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Barry Minkow

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Barry Minkow

BEFORE PRISON, Barry Minkow was a cocky 16-year old from the Los Angeles Valley who ran a carpet-cleaning business from his parents’ garage. In 1986, a 20-year-old Minkow took the company public; at its high point the stock was worth $300 million. But the business was a house of cards.

The whiz kid had amassed more than $20 million from banks, friends and mob loan sharks. Revenues were 90 percent less than what he reported, and the company hadn’t made a dime of profit. At 21, the charade was up, and Minkow was sentenced to 25 years in a federal penitentiary for defrauding investors. He was also given a $26 million restitution order for the money he owed banks and stockholders.

Now 38, he’s out, and is an evangelical Christian with three college degrees, senior pastor of Community Bible Church in Mira Mesa and cofounder of the Fraud Discovery Institute, a firm composed of ex-cons and auditors who detect corporate fraud. Still repaying the stockholders and banks, Minkow also lectures FBI agents and CEOs—for free—on the finer points of white-collar crime.

He says his life turned around during a prison football game. Minkow was hit so hard his nose broke. He wanted to quit, but his best friend, “Peanut,” told him to get back in the game.

“He said, ‘Barry, when times get tough in your life, you take shortcuts and quit. That’s who you are. You gotta go back in; you gotta break that pattern.’ I did,” says Minkow. His comeback is chronicled in the book Cleaning Up: One Man’s Redemptive Journey Through the Seductive World of Corporate Crime (Nelson Current, $25.99).

Minkow has helped federal investigators uncover $1.1 billion worth of fraud. But juggling two jobs isn’t easy. One evening Minkow was working undercover on a large fraud case, knowing he had to get to the hospital later to pray with a congregant about to undergo surgery. “The guy I was supposed to meet was late, and I wound up more nervous about missing the prayer than wearing a wire,” he says.

Afterward, he raced to the hospital, but the woman’s surgery had already begun. Her son was furious; Minkow didn’t even try to explain. “I broke my promise,” he says, with the conviction of someone who has learned hard lessons. “After that, there’s nothing else you can do.”

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