The Amazing Minkow Makeover

By Matthew Heller

June 13, 2004 12 AM PT

Matthew Heller last wrote for the magazine about Utah's dietary-supplement industry.

In the auditorium of a San Diego church, pastor Barry Minkow paces the stage like a caged jungle cat, sweat saturating the back of his blue shirt, an audience of some 400 worshippers hanging on his every passionate word. He has spent the first 40 minutes of his Sunday sermon talking about damnation and redemption, about the two thieves at the crucifixion--the one who doubts Jesus and the one whom Jesus welcomes to paradise. Now he turns toward the wooden cross at the back of the stage. It’s time for a dramatic finale.

The preacher picks up an ax. Whack! With his powerful bodybuilder arms, he drives it into the cross, acting the biblical part of a soldier breaking the legs of the unrepentant thief. Then another smite of the ax. He’s broken, symbolically, the legs of the saved thief. Though both suffer and die on the cross, only one is going to heaven with Christ.

Minkow turns back to his audience. He wants to know if they, too, are ready to be saved. “Will you,” he bellows in his husky voice, “meet that thief?”

This is the same Barry Minkow who was once quite a thief himself, who gave a performance of a very different kind 15 years ago in a Los Angeles federal courtroom as he defended himself against charges that, starting out as a 10th-grader, he perpetrated the ZZZZ Best carpet-cleaning caper, one of the most audacious swindles in Wall Street history.

The $26-million scam involved the charismatic, hyperactive and ambitious Minkow using phony financial statements to obtain bank loans and then inventing a phony insurance-restoration business to sell ZZZZ Best to public investors. On the witness stand, however, he told the jury that he was the puppet of mobsters.

That performance wasn’t very convincing. The jury convicted him of all 57 counts of fraud, and in 1989 the judge sentenced the then-22-year-old to 25 years in prison--a severe punishment for a white-collar criminal. During sentencing, the judge described Minkow’s testimony as “el toro poo-poo.”

Behind bars, Minkow experienced a religious conversion, often an appealing way for inmates to generate sympathy and an early release. But after he was paroled in 1995, his fervor did not wane. He trained as a pastor at the Rocky Peak Church in Chatsworth and, in 1997, was hired by the nondenominational Community Bible Church in San Diego.

In addition, Minkow has gone from fraud perpetrator to investigator, helping to uncover scams as a consultant to the Fraud Discovery Institute, a company that he founded with accountant Sam Kephardt and software expert Steve Austin. And he’s a family man who, with his wife Lisa, recently adopted twins from Guatemala. The former resident of an exclusive community in Woodland Hills now lives in unfashionable Imperial Beach.

The “new” Minkow confesses at every opportunity that he is a “liar and a thief saved by God’s grace.” It’s hard not to be skeptical. Minkow himself acknowledges that there are “people who are going to say [about him], ‘He’s a frigging crook and he always will be.’ ” And in this age when three felonies can get you locked up for life, can any ex-con--let alone a notorious swindler--truly restore himself to the public’s grace?

In conversation, Minkow, now 38 and with a few flecks of gray in his close-cropped black hair, is engaging and articulate, worldly yet boyish, sophisticated yet folksy. And, yes, even modest.

“I could show you stacks of letters from prisoners who say, ‘You’re our guy, you’re our model,’ ” he says. “But I don’t want to be the poster boy of rehabilitation . . . . That would tend to deceive [prisoners] into believing that I still don’t have a long way to go.”

Superficially, at least, Minkow has come a long way. Under his energetic guidance, the Community Bible Church’s membership has grown from about 140 to more than 1,000, drawn partly by the high-octane sermons he delivers during four services each weekend. “He’s a very gifted teacher, a very gifted speaker,” says Tony Nevarez, chairman of the church’s board of elders.

At the Fraud Discovery Institute, Minkow works with licensed investigators to uncover white-collar crimes and also trains auditors, insurance underwriters and bankers on how to detect fraud. Recent cases he has brought to federal authorities include those of James P. Lewis Jr., an Orange County investment advisor alleged to have operated an $813-million “Ponzi scheme,” and W.L. Ware Enterprises and Investments, a Florida firm that raised at least $16.5 million from mostly African American and Christian investors before federal regulators shut it down in January. Minkow volunteers his time for the anti-fraud work, and declined to reveal the amount he earns for running training sessions for the institute.

Lisa Minkow, who married Barry in February 2002 after dating him for about eight months, believes scam-hunting is his way of atoning. “I hate to say he’s like a savior, but he wants to protect people from being taken,” she says.

The Minkow makeover has impressed the lead prosecutor in the ZZZZ Best case, James R. Asperger, who acknowledges that Minkow has “been able to stay out of trouble and contribute productively to society.” At a hearing in 2002, U.S. District Judge Dickran Tevrizian took him off probation and complimented him for taking “big steps on the right side of the road.” And even though he will never fully repay his debt to his main ZZZZ Best victim, Union Bank of California--it now amounts to nearly $19 million, including interest, of which Minkow has repaid an amount in “the six figures”--the bank temporarily released its lien on his house so he could proceed with the adoption of his twins.

Minkow also lectures corporate executives on how to stay out of legal trouble. And he even has a few words of advice for Martha Stewart, who is scheduled to be sentenced Thursday, as she faces her own white-collar prison term.

“You know what America loves?” he asks. “A winner . . . . But you know what [it] loves the most? A comeback story. You can come back from failure in this country. But you must admit it before you can come back from it.”

So, should you buy Minkow’s comeback story? One woman never will. She worked for a Minkow contemporary at the height of the convicted swindler’s notoriety, and said bluntly: “I don’t think Barry can be for real at anything.” The evidence at the ZZZZ Best trial suggested he was possibly a sociopath-in-training, and, from Elmer Gantry to Jim Bakker, evangelical ministries have provided a safe haven for scoundrels.

But Minkow does seem earnest, self-aware and intent on self-improvement in an Oprah-esque sort of way. “I’m not where I need to be,” he says.

“Where do you need to be?”

“I need to be a better man and a better person than I am today.”