Barry Minkow
Barry Minkow – Misrepresentation and Ponzi in 1987
Establishment of ZZZZ Best Company
When he was a sophomore in high school, Barry Minkow founded a carpet cleaning company - ZZZZ Best Company in his parents’ garage. At that time, the carpet cleaning industry has few entry barriers and all Minkow needed was a small amount of start-up capital. However, he soon found out that his firm was actually tough to survive in the industry as the ease of entry means fierce competition. The young man encountered a series of trouble: bad checks, complaints from customers, urge for payment from suppliers and finally the shortage of working capital. Not surprisingly, the bank refused to loan money to his low profit margin company.
Minkow would like to try any method to expand his company and he came up with his own creative idea of financing the business including check kiting, credit card forgeries, committing insurance fraud and stealing grandma’s jewelry. Minkow met the insurance claims adjuster Tom Padgett at a swanky Los Angeles health club and began to step into the field of insurance restoration. With the promised payment of 100 dollars per week from Minkow, Padgett told any interested third parties that Minkow was the recipient of insurance restoration contracts which allowed Minkow to do repairing work on damaged properties. They also set up a fake company, Interstate Appraisal Services, to verify the details of restoration to Minkow’s bankers. In the late 1985, Morze joined the company as a part-time consultant to ask for loans around the country’s banks. At that time, he enticed mainly private investors of any kind: an elderly lady who ran the cigarette concession at a Las Vegas hotel, the wife of singer Tony Orlando, even a reputed local crime figure who delivered 25,000 dollars cash in a brown paper bag.
In this way, the ZZZZ Best Company began to be flushed with bank loans expand and several carpets cleaning outlet were established in Southern California. The
Establishment of ZZZZ Best Company
When he was a sophomore in high school, Barry Minkow founded a carpet cleaning company - ZZZZ Best Company in his parents’ garage. At that time, the carpet cleaning industry has few entry barriers and all Minkow needed was a small amount of start-up capital. However, he soon found out that his firm was actually tough to survive in the industry as the ease of entry means fierce competition. The young man encountered a series of trouble: bad checks, complaints from customers, urge for payment from suppliers and finally the shortage of working capital. Not surprisingly, the bank refused to loan money to his low profit margin company.
Minkow would like to try any method to expand his company and he came up with his own creative idea of financing the business including check kiting, credit card forgeries, committing insurance fraud and stealing grandma’s jewelry. Minkow met the insurance claims adjuster Tom Padgett at a swanky Los Angeles health club and began to step into the field of insurance restoration. With the promised payment of 100 dollars per week from Minkow, Padgett told any interested third parties that Minkow was the recipient of insurance restoration contracts which allowed Minkow to do repairing work on damaged properties. They also set up a fake company, Interstate Appraisal Services, to verify the details of restoration to Minkow’s bankers. In the late 1985, Morze joined the company as a part-time consultant to ask for loans around the country’s banks. At that time, he enticed mainly private investors of any kind: an elderly lady who ran the cigarette concession at a Las Vegas hotel, the wife of singer Tony Orlando, even a reputed local crime figure who delivered 25,000 dollars cash in a brown paper bag.
In this way, the ZZZZ Best Company began to be flushed with bank loans expand and several carpets cleaning outlet were established in Southern California. The