Ex-Minkow Aide Enters 4 Guilty Pleas

A former top official of Barry Minkow’s ZZZZ Best carpet cleaning company pleaded guilty Thursday to four counts of income tax fraud and conspiracy, admitting that he maintained a $200,000 slush fund for Minkow and gambled away $42,000 during a mad, last-minute attempt to take cash out of the crumbling company by laundering it through Las Vegas casinos.

Jack N. Polevoi, a former ZZZZ Best vice president, also detailed new insider trading charges filed Thursday, admitting that he and his brother made a $225,000 profit by selling 54,200 shares of ZZZZ Best stock once they learned that Minkow planned to resign and the company was falling apart.

“For several months, I convinced myself that I didn’t do anything wrong, but I tell you now, I know I did,” Polevoi told U.S. District Judge Dickran Tevrizian, his voice breaking. “I want to pay my dues. I want to get on with my life.”

Polevoi was the seventh of 12 original defendants indicted on bank fraud, securities fraud and racketeering charges in connection with ZZZZ Best’s transition from a hot Wall Street commodity to financial ruin.

Several company employees have already admitted they helped Minkow, 22, carry out a fraud that made it appear ZZZZ Best’s earnings were strong so the company could qualify for millions in bank loans and stock offerings. Minkow claims he was forced to engage in the fraudulent activities by organized crime figures.

“I wanted to pal around with him (Minkow) because I liked his life style,” Polevoi, a former neighbor of the entrepreneuer, said. I got caught up in it, your honor. Barry Minkow never held a gun to me, he never forced me to do anything. I did it on my own,” he said.

Tells of Slush Fund

Polevoi told the court that he maintained, at Minkow’s request, a slush fund that prosecutors have estimated at well over $200,000 from which Minkow bought cars, jewelry and, on occasion, concert tickets for 40 to 50 people.

As reports that the company had engaged in fraud became public and the empire began to crumble, Polevoi said, Minkow told him he planned to resign as head of ZZZZ Best and asked him to take $712,000 in cashier’s checks from corporate accounts and bank drafts and convert them to cash in Las Vegas.

While several associates exchanged the checks for gambling chips, Polevoi, who admitted to having a gambling problem, said he “sat at the tables for four solid days,” winning some money but losing about $42,000.

Polevoi said he had asked Minkow about the source of the money for the cashier’s checks, and Minkow told him that he simply hadn’t cashed his $30,000-a-month salary checks for the previous nine months.

“But you know something? My eyes were closed. I didn’t care,” Polevoi said. “When I heard Las Vegas, sparks just started flying. I didn’t care.”

The insider trading charges, one of the conspiracy counts included in a four-count information to which Polevoi pleaded guilty, allege that he and his brother, Jerry, sold short 54,200 shares of ZZZZ Best stock based on non-public information that Minkow was resigning and the company was in a shambles.

The judge set sentencing for Oct. 17. Polevoi faces a maximum of 16 years in prison and a $1-million fine.