Mark Morze, the one-time UCLA linebacker whose finesse with accounting ledgers and smooth-talking helped the ZZZZ Best carpet cleaning company pull off a $70-million swindle, was sentenced Tuesday to eight years in prison.
"The integrity of the American financial system is at stake, and I don't think you can just do some wrist-slapping," U.S. District Judge Dickran Tevrizian said in sentencing the second of 12 men convicted in the ZZZZ Best case.
Morze, an accountant who prosecutors said had a genius for generating phony invoices, ledgers, checks and other financial documents, has been portrayed as the brains behind the fraudulent insurance restoration scheme that bolstered ZZZZ Best's books with up to $43 million a year in phantom revenues.
Senior Vice President
Morze, 38, was appointed by ZZZZ Best founder Barry Minkow as the senior vice president in charge of a division that purportedly earned 90% of the company's revenues by repairing buildings damaged by fire or flooding.
He was, prosecutor James R. Asperger said Tuesday, a "classic con man" who could persuade lawyers and accountants from prestigious financial firms that the phony insurance jobs were real--thus bringing in millions of dollars through bank loans and driving up the value of the Reseda-based company's stock.
Morze's role, Asperger said, was to breeze in to meet with investment officers, introduce himself as ZZZZ Best's vice president in charge of insurance restoration, then rush off to catch a plane or answer a phone before too many questions could be asked.
In at least two cases, the prosecutor said, Morze led financial officers on tours of phony job sites, choreographing every detail to make it appear as though the floor space ZZZZ Best had hastily rented in distant office buildings was actually the site of extensive restoration jobs.
"Mr. Minkow had the idea, but he didn't have the bookkeeping skills to carry this thing off," Asperger told the court.
Federal prosecutors have estimated that Morze funneled more than $3 million to himself, his family and his girlfriend, of which about $650,000 was converted to cash and cannot be accounted for. Some of the money, Asperger said, went to buy cars, furs, a house and jewelry for Morze's girlfriend.
Morze told the judge he has sought to make amends for his conduct since the day Minkow resigned from the company in 1987.
"I immediately felt an unbelievable pressure because it started to become clear, literally within a matter of hours, just what I had done," he said. "I was suddenly barraged with a feeling of remorse, embarrassment and shame."
Even before he hired an attorney, Morze said, he began contacting ZZZZ Best board members, notifying them that the insurance restoration work was a hoax and offering to make reparations.
He has delivered box loads of financial documents to the government and spent nearly 40 hours in interviews with the FBI and the Internal Revenue Service to aid ongoing investigations, according to his attorney, Anthony Glassman.
"I think we have someone who has committed, without question, a major financial offense but who has done everything conceivable to rectify the circumstances," Glassman said. "His testimony really was a road map to and through the finances of this company."
Morze has said that top ZZZZ Best officials were planning to carry on the fraud only long enough to complete a $40-million acquisition of a new chain of carpet-cleaning companies. They hoped the deal--which never was completed--would enable ZZZZ Best to pay off its debts and begin operating legitimately, he said.
But Asperger rejected that notion. "I think his hope that the lies would stop was really more of a self-rationalization," the federal prosecutor said. "His hope that the fraud would be ended was, I think, a pipe dream."
Tevrizian said he was sentencing Morze as a "second-tier" defendant, a man who was more culpable than others in the scheme but who was not as guilty as Minkow. The judge said he was also taking Morze's cooperation into account.
"Yours was a youth where you were never handed anything. You had to work for it," he told Morze. "But people go for the home run all the time . . . (and) it only comes one step at a time."
Morze, who pleaded guilty to three counts of stock fraud, bank fraud and income tax evasion, will be eligible for parole after serving 32 months of his sentence.
Minkow, who was convicted by a federal court jury Dec. 19 on 57 fraud counts, is scheduled for sentencing Feb. 21. He faces a maximum sentence of 403 years in prison.