Case Study: Zzzz Best Case

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ZZZZ Best Case ZZZZ Best was founded in 1982, by Barry Minkow who was 16 at the time. ZZZZ Best was a carpet cleaning business that was operated by going door-to-door. The business operated out of San Fernando Valley, Southern California in his parent’s garage. The business experienced drastic growth the first three years, bringing an income of no less than $200,000 however no more than $5 million. Prior to going public, ZZZZ Best experienced many struggles such as complaining customers, bank account closures, and bad checks. Therefore, in 1986, ZZZZ Best went public, the owner and his associates were millionaires immediately. Due to Barry’s immediate success he was sought after by many television networks. He appeared on Oprah and many other famous television shows. He sent a message to people that “the sky was the limit” and they could achieve anything. He was an attractive man and very charming. About two years after his appearance on Oprah, Barry was in prison serving a 25 year sentence, he was found guilty on 57 charges of security fraud. Once he was exposed, he was viewed as a fast talking swindler who took people’s money. Barry used his extensive social background to get what he wanted. He realized that his social connection could be used to his advantage. Many of his social connections came from the Los Angeles health club. One of his acquaintances, Tom Paige in particular was a claim’s adjuster, he came up with a scheme to use his relationship to his advantage. Barry created fraudulent insurance contracts to have proof of profit on paper to convince bankers to lend him money. Once he obtained loans he began to expand his business in Southern California. He used his falsified financial statements to attract wealthy indiv... ... middle of paper ... ...ities Exchange Commission to be made publicly. In conclusion, Barry Minkow was a thief from the beginning well before the incorporation of ZZZZ Best. He committed security fraud and left many investors without any money. He was a conniving thief since he was 16, and founded the business. He never conducted business in a legit matter. He ignored customer complaints, wrote bad checks and created false insurance contracts. The false insurance contracts were made up to have a paper trail of his revenues and profits. Barry had one motive and that was to make money by any means necessary. Everything that he portrayed about the business was false and in violation of several laws. He violated Generally Accepted Accounting Principles and Auditing standards. Barry should have been punished to the fullest extent of the law. He robbed his own friends for personal gain.

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