Synopsis
Barry Minkow founded the ZZZZ Best (pronounced “Zee Best”) Carpet Cleaning Company when he was only 16 years old. By Barry’s 21stbirthday, ZZZZ Best had 1,400 employees working out of 21 offices in three states. Barry’s 5.9 million shares of ZZZZ Best stock were worth almost $100 million. Unfortunately, ZZZZ Best never earned a legitimate profit during any year of its spectacular history. Barry used a variety of schemes ranging from credit card fraud to forged building restoration contracts to induce unsuspecting investors to lend him money and buy his company’s shares. A federal judge sentenced Minkow to serve 25 years in prison and ordered him to pay $26 million in restitution.
Discussion Questions
- How did Barry Minkow record loan proceeds and repayments to make ZZZZ Best appear more profitable than it really was?
- What role did Interstate Appraisal Services and Marbil Marketing play in the ZZZZ Best fraud?
- Describe the procedures Arthur Young partner Larry Gray performed to verify the existence of ZZZZ Best’s restoration projects. Were these audit procedures sufficient?
- What events led to ZZZZ Best’s collapse?
- According to the SEC, what errors did auditor George Greenspan make in auditing ZZZZ Best’s April 30, 1986 financial statements?
Additional Resources
Barry Minkow Interview. In this video, Minkow explains his role in the ZZZZ Best accounting fraud (13:26 minutes).
Barry Minkow: All-American Con Man This 2012 Fortune magazine article describes Minkow’s early career at ZZZZ Best, his years as pastor of an Evangelical Christian Church, and his criminal conviction for insider trading.
Called to Account 