Revenue was recorded but there was no cash. The congressional subcommittee was surprised, if not alarmed, that he had not personally visited at least a few of the job sites. Soon after becoming a friend of Tom Padgett, an insurance claims adjuster, Minkow devised a scheme to exploit that friendship.
They were charged with "participating in and aiding and abetting various fraudulent activities," the U. Ultimately, the persistence of an indignant homemaker who had been bilked out of a few hundred dollars by ZZZZ Best resulted in Minkow being exposed as a fraud.
Minkow was able to rationalize his crimes by believing it was up to him to rescue his failing business. Padgett, 37; Mark L.
Attorney for Los Angeles. Tom Padgett, an insurance claims adjuster, conspired with Minkow to forge documents crediting ZZZZ Best for restoration work and use Interstate Appraisal Services as the source to verify the claims.
Minkow sent two of his cohorts to Sacramento to find a large building under construction or renovation that would provide a plausible site for a restoration contract. Minkow informally investigated and reported other Ponzi schemes. Minkow after ZZZZ Best In JanuaryMinkow and 10 other company insiders were indicted by a grand jury on counts of racketeering, money laundering, securities fraud, embezzlement, mail fraud, bank fraud, and tax evasion.
The business performed poorly and year-old Minkow was often inundated with customer complaints and supplier collection requests. These included accounts receivable fraud, check kiting, loan fraud, bribery, fictitious record keeping, broken trusts, phony loan files, check registers and general journals.
Assuming the paperwork was provided by an independent third party, the CPAs used false appraisal documents to perform its audit. Minkow and his career are now the subject of continuing investigations by the local U.
Eventually, the truth behind the fictitious companies was revealed and the Ponzi scheme was exposed. This added pressure to run a successful, profitable business was very overwhelming to Minkow. The reported profits of the firm were nonexistent and the huge restoration contracts, imaginary.
Within months of striking out on his own, Minkow faced the ultimate nemesis of the small businessperson: The gullible Padgett was led to believe that the sole a purpose of such confirmations was to allow Minkow to circumvent much of the bureaucratic red tape in the insurance industry.
The company that Minkow founded was, in fact, an elaborate Ponzi scheme. Minkow and his employees never performed any building restorations. Unexpected attention gave Minkow the opportunity to create a positive image for himself in the press.
When the CPA firm requested to visit a building refurbishing customer site, Minkow and his associates rented a building and created a bogus customer job site. Pressure, opportunity, and rationalization make up the fraud triangle.
To create an illusion of a profitable business, Minkow began committing criminal acts, such as check kiting, theft, insurance scams, and fraud, to fund operations and pay suppliers. Contracts did not contain details and specifications of the work to be done.
Among other things, the federal indictment alleges that around July 1, Mr. Minkow used numerous methods to perpetrate this fraud. Gray had visited Sacramento weeks earlier to search for the site that Minkow had refused to divulge.
They tried to make it seem that ZZZZ Best was highly profitable as a result of millions of dollars of non-existent refurbishing work it was supposedly receiving from insurance companies, according to the indictment.
Polevoi and Jerry N. The indictment also makes racketeering charges against Mr. Eugene Lasko, 56, was charged separately with conspiracy to participate in the theft and laundering scheme. However, it was actually a front to attract investments for a massive Ponzi scheme.
You were as much a victim as some of the investors in this company? Because the amount of insurance restoration contracts was material, Gray informed ZZZZ Best of his wish to observe the restoration sites to From this success, he formed the fraudulent Fraud Discovery Institute.
I did—there was nothing because they never got in touch with me. Under a legitimate audit, auditors would have easily found the errors contained in the financial statements.
Parents used Minkow as an example of how working hard pays off. ZZZZ Best started as a carpet cleaning company. Barry Minkow manipulated the auditors by redirecting their attention away from the restoration contracts and drawing their attention to the legitimate side of the business.
The internal control independence was compromised by the auditing team, which caused the fraudulent activity to take place.Best of the Web Newsletter ZZZZ Best Founder Minkow Indicted on Racketering And Fraud Charges "This case is the most massive and elaborate securities fraud perpetrated on the West Coast in.
View Homework Help - Case ZZZ Best from ACCOUNTING at California State University Los Angeles. Case ZZZZ Best* The story of ZZZZ Best is one of greed and audaciousness. It is the story of90%(10). Nov 09, · ZZZZ Best Case Introduction: Barry Minkow founded a carpet-cleaning company named ZZZZ Best in his sophomore year of high school.
ZZZZ Best appeared to be an instant success. this to his advantage by gaining trust in the community so people would not be suspicious of the fraud or question ZZZZ Best’s financial stability. View Notes - Case ZZZZ Best Co. Solutions from BUSINESS at Western Connecticut State University.
Case ZZZZ Best Company, Inc. 1. A review is similar to an audit but is less in scope and. ZZZZ Best, Inc. The start of ZZZZ Best: ZZZZ Best started as a carpet cleaning company.
Barry Minkow founded ZZZZ Best in his parents’ garage in when he was only sixteen years old. Essay on ZZZZ Best Company, Inc.: Case Study; Essay on ZZZZ Best Company, Inc.: Case Study.
Words | 6 Pages. ZZZZ Best Company Case Ernst and Whitney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for the three months ended July 31.Download