Minkow Describes Drug Use, Attack on Fraud Victim

Barry Minkow testified Friday that he provided money for cocaine on several occasions to an employee of his ZZZZ Best carpet cleaning company for being “a good worker” and that he had used cocaine himself about a dozen times despite his widely publicized anti-drug campaign, “My Act Is Clean, How Is Yours?”

Under a third day of cross-examination in his fraud trial in Los Angeles federal court, Minkow also admitted collecting “usurious” interest rates on ZZZZ Best money he loaned to a businessman, and he also described “the worst conduct that I ever displayed as a human being,” an incident in which he watched approvingly as a man he overcharged in a credit card scheme was beaten.

“I was like, ‘Yeah, get him, get him! He served me with a (lawsuit), he deserves it,’ ” Minkow testified.

Prosecutors have alleged that Minkow himself then picked up the man’s glasses and, laughing, crushed them on the pavement. But Minkow testified that the glasses were smashed by an associate who administered the beating.

Throughout his testimony, Minkow insisted that it was former ZZZZ Best associate Daniel Krowpman, a man he alleges terrorized him with regular threats and beatings, who forced him into many of the actions. Minkow said Krowpman directed him to make the usurious loans and then collected the interest proceeds himself.

Prosecutors played for the jury a videotape of Minkow’s anti-drug commercial, in which he tells young viewers that he is 21 years old and heads a business that employs 3,000 people.

“That’s pressure, and it’s drug free. If I can handle pressure, so can you. If you can’t, don’t be afraid to ask for help--please,” Minkow entreats in the television commercial, which was filmed for KTLA in Los Angeles.

Minkow testified that he was taking massive doses of steroids as part of a weight training program and occasionally using cocaine, which he at one point described as “fun,” throughout the anti-drug campaign.

‘Cocaine Bonuses’

Questioned about whether he provided “cocaine bonuses” for ZZZZ Best employees, Minkow said that he provided money to buy cocaine for one former ZZZZ Best worker, Bruce Blair.

“I would pay for it at times because Blair was a good worker,” he said. “I never bought cocaine and said, ‘Here, Mr. Blair, have some, it’s on me.’ But it’s not something that I wouldn’t have done.”

Blair was transferred to another ZZZZ Best office after he began making sexual advances toward Minkow and was eventually fired, Minkow said.

The incident with the credit card fraud victim involved a couple, Bill and Robin Swanson of La Canada, who had bought $25 worth of flowers at a company Minkow secretly owned and found themselves with an unauthorized $611 charge on their credit card.

Reneged on Promise

When Minkow reneged on a promise to cancel the charge, Bill Swanson arrived at ZZZZ Best with a small claims court lawsuit and began to serve it on Minkow’s father, according to testimony.

Minkow said he was at another ZZZZ Best office when he got a call that someone was threatening his father. He took along Krowpman’s son, Daniel Krowpman Jr., raced over to the other office and confronted Swanson in the parking lot, he said.

“I had received a lot of threats, and I was really scared. . . . I was freaked out,” Minkow testified.

When Swanson served him with the lawsuit, he said, he read it and was relieved that it was not a lawsuit directed at the entire company. He crumpled it up and threw it down in disgust, he said.

“What you said (then) was, ‘This is chump change.’ Do you remember saying that?” Assistant U.S. Atty. Gordon Greenberg asked.

“I might have said it was chump change,” Minkow replied.

Attack Described

When Swanson began to walk back to his car, Minkow said, Krowpman went after him and punched him “several times.” Swanson’s glasses “went flying off,” he said. “He said, ‘Give me my glasses, give me my glasses, please.’ ”

But Krowpman picked them up and smashed them on the pavement, Minkow said, adding that he egged his companion on.

Minkow is charged with 57 counts of bank fraud, securities fraud and other violations stemming from the credit card overcharging and a phony insurance restoration scheme that netted ZZZZ Best up to $70 million in bank loans, stock offerings and other revenues.