A former weightlifter--who Barry Minkow said threatened and beat him into staging an elaborate fraud at his ZZZZ Best Carpet Cleaning Co.--was sentenced Monday to three years in federal prison.
Daniel Krowpman, who claimed he was just another of Minkow’s victims, also was ordered to serve five years probation and pay a $5,000 fine for helping generate a series of fraudulent financial documents that helped carry off the multimillion-dollar swindle.
“I never meant to hurt anyone,” he told U.S. District Judge Dickran Tevrizian. “If I’d have known what was going on, I’d have never been involved. Never. . . . You heard a lot of bad things about me, but they weren’t true.”
An accountant who demanded a bribe to conceal the ZZZZ Best swindle from lawyers and auditors, Norman Rothberg, was sentenced to one year in prison, and a third player in the ZZZZ Best fraud, Edward M. Krivda, was ordered to serve 60 days in a halfway house and contribute 300 hours of community service for making false statements to the Securities and Exchange Commission.
Minkow, 22, who was convicted on 57 counts of fraud for swindling banks, investors and customers out of at least $26 million by staging a series of phony insurance restoration jobs, is scheduled to be sentenced March 13.
Krowpman went into business with Minkow after the two men met while working out at a San Fernando Valley gym. He was the man who, Minkow said, initially beat him and threatened him into making huge interest payments on the money he put into the company. At one point, Minkow testified, Krowpman attempted to rape him.
Both prosecutors and the judge discounted Minkow’s story, although Assistant U.S. Attys. James Asperger and Gordon Greenberg said Krowpman did help generate paper work showing that a tool company he represented was supplying large quantities of tools for ZZZZ Best’s phony insurance restoration work, when in fact it was not.
‘Knew He Was Lying’
Asperger said it is even possible that Krowpman believed Minkow’s story that most of the insurance restoration jobs were real. “But he knew he was telling lies . . . He was used and manipulated by Barry Minkow, but Barry Minkow was capable of using and manipulating some incredibly sophisticated people.”
“Every one of the defendants comes here and says how naive they were,” the judge said. “This is not a situation where the Keystone Cops masterminded this tremendous fraud.”
Tevrizian also noted the estimated $600,000 Krowpman allegedly took in through his dealings with ZZZZ Best.
“You don’t get $600,000 over a short period of time just standing around in line,” the judge said. “He doesn’t want to destroy that income stream. It’s not naivete. It’s greed.”
Tevrizian also was harsh with Rothberg, who accepted more than $17,000 to backtrack from his initial reports to auditors that ZZZZ Best was faking the insurance restoration work.
“You’re educated, you’re articulate, you’re intelligent, and I think what happened is you got caught in that whole Barry Minkow thing, going for the home run each and every time you step up to the plate,” the judge said. “You caught the greed bug, the greed disease.”
Rothberg’s attorney, Richard D. Burda, said Rothberg was a relatively poor staff accountant who was watching everyone around him make millions.
“I just think he’s been poor and scraping for so long . . . that he wanted a taste for himself,” Burda said.
The attorney also said it was Rothberg who initially raised the suspicion of outside lawyers and accountants, touching off the investigations that eventually led to ZZZZ Best’s downfall.
“He was the whistle-blower in this case,” he said, prompting Tevrizian to interject:
“The whistle got plugged up.”