Today in History - December 14: Teen turned carpet cleaning business into billion-dollar fraud

A 22-year-old businessman pleaded guilty over a massive investment fraud that made his carpet-cleaning business worth hundreds of millions of dollars on December 14, 1988.

Barry Minkow started ZZZZ Best in his parents' garage as a 16-year-old in California.

Too young to drive, his friends had to drive him to houses to clean carpets.

But through a series of fraudulent activities, he managed to make his company appear far more successful than it was.

And as a 20-year-old, he took ZZZZ Best public.

With investors under the impression ZZZZ Best was a far bigger and better business than it was, Minkow became an instant millionaire when the company was publicly listed.

The next year, the carpet cleaning business was valued at US$280 million (A$1.2 billion in today's money).

As the primary shareholder, Minkow was worth hundreds of millions of dollars.

His success as America's youngest CEO saw him appear on The Oprah Winfrey Show.

All the while, ZZZZ Best had major cash flow issues.

A merger with another company KeyServ, would have put many more clients into their business and resolved their financial problems.

But he was brought undone by a woman he had ripped off.

The woman had been overcharged by several hundred dollars. Angered by the difficulties she was facing in getting her money back, she began gathering the stories of other people ripped off by the company.

She went to the Los Angeles Times with her story. The newspaper published an expose just as the merger was about to take place.

Alarmed by the company's apparently precarious situation, bankers and investors tried to get their debts paid and their money back.

Minkow was charged with 54 counts including racketeering, fraud, embezzlement, tax evasion and bank fraud. He was sentenced to 25 years in prison.

Released early in 1995, he became a pastor and started a fraud investigative firm.

But his shiny new image was every bit as fraudulent as his teenage CEO image.

He ripped off hundreds of thousands of dollars from his parishioners, convincing them they were donating to charities.

Minkow was using the ill-gotten gains to fund a movie about his life, that he insisted on starring in.

"Barry Minkow is among the worst kind of predators," US Attorney Laura Duffy said in 2014.

"He gained the affection and trust of his victims from the pulpit and then stole not only their money, but their faith in humanity, the clergy, the church, and themselves."

He was sentenced to a further five years in jail and released in 2019.

The film about his life, entitled Con Man, was released in 2018 and received dreadful reviews.

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