ZZZZ Best Founder Minkow, 21, Arrested on U.S. Fraud Charges

Barry Minkow, the young entrepreneur who turned a garage-based carpet cleaning business into a multimillion-dollar business empire, has been arrested on federal fraud charges, authorities disclosed Thursday night.

Los Angeles Police Cmdr. William Booth said Minkow, the 21-year-old whiz kid who became the target of a massive money-laundering investigation, turned himself in about 10 p.m. in response to a federal indictment.

Authorities refused to provide details of the arrest, but sources said Minkow and several other ZZZZ Best associates were secretly indicted Thursday by a federal grand jury probing allegations that the company laundered millions of dollars for organized crime figures.

As of late Thursday, Minkow’s was the only arrest in the case, but Booth said other arrests were expected.

“The details of the arrest and the charges and how they came back will be announced by the U.S. attorney’s office very early tomorrow morning,” Booth said.

The arrest capped a yearlong investigation by state and local authorities into allegations that Minkow’s now-bankrupt company was part of a nationwide narcotics money-laundering operation with ties to organized crime.

ZZZZ Best ceased operations last July amid $25 million in lawsuits from creditors and stockholders alleging that Minkow and other directors of the company had misled them about company assets, had stolen company property and falsified reports about company operations.

Minkow himself, who had launched ZZZZ Best as a teen-ager from his family garage in Reseda and turned it into a hugely successful moneymaking enterprise, had personal stock in the company worth $100 million last year before he filed a petition to liquidate his assets under Chapter 7 of the U.S. Bankruptcy Code.

Resigned as Chairman

Minkow resigned as chairman of ZZZZ Best, days before the company filed for bankruptcy protection.

The investigation was launched by the Los Angeles Police Department early last year.