Minkow Says Fear of Reputed Loan Shark Led Him to Crime

Barry Minkow, the former ZZZZ Best carpet cleaning executive, told jurors at his fraud trial Wednesday that he was driven into debt and petty crime while still in high school by an associate who threatened him with death if he sought outside help.

“I never told,” Minkow, 22, said during his second day of testimony in federal court. “I was afraid of being killed.”

As he did during his opening testimony Tuesday, Minkow said the man who intimidated him was Daniel Krowpman, 42, a former ZZZZ Best director who pleaded guilty last March to fraud charges stemming from his role in the $43-million stock-and-insurance hoax committed by the Reseda-based company.

Minkow, under questioning from his attorney, David Kenner, said he lived in day-to-day terror from the reputed Woodland Hills loan shark during 1983 and 1984, when he was a teen-ager building the carpet cleaning business he founded in his parents’ garage.

Both Kenner and U.S. District Judge Dickran Tevrizian asked Minkow why he didn’t seek help from police or federal authorities.

“You don’t understand,” Minkow said. “This guy (Krowpman) doesn’t feel pain, pity or remorse. He would kill me.”

Minkow’s testimony, during the 10th week of his trial, continues to follow the defense strategy of portraying him as a young man coerced by devious people, ranging from penny-ante thugs to sophisticated criminals with organized crime connections.

Minkow’s portrayal of his relationship with Krowpman, however, appeared at odds with a telephone conversation they had on Oct. 23, 1987, which was taped by Los Angeles police detectives and released earlier this year by a congressional subcommittee investigating the collapse of ZZZZ Best.

At the time, as authorities were looking into the Minkow firm, a nervous Krowpman was assured by an apparently friendly Minkow that he--Krowpman--had nothing to worry about.

“You knew nothing, you’re not involved . . . “ Minkow assured Krowpman, according to a transcript of the police tape, parts of which were played for the jury last month. “Danny, take the Fifth Amendment. Don’t say a . . . word.”

Minkow has not yet testified about that conversation.

Speaking calmly most of the time, Minkow has portrayed himself as a naive high school kid who had gone astray. During one break Wednesday, he rested his head on his arms on the witness stand.

Checks Bounced

At one point, Kenner asked him about a time when he cashed about $20,000 worth of checks for an acquaintance and charged a 5% commission. The checks bounced and the bank held Minkow responsible.

“Did that venture go awry?” Kenner asked.

“What’s awry?” Minkow replied.

On another occasion, Minkow said, he made out checks to “The Telephone Co.” because, as a 16-year-old, he didn’t know that Pacific Bell was the company that owned the ZZZZ telephone lines.

In his junior and senior years in high school, Minkow said, he was thousands of dollars in debt to Krowpman, whom he had met at a body-building gym and turned to for a loan to start the carpet cleaning firm.

Minkow said that in September, 1983, Krowpman became angry with him, threw him up against a wall and kicked him in the stomach, causing him to “throw up blood.”

By the spring of 1984, Minkow said, he was so desperate to pay back Krowpman that he resorted to stealing money orders from a nearby company “to pay my bills and get out.”

“I was in high school,” Minkow said. “I just wanted to go to football games on Friday nights. I didn’t want to be worried about this damn business anymore.”

His own attorney is expected to continue questioning Minkow at least through today. In discussing the chronology of ZZZZ Best, Minkow has not yet reached the stage where it became a company with franchises throughout Southern California whose stock was a Wall Street favorite. Nor has he discussed a variety of organized crime figures whom his attorney claims coerced him into the major fraud in which ZZZZ Best overstated its earnings by fabricating jobs repairing flood and fire damage to buildings.

Ten of the 12 original defendants in the fraud case have pleaded guilty. Accountant Norman Rothberg is on trial along with Minkow.