FORMER CON ARTIST WHO NOW EXPOSES SCAMS TAKES
"60 MINUTES" HIDDEN CAMERAS ON AN INVESTIGATION
OF A POTENTIAL FRAUD -- SUNDAY ON CBS
According to Barry Minkow, the Dallas-based couple promising to double the money of churches and charities that are willing to deposit $500,000 or more in a bank account controlled by one of their representatives is running a classic con. And he should know. Minkow went to prison for seven-and-a-half years for swindling people who invested millions in his ZZZZ Best Carpet Cleaning Company in the late 1980's. Now an evangelical minister, he says he is seeking redemption by rooting out scams targeting the public. Minkow tells his story to Steve Kroft and goes undercover to expose what he calls a Ponzi scheme targeting churches on 60 MINUTES Sunday, May 22 (7:00-8:00 PM, ET/PT) on the CBS Television Network.
"They're going after...black churches, non-profits and that's my territory," he says of Debby and Eric Berry. The Berrys fund a non-profit organization based in Oklahoma City called the Nehemiah Fund that promises a 100-percent matching grant to churches or charities willing to deposit $500,000 or more. It's a scam, says Minkow. "Genesis Capital, Genesis Alliance and the Nehemiah Fund is what I believe a financial crime in progress," Minkow says, naming the two entities the Berrys control that he says are part of the fraud . "Normally and regularly, people who are in the grant business don't ask for your money first before they double it," he tells Kroft.
Minkow investigated the Berrys with the knowledge of the FBI as part of his company, the Fraud Discovery Institute. He allowed 60 MINUTES hidden cameras to come along to record his dinner with the Berrys, during which the couple said their company, Genesis Capital Management, controls $1.5 billion in investments and supplies the money for the Nehemiah Fund's matching grants. Minkow did some checking and was even more convinced it was a con. "They claim to have $1.5 billion and they operate out of 900 square feet, where they share a secretary with everybody on the floor?...I have a church...it takes like eight elders and 17 employees to run $1.8 million. How [much] the more to run $1.5 billion?" asks Minkow.
Instead of finding assets or holdings that would support the Berrys' story, Minkow found outstanding tax liens against them totaling $240,000. The Berrys have not been charged with any crimes, but the FBI, the Texas Attorney General and the Montana Auditor's office are investigating the suspected scam.
None of this is a stretch for Minkow, who has exposed 11 suspect deals in the last year-and-a-half; the difficult part is getting them shut down quickly enough to save people's money. "I get a probable cause and all of a sudden in my mind, the clock ticks," he tells Kroft, "and I know that every day that I don't do something, somebody's pouring money into this deal. And they're going to end up feeling like I made people feel back in the 1980s."
Back in the 1980s, Minkow started ZZZZBest Carpet Cleaning at the age of 16, turning it into a company that was once valued at $300 million. He did it by inflating revenues, falsifying documents and then selling the stock to the public.
Minkow went to jail when it all fell apart and it was there, he says, he had an epiphany that put him on his current path. It happened, he says, Thanksgiving Day 1988, when he was being held in a small cell with a tattooed bank robber named John Hensley, a toilet and a sink. "They feed me Thanksgiving dinner through a hole in the door and they nuke it -- the salad and everything -- because by the time it got from the kitchen to the hole it was cold. So they nuke it...Jell-O and all," he tells Kroft. "I look at Hensley. I look at the nuked Jell-O. I look at the toilet. I look at the door that doesn't open and I'm thinking, 'You know, maybe it's me. Maybe there's something wrong with me. When they go to all this trouble to put you in a place like this - you better do some changing,'" recalls Minkow.