This came to an end in 2011, when he admitted to helping deliberately drive down the stock price of homebuilder Lennar and was ordered back to prison for five years.
Barry Minkow was born in Inglewood, California and was raised in the Reseda area of the San Fernando Valley in a Jewish family.
Faced with a shortage of operating capital, Minkow financed his business via check kiting, stealing and selling his grandmother's jewelry, staging break-ins at his offices, and running up fraudulent credit card charges.
[6] Minkow raised money by factoring his accounts receivable for work under contract, as well as floating funds through several banks in an elaborate check kiting scheme.
Short of cash despite the recent expansion, he got a loan from Jack Catain, a Los Angeles businessman who had ties to organized crime.
[2][4][10] In order to obtain more financing, Minkow was persuaded to raise $15 million of capital through an initial public offering of ZZZZ Best stock.
Mark Morze, ZZZZ Best's financial consultant, tricked the accountants sent to perform the necessary due diligence by faking thousands of documents.
[9] Minkow launched a massive television advertising campaign portraying ZZZZ Best as a carpet cleaner that Southern Californians could trust.
"[8] ZZZZ Best's chief financial officer, Charles Arrington, was accused of running up $91,000 in fraudulent charges against customers of his florist business.
[13] When the Feshbach brothers, a pair of short-sellers, learned that Minkow still stood behind Arrington, they did further investigating and discovered ZZZZ Best's claimed $7 million contract to clean carpets in Sacramento was likely a fraud.
Minkow believed he'd found a solution when he learned that KeyServ, the authorized carpet cleaner for Sears, was being sold by its British parent.
[4] Additionally, Minkow thought that KeyServ's Sears business would give ZZZZ Best enough cash to end the Ponzi scheme sooner than originally planned.
The merger would have made ZZZZ Best Sears' authorized carpet cleaner, and also would have made Minkow the president and chairman of the board of the largest independent carpet-cleaning company in the U.S.[4] Soon after the KeyServ deal was announced, Minkow began making plans to become even more powerful, planning to raise $700–800 million to buy ServiceMaster in a hostile takeover and intending to expand to the United Kingdom.
[19] Just as the KeyServ merger was about to close, the credit card fraud that helped keep ZZZZ Best afloat in the early years proved to be Minkow's undoing.
[4] When he ignored her requests to pay her back, she tracked down several other people who had been defrauded by Minkow and gave a diary of her findings to the Los Angeles Times.
[19] The day after this press release, Ernst & Whinney discovered that Minkow had written several checks to support the validity of the non-existent contracts.
[21] Two days later, the Los Angeles Police Department raided ZZZZ Best's headquarters and Minkow's home, and found evidence that the company was being used to launder drug profits for organized crime.
It also accused Minkow of setting up dummy companies, writing phony invoices and conducting tours of purported restoration sites.
[17] On 20 February 2007, Minkow distributed a 500-page report to officials at the SEC, the Federal Bureau of Investigation (FBI), and the Internal Revenue Service (IRS), accusing USANA of operating an illegal pyramid scheme.
[38] Separately from the settlement, USANA paid $142,510 in attorney fees to Minkow and the FDI under an order from federal Magistrate Samuel Alba.
Court documents show that USANA never pursued others whom they suspected of being part of the alleged stock manipulation nor did they ask for an injunction, their only avenue of release in this case.
[28] Minkow issued the report after being contacted by Nicholas Marsch, a San Diego developer who had filed two lawsuits against Lennar for fraud.
Minkow forged documents alleging misconduct on Lennar's part and lied about having to go to the emergency room on the night before he was first scheduled to testify.
[17] On December 27, 2010, Florida Circuit Court Judge Gill Freeman issued a default judgment against Minkow in response to a motion by Lennar.
According to legal experts, terminating sanctions such as default judgments are extremely rare, since they are reserved for particularly egregious misconduct and have the effect of revoking a litigant's right to defend himself.
Prosecutors charged that Minkow and Marsch (listed as an unindicted co-conspirator in the complaint) conspired to extort money from Lennar by driving down its stock.
The complaint also revealed that Minkow had sent his allegations to the SEC, the FBI, and the IRS, and that the three agencies found his claims credible enough to open a formal criminal investigation into Lennar's practices.
[51][52][53] The Los Angeles Times obtained a copy of the plea agreement, in which Minkow admitted to issuing his FDI report on Lennar at Marsch's behest.
While Minkow's attorneys asked for a sentence of forty-one months, Anello felt obligated to impose the maximum for what he called a "despicable, inexcusable crime.
The film, featuring Mark Hamill, Justin Baldoni, Talia Shire and Ving Rhames, was partially funded by donations Minkow solicited from his congregation.