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corporation (By: Robert Hughes, President). Minkow’s and ZZZZ
Best’s financial statements were false.
Petitioner examined ZZZZ Best’s financial statements in mid
to late June 1987 and concluded that its balance sheets were
unusually skewed toward accounts receivable. He believed that
nearly 80 percent of ZZZZ Best’s assets were receivables. He
concluded that ZZZZ Best’s “nominal balance” did not match the
total amount of receivables. Petitioner corporation did not buy
ZZZZ Best receivables because petitioner could not verify the
source of the receivables.
On June 23, July 13, and July 24, 1987, petitioner sold the
70,000 shares of ZZZZ Best stock he bought in June. His sale
price was $45,270.72, and his loss was $633,540.68.
C. Minkow’s Conviction and ZZZZ Best Class Action Suit
In June 1988, Minkow and other officers of ZZZZ Best were
charged with the crimes of conspiracy, unauthorized use of access
devices, money laundering, interstate transportation of stolen
securities and money, and securities, mail, bank and tax fraud.
Minkow was convicted early in 1989.
At various times not specified in the record, petitioner
contacted the attorneys who represent the plaintiffs in the
shareholder class action suit. A recovery agreement on the class
action suit was reached in 1991. It was signed by the parties in
July 1994.
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Last modified: May 25, 2011