Financial Felons: Barry Minkow

Posted Nov 21st 2008 10:17AM by Tracy Coenen
Filed under: Law, Scandals

This post is part of a feature in which he wonder whatever happened to some notorious financial felons. See all 17.

Barry Minkow was one of the youngest people to ever take a company public in the United States. He is remembered not for that feat, but for the massive financial fraud he committed via his company ZZZZ Best Co., Inc. The stock of the carpet cleaning company once had a value of $300 million, but it all came crashing down in the late 1980s.

Minkow and a few associates successfully fooled financial statement auditors into believing the company had millions of dollars of revenue each year. In reality, the revenues were 86% below what they were reported to be. Barry took over $20 million in loans from 15 banks and several individuals in furtherance of his fraud.

He was sentenced to 25 years in prison while still in his early twenties, and ultimately spent more than seven years in prison, all of it in maximum or medium security prisons. Minkow's sentence also included $26 million in restitution. While in prison, Minkow became a Christian and devoted his life to ministry.

On his release from prison, Minkow went to work at a church, eventually becoming Senior Pastor of San Diego Community Bible Church. He still holds this position, but also works as a fraud investigator through Fraud Discovery Institute, which he cofounded. Minkow is credited with helping law enforcement uncover over a billion dollars in fraud. He frequently trains federal law enforcement on fraud schemes, and is featured regularly on television programs to talk about fraud-related issues. Minkow still owes millions in restitution, but is reportedly still making regular payments on the balance owed.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Tags: Barry Minkow, financial felons, fraud, Fraud Discovery Institute, San Diego Community Bible Church, ZZZZ Best

Print this

Reader Comments (Page 1 of 1)

11-19-2008 @ 8:07PM

LEIGH said...

This man got 25 YEARS, ONLY SERVED 7 OR 8 YEARS, STILL OWES MILLIONS OF $$ RESTITUTION & IS OUT OF PRISON BECAUSE HE BECAME RELIGIOUS????? GIVE ME A BREAK!!! What about all the people that lost MILLIONS OF $$ because of him???? Are they forgiving him too??

11-21-2008 @ 10:34AM

tbforesight said...

This is the second great depression:

You wroteon November 20, 2008 at 7:27am
A technical analysis of the Great Depression shows that the Dow industrial average closed at 381.17 at its peak and 41.22 at it's bottom. This occured from the initial decline beginning September 3, 1929 and ending July 8, 1932. Over a period of almost three years, the markets experienced an 89% decline. If this occured in the past, is it possible that it could occur today? An 89% decline of the Dow today would mean a Dow 1559. This would be unthinkable if it happened. Right now (today) we are at a Dow 7,862. The market peaked at 14,165 in 2007. This is a 44% decline so far. Assuming that the Great Depression was the worst case scenario, we have only seen one other decline of similar proportions and quickness. Aside from the period 1929 through 1932, there was an additional similar decline from 1937 to 1938. Now the market is much broader than it was then and far more complex. There are now stock market indexes across the globe. All are currently in decline. Does this mean that markets are more diverse and complex and therefore will not decline by the same percentage as in 1929? I feel that it is unlikely to decline by the 89% it once did but a 66% decline in the Dow is possible and in fact likely considering the shear size and depth of the market and the interconnectedness of the global market. This means a Dow of 4,674 at the bottom or about 3,300 more points off the Dow over the next two years. If the government continues to pump dollars into the economy, this could prop up the market in the 5,000 - 6,000 range but may only delay the inevitable decline to the predicted 4,674. A further analysis of the 1929 crash indicates that the market reached an average bottom at an index of approximately 100 from 1933 until 1942 before beginning to gain again. This would be slightly under 1/3 of the peak index of 1929. Based on worst case scenario, the market would drop to the 4,674 (on average) and stay there for 10 years. Does anybody believe this is unlikely?