In late 1986, the company, which had grown to 1.3k+ employees, got listed on the Nasdaq through a ~$13m public offering.
It's amazing how tiny companies used to be, or how much things have grown, even when adjusted for inflation. Nowadays, that is like a seed round for a big data or cloud company.
He was worth tens of millions, why not pay the lady her $600? Dumb. Shows how greed is always the ultimate downfall.
> It's amazing how tiny companies used to be, or how much things have grown, even when adjusted for inflation. Nowadays, that is like a seed round for a big data or cloud company.
The was the total price of the shares sold in the IPO, not the valuation of the company.
From the WSJ link in the article:
> Last December, ZZZZ Best had a public offering of one million units consisting of three shares of common stock and one warrant each.
> On Monday alone, nearly 5.3 million of the company's 11.5 million outstanding shares changed hands.
This would be 3 million shares and 1 million warrants sold for ~$13 million, versus a total 11.5 million shares at the time of bankruptcy. So the ~$13 million IPO was, at best, a little over 1/3rd the market cap of the company at the time of the IPO. This market cap increased to $211 million at its peak some months later. Not bad for a regional services firm.
Side note: "ZZZZ Best" as a company name might have been the old practice of trying to name your company so it was either first or last in it's category in the yellow pages. Either spot would get you more calls.
About 10 years before this one, there was a similar fraud, National Student Marketing Corporation, that was similarly successful based on a similar foundation. My recollection is that it also attributed its (temporary) success partly to rapid growth of a cleaning service (for offices) business. That one was somewhat overshadowed in the business fraud section of the papers by the coincidental bursting billion-dollar bubble around the same time of an equally fraudulent NYSE-listed go-go financial services firm that had similarly been acquiring companies hoping that the acquisitions would somehow allow them to unwind their Ponzi operation.
>>“If everything had worked out,
everyone makes out like a bandit,”
he said. “The stockholders make
money, the income tax people
collect taxes, three or four
thousand people get jobs, America gets its carpets cleaned.” Instead, Minkow was convicted on
fraud charges, sentenced to 25
years in prison, and forced to pay
back defrauded investors $26m in
restitution. The prosecutors used
Swanson’s notes as evidence during the trial.
I'm not sure how i feel about it. Obviously it's a good thing to put a fraudster away but the way it's framed, it sounds like he was planning on going straight until a journalist went and ruined his life. Maybe i'm being naive, but i'm wondering if everyone might have been better off had the whole affair been swept under the... carpet?
It's an incredibly common thing for con artists to claim they were just one thing away from going straight. This one big con, deal, whatever. There's absolutely no reason to believe them. There's always that next big con, next opportunity to rake in even more, an addiction. They always have some kind of justification or another.
Even after having been found guilty of fraud, serving time, Minkow did it again. There was no need for him to do it then, he didn't have those business loans going on. He'd gone "straight". Pastor, fraud investigator.
The article mentions cooking the books with fake revenue, check kiting, deliberate overcharges, intimidation, assault, and so on. He's just a straight up bad actor, there wasn't a plan where he was going straight. More resources would have just fueled more crime.
Given that Mr Minkow would continue to engage in fraud after his release, in 2009, likely not . He would find some way to screw things up again, but bigger.
Many of those people already had jobs cleaning carpets for KeyServ (or Flagship Cleaning Services Inc. as it appeared to be called at the time according to the WSJ article). They weren't going to suddenly gain new ones from a change in ownership.
> the income tax people collect taxes
Again, they're already collecting those taxes from the employees of KeyServ.
> America gets its carpets cleaned
Already getting them cleaned by KeyServ, and many other independent companies.
I guess the stockholders would have indeed made money though. At least they got a write-off from the loss though.
It's amazing how tiny companies used to be, or how much things have grown, even when adjusted for inflation. Nowadays, that is like a seed round for a big data or cloud company.
He was worth tens of millions, why not pay the lady her $600? Dumb. Shows how greed is always the ultimate downfall.