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'Like the 3 Stooges' : ZZZZ Best: How the Big Bubble Burst

March 30, 1989|KIM MURPHY | Times Staff Writer

To look at them, nobody would have thought they could do it: An insurance adjuster who couldn't seem to hold down a job. A family man who ran a small janitorial business. A former UCLA linebacker who taught himself accounting. And the kid with the big mouth and an overdose of charm.

But together they pulled off one of the biggest swindles in Southern California history, a $100-million con that convinced wealthy investors, a Big Eight accounting firm and Wall Street bankers that Barry Minkow's ZZZZ Best carpet cleaning company was making a fortune repairing office buildings damaged by flood or fire.

Even today, after a 3 1/2-month trial that laid bare the charade, investigators are having a hard time figuring out how such a bunch of seeming ne'er-do-wells managed to pull it off. But then, so are the guys who did it.

Doctoring the Books

"It was literally like the Three Stooges, practically," said Mark L. Morze, the former football player who stayed up nights with a small word processor and a bottle of White Out doctoring the books. "We used to just sit there and look at each other every day, saying, 'I can't believe it's still going along, that people still believe this stuff.' "

By the time it was over, Minkow was found guilty of 57 counts of fraud and conspiracy, and 11 associates of the company he had vowed to turn into "the General Motors of the carpet cleaning industry" stood convicted of various fraud charges.

Minkow, scamming to the end, claimed throughout his trial that he had been manipulated by shadowy organized crime figures into carrying out the fraud.

But at his sentencing this week, when a federal judge handed down a 25-year prison term, the now-23-year-old Minkow admitted that the Mafia story was just that--another story. And the truth, it turned out, was even stranger: ZZZZ Best really was, all along, the tale of a kid who started a company in his parents' garage, brought in some buddies from the gym, cut a few deals with reputed mobsters, dabbled in the netherworld of junk bonds and stock splits--and wound up with an empire worth $200 million on Wall Street.

An Unbelievable Script

"If you wrote a movie script with this cast of characters, no one would believe it," said Assistant U.S. Atty. James Asperger, who tried the case with co-prosecutor Gordon Greenberg. "It was like the 'Dirty Dozen,' only they were out to commit evil."

Although most of the ZZZZ Best principals still face civil suits filed by investors, stockholders and banks that were duped, the initial wave of criminal prosecutions concluded with Minkow's sentencing on Monday.

As they prepared to go off to prison, three of Minkow's top lieutenants spoke at length for the first time about how they pulled it off.

They admit that they deserve to be punished. All profess stinging regret for the people who got left holding the bag when the swindle collapsed. But there is in all of them still a hint of carefully shrouded pride about the entire mad, brazen, larcenous affair, an infectious enthusiasm that allows them to plunge into the story and get caught up in it again, and talk about how they came that close --four days away, they figure--to making ZZZZ Best a legitimate, multimillion-dollar corporation.

"If everything had worked out," Morze said dreamily, "everyone makes out like a bandit. The stockholders make money, the income tax people collect taxes, three or four thousand people get jobs, America gets its carpets cleaned, the investment bankers get paid back, I become wealthy, Barry becomes wealthy, everybody makes out."

Even Morze couldn't resist the next line: "But noooo . . . ."

Minkow's story, by now, everybody knows. How he started the business with a few rug shampooing machines and went on to publish his own book about becoming a teen-age millionaire. How he started driving a $130,000 Ferrari, bought a mansion with a huge Z on the bottom of the swimming pool and hired fans, at $100 apiece, for the softball team he managed.

Less prominent have been the stories of the men he took with him to short-lived glory, the men, many of them approaching middle age, who suddenly saw the answer to their dreams in the visage of a wisecracking teen-ager.

Minkow was only 14 when Tom Padgett ran into him in a San Fernando Valley gym. Padgett was a Vietnam vet who could bench press more than 300 pounds, who didn't want to hear from the kid who kept lurking around, nagging about how he wanted to train with him.

Padgett was 30 then and had a decent job as a claims adjuster with Allstate Insurance, but it was starting to get to him; his life wasn't going anywhere. He took up boxing and, by his third fight, got hammered so badly he had to wear dark glasses the next day.

'You Forget to Duck?'

"Everyone at the gym is getting a big charge out of it," he recalled. "They're saying, 'What's the matter, punchy? You forget to duck?' "

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