Conviction and Prison
Minkow and 10 other ZZZZ Best insiders were indicted by a Los Angeles federal grand jury in January 1988 on 54 counts of racketeering, securities fraud, money laundering, embezzlement, mail fraud, tax evasion and bank fraud. The indictment accused Minkow of bilking banks and investors of millions of dollars while systematically draining his company of assets. It also accused Minkow of setting up dummy companies, writing phony invoices and conducting tours of purported restoration sites. Prosecutors estimated that as much as 90 percent of ZZZZ Best's revenue was fraudulent. On June 16, prosecutors won a superseding indictment charging Minkow with credit card fraud and two additional counts of mail fraud.
While Minkow admitted to manipulating ZZZZ Best's stock, he claimed that he was forced to turn the company into a Ponzi scheme under pressure from the organized-crime figures who secretly controlled his company (a story he later admitted was false). On December 14, he was found guilty on all charges. On March 27, 1989, he was sentenced to 25 years in prison. He was also placed on five years probation and ordered to pay $26 million in restitution. In sentencing him, U.S. District Court Judge Dickran Tevrizian described Minkow as a man without a conscience. He rejected Minkow's plea for a lighter sentence as "a joke" and "a slap on the wrist" for someone who had manipulated the financial system. The SEC subsequently banned him from ever serving as an officer or director of a public company again. He served under seven and a half years, most of them at Federal Correctional Institution, Englewood.
During his prison stay, he became involved in Christian ministry, completing coursework through Liberty University's School of Lifelong Learning.
Read more about this topic: Barry Minkow
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—John Dos Passos (1896–1970)
“He that has his chains knocked off, and the prison doors set open to him, is perfectly at liberty, because he may either go or stay, as he best likes; though his preference be determined to stay, by the darkness of the night, or illness of the weather, or want of other lodging. He ceases not to be free, though the desire of some convenience to be had there absolutely determines his preference, and makes him stay in his prison.”
—John Locke (1632–1704)