When the ZZZZ Best carpet cleaning company hit Wall Street, the firm was in debt for $7 million and was in the control of mobsters, Barry Minkow testified Tuesday at his securities fraud trial.
Minkow said he conducted “a road show” to sell investors on the financial wonders of ZZZZ Best in 1986 as he prepared a $15-million stock offering for the company, whose sales were inflated with made-up jobs repairing flood and fire damage to buildings for insurance companies. “It was important to puff up our income,” he said.
The engineers of the scheme, he said, were Maurice Rind and Richard Schulman, Encino neighbors linked by police to organized crime but who have not been charged in the case.
Minkow, 22, beginning his second week of testimony, told a Los Angeles federal court jury that several associates once held his head under water to force him to obtain $11 million in loans.
The prosecution maintains that Minkow was a skilled con man who helped orchestrate the massive fraud at ZZZZ Best, which collapsed in July, 1987. The defense is arguing that Minkow was forced to commit the fraud.