Unfortunately, that version of ZZZZ Best
did not really exist, did not have any contracts, and had originally been funded through a series of credit-card thefts.
In the 1980s, accounting transgressions such as ZZZZ Best
and Crazy Eddie, among a number of others, led to the formation of the Treadway Commission and eventually a compilation of internal control processes under the auspices of the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
A historical look at massive fraud cases supports Kranacher's latter point: Barry Minkow of ZZZZ Best
infamy, Ivan Boesky, WorldCom's Bernard Ebbers and the Rigas family in Adelphia the list goes on.
The call came in for Barry Minkow, the onetime San Fernando Valley whiz-kid con artist who'd just served 7 1/2 years for bilking investors out of $26 million in the notorious ZZZZ Best
carpet cleaning company fraud.
For example, in the ZZZZ Best
fraud, the auditors accepted the client's representation that a $7.
stock traded publicly, opening at $4 and climbing to nearly $19 per share within 4 months of its initial offering.
His company, ZZZZ Best
Carpet Cleaning, once valued at over $350 million dollars, was ultimately sold for less than $60,000.
Heck, just look at ZZZZ Best
, I've made a fortune on GE, then turned around and got my clock cleaned shorting GTE.
That report warned against blank-check blind pools and noted that ZZZZ Best
, in which banks and investors lost about $70 million in a massive stock fraud scheme, went public in 1986 through a merger with a Utah blank-check blind pool.
Another bizarre and widely publicized business flame-out with its share of screwy accounting was ZZZZ Best
, the carpet and furniture cleaning enterprise hatched by a wily Los Angeles teenager named Barry Minkow.
The inescapable logic of the accounting equation ensures that any major overstatement of assets or profits, such as in the infamous ZZZZ Best
case, will show up over time.