Last Loose End Wrapped Up in ZZZZ Best Fraud Case : Finance: Key player Maurice Rind signs decree, averting trial. But U.S. won’t be able to collect $720,000.

From the moment authorities tried to brand him as the mob-connected mastermind behind the fraud-ridden ZZZZ Best carpet cleaning company, Maurice Rind issued a challenge: “They can investigate . . . until the world comes to an end, and they wouldn’t come up with nothin’.”

Then, for nearly seven years, it looked like he might pull it off.

While the whiz kid who founded ZZZZ Best in his parents’ garage, Barry Minkow, was convicted with 11 others and jailed on federal fraud charges, Rind was never even indicted; this after he had been described by Los Angeles police--before Congress, no less--as having ties to “all five New York organized crime families” and as being the man who sent ZZZZ Best public, enabling its stock to soar to a value of $200 million.

He was, to be sure, a defendant in civil suits brought by the Securities and Exchange Commission against 14 principals of ZZZZ Best when its miracle rise turned out to be based more on cooked books than shampooed rugs. But after 13 others settled or defaulted, leading to injunctions against them, Rind fought on. And on.

Until this week. On Tuesday, the SEC announced it had reached a consent decree with Rind just as his trial was to begin in U.S. District Court in Los Angeles. The action not only resolved the civil case against the 55-year-old Encino resident, but concluded, at long last, all government action stemming from the 1987 demise of ZZZZ Best.

“It’s been a long time,” said SEC attorney Karen Matteson, clearly relieved to reach a settlement with the combative “last defendant,” who often served as his own attorney as he delayed and exasperated government lawyers with convoluted explanations--in his classic New York twang--of matters such as his criminal record and allegations that he helped ZZZZ Best file false financial statements.

Rind, the SEC said, cleared a $720,000 profit for himself by using aliases and a backdated document to purchase power generators for ZZZZ Best through a Cayman Islands company.

But Rind admits no wrongdoing in the “Final Judgment and Permanent Injunction and Disgorgement,” simply pledging to obey all relevant securities laws in the future. And while the government gets the full judgment it sought--the $720,000, plus interest--it acknowledges that it will not be able to collect a penny. For Rind’s financial records now show no assets to seize.

“To me, it’s a win,” declared Rind. “As far as I’m concerned, it’s no runs, no hits, no errors . . . I’m not admittin’ or denyin’ anything.”

Even one of the former ZZZZ Best prosecutors acknowledged that the SEC sanctions were not a bad outcome--or an unfamiliar outcome--for the man once listed among the prime ZZZZ Best suspects.

“How many times has he agreed not to do it again?” asked onetime prosecutor Gordon Greenberg, now in private practice. “Three, isn’t it?”

*

Over the years, as the ZZZZ Best scandal played itself out, Rind liked to mock authorities--Los Angeles police in particular--for the way they had gotten it all wrong at the start, seeing the Reseda-based company as a “house of hoods,” as an organized crime case. Later, federal prosecutors saw it differently, branding ZZZZ Best as merely a “house of scams,” a classic financial fraud.

In the meantime, however, “they made me bigger than Meyer Lansky!” Rind exclaimed one day. And this time, at least, he could not be accused of distorting all at much.

It began in March, 1987, when LAPD detectives set out to investigate a tip seemingly far removed from carpet cleaning.

The lead concerned the owner of Splash, a Malibu restaurant, who was suspected of being a member of the Bonnano crime family with a warrant against him in New Jersey. The warrant proved trivial, but local authorities began frenzied investigations of the restaurateur, Ronnie Lorenzo, who finally was sent to prison last year on unrelated federal charges and in the process drew attention as the best friend of actor James Caan.

Seven years ago, detectives soon found themselves on a winding trail when they learned that Splash had recently changed hands in a sale handled by an Encino company, Richman Financial Services, and that Lorenzo’s car, a Pontiac, had been registered by the president of that firm, one Maurice Rind.

A background check came up with a hit on the new name: As a stockbroker in New York, Rind had been convicted twice on fraud charges in the 1970s and sentenced to a year in prison. In separate SEC civil actions, according to legal briefs filed by the agency in federal court, he was barred from working as a broker, and twice was enjoined--the last time in 1985, while acting as a consultant--from violating portions of the securities laws.

No rap sheet, however, could do justice to a man described by one of his own attorneys as “straight from Central Casting.”

Though by then living in Encino, in the shadow of the Ventura Freeway, Rind was firmly planted in the streets of New York. A bespectacled, pinky-ringed chain-smoker, he used lingo straight out of Damon Runyon to expound on favored topics: the many injustices he had suffered over the years, and the stocks he liked, often the obscure offerings of small companies recently gone public.

In Los Angeles, his acquaintances included other colorful East Coast refugees, such as his partner in Richman Financial, 300-pound Richard Schulman, who had once served time for extortion and now liked to sit around in his underwear, smoking cigars.

Detectives soon speculated that Rind had become a financial adviser to the “Mickey Mouse Mafia,” L.A.’s ragtag coterie of mob fringe figures known as much for their bumbling as their menace.

But others from the straight world--attorneys, investigators and the like--also had open ears when Rind dished out stock tips, much like a racetrack tout offering his wisdom on the daily double. “A lot of people think I have an educated opinion,” was the way Rind put it.

In 1987, investigators got a clue to his hot stock of the moment when they learned that the utilities at Richman Financial’s address--Schulman’s condo--were paid by another company, whose registered agent was Barry Minkow, then gaining fame with his promises to clean two rooms for $39.95 and his TV anti-drug campaign, “My Act Is Clean. How’s Yours?”

He had met Rind in 1985, it turned out, when ZZZZ Best was still a small private company. That October, Minkow hired Rind as a consultant to perform “whatever duties are necessary” to take the company public.

Rind set Minkow up with a New York attorney who knew one route, merging ZZZZ Best with a publicly held Utah shell corporation. Of 15.3 million original shares, Rind acquired 500,000 through a company he owned and 200,000 in his own name, for “about five cents per share,” according to the SEC.

Authorities never challenged the legality of those deals. What did draw special scrutiny were the maneuvers designed to earn ZZZZ Best a listing on the over-the-counter Nasdaq exchange, something that required a company to have $2 million in hard assets.

So it was that one of ZZZZ Best’s first press releases announced that it had acquired 22 used power generators “for $2 million in cash and notes.”

The rest, as they say, is history. The stock rose steadily, helped by Minkow’s propensity for public relations and millions in profits listed for a side specialty in “insurance restoration work,” repairing large buildings damaged by flood or fire. By the spring of 1987, the company was poised to acquire a national carpet cleaning chain that got its business through Sears Roebuck, the country’s premier retailer.

But it was not to be. Creditors got hints that the insurance jobs existed only on paper. ZZZZ Best was forced into bankruptcy. Then Los Angeles police moved in.

In a remarkable July 8, 1987, press conference announcing the serving of search warrants around the city, then-Police Chief Daryl F. Gates listed nine individuals, including Rind, who were suspected of using ZZZZ Best and several less-notable businesses to launder “large organized crime proceeds” for East Coast crime families.

The lead LAPD detective later went before a Congressional subcommittee and further spotlighted Rind as “an associate to all five” major organized crime families who had made “staggering profits” on ZZZZ Best stock.

For all the LAPD’s talk, though, it was federal authorities--the FBI and the U.S. attorney’s office--who were assigned to bring the criminal case. And to them, the local cops seemed mob-crazy. To the feds, ZZZZ Best was about “a lot of financial shenanigans,” as the main prosecutor put it, particularly the fabrication of insurance jobs to drive up the stock.

While the feds were suspicious of the role of several convicted felons in Minkow’s inner circle, Rind, for one, threw them for a loop by hardly acting like a culprit with something to hide. The day after Gates’ press conference, he volunteered to tell authorities anything they wanted--even lead them through his ledgers.

He and his friends had been among the victims of ZZZZ Best, he said, simply advisers and early investors who had no idea about the insurance fraud. With all the bloodsuckers sniffing around Minkow, “we were protecting the kid from being extorted,” Rind told authorities when they took him up on his offer to talk.

When the federal indictments came down, only one of the suspects trumpeted by Gates--Minkow--was named as a defendant.

The problem for federal prosecutors, recalled Greenberg, was figuring out “who duped who . . . whether Maurice Rind took advantage of Barry Minkow or Barry Minkow took advantage of Maurice Rind--or (if it was) a feeding frenzy on each other.”

That didn’t mean the mob angle was absent from the criminal trial. Minkow made it the centerpiece of his defense, claiming he acted under “duress,” terrified of tough guys who threatened him until he was “just a puppet.”

At least that was his spin until sentencing in 1989, when he drew a 25-year term. “They got the right guy,” he announced then, adding that he had “enjoyed being a little Mafioso.”

Rind declined an opportunity to testify. Called by the defense, he pleaded the 5th Amendment--92 times.

He was hardly silent, however, when the SEC civil case was brought in August, 1990. He vowed to “beat their ass,” to win exoneration once and for all.

At issue was the supposed $2-million generator deal. The SEC alleged that ZZZZ Best actually paid just $597,000, then made the sale look larger with “sham transactions” through an intermediary firm--set up by Rind, using the names Michael Phelps and Michael Stone in correspondence.

Rind had explanations for every detail. A company lawyer “directed” him to sign another name. The generators were “valuable pieces of equipment . . . the only real thing in the whole company.”

“Yeah, I made a profit,” he said when a reporter dropped by his condo, dominated by a pool table and a giant print of Marilyn Monroe. “ . . . Me myself, I made, let’s put it this way, a sizable amount of money--but nowhere near the amount they claim.”

The legal fees, though, were grinding him down, he said. “Are you kiddin’ me--$250 an hour?”

So he took over his own case, for the most part, conducting lengthy depositions himself. While 13 ZZZZ Best principals, two auditors and an accountant were accepting SEC sanctions, Rind trekked to Minkow’s federal prison in Colorado to quiz the onetime whiz kid, who since his trial had claimed to have gotten religion and who--from behind bars--marketed videotapes advising accountants how to avoid another ZZZZ Best.

As Rind’s case dragged on, SEC attorneys complained that some of his arguments were “a rambling hodgepodge,” attempts “to retract or modify certain of his previous admissions, (and) explain away his responsibility.” They noted how Rind once started talking about the New York judge who presided over one of his criminal cases and declared “on his own ‘personal knowledge,’ (that the judge) was ‘disbarred for corruption at a later time.’ ”

SEC lawyer Matteson reported that she had contacted New York authorities to check on the man. He was, she learned, “still a judge.”

*

It was the legal fees, Rind said, that recently convinced him, “I just can’t go any further.” And maybe it wasn’t wise to go to trial as his own lawyer. And since his financial records showed “I’m in very, very bad shape,” what could they get?

The SEC knew Rind had agreed to injunctions before, only to fall under scrutiny again. But the new order enjoins him from “future violations” of sections of the securities laws never covered before, SEC attorney Matteson said, and the government could seek to have him cited for contempt if he violates them. Similarly, if Rind is found to have any assets, “we can pursue him,” she noted.

“We were satisfied he didn’t have any income or assets,” Matteson said, though she acknowledged that SEC officials “just have his representation of what he’s been doing.”

So what has he been doing?

“I’m doin’ some things,” Rind himself said. “. . . I’m not looking for no problems.”

His latest pursuit: acting as a consultant to a company “really starting to make tremendous headway.”

The concept: put hidden markings on paintings and other artworks so they can be registered and traced if stolen. In other words, “a systems company designed to protect the collectibles industry against fraud.”

Maurice Rind in the anti-fraud business. He savors the notion, then adds, “Believe it or not.”