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Fallen Whiz Kid Tells Tale of Gangsterlike Coercion in ZZZZ Best Trial

October 28, 1988

LOS ANGELES (AP) _ A fallen whiz kid has tried to convince jurors at his fraud trial that he was forced to commit crimes by shady characters, including a muscular loan shark, his bodyguard and a reputed mobster.

In his third day on the witness stand Thursday, 22-year-old Barry Minkow cited the late Jack Catain, a reputed underworld figure who Minkow said helped bankroll the troubled ZZZZ Best carpet cleaning company.

Minkow said he met Catain in 1985 when he repaired a carpet at Catain’s home. At the time, he said, he was deeply in debt and being pressured for money by a loan shark named Dan Krowpman and his bulky bodyguard named Mel.

″Everything was terrible,″ Minkow said. ″I was bouncing payroll checks.″

By then, he said, he had committed credit card fraud, insurance fraud and tax fraud on the orders of Krowpman and Mel, who threatened him with a gun.

Minkow, who was 16 when he started his business in his parents garage, has portrayed himself as a youth victimized by greedy older men. He is charged with 57 counts of securities fraud, credit card fraud and mail fraud.

Prosecutors have portrayed him as a shrewd con man who bilked investors out of millions.

Minkow, who had hired a public relations firm to promote himself, said newspapers were writing about him as a whiz kid when he met Catain.

He said Catain knew about ZZZZ Best’s difficulties and offered to help.

″I don’t know how he knew,″ said Minkow. ″But he knew I was having financial problems.″

After Minkow paid $2,500 in ″up-front money,″ Catain arranged for him to receive $75,000 in loans from two small banks. He said Catain also set him up with a new accountant who filed fictitious income tax returns without consulting Minkow.

Meanwhile, he said, Krowpman had a new scam, urging Minkow to get loans from banks for carpet restoration work which was never done and to continue committing credit card fraud to raise more funds.

″I didn’t want to do this,″ said Minkow. ″I said, ’The business is moving well. We don’t need to do this.‴

But he was persuaded, he said, by the 6-foot-7-inch Mel.

″Mel pulled out a gun from under the sofa and said, ’You have no choice but to do this,‴ Minkow testified.

″I was paranoid and I was on these steroids,″ he said. ″I was scared.″

Krowpman and 10 other co-defendants pleaded guilty to various charges related to the ZZZZ Best operation. Accountant Norman Rothberg is on trial with Minkow, accused of taking a bribe to cover up ZZZZ Best’s frauds.

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