ZZZZ Best

What Was ZZZZ Best?

ZZZZ Best was a floor covering cleaning and restoration company founded by Barry Minkow that filled in as a front for a renowned Ponzi scheme. The company opened up to the world in December 1986 and was immediately valued at more than $300 million. Inside just seven months of the initial public offering (IPO), be that as it may, ZZZZ Best was bankrupt and its assets were unloaded for around $64,000.

Grasping ZZZZ Best

Barry Minkow framed ZZZZ Best in his parents' garage. The business performed inadequately and 15-year-old Minkow was frequently immersed with customer objections and provider assortment demands. To make an illusion of a beneficial business, Minkow started carrying out criminal acts, for example, check kiting, theft, insurance scams, and fraud, to fund operations and pay providers.

Inside a couple of long stretches of ZZZZ Best's origin, Minkow sent off fictitious insurance restoration and appraisal businesses. While active, ZZZZ Best was at the center of a credit card scheme including more than $70,000 in fraudulent charges. Although Minkow assigned fault to contractors and employees, he reimbursed all of the casualties with the exception of one: a homemaker cheated out of two or three hundred dollars.

The Scheme and the Downfall

Minkow and business associate Tom Padgett made a fictitious company, Interstate Appraisal Service, to defraud banks and other lending institutions out of millions of dollars. Tom Padgett, an insurance claims adjuster, contrived with Minkow to manufacture reports crediting ZZZZ Best for restoration work and utilize Interstate Appraisal Services as the source to confirm the claims. Progressively, investors and bankers developed an interest in ZZZZ Best in view of fraudulent financial statements created by Minkow's firm.

Barry Minkow guaranteed his fraudulent activities were driven by a need to repay organized crime.

As the Ponzi scheme proceeded, ZZZZ Best experienced huge cash flow issues. As a solution, Minkow wanted to gain KeyServ, Sears' authorized floor covering cleaner, for $25 million. As indicated by Minkow, the revenues from KeyServ would give sufficient cash flow to end the Ponzi scheme. Before the deal was closed, the abandoned homemaker started a campaign against ZZZZ Best that would uncover more than the fraud committed against her.

The L.A. Times highlighted her story, which made ZZZZ Best's stock price decline pointedly. Lenders started to call their loans and more examinations initiated, unwinding Minkow's dark web of duplicity and fraud. Eventually, the truth behind the fictitious companies was revealed and the Ponzi scheme was uncovered.

How Auditors Were Misled

To send off an IPO, the Securities and Exchange Commission (SEC) requires a firm to order a prospectus, which must incorporate a set of audited financial statements. Independent certified public accountant (CPA) firm Ernst and Whinney (presently Ernst and Young) audited ZZZZ Best's financials to give an assessment with respect to whether the financial statements were free of material misquote.

Accepting an independent outsider gave the paperwork, the CPAs utilized false appraisal reports to perform its audit. At the point when the CPA firm mentioned to visit a building restoring customer site, Minkow and his associates leased a building and made a counterfeit customer job site.

Minkow After ZZZZ Best

In January 1988, Minkow and 11 other company insiders were prosecuted by a grand jury on counts of racketeering, money laundering, securities fraud, embezzlement, mail fraud, bank fraud, and tax evasion. Separately, Minkow was also arraigned on counts of credit card fraud. Roughly a year after the fact, Minkow was found blameworthy on all charges, was condemned to 25 years in jail, and was requested to pay more than $26 million in restitution.

After his initial release in 1995, he turned into an appointed clergyman and filled in as a pastor of a congregation in California. Minkow informally examined and reported other Ponzi schemes. From this achievement, he framed the fraudulent Fraud Discovery Institute.

In 2011, he was again indicted for fraud and condemned to five years in jail. It was found that while shooting and delivering his life story, he at the same time was utilizing his enemy of fraud company to short stocks of companies he was exploring. A couple of years after the fact, Minkow was condemned to an additional five years in jail for defrauding his congregation and tax evasion. His restitution balance has increased ten times to $612 million.

ZZZZ Best Frequently Asked Questions

The Bottom Line

Barry Minkow's company ZZZZ Best committed serious fraud and is one of the most mind-blowing realized Ponzi schemes ever. Even however Barry was released from jail early, he wasted the second chance and eventually ended up in a lot greater difficulty and ended up back in jail. Although there are various true to life renditions of his story, he is in no way, shape or form a good example. ZZZZ Best was an incredible company on paper and at one point was valued over a quarter billion dollars, then bankrupted shortly a while later.

Features

• Minkow and his business associate Tom Padgett set up a fake company called Interstate Appraisal to defraud financial institutions out of millions.
• ZZZZ Best was a company set up as a front for a Ponzi scheme.
• Its founder Barry Minkow participated in a range of criminal acts including insurance scams and check kiting.
• The fraud was a the found by a lady paper trail, al due to a cheat of two or three hundred dollars.
• Minkow was eventually condemned to 25 years in jail for fraud. When released, he ended up indicted for fraud once more and condemned to five additional years.

FAQ

Is There a Barry Minkow Movie Being Made?

There was a Barry Minkow film made in 2011 that was eventually released in 2018, named Con-Man. During the recording, Barry was captured and conceded to insider trading charges. In January of 2022, a docuseries named King of the Con was released on Discovery+.

How Was the ZZZZ Best Fraud Discovered?

Minkow was visited by his past when a homemaker who was cheated just a couple hundred dollars by Minkow found a couple of other people who Minkow had defrauded. At the point when the homemaker found the others, she passed her discoveries onto the Los Angeles Times. The newspaper then ran a story uncovering Minkow's moderately minor fraud. This caused a cascading type of influence and ZZZZ Best was immediately exposed as a Ponzi scheme.

What Accounting Procedures Did ZZZZ Best Fail to Follow?

ZZZZ Best failed on the grounds that it was a Ponzi scheme in this way, generally, the company followed almost no legitimate accounting procedures. Notwithstanding, it took the company opening up to the world before the fraud was found so there is a contention that exists that Minkow was very skilled with his accounting.

When Did Barry Minkow Get Out of Prison?

Barry Minkow was released from jail most as of late in 2018 in the wake of spending time in jail for insider trading and embezzlement from his congregation. Before that conviction, he carried out a huge prison punishment from 1989 to 1995, being released just six years into his 25-year sentence.