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How Barry Minkow Made Millions In ZZZZ Best Ponzi Scam


ZZZZ Best was a company founded by Barry Minkow that cleaned and repaired carpets, and also carried out a massive fraud.

But in fact, the company was a front for one of the biggest Ponzi schemes in history which led to long jail sentences for Minkow and a number of the staff.

The company (pronounced Zeebest) was formed in Minkow's parent's garage in 1982.

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Initially, its performance was terrible, and Minkow, just 16 years old, constantly had to deal with complaints and supplier collection requests. 

Faced with a shortage of money, Minkow raised cash by by various nefarious means including stealing, selling his grandmother's jewelry, faking break-ins at his offices and running up fraudulent credit card charges.


In December 1986, the business went public.

It was valued at an astonishing $300 million in the first seven months of the initial public offering.

Minkow created the illusion that his business was doing well and was profitable, so he began committing crimes like fraud, theft, and insurance scams to keep it running and pay suppliers.

What was the scam?

Minko and his business partner Tom Padgett formed a fake company to defraud banks and lending organizations out of millions of dollars.

Padgett, an insurance claims adjuster, schemed with Minkow to forge documents crediting ZZZZ Best for repair work using Interstate Appraisal Services as the reference to prove the claims.

Just as they wanted, bankers and investors acquired an interest in ZZZZ Best solely based on the fake financial statements made by Minkow's firm.

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As time passed and the Ponzi scheme continued, ZZZZ Best experienced massive cash flow issues. 

Minkow planned to get KeyServ, Sears' carpet cleaner, for $25 million.

This was meant to solve all the issues within the business to end the Ponzi scheme.

As you can guess, the plan failed.

Before the deal was finalized, the one woman who never got her money back exposed the initial fraud.

The L.A. Times featured her story, which caused ZZZZ Best's stock price to fall quickly.

Lenders stopped their loans, and more investigations began, exposing everything about Minkow and his fake company.

The Ponzi scheme was exposed after this.

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How was the Ponzi Scheme discovered?

Remember that one woman who was overcharged just a few hundred dollars by Minkow that he never paid back?

Well, she tracked down a couple of others who had been conned by Minkow.

She gathered all evidence from the people she met and passed her discoveries on to the Los Angeles Times.

The newspaper publicized a story revealing Minkow's relatively minor fraud.

However, this created a domino effect, and ZZZZ Best was outed as a Ponzi scheme - one of the biggest ever carried out by one person.

Read More: Florida Man Charged Over Alleged $35 Million Ponzi Scheme Which Targeted Churchgoers

Fraud sentencing, finding God, jail again, and again

In January 1988, Minkow and ten other ZZZZ Best insiders were indicted by a federal grand jury.

They were charged with 54 counts of racketeering, securities fraud, money laundering, embezzlement, mail fraud, tax evasion and bank fraud.

Individually, Minkow was charged with counts of credit card fraud. 

One year later, he was found guilty of all charges, was sentenced to 25 years in prison, and had to pay more than $26 million in reimbursement.

Padgett was jailed for eight years.

In prison, Minkow found God and became a born-again Christian, despite being raised a Jew.

He was released on parole in 1995, where he became pastor of a church in San Diego.

In 2001, he formed the Fraud Discovery Institute, which works with the FBI and other government agencies.

The formation led to at least 20 massive Ponzi schemes being shut down, including one which had taken $500 million from investors.

Another saw the ringleader jailed for 30 years.

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However, just when it seemed Minkow had changed his ways, he was jailed again in 2011 for five years for another fraud.

He released a report accusing major homebuilder Lennar of massive accounting irregularities and fraud.

This led to a massive drop in the company's share price.

Court records show Minkow had shorted Lennar stock before he issued the report.

He was charged with conspiracy to commit securities fraud and jailed for five years.

He was ordered to repay a staggering $583.5 million to Lennar.

"It doesn’t get much worse than that in the world of non-violent crime"

Two years later, it was found he also embezzled more than $3 million from his own parishioners.

One of the more despicable acts was stealing $75,000 from a widow whose husband had died of cancer.

He persuaded her to donate to a made-up hospital in Sudan, and simply kept the money for himself.

In sentencing for the church fraud, U.S. District Judge Michael Anello said: "It doesn’t get much worse than that in the world of non-violent crime.

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Minkow admitted more fraud charges spanning a decade.

His crimes included opening unauthorized bank accounts on behalf of the church.

He also forged signatures on checks, used money from official church accounts for himself and charged personal expenses to church credit cards. 

Minkow also confessed to diverting member donations for his own benefit and embezzling money intended as church donations.

A film of the life of Minkow - who is still only 56 - called "Con Man" in which he insisted on playing his middle-aged self, was released in 2018.

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