Barry Minkow ZZZZ Best CEO Profiled on CBS 60 Minutes

Takes one to know one video

GRAHAM MESSICK: If you were
going to start a hall of fame

for con men, Barry Minkow would
have to be one of the

first inductees.

He was one of the most famous
stock swindlers of the 1980s,

and certainly the youngest.

Age 20, he was the boy wonder of
Wall Street, CEO of a $300

million company.

At 22, he'd been convicted of 57
counts of fraud and was off

to federal prison.

Now at age 39, Barry Minkow is
back in the spotlight, not for

committing fraud, but
for exposing it.

He's seeking redemption as an
evangelical minister and by

going undercover to help
federal law enforcement

agencies crack a number of
important cases, proving that

when it comes to con men, it
takes one to know one.

Everything you say today, you're
going to tell me the

whole truth, nothing but
the truth, right?

BARRY MINKOW: Yeah.

Brings back memories.

GRAHAM MESSICK: As
well it should.

19 years ago, Barry Minkow
perpetrated a con so audacious

that it's still taught as a
case study in business and

accounting schools.

BARRY MINKOW: Call me when
the market closes.

GRAHAM MESSICK: He founded ZZZZ
Best Carpet Cleaning when

he was just 16 years old, then
franchised it into a chain,

and finally took it public.

BARRY MINKOW: We clean carpets
with such care, I'll guarantee

the work and our price
in writing.

GRAHAM MESSICK: On paper, he
was worth $100 million.

He drove a Ferrari, and even
appeared on Oprah Winfrey,

touting to himself
and his stock.

BARRY MINKOW: Think
big, be big.

OPRAH WINFREY: Really?

BARRY MINKOW: End of story.

I started with the best
of intentions.

Really, I can say that much.

And when economic pressure
reared its ugly head and I

couldn't make payroll, I lied
and stole and cheated.

GRAHAM MESSICK: He borrowed
money from the mob, cooked the

books for accountants, and lied
to investors about 10s of

millions of dollars in insurance
contracts to restore

buildings damaged by
fire and water.

BARRY MINKOW: We were claiming
to be doing restoration jobs

totaling in excess
of $50 million.

We weren't doing any.

And so--

GRAHAM MESSICK: None?

BARRY MINKOW: None.

Well, I mean, I did, like, some
toilet overflows and Mrs.

Jones house.

But that's certainly didn't
constitute $50 million.

GRAHAM MESSICK: How did you
manage to convince bankers,

and lawyers and investors that
this was on the up and up?

BARRY MINKOW: By getting an
auditing firm and getting them

the paperwork, and much to our
shame, creating documents that

would support earnings and
contracts, 22,000 documents.

GRAHAM MESSICK: All phony?

BARRY MINKOW: Cutting and
pasting, white out.

GRAHAM MESSICK: When a major
accounting firm finally

demanded to see one of the
restoration jobs, Minkow found

a brand new building in
Sacramento, paid off a guard,

and brought the auditors in
on a Saturday morning.

BARRY MINKOW: We'd give the
guard $50 to recognize us.

We'd bring the auditors in.

They'd say hi.

And we'd walk in, just say,
yeah, we just did all this.

We'd put signs about
ZZZZ Best.

It was like a Hollywood
production.

And we went to great lengths
to fool and to deceive.

GRAHAM MESSICK: But it worked.

BARRY MINKOW: Temporarily.

Most frauds, that's
the way they are.

I call it the second law
of fraudo-dynamics.

They go from order
to disorder.

They work, but it's not
if you're going to

get caught, but when.

GRAHAM MESSICK: When it did
collapse, he left investors

holding the bag for $26 million,
wiping out life

savings and ruining lives.

He spent seven years and four
months behind bars.

And it was in the hole at
Terminal Island in Los Angeles

that he had an epiphany.

BARRY MINKOW: When I was 1988
in prison, Thanksgiving

dinner, I'm sitting there
with a bank robber.

His name's John Hensley, great
guy, 50 some odd years old.

He's got spider web
tattoos here.

There's a toilet here.

Here's the bunk.

Here's Hensley.

They feed me Thanksgiving
dinner through

a hole in the door.

And they nuke it, the salad
and everything.

Because by the time it got to
the hole from the kitchen it

was cold, so they nuke it, salad
and all, Jello and all.

I look at Hensley.

I look at the nuked Jello.

I look at the toilet.

I look at the door
that don't open.

And I'm thinking, you
know, maybe it's me.

Maybe there's something
wrong with me.

Maybe when they go to all this
trouble to put you in a place

like this, you better
do some changing.

GRAHAM MESSICK: And he did.

He earned masters degrees in
religion and divinity, and now

preaches to 1,400 parishioners
at his Community Bible Church

in San Diego.

But he doesn't go near
the collection box.

BARRY MINKOW: The better part
of wisdom says alcoholics

shouldn't be bartenders.

I mean, I just don't want
to be part of it.

GRAHAM MESSICK: Do you
talk about your sins?

BARRY MINKOW: All the time.

GRAHAM MESSICK: Evangelism
has been known to be a

refuge for con men.

BARRY MINKOW: Yeah.

Our church, we we're
not like that.

We tell people who are
visiting not to give.

We're not a TV ministry.

We don't say, if you
don't send me money

I'm going to die.

It's not that kind of
ministry at all.

There's this God who
created you--

GRAHAM MESSICK: But
not all of his

preaching is done in church.

He founded a company called the
Fraud Discovery Institute,

and lectures business students,
law enforcement

officers, and corporate
executives on

white collar crime.

He actually began investigating
white collar

crime two years ago when a
friend asked him to check out

a questionable investment.

BARRY MINKOW: I'd looked
at the thing.

It was volumes of information
and websites.

And I thought to myself, if I
was a crook, what would I do

to pull this off?

And I thought, there's
a unique approach.

GRAHAM MESSICK: He quickly
discovered the company, Mx

Factors, was operating without
a business license and

appeared to be a scam.

So he wrote up a report and
sent it off to a federal

postal inspector named
Tim France.

TIM FRANCE: He urgently asked
me to look into it.

GRAHAM MESSICK: It turned
out to be a big fraud.

TIM FRANCE: Yes, $35
million in losses.

GRAHAM MESSICK: And you wouldn't
have known about this

unless Barry Minkow had
brought it to you.

TIM FRANCE: That's
absolutely right.

I probably would not have known

about it until it collapsed.

GRAHAM MESSICK: Since then,
Minkow has helped law

enforcement expose 11
suspected scams.

He's even gone undercover for
the FBI wearing a wire.

The biggest case involved
Financial Advisory

Consultants, run by James Lewis,
who's charged with

bilking investors out of $300
million in retirement money.

BARRY MINKOW: I took
one look at him and

it was like a flashback.

I could just look in his eyes
and know he had 80 balls

juggling in the air.

Phone calls were starting
to come in.

You have that look.

And unless you've been a
perpetrator about to be

exposed, you don't know
what that look is.

And I could just tell
in his eyes.

GRAHAM MESSICK: But despite all
the help he's given to law

enforcement, working with Minkow
can be a frustrating

experience.

TIM FRANCE: He is a bull
in a China shop.

He expects us federal
investigators to immediately

jump on it and have this
thing shut down

within a couple weeks.

You just can't do that.

First of all, the information
that I'm getting

is from Barry Minkow.

So I have to re-verify

everything he has done already.

GRAHAM MESSICK: You trust him.

TIM FRANCE: Trust but verify.

GRAHAM MESSICK: Minkow is much
less interested in prosecuting

frauds than he is in
exposing them while

they're still going on.

He searches public records,
employs private detectives,

and goes undercover to perform
the kind of due diligence most

investors don't know
how to do.

BARRY MINKOW: The problem that
I have the minute I get the

call, Steve, is here's
what happens.

I get a probable cause.

And I'll listen in my mind.

The clock ticks.

And I know that every day I
don't do something, somebody's

pouring money into this deal.

And they're going to end up
feeling like I made people

feel back in the 1980s.

And that clock is just
ticking in my head.

I got to just--

I got to shut this down.

I've got to--

GRAHAM MESSICK: Before anybody
else puts more money in it.

BARRY MINKOW: And it's
a race against time.

GRAHAM MESSICK: While we were
researching the story, he

received a tip about
this Texas couple,

Debby and Eric Berry.

They control two Dallas-based
companies called Genesis

Capital Management and Genesis
Alliance, which bankroll a

nonprofit organization called
the Nehemiah Fund.

It promises a 100% matching
grant to churches willing to

put a minimum of $500,000 into a
bank account controlled by a

representative of the Berrys.

BARRY MINKOW: Genesis Capital,
Genesis Alliance, and the

Nehemiah Fund is what
I believe a

financial crime in progress.

GRAHAM MESSICK: What makes
you so convinced

it's a crime in progress?

BARRY MINKOW: All the red flags,
every one of them.

No accountability
from the Berrys.

They just are one man shows.

The untenable business model--

normally and regularly, people
who are in the grant business

don't ask for your money first
before they double it.

GRAHAM MESSICK: He decided to go
undercover and apply for a

matching grant.

Wearing a hidden camera provided
by 60 Minutes, which

was concealed in a pair of
glasses, and carrying a phony

bank statement prepared by the
FBI, stating his church add an

excess of $2 million, he met
the Berrys in a Dallas

restaurant.

One of the first things he asked
was how much money was

in the fund.

BARRY MINKOW: What can I say
without being misrepresenting

to my elder board?

DEBBY BERRY: Tens of millions.

GRAHAM MESSICK: The Berrys told
him the money from the

matching grants comes from
a commercial venture they

control called Genesis Capital
Management, which they claim

pays out a return of 300% on
investments totaling more than

a billion dollars.

BARRY MINKOW: So you guys invest
ethanol plants, various

apartment complexes,
resort hotels?

You're in all that stuff?

ERIC BERRY: Different
stuff, yeah.

BARRY MINKOW: Amazing.

GRAHAM MESSICK: Minkow searched
the public records,

but was unable to turn up assets
or holdings consistent

with the Berry's claims.

He did find outstanding tax
liens against them totaling

more than $240,000, and
discovered that they were

operating out of three
small rooms in this

Dallas office park.

BARRY MINKOW: They give you
three to one your money back

if they're in a business with
you commercially, one to one

if you're a nonprofit?

They claim to have
$1.5 billion?

And yet they operate out of
900 square feet where they

share a secretary with everybody
else on the floor?

I mean, I have a church and our

budget's like $1.8 million.

It tastes like eight
elders and 17

employees to run $1.8 million.

How much the more
$1.5 billion.

It's just misrepresentation
after misrepresentation.

GRAHAM MESSICK: To get an
independent evaluation of the

Berrys' operation, we went
to Sean Delany, a former

Assistant Attorney General in
New York state, and an expert

in charity fraud.

We gave them Minkow's report,
and transcripts of all the

tape conversations.

SEAN DELANY: It has the indicia
of a Ponzi scheme.

And yes, it appears to be
in its early stages.

GRAHAM MESSICK: What's your
general impression of the work

that Barry Minkow has
done on this?

SEAN DELANY: For someone who
does not have the tools of a

law enforcement agency at his
disposal, Mr. Minkow does

quite thorough work.

I was impressed with
his report.

GRAHAM MESSICK: He's familiar
with the field of fraud.

SEAN DELANY: I've heard
that he is.

GRAHAM MESSICK: If you had money
with the Berrys right

now, knowing what you know,
would you call up the Berrys

and say I want my money back?

SEAN DELANY: I'd demand my money
back in writing and I'd

hire myself a good lawyer.

GRAHAM MESSICK: The Berrys
have not been

charged with any crime.

They declined our request for
an interview, and for copies

of their latest financial
statements.

But since Minkow issued his
report, the FBI, the Texas

Attorney General, and the
Montana Auditor's Office have

all begun investigations.

Minkow sees uncovering fraud
as an extension of his

ministry, but wants everyone
to know it's not easy.

BARRY MINKOW: One report
is wrong, I'm done.

When you're Barry Minkow and you
say something's a fraud,

get law enforcement involved,
blow the whistle, and you're

wrong, it's over, over.

It's called one and done.

And that's why I'm so afraid
to take on new stuff.

Because I'm like, I've been
right, like, 11 of 11 times.

And it's like, nobody
bats 1,000.

And I'm going to be wrong
and I'm not perfect.

And I make mistakes and I don't
want to take on cases.

And then, the ticking clock, the
investors investing, and

you've got to move, and
you've got this--

but I can't be wrong.

But this guy's going to
lose money, and the--

[SIGHS]

GRAHAM MESSICK: He's now helped
authorities uncover far

more fraud than he
ever perpetrated.

And as a result, Judge Dickran
Tevrizian, who originally

sentenced Minkow 25 years,
released him from the terms of

his probation.

DICKRAN TEVRIZIAN: He has
done some good things.

He's uncovered several hundreds
of million dollars

worth of frauds.

And I give them credit
for that.

GRAHAM MESSICK: So you,
I mean-- this is real.

You've heard from federal
authorities, federal agencies,

that he has helped them in
various investigations.

DICKRAN TEVRIZIAN: Not only the
federal agencies, local

agencies, but the insurance
industry in covering the loss

of frauds that have
been committed.

Autographed copy
of this book--

GRAHAM MESSICK: And Minkow
has not lost his

flair for self promotion.

He's written a book called
Cleaning Up.

And his agent is negotiating
with several production

companies to film
his life story.

What do you want?

What are you looking for?

BARRY MINKOW: I want everybody
who's ever failed to know that

they can come back
from failure.

You can take what you used to
use for evil and manipulative

reasons and to hurt people, and
use those same talents and

abilities to help them.

And I believe people
can change.

GRAHAM MESSICK: One footnote,
Genesis and Nehemiah are

common names used by
many legitimate

companies and charities.

For more information on the
enterprises operated and

funded by the Berrys, as well as
more of our interview with

Barry Minkow, go to our website
at 60minutes.com.

[TICKING CLOCK]

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