Witness Says Minkow Stashed Money, Spent Freely as End Drew Near

Times Staff Writer

ZZZZ Best founder Barry Minkow stashed tens of thousands of dollars in cash at a neighbor's house and spent it on luxury cars, jewelry, trips to Hawaii and concert tickets in the months before his company slipped into bankruptcy, the wife of a former company official testified Tuesday.

Minkow, the youthful entrepreneur who is on trial on 57 fraud counts stemming from the collapse of his carpet cleaning empire, spent more than $26,000 during six weeks in 1987 by hiring a cheering section for a girls softball team he managed and $840 to cater a romantic dinner with a new date when his girlfriend left town, said Jan Polevoi, wife of former ZZZZ Best Vice President Jack Polevoi.

As Minkow alternately grinned sheepishly and chewed huge chunks out of a Styrofoam cup, Jan Polevoi described in federal court how the money was secreted in a leather pouch at the Polevoi residence near Minkow's Woodland Hills home. Federal prosecutors have described the cash as a corporate slush fund set up with the proceeds of Minkow's fraudulent business enterprises.

In a separate development, defense lawyer David Kenner reached a stipulation with the prosecution in which Minkow formally admits that ZZZZ Best's supposedly profitable business restoring flood and fire damage to buildings for insurance companies was, in fact, "virtually entirely fictitious." The stipulation says that 26 job sites from San Diego to Tempe, Ariz., where restoration work was supposedly going on, were "fictional."

Prosecutors claim that Minkow bolstered sales figures on the Reseda-based company's books with phantom revenues from the insurance restoration jobs in an elaborate pyramid scheme to generate loans and stock offerings.

Minkow, 22, has conceded that the jobs were fictitious but claims that he was forced into maintaining the fraud by mobsters who were taking money out of the company and threatening his life. Kenner has told the jury that Minkow's only personal profit from the company was a $6,000 car.

But testimony from Polevoi revealed that Minkow spent $7,620 from the slush fund to buy a ring for his girlfriend and took out additional money to make payments on a Mercedes, a Porsche and a Cadillac, to buy himself new suits and to send his girlfriend to Hawaii.

$26,000 for Spectators

Polevoi testified that Minkow spent $26,000 in 1987 hiring spectators to attend games of his girls softball team in Encino.

One week, she said, Minkow was particularly concerned about the team winning and spent $4,250 for a cheering section. "He said, 'I want fanfare, I want pompons, I want placards, I want bullhorns,' " Polevoi said.

"Were they happy fans?" Assistant U.S. Atty. Gordon Greenberg inquired.

"Very happy," she replied.

They were so happy, one-time ZZZZ Best associate Eugene Lasko testified earlier Tuesday, that the father of an opposing player got angry "about the way we were all yelling" and pinned Minkow to the wall near the hot dog stand. Minkow's bodyguard "creamed the guy" with a punch to the face, Lasko testified.

The night after Minkow's girlfriend left for Hawaii, Polevoi said, Minkow made plans for a romantic at-home dinner with a woman he had just met and asked Jack Polevoi and his brother, Jerry, another former ZZZZ Best employee, to show up at his house and serve the $840 feast.

"Barry said he wanted it classy, gourmet. He really wanted to impress her," Jan Polevoi testified.

The Polevoi brothers, who both have entered guilty pleas to various charges in the case, donned tuxedoes and arrived at Minkow's house to serve dinner, she said.

"I went over and set the dinner table because Jack didn't know where to put the forks and spoons," Jan Polevoi said as FBI agents, spectators, lawyers and even Minkow broke into laughter. "He did call me at one point during the evening and said, 'Everything's going fine; I'm getting ready to serve dessert.' "

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