Sunday, December 27, 2009

It takes a Ponzito know a Ponzi

"The offering memorandum, itself, was probable cause to suspect a financial crime in progress," Minkow said.

So he called the FBI, put on a wire, and had lunch with Gross.

"The guy drove up from the Valley and I was afraid he was going to recognize me," Minkow said.
"Because in the San Fernando Valley, that's where I did my crime. .. He said, "You look familiar." .. I said, "Yeah, just tell me about those returns." And we just sort of moved on."
Minkow said he came to the meeting with an assistant posing as his wife. Gross asked how many kids they had.

"I said four and she said three, at the same time," Minkow said. "Then I made some joke about how she doesn't like to acknowledge our oldest."

A man intent on closing a deal doesn't always notice such inconsistencies. And Minkow had been referred by people Gross trusted--a tactic masters like Bernie Madoff deploy universally.
"We all do the same thing," Minkow said. "This guy was saying I couldn't talk to anyone at FedEx or Home Depot, and the reason was because it would jeopardize his relationship. .. This is what I used to say."

When auditors wanted to check if ZZZZ Best did the work it claimed, Minkow told them they couldn't go to the job sites. It was a liability, he'd explain. They might slip and fall.
This usually worked, and when it didn't Minkow took the auditors to empty office buildings that he had staged as work sites.
"What deja vu is this?" Minkow said he thought as he listened to Gross' pitch. "It's just a variation on a theme."

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