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Attorney Cites 'Health Reasons' : Barry Minkow Is Reported to Resign as Head of ZZZZ Best

July 03, 1987|BARRY STAVRO | Times Staff Writer

Barry Minkow, the 21-year-old "whiz kid" entrepreneur, has resigned as president of ZZZZ Best Co., the carpet-cleaning firm he founded, his personal attorney said Thursday.

Lawyer Arthur H. Barens said Minkow told him in a phone conversation Thursday morning that Minkow resigned for unspecified "health reasons."

Minkow did not return a reporter's phone calls.

ZZZZ Best, based in Reseda, made no statement regarding Minkow. Bruce T. Andersen, the company's chief financial officer, said through his secretary that he had no comment.

In over-the-counter trading, ZZZZ Best shares fell $1.125 Thursday to close at $3.50 in extremely heavy trading of 2 million shares. The company has 11.6 million shares outstanding.

One trader in ZZZZ Best's stock, who asked not to be named, attributed the stock's fall to rumors that Minkow would resign.

The Times reported in May that ZZZZ Best had rung up $72,000 in false credit card charges from November, 1984, to March, 1985. The company blamed the false charges on a half dozen subcontractors and six of their employees who did carpet-cleaning work for ZZZZ Best. The company said it fired the subcontractors and paid back the charges once they were discovered.

Before the story appeared, ZZZZ Best's stock was trading at $15.375 a share.

Earlier this month, the company's auditor, Ernst & Whinney, resigned and was succeeded by Price Waterhouse. Ernst & Whinney has not said why it resigned.

The company has grown dramatically. In May, Minkow said the company posted record net income in excess of $5 million, or 50 cents per share, on at least $50 million in revenue for its fiscal year ended April 30 compared to net income of $945,645, or 12 cents a share, on $4.8 million in revenue the year before.

As the company has expanded, Minkow has developed a reputation as a whiz kid. He started the company at age 15 working out of his parents' garage in Reseda. He has appeared on television programs, including the Oprah Winfrey Show, and has received a commendation from Mayor Tom Bradley for his "fine entrepreneurial example."

Despite ZZZZ Best's growth, Minkow has been involved in a number of lawsuits. In the past month, several class-action suits have been filed against him and the company, alleging that misleading statements were made in the company's stock prospectus issued last December. Minkow took ZZZZ Best public in January, 1986, and after a stock offering last December, he owned about 52% of the company's shares.

Earlier this year, when ZZZZ Best's stock hit a high of $18.375 per share, Minkow had a paper fortune worth more than $100 million.

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