Fraud of ZZZ Best Company
The ZZZ Best was the carpet cleaning company that was started by 15 year old Barry Minkow in 1982. He was inspired to enter into this industry by his mother when he was 12 years old. His mother was working as a telephone solicitor for a small carpet cleaning firm. Though most of the companies in carpet cleaning industry were legitimate, the nature of this business attracts many seedy characters of the malpractice. There are no barriers for any entry even no license was required.
It was too easy that a 16 year old boy can start this business with his new driver’s license. The boy started his business as “rug sucker”. Minkow started his business named ZZZZ Best Carpet Cleaning Company in Reseda, San Fernando Valley, California. In the beginning stage Minkow ran his home based business out of his parent’s garage. Minkow soon realized that a small carpet cleaning business grew rapidly in next five years, but Minkow realized that it was difficult to earn from this business. To make earning better he had to face the cutthroat competition.
The young boy had to face customer complaints, bad checks, and nagging vendors also demanding payment. And within very short time phrase he faced the fact of shortage of working capital. And moreover because of Minkow’s young age and the fact that ZZZZ Best was only marginally profitable business. All the local banks refused to give him loan. So, this teenager was looking for some easy ways of earning. Like check kiting, credit card forgeries, and the staging of thefts to fleece his insurance company.
Need essay sample on "Fraud of ZZZ Best Company"? We will write a custom essay sample specifically for you for only $13.90/page
But because of his young age and charm, in this early stage he was able to escape unharmed from the law. And as he came to know the easiest way to make money he wanted to earn more and more. And this inspired him to make his plans larger. The ease with which the system could be beaten encouraged him to exploit it on a larger scale. Minkow was the ambitious teenager who started the company from garage, had the explosive growth in both revenue and also profit. In the period of 1984 to 1987 the net profit of the company increased from $200,000 to more than $5 million.
Also the company grew from a small door to door carpet cleaning service with few employers to a company with 1400 employees. The employees were specialized in “insurance restoration” cleaning. One of the first contracts ZZZZ Best received was from the Genovan Mafia family. During 1986-87, Minkow took the way to frequent television commercials. This advertisement showed Minkow in sharp business suit, selling confidently selling the superiority of the ZZZZ Best Company. Minkow worked hard to get more and more business.
Even he had one man called Tom Padgett of Interstate Appraisal Services, an insurance claim adjuster. He was the one who used to get him larger restoration contracts. Even the ZZZZ Best Company did not clean the carpets as the company was claiming in the advertisement. But this was the way to attract investment for his new plan called Ponzi scheme. Minkow generated fraudulent paper trails to fool the investors. Also Interstate Appraisal Services was created as a separate company to support ZZZZ Best Company.