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March 27, 2022 11:54 pm

How 'Crazy Eddie' Electronics Chain Scammed America

In 1983 the annual revenue at the electronics chain Crazy Eddie was roughly $134 million (or about $372 million today), remembers The Hustle. The next year they'd sold $44 million just in computers and games — and eventually grew to 43 stores. The company's stock ticker symbol was CRZY. "There was just one major problem," the article notes. "Crazy Eddie had been lying about its numbers since its inception — and the higher the stock soared the further founder Eddie Antar went to maintain the illusion." It's a colorful story from the early days of home PC sales. Antar's uncle hid up to $3.5 million in cash in a false ceiling at Antar's father's house, according to The Hustle. "Eddie Antar kept close tabs, usually calling his uncle twice a day to see how much money they were skimming.... The skimming strategy allowed Antar to not only hoard cash but also evade sales taxes. His employees were also paid off the books so Crazy Eddie could avoid payroll taxes.""Money was always in the house," said Debbie Rosen Antar, Antar's first wife, to investigators in the late 1980s. "And if I needed it and I asked him, he would say, 'Go underneath the bed and take what you need....'" Why would a company built on a family fraud go public? Somebody told Antar he could keep making millions skimming cash, but he could make tens of millions if the company traded on the stock market. Strangely, Crazy Eddie's fraudulent history gave it an advantage. To provide the illusion of quickly increasing profits ahead of the IPO, the Antars simply reduced the amount of cash they were skimming. With millions more on the ledger instead of in the family's pockets, the company's profits looked more impressive. As a public company, Crazy Eddie then made up for its inability to skim cash by initiating new fraud streams. - The company embellished its inventories by millions of dollars to appear better-stocked and better positioned for profits. - The Antar family laundered profits it had previously skimmed — and deposited in foreign bank accounts — back into the company to inflate revenues.... In November 1987, a hostile investment group led by Houston entrepreneur Elias Zinn pounced, purchasing Crazy Eddie. As Antar's cousin later recounted, Antar thought the sale would at least give them an opportunity to pin the fraud on the new owners. But Zinn immediately discovered $45 million of listed inventory was missing. Stores soon closed, and the company went bankrupt in 1989. Two disgruntled ex-employees then brought fraud allegations to America's stock-regulating agency, the article reports, while the FBI "started sniffing around, too." Crazy Eddie fled the country, using forged passports to escape to Tel Aviv, Zurich, São Paulo, and the Cayman Islands. But he was eventually arrested in Israel, sentenced to 12.5 years in prison, and ordered to repay investors $121 million (though he apparently served only seven). But Crazy Eddie also became a cultural phenomenon -- sort of. In the 1984 movie Splash, Darryl Hannah's character even watches a Crazy Eddie TV ad. The Hustle's article also includes photos of a Crazy Eddie stock certificate — and an actual "Wanted" poster issued the next year by the U.S. Marshalls office. Yet just four years before his death in 2016, Antar — a high school dropout — was telling an interviewer from The Record that "I changed the business...."

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