Minkow Released From Custody After 7 Years

Barry Minkow, the former Reseda business whiz convicted of swindling investors out of more than $26 million, ended roughly seven years in custody Wednesday with a bus ride from the federal prison in Lompoc to a halfway house in Echo Park.

Minkow was released after serving only about one-third of his 25-year term because of good behavior. He will remain at the halfway house until April 12, when he is due to be set free on parole, said Monica Wetzel, a spokeswoman for the Bureau of Prisons.

During the next four months, Minkow, 28, will work at a Los Angeles law firm and begin the difficult task of restitution, paying back the $26 million owed investors in his failed Reseda-based ZZZZ Best Co., said his attorney, Randy Long.

“He’s not getting any special treatment, I can assure you,” said Long, who is trying to get Minkow released from the house before April. He added that Minkow has served more time than other high-profile criminals convicted of similar offenses.

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Minkow, who said he found God in prison, has written an autobiography--his second--to be published early next year by a Christian publishing house. He has pledged to pay back the stolen money with a portion of any profits from the book, Long said. The former San Fernando Valley entrepreneur also plans to go on a speaking tour.

“Anybody else from a business perspective would have filed Chapter 7 (bankruptcy) and flushed the debts,” Long said of Minkow’s desire to make amends.

James Asperger, the former U. S. attorney who prosecuted Minkow, said he will withhold judgment on Minkow’s rehabilitation.

“He’s got a lot to prove,” Asperger said. “Not only am I skeptical, but I think the world will be skeptical until he proves he can change his ways.”

Another skeptic is Ann Randall, who says she was cheated out of $150,000 in cash plus stock in Minkow’s company.

“The only way justice can be served is for him to pay back everyone their money,” she said in a telephone interview from her home in Chico. “He stole such a large sum of money and I have no way to replenish it. He changed my whole lifestyle. . . . Maybe he has developed a conscience and will pay us back.”

Prisoners eligible for parole are frequently sent to halfway houses to reintroduce them to society, prison spokeswoman Wetzel said. But if Minkow violates any of the house’s rules he will be returned to confinement, she said.

Minkow, described by prosecutors as one of the most significant white-collar criminals ever, started his carpet cleaning company in his parents’ garage and later wrote his first autobiography, telling how he became a teen-age millionaire.

For more than two years, his talkative charm had convinced accountants, lawyers and investment bankers that he had figured out a way to cheaply restore office buildings damaged by fire and flood--a business supposedly earning ZZZZ Best up to $43 million a year.

Within a few years, Minkow, with the help of several more experienced business colleagues--some later described by law enforcement officials as having ties to organized crime--transformed the private company into a public one.

Its stock soared in value, helped by Minkow’s knack for publicity and ZZZZ Best’s impressive balance sheets. In the early summer of 1987, Minkow was poised to take over carpet cleaning services offered by Sears, the nation’s largest retailer.

Then it all collapsed.

It turned out that most of the lucrative restoration jobs never existed--and neither did the revenues. Within days of Minkow’s resignation in July, 1987, ZZZZ Best collapsed, leaving investors holding thousands of shares of worthless stock.

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Throughout his three-month Los Angeles federal court trial in 1988, Minkow claimed that he had been manipulated by mobsters and stock swindlers who had taken advantage of his youth.

But at his sentencing, Minkow declared: “Today is a great day for this country. The system works. . . . They got the right guy.”

In prison he acquired two degrees from Liberty University in Virginia, a school founded by the Rev. Jerry Falwell. Also, while he was in prison, Minkow filmed a videotape to help accountants uncover corporate fraud.