Tuesday, January 17, 2012

Barry Minkow - Fortune Magazine Jan 15 2012 - The Future Issue

Elementary School is a funny time in a kids life.  I knew Barry Minkow then, and that part of his life is never mentioned when you read about him.  Barry lived in Southern California until ZZZZ Best was raided.  At that time, Barry was part of a family that stayed put and was a foundation in the community, he knew everybody. My family never stayed in a house more than 5 years. In fact the 5 year rule has followed me into my adult life.

If you are like me and moved a lot due to parental employment, divorce and a host of other things, you probably don’t keep in touch with too many of your elementary school friends. You just have some fond memories of a time when you didn’t have bills to pay. I have the phone numbers of exactly one person from my elementary school days and we only see each other once or twice a year.  I lost contact with Barry about the time he started ZZZZ Best Carpet Cleaning.

The nomadic nature of my youth made it difficult to stay in contact with any of my elementary and junior high school friends. The fact that the nomadic life stayed with me into adult hood is another story. Back then, I didn’t have a car, there were no cell phones, and as with all things new and old, new friends came and old friends faded away. We didn’t have Facebook to stay “connected” or “friends” for life even if we never saw each other again. Most of my friends don’t even have a Facebook account, and others stopped using it sometime ago. If they want to know what I am doing today, they just text and come over with a bottle of wine.
There are people I wouldn’t mind keeping in touch with or at least finding out where they ended up in life just for curiosity. About three years ago I ran across a very unique name from my junior high days, Grady G. I looked the guy up and it was the same person. We ended up riding motorcycles up Red Rock Canyon just outside of Las Vegas and had a great time. We still get together about every six months. Grady and I went to a few years of Elementary School with Barry Minkow.  The school that was very class divided between very rich kids and kids of middle class parents struggling to keep their kids out of trouble. The funny thing is the ones who got famous weren’t the ones you expected.

Maybe they are famous and I am just living in the wrong circles. As far as I know, the most notorious is Barry Minkow. He graces the pages of Fortune Magazine this month for his latest antics.  Quite an interesting continuation of the life story I was part of before Barry started ZZZZ Best. Barry was one of the “poor” kids like me who’s family probably sent him to a private school to avoid mandatory bussing in Los Angeles.

Ridgewood, as the school was called, was situated on some prime property in the San Fernando Valley, right on Ventura Boulevard. The most famous parent was probably Barry White. Oddly, I didn’t appreciate his music until he passed away, even though I rode in the same carpool with Kevin and Darryl for two years. The lady that drove the carpool loved Barry Whites music. Since it was AM in her car, all I could remember was static.

Alex Powers was one of the girls in the same class as Barry Minkow, Darryl White, Grady G. and me. She made an appearance in Dead Poets Society and a few other things I haven’t see according to the Wiki entry, but that is about it. There were a couple of kids who were in the movie “The Bad News Bears”. One was the “pitching double” for Tatum O'Nealand wore a wig while shooting the scenes. Like Alex Powers, I haven’t seen their name in lights since. Barry on the other hand has been gracing the papers since Ridgewood was closed and sold off to developers. About two years after Ridgewood closed I was visiting another friend whose father was an entertainment agent. When my mom delivered me to the door, my friends dad, said “Did you hear about Barry Minkow?”

 I think I was 17 at the time. It turned out Barry had started a commercial carpet cleaning and restoration company called ZZZZ Best, known as “For Z Best” Carpet Cleaning, and created one of Southern California’s most famous Ponzi Schemes. None of us could believe it, but the more we read about it, the more we knew it was the same Barry Minkow. He was 16 when it started. Barry Minkow was always a smart guy, and we weren’t surprised that he figured out how to do it, we were more surprised that he got caught.

The part that didn’t make sense was the money. What happened to it all? Barry Minkow only bought a few vans and on paper looked like he was playing the same game Donald Trump played when he rented bulldozers to “prove” he had investors for a property. Barry staged trucks and bribed security guards to make it look like he had more work than he did from what I read. Nothing really new or ingenious there really, and unlike Madoff, he didn’t have private jets. He did have a Ferrari though.

What I don’t understand is with all of Barry’s skills why didn’t he just become a TV pitchman for his carpet cleaning service? It was clear he could sell. Maybe he should have sold Oxy-Clean? The article in Fortune magazine this month had an interesting insight about that most people would miss not knowing him. Barry said that he worked best in confinement, which is basically the only way I knew him.

Ridgewood was called Ridgewood Military Academy until the last three or four years. I guess the owners figured out it was easier to market “Ridgewood School” to middle class kids in the San Fernando Valley. Uniforms, restricted travel and corporal punishment for failing to comply were among several of the traits more common to prison than public schools that I can recall. I get it. Personally I ended up joining the military for many of the same reasons. I wasn’t ready for a “normal life”. I didn’t know any better at the time, but the funny thing is, unlike Barry, I didn’t perform well in confinement. My military career was basically uneventful for the first 15 years, just like my time at Ridgewood.

Maybe I was slow since it took me 15 years to find the right spot where I fit and really hit my stride. As far as I know, the rest of the group from Ridgewood are either quietly enjoying their place in life or seeking the place where they find their own stride. I hope Barry Minkow finds his soon, it is a shame to see that much brain power going to sit in prison again instead of helping society move forward. I haven't read his books, or seen the movie about him starring James Caan, simply titled Minkow. I don't know if I ever will invest the time, after all there is a lot of other things to do in life isn't there?

So why am I writing about this? A couple of reasons, the first is, you never know who will make the papers or why.  Barry White's kids should have been regulars.  Alex Powers after Dead Poets, I thought would be a regular, instead it is Barry Minkow.  He is paying a big price for it too.

The second reason I thought that Barry's back story was important was to point out, that Barry Minkow started out as a regular kid. He wasn't the school bully, drug dealer, or even really that big a trouble maker. You couldn't pick him out of the crowd.  Sort of like the "overnight" success, Barry didn't really change or do all of this overnight.

The big lesson from Barry Minkow is this; It really doesn't take much before crossing the line becomes comfortable, and that is exactly what is wrong with our countries' attitude. Politicians make promises and don't care what the real results are because they aren't accountable. Some CEO's do the same thing, telling us to invest in their companies for "growth". Politicians run on the premise of "freedom" and then cast votes to peek into your house.  I am sure like Barry Minkow, they started with baby steps, a minor ethical violation and talked themselves into it for "the greater good".  After all Hitler didn't think he was a monster, but I am sure a few others do.

Porter Stansberry wrote a great letter in his Investment Advisory last December. I am working on permission to share it with you here. We really need to be responsible for our business, our lives and our country. Creating a show like Donald Trump to get the job done is one thing. Creating a show like Barry that leaves people broken is another. Make sure your business builds people, both inside and outside the business.

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Thank you for your insights.