Last week Minkow's bubble suddenly and shockingly burst. ZZZZ Best officials filed for bankruptcy protection and sued Minkow for allegedly misappropriating more than $23 million in company funds. The Los Angeles police, meanwhile, raided Minkow's office and home, and the police chief publicly linked him with mobsters who allegedly used his business to launder millions of dollars earned through the sale of illegal drugs.
Minkow's attorney Arthur Barens dismissed the allegations as preposterous: "Barry does not know anyone who is a coke dealer, and he knows nothing about organized crime." In an interview published in a local paper, Minkow went further, suggesting that he was being unjustly singled out because of his ^ notoriety. Said he: "They're trying to lay it on the star."
But by week's end it was clear that the star had fallen. The surprise was particularly rude in Los Angeles, where Minkow had won some influential admirers -- including Mayor Tom Bradley -- for his community involvement. The entrepreneur coached a local softball team, campaigned against alcohol abuse and spoke out against the use of drugs. Indeed, the charge of drug-money laundering was especially strange, since he had asked his employees to take drug tests and adopted the motto "My act is clean, how's yours?"
Born in a lower-middle-class subdivision in Los Angeles' San Fernando Valley, Minkow discovered early on that money was the magic carpet by which he could escape his humble origins. His family could not afford a baby-sitter, so after school the youngster did odd jobs for his mother at the local carpet- cleaning shop she managed. By the time he was ten years old, he was soliciting business over the phone. Five years later, in 1981, he bought some steam- cleaning equipment and set up shop in his family's garage. Unlike many entrepreneurs who give their companies names like AAAA Best, Minkow gave his firm a name that put it near the end of the telephone book. When the business boomed, he hired his parents, making his mother an office manager and putting his father into sales.
Minkow made himself over too. A scrawny, hyperactive youth, he became a body builder to attract girls. "I was no James Bond in high school," he told an interviewer. "I wanted the attention." He drove a bright red Ferrari, lived a bachelor's life in a million-dollar home and lolled around in a backyard swimming pool with a big black Z on the bottom.
Not that there was much opportunity for lolling around. Like many who make their fortune before they shave, he was an obsessive worker and something of an office tyrant. Former staffers recall that he insisted on being called "sir" or "Mr. Minkow," yet would habitually forget their names or call them by unflattering sobriquets. Challenged, he would reply, "My way or the highway." He once reportedly boasted that he would fire his own mother if she stepped out of line.
The problems began last May when the Los Angeles Times published a report alleging that in 1984 and 1985, ZZZZ Best had rung up $72,000 in false credit- card charges. The paper also reported that the same thing happened a year later at a flower shop owned by ZZZZ Best's chief operating officer, this time for a total of $91,000. Minkow blamed both overcharges on unscrupulous subcontractors and an employee, and repaid all the customers.
Although his explanations were riddled with troubling contradictions, it looked as if Minkow was going to come out of the controversy relatively unscathed. Then, two weeks ago, he abruptly resigned from the company he had founded, citing unspecified health problems. Four days later, ZZZZ Best's new management filed a suit charging Minkow with several multimillion-dollar deceptions, including allegations that he had withdrawn $3 million from company accounts for his own personal use and diverted an additional $18 million in company funds to a firm owned by an associate.
The most stunning revelations, however, were those unveiled two days later by the Los Angeles police. In a dramatic midweek press conference, Chief Daryl Gates revealed a three-month investigation that had linked ZZZZ Best to the drug-profit laundering operation. As the police tell it, ZZZZ Best was probably acting as a front for organized crime figures, who would buy equipment for the company with "dirty" money and replace their investment with "clean" cash skimmed from the proceeds of the firm's legitimate business. According to Gates, the spectacular growth in revenues that led to Minkow's fame was in fact an elaborate fiction.
Shares of ZZZZ Best stock, which had traded for more than $18 a share three months ago, plummeted last week to less than $1, triggering suits by flabbergasted stockholders. One investor is reported to have lost $7 million in the debacle. But the hardest hit was Minkow. Not only had his $100 million stock holdings shrunk to less than $6 million, but his oft announced dream of making ZZZZ Best the "General Motors of carpet cleaning" was irrevocably shattered. Once lionized as an emblem of what brash youth can do, he had become, almost overnight, a symbol of where overreaching ambition can lead.