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The Other Side of ZZZZ Best Probe : Police Learn How Mob Moved In on Minkow

February 21, 1988|RONALD L. SOBLE | Times Staff Writer

As Maurice Rind told it to the Los Angeles Police Department's organized crime investigators, "We were protecting the kid from being extorted by everybody. . . . We didn't want the kid to get shook down. We were the police force."

"The kid" was Barry Minkow, who turned his Reseda-based ZZZZ Best carpet cleaning company into a hot stock on Wall Street, but who now is in Terminal Island federal prison awaiting trial on federal racketeering and fraud charges.

"We" meant Rind and his partner, Richard Schulman, Encino neighbors and old friends from New York who have criminal records and links to organized crime, according to police.

$1-Million Profit

They were looking after Minkow's health, Rind told detectives, to protect what proved to be a remarkable investment. In one ZZZZ Best stock deal alone, police determined, Rind and Schulman had reaped more than $1-million profit each.

"Everybody was taking shots at (Minkow)," said Rind, 49, referring to reputed mobsters who wanted a piece of the ZZZZ Best action.

But if Rind and his partner were the 21-year-old Minkow's protectors, the relationship was not exactly affectionate. As ZZZZ Best was collapsing last summer, headed toward bankruptcy and criminal investigations, Minkow visited the two men and declared, "You're going to kill me . . , " Rind told police.

Rind said he then hugged Minkow, but hardly to console the apparently shaken young entrepreneur--he was frisking Minkow to discover if his body had been wired with a police microphone.

Rind's comments to detectives are contained in more than 150 pages of reports compiled by the Los Angeles Police Department's Organized Crime Intelligence Division as part of an investigation that began last March.

Usually Confidential

Normally, such reports--describing long interviews with suspects and witnesses, as well as surveillance notes--remain confidential and are made public only at a trial, if then. In this case, however, the division's documents were subpoenaed, and then released--before the investigation is even completed--by the House subcommittee on oversight and investigations, which held two recent hearings in Washington on the ZZZZ Best collapse.

The documents, presented to the committee by Detective Mike Brambles, deal with a side of the ZZZZ Best scandal other than the recent federal indictment of Minkow and 10 others. That indictment focused exclusively on white collar crime, alleging that Minkow and others drove up the value of ZZZZ Best stock by fabricating millions of dollars of contracts from insurance companies. The case involved a classic "sting" operation: ZZZZ Best officials allegedly staged tours of high-rise buildings to dupe lawyers and accountants into believing that they actually were doing million-dollar jobs repairing water and fire damage.

The police reports, which officials said may not produce arrests until spring, tell the organized crime side of the story: How ZZZZ Best allegedly was exploited by East Coast-based Mafia families. And they describe people using not just deception, but displaying guns and issuing threats with talk of "outside muscle" and "cleaning and investing" money.

A major theme running through the documents is the central behind-the-scenes role of Rind and Schulman, neither of whom was named as a defendant in the federal indictment but both of whom were identified by Police Chief Daryl F. Gates at a July press conference as suspects in the LAPD investigation.

Ties to Crime Alleged

The documents indicate that the pair, who Rind insists are legitimate businessmen, were the last of a series of men with alleged organized crime ties to gain interests in ZZZZ Best amid infighting and the forcing out of a prominent Los Angeles mob figure, the late Jack M. Catain Jr.

Unknown to the Establishment business community, which was helping ZZZZ Best gain a paper value of more than $200 million, 75% of a shell company used to take the business public "was owned by individuals with convicted felony criminal backgrounds," detectives said.

Court records previously filed show that Minkow turned early to Catain for help when he had trouble getting conventional financing for the company he started in his parents' garage. But the two men had a falling out and Catain sued Minkow in December, 1985, contending that he was owed $1.3 million as part of a deal in which he arranged loans for ZZZZ Best and received a 50% interest in the insurance restoration business.

In the just-released police documents, Rind is quoted as saying that "other guys . . . kicked Catain out." Rind does not name the others, but investigators said it was a reference to Robert Victor, 51, of Woodland Hills, who is identified in the police reports as "a reputed member of the Colombo organized crime family."

Not a 'Made Guy'

Rind noted that Catain, who died last February, was not a "made guy," meaning that he was never inducted into an organized crime family.

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