[ young today, rich tomorrow ]

Cleaning House: The dirty business of white-collar crime

By brass Staff, Bryan Sims on February 1st, 2005 • Advice, Career, Entrepreneurship, Investing, Life
Originally appeared in: Spring 2005

Barry Minkow wants the story of his roller coaster life to be an example to ambitious young people out there. Don't get carried away with success, and never sacrifice your values. At the age of twenty-one he owned a mansion in Southern California, drove a red Ferrari, employed over 1,400 people and was the youngest CEO of a publicly traded company in United States history, valued in the hundreds of millions. Life was great for Barry, or Mr. Minkow as he made his employees call him at ZZZZ Best, a carpet cleaning company he started in his parent's garage at age sixteen.

No one knew that behind the veil of success was a steroid crazed young adult driven to perfection who had managed to get himself in too deep, too far, too fast. Barry and his success were no more than one lie piled on top of another. At the bottom was one of the larger scams in recent history with all the inner workings of the mafia, FBI investigations and just about every forged document imaginable. Barry was caught and what he faced drove him to the contemplation of suicide. Upon his conviction, Barry received a 25-year prison sentence with a $26 million restitution to pay back victims of his fraud.

That would have been the end of the story for most, but for Barry it was just the beginning. Housed with a convicted murderer in high level security prison, he experienced things that ultimately changed his life. While in jail Barry received two degrees, a BA and Masters in ministry, while starring as the prison's quarterback and serving on the suicide prevention team. Due to good conduct, Barry was released after seven years and four months.

What ensued is a remarkable story about a former convict-turned pastor who came back from failure to spend the majority of his life doing good for people around him. Barry still leads a double life. What was once lies and fraud is now a balancing act of preaching to a growing church in San Diego and running the Fraud Discovery Institute. He is uncovering over a billion dollars in fraud cases across the country while working collaboratively with government agencies such as the SEC and the FBI. To cap it all off, Barry continues to make payments to the victims of his scam despite having his restitution revoked by the court.

We had the lucky opportunity to speak with Barry about his experiences and have included some excerpts from the interview in addition to an excerpt from his recently released book, Cleaning Up, on the following pages.

Unlike most white collar criminals, Barry did not receive a slap on the wrist and an 18-month stay at a golf course prison camp for his crimes. Quite the contrary… Mr. Minkow served more time in custody than Michael Milken, Nick Lesson and Leona Helmsey combined. He served his sentence in maximum security and his cellmate was serving time for murder.

BRYAN: Can you talk about some of your previous experiences with ZZZZ Best before your life now as a pastor fighting fraud?
BARRY: My reasons for starting ZZZZ Best were pretty pragmatic. Basically, I started a company in eleventh grade trying to get a date with a cheerleader. I needed to buy a new car so she'd go out with me, since I wasn't good looking or a star on the football team. I didn't start out trying to defraud Wall Street by age twenty. That's a critical point, Bryan. There are more than 2.4 million people in prison with one thing in common: none of us ever planned on being there. We started out with the best of intentions. I believed firmly that fraud wasn't an end in itself; it was a means to an end. Basically, I was only going to lie to auditors and defraud investors until the stock became free traded in January of 1988. Then I would've sold a million shares at $18 a share, gotten 18 million dollars, paid back the mafia, paid back investors and banks and gone legit! Fraud is a means to an end and not an end in itself.

BRYAN: How did you first start attracting investors when you were 20 years old?
BARRY: I made sure their first names ended in vowels, it made it kind of easy.

BRYAN: So were they mostly from the...
BARRY: Mob. Early investors were mob driven. Banks didn't come until the company was already public.

BRYAN: My understanding was that the whole downfall of the company was that the FBI was investigating the mafia and...
BARRY: Yeah, then I got back-ended in it. Plus there was an LA Times article. That's the problem with fraud, it goes from order to disorder quickly. You know Bryan, I think your readers can learn two things about failure. You can bounce back from failure and it's not the end of the world to fail. It beats the hell out of lying, cheating, stealing and ending up in prison. You can come back from failure. That's the whole point of my book. Nobody failed worse than me. I was twenty-one years old with a 26 million dollar restitution order. I was the king of failure. If you start a business and fail, it's ok. Just don't lie about it. The SEC doesn't indict people for losing money; the SEC indicts people for lying about making money. That's what I think the sad reality is and people aren't grasping; too many young entrepreneurs fall into the trap of "I can't fail." In this country, you can fail and it's ok because it's not about what you did yesterday, it is about what you're going to do today and tomorrow.

BRYAN: What is it like leading a double life between what you do as a pastor and ...
BARRY: It's very difficult. One minute I'm premarital counseling for a couple, the next I'm on the phone with the FBI talking about wearing a wire! It's tough to juggle.

BRYAN: I'm sure you've had people comment about your authenticity...
BARRY: No, actually they don't. They used to. They used to say, "Born again until you're out again." But when you're out for ten years and you've uncovered a billion dollars in fraud and your judge and your prosecutor are your buddies, that all stops real quick. We built the church, which has grown from 130 to 1200 people, and I've been the senior pastor for eight years. Time, plus truth, equals trust. You need a lot of truth over a long period of time to regain the trust.

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