To look at them, nobody would have thought they could do it: An insurance adjuster who couldn’t seem to hold down a job. A family man who ran a small janitorial business. A former UCLA linebacker who taught himself accounting. And the kid with the big mouth and an overdose of charm.
But together they pulled off one of the biggest swindles in Southern California history, a $100-million con that convinced wealthy investors, a Big Eight accounting firm and Wall Street bankers that Barry Minkow’s ZZZZ Best carpet cleaning company was making a fortune repairing office buildings damaged by flood or fire.
Even today, after a 3 1/2-month trial that laid bare the charade, investigators are having a hard time figuring out how such a bunch of seeming ne’er-do-wells managed to pull it off. But then, so are the guys who did it.
Doctoring the Books
“It was literally like the Three Stooges, practically,” said Mark L. Morze, the former football player who stayed up nights with a small word processor and a bottle of White Out doctoring the books. “We used to just sit there and look at each other every day, saying, ‘I can’t believe it’s still going along, that people still believe this stuff.’ ”
By the time it was over, Minkow was found guilty of 57 counts of fraud and conspiracy, and 11 associates of the company he had vowed to turn into “the General Motors of the carpet cleaning industry” stood convicted of various fraud charges.
Minkow, scamming to the end, claimed throughout his trial that he had been manipulated by shadowy organized crime figures into carrying out the fraud.
But at his sentencing this week, when a federal judge handed down a 25-year prison term, the now-23-year-old Minkow admitted that the Mafia story was just that--another story. And the truth, it turned out, was even stranger: ZZZZ Best really was, all along, the tale of a kid who started a company in his parents’ garage, brought in some buddies from the gym, cut a few deals with reputed mobsters, dabbled in the netherworld of junk bonds and stock splits--and wound up with an empire worth $200 million on Wall Street.
An Unbelievable Script
“If you wrote a movie script with this cast of characters, no one would believe it,” said Assistant U.S. Atty. James Asperger, who tried the case with co-prosecutor Gordon Greenberg. “It was like the ‘Dirty Dozen,’ only they were out to commit evil.”
Although most of the ZZZZ Best principals still face civil suits filed by investors, stockholders and banks that were duped, the initial wave of criminal prosecutions concluded with Minkow’s sentencing on Monday.
As they prepared to go off to prison, three of Minkow’s top lieutenants spoke at length for the first time about how they pulled it off.
They admit that they deserve to be punished. All profess stinging regret for the people who got left holding the bag when the swindle collapsed. But there is in all of them still a hint of carefully shrouded pride about the entire mad, brazen, larcenous affair, an infectious enthusiasm that allows them to plunge into the story and get caught up in it again, and talk about how they came that close --four days away, they figure--to making ZZZZ Best a legitimate, multimillion-dollar corporation.
“If everything had worked out,” Morze said dreamily, “everyone makes out like a bandit. The stockholders make money, the income tax people collect taxes, three or four thousand people get jobs, America gets its carpets cleaned, the investment bankers get paid back, I become wealthy, Barry becomes wealthy, everybody makes out.”
Even Morze couldn’t resist the next line: “But noooo . . . .”
Minkow’s story, by now, everybody knows. How he started the business with a few rug shampooing machines and went on to publish his own book about becoming a teen-age millionaire. How he started driving a $130,000 Ferrari, bought a mansion with a huge Z on the bottom of the swimming pool and hired fans, at $100 apiece, for the softball team he managed.
Less prominent have been the stories of the men he took with him to short-lived glory, the men, many of them approaching middle age, who suddenly saw the answer to their dreams in the visage of a wisecracking teen-ager.
Minkow was only 14 when Tom Padgett ran into him in a San Fernando Valley gym. Padgett was a Vietnam vet who could bench press more than 300 pounds, who didn’t want to hear from the kid who kept lurking around, nagging about how he wanted to train with him.
Padgett was 30 then and had a decent job as a claims adjuster with Allstate Insurance, but it was starting to get to him; his life wasn’t going anywhere. He took up boxing and, by his third fight, got hammered so badly he had to wear dark glasses the next day.
‘You Forget to Duck?’
“Everyone at the gym is getting a big charge out of it,” he recalled. “They’re saying, ‘What’s the matter, punchy? You forget to duck?’ ”
The Minkow kid told them all to shut up. “At least Tom had the guts to go in the ring, and that’s more than you guys,” Padgett recalled him saying. “It shut everyone up--and it really drew me to him.”
They got to hanging around in the Valley, and when Minkow, at 15, decided he wanted to start a carpet cleaning company, he got $1,500 from one of the weightlifters and another $4,500 from Padgett, who took out a loan for him.
It wasn’t a bad idea. Minkow had learned telephone sales from working with his mother, and soon ZZZZ Best’s vans were parking in front of houses around Los Angeles, promising to clean two rooms for $39.95--without extra charges.
Having Padgett at Allstate was a big boost for the fledgling carpet company. Padgett was able to steer an occasional insurance job ZZZZ Best’s way, contracts to repair homeowners’ floors after the bathroom flooded or someone dropped a burning frying pan in the kitchen.
But Minkow was having money troubles even from the start, trouble paying back the money he had borrowed to get the company going. Padgett got a notice from the bank that Minkow had missed several payments on the loan Padgett had obtained. Then, his bosses at Allstate called him in and asked him about someone named Minkow who apparently had stolen and cashed some Allstate warrants--similar to blank checks--after finding them in Padgett’s car.
When Allstate found out they were friends, and that Padgett had been referring jobs to Minkow, he was out of a job.
Things started looking up a few weeks later, though, when Padgett got hired as an auto appraiser at The Travelers insurance company.
He only had to go out on four jobs a day, leaving plenty of time to make it home by noon to watch “Twilight Zone” reruns. He met his best friend’s cousin, Debbie, and fell in love. He might have cut Minkow off, what with the problems the teen-ager caused, but he was looking for ways to make Debbie notice him, and Minkow told him, “You want that girl, you got to get the money.” Minkow, as always, had a way.
Minkow told Padgett he was taking on some larger insurance restoration jobs on the side, fixing up whole buildings that had been burned or flooded. But to keep his bankers happy, he needed to show that he wasn’t getting all his work from one place. Could Padgett borrow some stationery from Travelers, “just for our internal books,” to make it look like Padgett was sending him some of the jobs?
Began to Suspect
Padgett agreed, even though he began to suspect that Minkow did not have as many restoration jobs as he claimed--that maybe some of the jobs he made up. It worked for a while, until one loan officer dropped by Travelers to ask about a supposed deal, ran into Padgett’s boss and found out that he was not a big-time broker handing out building repair contracts, but an appraiser checking out bent fenders.
Padgett was out of a job again. But at least no one had called the cops.
Not to worry anyway, Minkow said. He would set up Padgett in his own insurance appraisal business. He could hire Debbie as his secretary. And maybe, Minkow said, Padgett could refer ZZZZ Best some work.
The idea was to find legitimate jobs, of course. But in the meantime Padgett would earn most of his keep posing as the wealthy, successful president of Interstate Appraisal Services who was supposedly responsible for sending ZZZZ Best contracts that kept getting larger and larger--contracts that Minkow knew, and Padgett knew, didn’t exist.
The phantom jobs paid off indirectly. They were listed as revenue on ZZZZ Best’s books, which then could be shown to banks or individual investors to encourage them to lend the company money--money that could be used not only to pay the salaries of Minkow and his friends, but also fuel expansion of the company’s legitimate business, the part where ZZZZ Best workers actually went out and cleaned carpets.
That enterprise was taking off. Over the years, the garage turned into five locations, then 21 offices in three states, employing more than 1,000 people.
Enter Jack Polevoi. A self-employed businessman, he suddenly found himself at the helm of ZZZZ Best’s carpet cleaning operation as it was reaching its peak.
Polevoi, 41, hadn’t really needed a job. The sale of his commercial maintenance business gave him enough to live on and build a luxurious house near Minkow’s in Westchester County Estates, a new gated community of mansions in Woodland Hills. Nevertheless, Polevoi was impressed with the kind of money being thrown around by this neighbor of his. And when ZZZZ Best commercials blitzed the airwaves--featuring Minkow promising clean carpets and no hidden charges--it was a kick to have such a celebrity around.
“You know, I was proud to introduce him to my friends. . . . He was a star, and a lot of people stopped me and asked, ‘Hey, what’s it like to have Barry Minkow as a friend?’ ”
So when Minkow told him he needed him to get the carpet cleaning operations in shape, Polevoi agreed. He brought in his brother, Jerry, to help.
“After the first week I was there, I got caught up in it. It was a great company! I mean, something I’d never seen in my life. Charisma. Everybody couldn’t wait to go to work. But after I was there a week, I went into Barry’s office, and I said, ‘Barry, I been in this business a long time, you’re not making any money.’ I said, ‘You got an overload of people, there’s no accountability, the place is like Disneyland here.’ ”
Managers at outlying offices were hiring limousines on a whim, Polevoi recalled. “The Coke machine in the corporate office, all you had to do was push a button and soda came out.”
Polevoi started cleaning house, firing the guys who were sitting around the offices and spending money, setting up interviews to land big corporate carpet cleaning accounts. But even when he landed major contracts to clean hotel carpets, Minkow didn’t seem to care.
“I flew back to Phoenix and met the guy (from) the Ramada Inn. He came back with me and closed the deal. We got the Marriott. . . . It just never impressed him. I said, ‘This is a national operation.’ He said, ‘OK, just do your job, Jack.’ ”
Polevoi was the only man Minkow seemed to trust with his own money, and he stashed thousands of dollars of pocket money for the boss in his desk drawer. When Minkow’s girls’ softball team had its championship games, the money to hire a cheering section came from there. When Minkow wanted money to buy a Mercedes for his girlfriend when she caught him in bed with another woman, Polevoi went to the drawer.
They Act as Waiters
Minkow was having a new girl over for a candlelight dinner. Would Polevoi and his brother dress up in tuxedos and act as waiters? Jack didn’t know where to put the forks and spoons, so he called his wife over to help.
“I became so involved, so obsessed with this whole thing, I wasn’t me anymore. I was someone else. I was obsessed with Barry. Barry would come over and say he wanted to go away for the weekend, go out for dinner, I went. And left all my friends behind. Because they didn’t want to be with him anymore. My friends were all very successful guys, young, in their 30s, did well. But they were never up to Barry’s expectations, because Barry always made megadollars.”
Long before Minkow was earning megadollars, Mark Morze, the one-time linebacker, had his own bookkeeping business, preparing tax returns and profit-and-loss statements for dozens of small businesses. He tried opening his own enterprise--a health club at the Sherman Oaks Galleria--but it lost $80,000 the first year, and he was back looking for clients when a loan broker introduced him to Minkow.
Morze, then 35, went to work for ZZZZ Best in late 1985 as a part-time consultant, shopping around Southern California for bank loans to help boost the company’s expansion. In the early days, Minkow had turned mainly to private investors: an elderly lady who ran the cigarette concession at a Las Vegas hotel, the wife of singer Tony Orlando, even a reputed local crime figure who delivered $25,000 cash in a brown paper bag. Some of the loans were negotiated at outrageous rates of interest. Most trickled in only fast enough to pay off earlier loans.
To help qualify for major bank loans, Minkow produced more and more contracts for insurance restoration work, most of it forwarded to ZZZZ Best from a guy Morze did not know, Tom Padgett. Morze said he figured the jobs were legit.
As Morze tells it, he began to learn the truth in 1986, when Minkow showed him a document from Interstate Appraisal Services indicating that ZZZZ Best had just completed work on a $2-million project in San Diego. An even bigger job was under way in Arroyo Grande, a tiny beach community south of San Luis Obispo, Minkow told him. Now a company that had loaned ZZZZ Best several hundred thousand dollars wanted to see how it was progressing.
“ ‘Mark,’ ” Morze said Minkow confessed, “ ‘the San Diego job is such a success that I invented the Arroyo Grande job to buy time, until we get the money from the San Diego job.’ ” Would Morze drive to Arroyo Grande and photograph any building that could pass as a restoration site?
He found the only three-story building in town, lying on the ground to photograph it so it looked bigger. But the ploy didn’t work. The lending company had beaten Morze to Arroyo Grande and quickly learned that ZZZZ Best did not have any contracts there. By the time Morze got back, Minkow was immersed in a tense meeting with officers of the lending company, trying to talk his way out of it.
Morze compared Minkow’s protestations to a small boy trying to hide an elephant behind his back. “ ‘What elephant?’ he says.” The company was reassuring on one point, Morze said, the matter would not be reported to authorities. But they would make no more loans to ZZZZ Best, thank you.
That was when Minkow confessed to him that the Arroyo Grande job wasn’t the only one that was fake, Morze said. All of the restoration jobs were. But don’t worry, Minkow said.
By this time, Minkow had hooked up with a guy from Encino, Maurice Rind--a convicted stock swindler, it so happened, but also a man with a reputation as a financial wizard--who was helping him merge with a publicly held Utah shell corporation. The move would eventually allow the sale of ZZZZ Best stock to the public. The Wall Street firm of Rooney Pace Inc. agreed to underwrite a public offering, a bonanza that would net ZZZZ Best an initial $11.5 million--enough to pay off the loans that were by now breeding at an alarming rate, enough so they would not have to fake any more restoration jobs.
“We gotta last 60 days, and we’re set,” Morze recalled Minkow telling him. “Mark, all you gotta do, if anybody asks you about the restorations, you gotta just say, ‘Yeah, they’re real, and they’re making money, and they’re moving along.’ ”
“And I said, ‘OK, I’ll do it.’ That was my start as a co-conspirator.”
The 60 days stretched into four, then five months. New loans had to be obtained to carry the company through. New restoration jobs had to be invented to show enough revenue to qualify for the loans. Morze, whose earlier bookkeeping work involved only rudimentary accounting, had to learn new tricks.
“A lot of people think I’m the genius behind the throne that made it all happen,” he said. “But I’d never seen a balance sheet in my life. I didn’t know what one looked like. The accountants would say, ‘Mark, we’re going to need your work sheets.’ I had to go to an encyclopedia and look it up, I didn’t know what a work sheet was. Then they said we need a performance bond. I ran to the business library and looked it up.”
Morze jotted down notes on every insurance job ZZZZ Best supposedly did. He cut and pasted checks together--taking the name of a bank from one, a signature from another--then smoothed out the edges with blobs of White Out and a copying machine. “If you saw me at the end of the night making checks, I’d look in the mirror and I’d have little white dots all over me,” he said.
The finished copies made it look as though ZZZZ Best was paying carpet and lumber suppliers for restoration materials. He drew up phony invoices to coincide with the checks and drafted two years’ worth of detailed bank statements--which IRS investigators later described as nearly perfect--that made the checks add up.
A Hitch Develops
But just before the stock sale came through, there was a hitch. To everyone’s horror, Ernst & Whinney, the accounting firm hired to help with the underwriting, wanted to inspect ZZZZ Best’s latest restoration job--touted as a $7-million project in Sacramento to restore an office building damaged by a massive water leak.
For months, Minkow, Morze and Padgett had been able to keep investors and their accountants away from the supposed job sites by saying that the insurance companies involved--who were paying for the work--were worried about being sued if anyone was injured.
When one determined loan officer insisted on coming to Padgett’s office, he was at his desk, and by prearrangement, his phone was ringing off the hook.
“And so every two minutes, I’d say, well, the reason you can’t go to the job sites, like I explained to you before"-- ring!-- “Yeah, hi Jim. You at the Anaheim job site? Right, OK, are the plumbers there? Oh, they’re not there? Fire ‘em. OK, let me spell it out: F-I-R-E T-H-E-M. OK? Sign my name on it. Do I have to fire everyone and get ZZZZ Best there? Cause I’m going to do that. OK.” Then: “Anyway, the reason you can’t go to the job site is a couple months ago somebody broke a kneecap"-- ring!
“They bought the whole thing.”
Ernst & Whinney was more persistent.
So Padgett and a colleague flew to Sacramento, found an office building where some construction work was under way, and set up a masquerade. They slipped $50 to the security guard so he would greet “Mr. Morze” when he showed up with some special guests that weekend. They took down contractors’ signs and replaced them with ZZZZ Best signs.
Morze flew up Saturday morning with an accountant from Ernst & Whinney and a lawyer from the prestigious law firm of Hughes, Hubbard & Reed. Padgett waited nervously in a nearby hotel room, at one point calling Minkow in Los Angeles.
“It’s like third down and we’re on the 25-yard line and there’s three seconds left on the clock,” Minkow told him. “We gotta kick a field goal. . . . It’s all come down to this.”’
The security guard gave Morze the appropriate greeting and Morze led the way to the elevator.
“I have never done a construction job in my life,” Morze recalled. “I don’t know anything about plumbing, I know nothing about electricity, I know nothing about carpeting. I’m sitting there going, ‘Please don’t ask me any questions. Please don’t ask me any questions.’
“And sure enough, these big experts that are here to sign off on a multimillion-dollar underwriting go, ‘Well, you guys seem to be doing a good job. Let’s go back to the airport and have a few beers.’ Back to the airport. On the airplane. Fly home. Call Barry. We did it!”
Later, the ZZZZ Best crew went to work again when the accounting firm demanded a tour of a supposed San Diego job site. This time, they actually signed a $2-million, seven-year lease to get a building and had a construction company work day and night to fix it up, putting in the last nail only hours before the inspectors arrived--for a 20-minute visit.
Afterwards, Morze said, Minkow sat back at his desk and laughed: “We spent $100,000 a minute for that inspection.”
The public stock offering finally came through in December of 1986, bringing money that would allow them to pay off all the “hooks,” as Morze called the loans, and put a little bit in the bank to help the legitimate carpet cleaning business. No more phony insurance jobs. No more lies.
“But now,” Morze said, “Barry confesses to me how many hooks there really are. And out of the $11 million we got, the first day, $8 million went out immediately. I say, ‘You owed $8 million?’ He says, ‘Yeah.’ I’m sitting there, oh my God, we only got $3 million left.” And there were more loans coming due in January and February.
At that point, Morze said, Minkow just looked at him. “It’s not enough,” he said.
Padgett was still desperately in love with Debbie, but she had taken up with another guy and didn’t want anything to do with him. He was driving himself crazy with jealousy.
“Finally, I figure I’m going to kill this guy, I mean, there’s no question in my mind, I’m going to kill him, I mean, don’t even talk about it. And Barry’s going, ‘No, no, no, there’s other women.’ ”
Padgett, the supposed source of insurance restoration jobs, took to drinking most of the day and going out at night with a gun, “just looking for trouble.”
“Imagine,” he said gleefully, “how Barry’s losing sleep nights, imagine that, you know, here’s 86% of his business running around Santa Monica drunk at 3 in the morning with a loaded gun--three loaded guns, as a matter of fact.”
The crisis ended when Minkow reminded his friend about the waterfront house in Newport Beach that he had wanted ever since hearing Debbie describe her dream home. It seems that one of ZZZZ Best’s investors had such a place he wanted to sell. What if Minkow bought it and let Padgett live there?
“I said, ‘Barry, it can’t be, I mean, things like that don’t happen to me.’ He says, ‘No, we got this line of credit from First Interstate that will be a big help.’ ” All Padgett had to do was put on his $800 suit, his Rolex watch, and show up at the bank and convince loan officers that a new batch of insurance jobs were real.
By now, in the spring of 1987, what Morze calls the big “cure” was coming. Drexel Burnham Lambert was talking about underwriting a $40-million private placement of junk bonds with which ZZZZ Best could acquire KeyServ, a nationwide carpet cleaning chain that got its business through the country’s premier retailer--Sears Roebuck. With respected ties like that, they would never again have to fake any restoration jobs, Padgett and Morze figured.
They dreamed of making a success with KeyServ, then using $700 million in junk bonds to finance a hostile takeover of a $1.3-billion international corporation.
“It’s the only thing that keeps you going in your brain,” Morze said. “We get KeyServ, the world is ours. We get KeyServ, the world is ours.”
Padgett was comfortably ensconced in the oceanfront house in Newport Beach. With ZZZZ Best stock soaring, Minkow was launching discussions to buy the Seattle Mariners baseball team. Everything was on track.
Then two things happened. First, an article appeared in The Times about some problems at ZZZZ Best a few years earlier, when dozens of customers had complained that large overcharges had been rung up on their credit cards. Minkow quickly threw the blame off on former employees, but the report sent shivers through Wall Street and the stock plummeted.
Then, Norman Rothberg, a thin, bespectacled accountant who rented office space from Interstate Appraisal, went to Ernst & Whinney and confided that the Sacramento restoration job was not real. Ernst & Whinney got on the phone to Minkow. Minkow quickly got Padgett on the phone.
“You better figure out what the hell this man has done,” Minkow declared.
Rothberg was cornered in a meeting with Padgett and another ZZZZ Best associate, who he said began toying with a gun. After the meeting, he took $15,000 to go back to Ernst & Whinney and say he had made up the story.
But the damage was done. The accounting firm hired a team of investigators. Shortly thereafter, Ernst & Whinney and Drexel Burnham Lambert pulled out of the KeyServ deal. It had been only four days--at the most seven--away from closing.
Padgett was on the San Diego Freeway, on his way home to Newport Beach, when the phone rang in his Lincoln Town Car. Minkow needed to talk to him right away. More news stories would be running soon exposing the fraudulent insurance jobs, the boss said.
“He said, ‘Tom, it’s over.’ And he was so tired in his voice. You see, Barry never sounds tired. This time, he was so tired, he said, ‘It’s over, man, it’s all over.’ I said, ‘We got to fight on.’ He says, ‘We can’t fight on, they’ve been to Sacramento. They know there aren’t any building permits. They’ve been to San Diego. We’re finished. We’re caught.’ ”
Minkow told him he would have to move out of the Newport Beach house right away.
“I said, ‘Barry, I’ve only been in there three months, I’ve waited all my life for a house like this.’ He said, ‘Tom, they’re coming, man, there’s gonna be all kinds of charges.’ ”
Padgett hung up and drove home. Debbie’s cousin was there. To surprise him, she had gone out and bought new bedroom furniture. The books were no longer stacked on the floor, they were neatly arranged in a new bookcase.
“She says, ‘You’ll never believe this, but Debbie called. She wants to come down this weekend,’ ” Padgett recalled. “And that’s the first time I cried.”
On July 2, 1987, Morze watched on the evening news as Barry Minkow’s attorney announced that the young entrepreneur had resigned from ZZZZ Best.
Their caper may have been over, but Morze had not come away empty handed. Investigators later estimated that he had made nearly as much as the $3 million they believed Minkow took out of the company--Morze admits only about $1 million in income on his tax return for 1987--and it enabled him to buy one new house for his parents, and help his girlfriend buy another.
But days before the end, Morze said, he had emptied his bank accounts and given his last cash to Minkow, who begged him for money to make the ZZZZ Best payroll. Now, on television, angry employees were complaining that they had not received their last paychecks.
“I guess I fell for Barry, too,” Morze concluded, “and I think it’s probably fitting punishment, and ironic, that I got cleaned out by the same guy that cleaned out everybody else.”
Trip to Las Vegas
In those last frantic days, Polevoi and his brother were dispatched to Las Vegas with $700,000 Minkow scrounged up from corporate accounts. Minkow handed over a pile of cashiers’ checks and instructed them to gamble the checks at various casinos and come home with cash. Both Polevoi brothers wound up pleading guilty to money laundering charges for that escapade.
After it was all over, Padgett went into his office at Interstate Appraisal and found out that a major insurance company wanted to open a legitimate account with him.
“That’s the second time I cried,” he said. “You can make an argument, maybe I deserve to go to jail, maybe I deserve 20 years, but I don’t think I deserved coming that close and getting knocked down.”
He got eight years in prison, the same as Morze. Polevoi is looking at 18 months.
From having owned his dream house outright when he met Minkow, Polevoi now owes $1 million against it in taxes, stock losses and legal fees.
“What I was hoping through all of this is that the judge would understand how a guy like me got caught up,” Polevoi said. “I said, what I did was wrong, no question about it. I want to plead guilty. But have an open mind to what was going through my head.” Minkow, he said, “could’ve made a legitimate company out of ZZZZ Best.”
Morze agreed: “We tried it. It coulda worked. It shoulda worked.”
But it didn’t, and all of the would-be millionaires will be behind bars by mid-April. Minkow, unable to make bail, has already been in prison for nearly a year and a half. He has telephoned Polevoi occasionally to chat and report that it’s not all that bad inside.
“I’ll tell you exactly what he said,” Polevoi recounted. “He said, ‘If this is all they can do to you, it’s a piece of cake.’ They can’t torture him. They can’t electrocute him.
“I said to myself, ‘this guy is totally invincible.’ ”
ZZZZ BEST SENTENCES
The sentencing of Barry Minkow was the last stemming from the federal court case that saw 12 men convicted for their roles in a multimillion-dollar fraud at the ZZZZ Best carpet cleaning company. DEFENDANT Barry Minkow, 23, Woodland Hills ROLE As founder and president of ZZZZ Best, promoted it in TV ads as the honest carpet cleaning company while he was conducting an elaborate fraud that bilked investors and drove up the value of the company’s stock. SENTENCE 25 years in prison, $26 million restitution DEFENDANT Thomas G. Padgett, 38, Westchester ROLE Posed as the primary source of fictitious insurance restoration projects for ZZZZ Best--which supposedly was repairing fire and flood damage to office buildings--through a company he founded, Interstate Appraisal Services. SENTENCE 8 years DEFENDANT Mark L. Morze, 38, Woodland Hills ROLE As ZZZZ Best’s senior vice president, he prepared paper work to back up fictitious insurance restoration jobs, and led accountants and lawyers on tours of buildings disguised to look like they were being repaired. SENTENCE 8 years DEFENDANT Mark Roddy, 37, Los Angeles ROLE Began working with Padgett at Interstate Appraisal Services in October, 1986. Created a company known as Assured Property Management to verify insurance restoration projects. SENTENCE 5 years DEFENDANT Daniel B. Krowpman, 43, Woodland Hills ROLE Met Minkow when the future entrepreneur was 9 years old and and befriended him in Little League. Later loaned Minkow $1,500 to start his carpet cleaning business, and eventually became a member of ZZZZ Best’s board of directors. Gave false impression that his Cornwell Quality Tools & Equipment Co. provided large amounts of materials for fictitious restoration projects. SENTENCE 3 years, $5,000 fine DEFENDANT Brian Morze, 42, Encino ROLE Mark Morze’s brother. Assisted in tour of phony job site in San Diego and held himself out as principal of sham businesses. SENTENCE 3 years DEFENDANT Jack Polevoi, 41, Woodland Hills ROLE Took over management of carpet cleaning operations for ZZZZ Best. Maintained a $200,000 slush fund for Minkow, laundered more than $700,000 in corporate funds through Las Vegas casinos, then sold his own stock based on non-public information that Minkow planned to resign. SENTENCE 18 months DEFENDANT Jerry Polevoi, 41, Simi Valley ROLE Worked with his brother, Jack, at ZZZZ Best. Participated in the money laundering and stock sale schemes. SENTENCE 18 months DEFENDANT Norman Rothberg, 52, Marina del Rey ROLE An accountant who worked in office space rented by Interstate Appraisal Services. After reporting his suspicions of fraud to ZZZZ Best’s outside accountants, he accepted a bribe to recant the story. SENTENCE 1 year DEFENDANT Charles B. Arrington III, 28, Woodland Hills ROLE Chief Operations Officer of ZZZZ Best. Assisted in preparation of false paper work. SENTENCE 6 months in halfway house, $4,000 fine DEFENDANT Edward M. Krivda, 31, Palmdale ROLE As an employee of Carpet Corner, exaggerated to accountants the amount of carpet supplied to ZZZZ Best. SENTENCE 60 days in halfway house DEFENDANT Eugene J. Lasko, 57, Reseda ROLE A former employee of Jack Polevoi, he helped the Polevoi brothers launder ZZZZ Best funds through Las Vegas casinos. SENTENCE 30 days in halfway house, $1,000 fine