

found it difficult even to meet payroll. Faced with a shortage of operating capital, he financed his

business via check kiting, stealing and selling his grandmother's jewelry, staging break-ins at his

offices, and running up fraudulent credit card charges.

After that, Minkow branched into the "insurance restoration" business. With the help of Tom

Padgett, an insurance claims adjuster, Minkow forged numerous documents claiming that ZZZZ

Best was involved in numerous restoration projects for Padgett's company. Padgett and Minkow

formed a fake company, Interstate Appraisal Services that verified the details of the restorations

to Minkow's bankers. Flush with loans from these banks, Minkow expanded ZZZZ Best across

Southern California.

 Minkow took the company public in January 1986, garnering a spot on NASDAQ. The

accountant who audited the company before it went public didn't visit the insurance restoration

sites himself. Had he done so, he would have discovered that they were mailboxes located

throughout the San Fernando Valley. Minkow retained a 53 percent controlling interest, making

him an instant millionaire on paper. Going public seemingly offered him a way to cover up his

fraudulent activities. Under securities law of the time, he had to retain his personal shares for two

years. He planned to sell a million of his shares to the public in January 1988, believing this

would give him enough money to pay everyone off and go completely legitimate.

On March 30, 2011, Minkow pleaded guilty to one charge of insider trading. He entered a plea

agreement, and instead of the maximum sentence of 30 years, he was sentenced to five years in

prison, and $584 million in damages to Nicholas Marsch, a San Diego developer. He has since

been accused by congregants from his former church of swindling them, a claim the FBI is

currently investigating. Minkow is serving his sentence at Federal Medical Center in Lexington,

Kentucky.