Accounting Frauds: ZZZZ Best Company, Inc

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  • Topic: Fraud, Barry Minkow, Audit
  • Pages : 3 (1013 words )
  • Download(s) : 222
  • Published : November 9, 2011
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ZZZZ Best company is one of the biggest examples of Accounting Frauds. The founder of ZZZZ best was Barry Minkow. He was a very smart young entrepreneur when he started the company. He was involved in credit card forgeries prior to starting his own carpet cleaning business “ZZZZ Best Company”. Minkow began his business with small carpet cleaning jobs and he became a multimillionaire in a very short period of time. Minkow met a person named Tom Padgett at Los Angeles Health club. This was the beginning of Minkow's big fraud scheme. Padgett was the insurance claims adjuster and Minkow became his friend. After becoming Padgett's friend, Minkow thought of using his friendship with him to make profit in his business. He convinced Padgett to simply confirm over the telephone to banks and any other interested third parties that ZZZZ Best was the recipient of occasional insurance restoration contacts. Minkow made a deal with Padgett that he will pay him $100 every week for doing this. Padgett did what Minkow wanted him to do and this was the first success of Minkow in his big fraud scheme. Minkow was able to get big loans from Banks by showing them the insurance restoration contacts. After successfully receiving loans from banks, Minkow decided to focus more on loans restoration contracts. ZZZZ Best's 80 percent of the revenue was from insurance restoration contacts. Minkow reduced his carpet cleaning services and started taking more and more loan from banks and he was successful in that with the help of his friend Padgett. After this huge success ZZZZ Best became a big firm from a very small carpet cleaning company. This was the time when Minkow decided to go public with ZZZZ Best Company. Minkow's decision to take ZZZZ Best public meant that he could no longer completely control his firm's financial disclosures. Registering with the SEC required auditors, investment bankers, and outside attorneys to pursue ZZZZ Best's periodic financial statements. ZZZZ Best was first...
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