"I am expanding to the hilt, and I have no shame." --From Barry Minkow's
"Making It in America."
Even as his financial empire was collapsing last summer, Barry Minkow planned to host a television show designed to counter the negative image of America's younger generation. A brochure for "Class of Tomorrow," which was being marketed by two producers to various networks, hailed the 21-year-old Wunderkind as nothing less than "what tomorrow's youth is all about."
After all, Minkow's exploits had been widely chronicled: He had founded the ZZZZ Best carpet cleaning company in his parents' Reseda garage at 15, built it into one of Wall Street's hottest firms and donated more than $110,000 to anti-drug and other civic ventures. He seemed too good to be true.
And he was.
The glowing descriptions of Minkow as the embodiment of the American dream--"the Rocky of rug cleaning"--have taken on darkly ironic overtones in the wake of the company's demise, accusations by Los Angeles police and last week's federal indictment of the former carpet cleaning king and 10 associates on 54 counts of racketeering, fraud and money laundering.
Minkow remains in custody with his bail set at $2 million, facing a maximum sentence of 350 years in prison and a $13.5-million fine if he is convicted on all counts.
His rapid rise from rugs to riches is a saga of personal and corporate deception of stunning proportions, according to prosecutors and former associates. The indictment alleges that Minkow masterminded an intricate scheme that used phony businesses, sham invoices and other ruses to secure millions of dollars from stock sales and bank loans by convincing lawyers, accountants and investors that vastly inflated revenues claimed for ZZZZ Best were bona fide.
One thing no one seems to dispute at this point: ZZZZ Best's major source of income, a business that purportedly restored office buildings damaged by flood or fire for insurance companies, was almost entirely fabricated. The legal finger-pointing concerns fixing responsibility.
"Minkow was, in substance, charged not only with participating in (the scheme) but with orchestrating it," U.S. Atty. Robert C. Bonner said. He estimated that losses to banks and investors exceed $50 million.
In his defense, attorney Arthur H. Barens argued that Minkow relied on older, more sophisticated business partners and was unaware of any illegal activities. Barens said these same businessmen are cooperating with the government "to exercise some damage control in their future by pointing the finger at some 19-year-old."
A jury likely will have to decide the question: Was Minkow, in essence, taken in by unscrupulous associates who called the shots, or is his defense yet another attempt at deception?
The characterization of Minkow as someone who was not in control would surprise many people who worked closely with the young tycoon. When ZZZZ Best launched a $2-million television advertising campaign in early 1987, for instance, Minkow insisted that he be featured on camera in the commercials depicting his company as the Mr. Clean of an often dishonest industry.
"He wanted to be the star," said David Marchese, a partner at the advertising firm that produced the ZZZZ Best spots. "That's his \o7 modus operandi. \f7 He felt he knew more about it than anybody else and it was his commercial and his company."
Minkow displayed that same confident demeanor Friday during his first appearance in court as a defendant. His muscular frame clad in baggy sweats and athletic shoes, he proffered advice to his attorneys, joked with other defendants awaiting arraignment and winked at a spectator.
At one point, he browsed through drawings of himself by television artists. "Don't like that one," he said. "The nose is too small."
In a television interview shortly before the sealed indictment was made public, Minkow averred that he was a victim of his own immaturity and arrogance.
"I'm not mature enough to handle a company with 1,400 people," he said. "I wasn't then, and at least I have the ability without the ego and the pride to admit it now."
Barry Jay Minkow's story reads like a 1980s version of F. Scott Fitzgerald's Jay Gatsby--a working-class youth driven to amass great wealth; a vain man who surrounded himself with fancy cars, glitzy parties and attractive women; a high-profile multimillionaire who is said to have quietly consorted with mobsters.
At a press conference in July, Police Chief Daryl F. Gates alleged that Minkow and ZZZZ Best were part of a conspiracy to launder narcotics profits for East Coast organized crime families. No arrests have been made in connection with the allegation, but police said last week that the investigation is continuing.
Born March 22, 1966, in Inglewood, Barry Minkow was the youngest of three children of Robert I. and Carole Minkow. The family moved to a small stucco home in Reseda when Barry was 4.
Called a Nuisance