2 in Case Plead Guilty on Eve of Minkow Trial

On the eve of Barry Minkow’s trial on charges of staging an elaborate securities hoax, two former associates pleaded guilty Monday to roles in setting up a series of phony jobs to inflate the value of the youthful entrepreneur’s ZZZZ Best carpet cleaning company.

The pleas entered by Mark Roddy, 36, and Edward Krivda, 30, leave Minkow virtually alone to stand trial on a variety of securities fraud and bank fraud charges stemming from the collapse of the company he launched in his parents’ Reseda garage.

Of 12 men originally charged in the case, all but two have now pleaded guilty. Minkow and accountant Norman Rothberg are scheduled to go to trial this morning in Los Angeles federal court in a case expected to span at least three months.

In pretrial motions Monday, government prosecutors were unsuccessful in winning an order from U.S. District Judge Dickran Tevrizian restricting Minkow’s defense that he was forced by organized-crime figures, who were secretly running the company, into staging the phony jobs, supposedly repairing fire and flood damage to buildings for insurance companies.

Though Tevrizian told the defense he would “basically not allow you to use what I consider to be the Godfather approach,” the judge said he would not yet require the defense to reveal its hand about how Mafiosi purportedly dominated Minkow and his company.

In a surprise move, defense lawyer David Kenner said he plans to call Los Angeles Police Detective Mike Brambles, the investigator who has probed ZZZZ Best for nearly two years, as an expert witness for the defense on organized crime.

Assistant U.S. Atty. Gordon A. Greenberg called the move “an example of legal foreplay at its finest,” in light of Minkow’s lawyers’ past assertions that Brambles lied about surveillance of organized-crime figures and depended on unreliable informants to assert that ZZZZ Best was used to launder illegal drug proceeds.

But Kenner said the Los Angeles Police Department’s reports on Brambles’ drug money laundering investigation prove that the department, at least, viewed ZZZZ Best as a tool of organized crime. No money laundering charges have been filed by either state or federal authorities.

Prosecutors won a concession of their own when Kenner agreed not to oppose introduction of evidence that Minkow forged more than $7,000 worth of stolen insurance checks and ordered his bodyguards to assault a victim of his company’s purported fraud--both long before he met the reputed underworld figure who is alleged to have drawn Minkow and the company deeper into crime.

Roddy, who admitted conducting tours of supposed insurance restoration job sites for accountants and attorneys overseeing ZZZZ Best’s attempt to sell stock to the public, pleaded guilty to one count of conspiracy and three counts of securities fraud. He faces a maximum of 20 years in prison and a $1-million fine when sentenced on Nov. 7.

Krivda, an employee of a company that supplied ZZZZ Best with carpeting, pleaded guilty to one count of making false statements to the Securities and Exchange Commission.

Krivda admitted that he lied when he denied he had once identified himself as a sales manager of the supplier in an audit report that exaggerated the amount of carpeting sold to ZZZZ Best.