zzzz best summary: ZZZZ Best Company Inc Summary PDF Insurance Business Law

Data will be collected through qualitative approach using open ended question because this is a method that generates and analyzes descriptive data, such as the written or spoken words and individual ‘s behavior observations. The empirical method is based on observation, documentation and interviews. The qualitative method with theoretical research will allow us to answer my questions and achieve my objective. Daniel Akst, a former reporter for The Los Angeles Times and The Wall Street Journal, was one of those who was fooled. In 1985, he wrote an admiring feature story about Mr. Minkow for The Los Angeles Times.

The ultimate fraud would be to make ZZZZ Best a public company and thereby open the doors to investors around the United States. ZZZZ Best’s chief financial officer, Mark Morze, had convinced Minkow that going public would enable the company to grow, and grow it did. Investors quickly pushed the company’s market price up to eighteen dollars per share.

Barry Minkow’s Financial Fraud Case

Also, will provide evidence that the transactions that were made have been recorded accurately and account balances have been valued correctly. Explains that zzz best’s auditors should have considered occurrence for corroborating insurance restoration contracts. The audit procedures would have been obtaining and understanding internal controls, testing the controls and substantive test. Even with the objection from the company on visiting their insurance restoration contract sites, the auditor did nothing to force for evidence. This, coupled with failure to report the irregularities when they resigned is indicative of their failure to prevent the ZZZZ BEST fraud.

At the age of 16, while a sophomore at Cleveland High School, Minkow started ZZZZ Best (pronounced “Zee Best”) in his parents’ garage with three employees and four phones. In the early days, he had to rely on friends to drive him to carpet-cleaning jobs since he did not have a driver’s license. They accused him of misappropriating over $23 million of the company’s money. White-collar crime is a nonviolent crime characterized by deceit to obtain or avoid losing money, or to gain a personal or business advantage.

Going public seemingly offered him a way to cover up his fraudulent activities. Under securities law at the time, he had to retain his personal shares for two years. He planned to sell a million shares to the public in January 1988, believing this would give him enough money to pay everyone off and go completely legitimate.

Walmart Internal Control Violations

Best case of fraud, it tells how and why fraud was perpetrated by Barry Minkow and why it was undetected for so long. According to the video, ZZZZ Best was founded by Barry Minkow in 1982; when he was sixteen years old, it started as a carpet cleaning company. But, due to high competition in the industry, low entry barriers, and bad internal control, this young entrepreneur started to have cash flow problems, thus creating a shortage of working capital. An initial public offering requires a company to produce a prospectus, which must contain a set of audited financial statements. ZZZZ Best’s financial accounts were audited by an independent CPA company in order to offer an opinion on whether the financial statements were free of substantial misrepresentation.

Explains that after graduating from high school in 1956, he studied at hofstra university. When being placed in the role of a manager, it is important to understand the finances of the organization and how to read and understand the recording of finances. It is also important to understand how all the different parts of the records fit together to give us the knowledge of where the business is financially. Knowing also the different responsibility centers related to financial recording and how they function is important as a manager. Once a manager understands what and where items belong on a balance sheet, they will better understand the state that the business is in.

”Wonder Boy” is Mr. Akst’s witty and insightful account of how an amoral individual still in his teens was able to sell what the author calls a ”hologram” of a corporation to Wall Street. There was a Barry Minkow film made in 2011 that was eventually released in 2018, named Con-Man. During the recording, Barry was captured and conceded to insider trading charges.

The first auditor, George Greenspan, failed to comply with standards as well as to objectively conduct audits of ZZZZ Best. He failed to obtain sufficient evidence concerning the authenticity of restoration contracts that could have prevented the company from going public and swindling public investors. Ernst & Whinney argue subsequent that even if the bank did depend on its report in making the loan such reliance was unreasonable as a matter of legislation. Ernst & Whinney base this argument on the report’s disclaimer which specifically states Ernst & Whinney did not audit ZZZZ Best’s financial statements and expresses no opinion as to those statements. As to reliance, Ernst & Whinney argue the information pled within the complaint show the financial institution did not rely on Ernst & Whinney’s evaluation report in extending credit score to ZZZZ Best.

Factoring in an Appraisal Business

He convinced zzzz best summary 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.

According to his https://1investing.in/yer, Minkow had bought his Lennar options using “nonpublic information.” The plea, which was separate from the civil suit, came a month after Minkow learned he was the subject of a criminal investigation. Though unsolved, it was noted as suspicious due to Minkow’s admitted history of staging burglaries to collect insurance money. ZZZZ Best’s chief financial officer, Charles Arrington, was accused of running up $91,000 in fraudulent charges against customers of his florist business. This prompted the Feshbachs to short ZZZZ Best’s stock, anticipating that it would fall. Additionally, none of the company’s four outside directors had any experience running a public company.

When accountants wanted to inspect the company’s operations, he borrowed fake offices for a tour of “Interstate Appraisal Services” and used an incomplete building to present a fake restoration job. Mark Morze, ZZZZ Best’s financial consultant, tricked the accountants sent to perform the necessary due diligence by faking thousands of documents. The public offering closed in December and Minkow became the youngest person to lead a company through an IPO in American financial history. Shareholders in ZZZZ Best were wiped out by the bankruptcy, although they did win a settlement of $35m from the firm’s auditors, Ernst & Whinney. One big red flag that things were not how they seemed was that Minkow employed convicted criminals as senior executives.

How Did Cardillo’s Outside Auditors And Evaluate The Level Of Internal Compliance?

He did not visit the sites of the contracts, neither did he looked for further details. Padgett was involved in the fraudulent scheme with Minkow and he lied to Mr. Greenspan that the contracts held by ZZZZ Best exist. But it was Mr. Greenspan’s duty as an independent auditor that he should have checked the sites of the contracts and all the paper work pertaining to them. It was his carelessness which made Minkow successful in deceiving the first Auditor of ZZZZ best. ZZZZ Best was a bankrupt firm that was owned by Barry Minkow in the 1980s and is now in receivership. Minkow and his friends created the appearance of a multi-million dollar firm by forging documents and stealing property.

• Her ruling stated that Minkow and Marsch had entered into a conspiracy to wreck Lennar’s stock in November 2008.
• And his Ponzi scheme went on to become one of “zee” best case studies in accounting fraud.
• Mr. Padgett, a gun-collecting body builder with a fondness for Hitler and SS jewelry, confirmed the jobs, while a ZZZZ Best vice president forged all the documents and contracts.
• Lennar responded by adding Minkow as a defendant in a lawsuit against Marsch.
• He failed to obtain sufficient evidence concerning the authenticity of restoration contracts that could have prevented the company from going public and swindling public investors.

Short of cash despite the recent expansion, he got a loan from Jack Catain, a Los Angeles businessman who had ties to organized crime. Catain later sued Minkow for not paying him his share of the company’s profits, but Minkow claimed Catain was a usurer. The suit was still working its way through the courts at the time of Catain’s death in 1987. Other organized crime figures turned up as Minkow’s advisers, which unnerved his employees. For instance, a major shareholder, Maurice Rind, had been convicted of securities fraud in 1976.

Example 47 Among a group of business leaders 77 believe that poor math and

Minkow had blamed the fraudulent charges on unscrupulous contractors and another employee, and paid back most of the victims. However, he had not paid back a homemaker who had been overcharged a few hundred dollars. When he ignored her requests to pay her back, she tracked down several other people who had been defrauded by Minkow and gave a diary of her findings to the Los Angeles Times. The Times then wrote a story revealing that Minkow had run up $72,000 in fraudulent credit card charges in 1984 and 1985. The story, which ran just days before the merger was to close, sent ZZZZ Best stock plunging 28 percent.

Shareholders got wiped out by the bankruptcy and by the time the scam had fully unraveled, investor losses amounted to more than $100 million. Barry Minkow learned the carpet-cleaning business from his mother and proceeded to establish his own company, ZZZZ Best Co., at the tender age of 16. However, the capital was a major issue and he soon started undertaking credit card forgeries alongside other frauds that provided his initial capital. As a charismatic individual, he was able to make friends with many professionals including Tom Padgett who was a claims adjuster.

The fraud was a the found by a lady paper trail, al due to a cheat of two or three hundred dollars. Its founder Barry Minkow participated in a range of criminal acts including insurance scams and check kiting. Following his release from jail, Minkow went on to become a church pastor, and in 2014 he was found guilty of embezzling $3 million from San Diego Community Bible Church via a variety of tactics. His thefts included gifts that were taken without permission and a loan from the church that was not allowed. You may use it as a guide or sample for writing your own paper, but remember tocite it correctly. Explains that habitat for humanity’s cost-benefit analysis shows that the pros of the project would make it beneficial to the people.

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ZZZZ Best was a carpet cleaning and restoration company founded in 1982 by 16-year-old Barry Minkow. The company became successful due in part to aggressive marketing and sales tactics. ZZZZ Best also benefited from the growing popularity of do-it-yourself home improvement projects in the 1980s. As the company grew, it began to offer a wider range of services, including water damage restoration and fire damage restoration.