Crazy Eddie - The Popular Electronics Chain That Duped Americans
Crazy Eddie had some of the highest retail sales in the country. However, its owner was more interested in committing a blatant fraud. Keep on reading to find out how Eddie chain scammed America without any suspicion!
On September 13, 1984, a regional electronics chain held an exciting initial public offering during a stock bear market.
If it seems strange that a seller of VCRs and stereos could entice investors, remember that this was the 1980s, and people were getting excited about cellular phones the size of microwaves. And be aware that this electronics company was Crazy Eddie, a brand that defied convention in many ways. In this article, you can read all about the numerous ways how Crazy Eddie scammed America.
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Table of Contents
Background of Crazy Eddie Electronics
Crazy Eddie’s annual revenues in the previous fiscal year were $134 million, or $372 million today. More impressively, the 13-store chain in the New York City area led the electronics industry in terms of sales per square foot and profit margins.
Crazy Eddie was also a cultural phenomenon, rising to prominence with silly commercials that were parodied on Saturday Night Live by Dan Akroyd. Darryl Hannah’s character in the 1984 film Splash first discovered television by watching a Crazy Eddie commercial.
On the first day, nearly 2 million shares of Crazy Eddie were purchased for $8 each under the ticker CRZY. By the end of the year, the stock would have risen 25%, outperforming a flat market and bolstering Crazy Eddie’s plans for further expansion.
There was only one major issue. Crazy Eddie had lied about its numbers since its inception, and the higher the stock rose, the more founder Eddie Antar went to keep the illusion alive – this is the point where Crazy Eddie electronics scammed America!
“It was like Goodfellas, except they used briefcases instead of guns,” one attorney told the Philadelphia Inquirer later when they found out Crazy Eddie chain scammed America.
How Did Eddie Electronics Come into Being?
Eddie Antar, a 22-year-old high school dropout, opened his first store in 1969 near Brooklyn’s Sheepshead Bay neighborhood. He was the stereotypical outer-borough tough guy: almost bald with a scraggly goatee, allergic to anything but sweatpants, crude yet charming.
Antar predicted that people would flock to stores that sold speakers, VCRs, and televisions all under one roof, and he was correct. Electronics sales increased from $8.5 billion in the late 1960s to $35 billion by the mid-1980s.
Antar had eight stores by 1979 and shared his success with his family, who were part of a close-knit Syrian Jewish community in Brooklyn. Sam M. Antar, his father, uncle Eddy Antar, and brothers Mitchell and Allen Antar all held important positions.
Meanwhile, Eddie Antar made sure everyone in New York City knew about his company by bombarding TV and radio with catchy commercials created by advertising director Larry Weiss. Weiss had connections in the radio and music industries, so he hired radio DJ Jerry Carroll as Crazy Eddie’s spokesperson. (Other candidates for the job included James Brown, the Godfather of Soul.)
Weiss created commercials that parodied music trends and the cultural zeitgeist, drawing inspiration from the humor of Mad magazine. Most commercials featured Carroll saying, “His prices are insane. The commercials were both catchy and unavoidable. Crazy Eddie claimed to be the largest purchaser of radio and television advertising in the New York market by the early 1980s, spending $5.5 million ($15.3 million today) on advertising.
Antar expanded on ubiquitous marketing by providing innovative customer service. When many retailers followed the Chick-Fil-A schedule, Crazy Eddie stores remained open on holidays and Sundays. Antar rarely advertised prices, but he always guaranteed the lowest prices in New York and matched competitors’ offers if his customers found a better deal. Fewer than one in every five Crazy Eddie customers attempted to compare prices.
“In business — and in life in general,” Weiss said, “he was daring and took chances, and he wasn’t afraid of the consequences.”
Weiss had no idea Antar was engaging in more daring business practices than he could imagine.
How Crazy Eddie Electronics Chain Scammed America
Are you wondering how Crazy chain scammed America? Every night at 10:30 p.m, Crazy Eddie store managers descended on Antar’s uncle’s Brooklyn home (also named Eddy). They arrived carrying bags full of cash, checks, and receipts.
Antar’s uncle spent the money on necessities before stashing the rest in a briefcase. When the suitcase became too full, he hid the cash beneath a radiator. When there was no more space under the radiator, he began bringing the money to Antar’s father’s house, where he hid up to $3.5 million — $11 million today — in a false ceiling.
Eddie Antar kept a close eye on things, calling his uncle twice a day to find out how much money they were stealing. According to a family member, Eddie Antar received two-thirds of the skimmed cash, and his father, Sam M. Antar, the other third.
Antar’s skimming strategy allowed him to not only hoard cash but also avoid paying sales taxes. Crazy Eddie also paid his employees off the books to avoid payroll taxes.
“At Crazy Eddie, there was a culture that said nothing should go to the government,” wrote Antar’s cousin Sam E. Antar, who eventually became Crazy Eddie’s CFO and has detailed his work in a series of blog posts.
Antar expanded his business empire by vacationing in Europe and South America and purchasing properties on the Jersey Shore and Miami. He went through cars like they were clothes, abandoning one on the Garden State Parkway and setting it on fire.
He also kept up to $200k in cash under his bed.
“Money was always in the house,” Antar’s first wife, Debbie Rosen Antar, told investigators in the late 1980s. “And if I needed it and asked him, he’d tell me to go underneath the bed and take what I needed.”
Despite his success, Antar kept a low profile, content with convincing people that Jerry Carroll was Crazy Eddie and declining almost all interviews. If his employees spoke to the press, it was usually under the condition of anonymity because they didn’t want to say something stupid and irritate their boss.
They understood the key to remaining on Antar’s good side. “He respects loyalty,” one employee told the New York Daily News in 1984 when asked about how Eddie electronics chain scammed America and so many people.
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Rising stock and a displeased family
Why would a company founded on a family swindle go public?
Someone told Antar that he could continue to make millions by skimming cash, but he could make tens of millions if the company went public.
Surprisingly, Crazy Eddie’s fraudulent past provided it with an advantage. The Antares simply reduced the amount of cash they were skimming to create the illusion of rapidly increasing profits ahead of the IPO. The company’s profits appeared more impressive, with millions more on the ledger than in the family’s pockets.
Crazy Eddie, as a public company, compensated for its inability to skim cash by initiating new fraud streams.
The company inflated its inventories by millions of dollars to appear better-stocked and more profitable. The Antar family reinvested profits it had previously skimmed and deposited in foreign bank accounts to increase revenues.
Nobody outside the family suspected anything was amiss, least of all Crazy Eddie’s auditors.
Employees shuffled excess merchandise from store to store or borrowed it from friendly competitors to make inventories appear more significant to conceal the fraud. As an added precaution, Sam E. Antar claims he set dinner dates for the auditors, who were primarily single men, with Crazy Eddie’s most attractive employees.
Crazy Eddie expanded to 43 stores between 1984 and 1987, and its stock price reached $79. Antar and other family members sold most of their stock at high prices, netting a reported $90 million and duping investors.
“We arrogantly committed our crimes simply because we could, and we had no empathy for our victims whatsoever,” Sam E. Antar later wrote.
However, some family members were dissatisfied with their assessment.
Despite enriching their pockets with stock and above-market salaries, Eddie Antar’s father and two brothers had been jealous of his status as family patriarch for years.
The turning point occurred on New Year’s Eve in 1983, which Antar’s father later referred to as the “New Year’s Eve Massacre.” It sparked a simmering family feud that erupted when the business failed.
Crazy Eddie began losing money in 1987 as the electronics industry became more competitive and struggled to manage its many new stores. The stock dropped like a rock, falling below its IPO price. A hostile investment group led by Houston entrepreneur Elias Zinn pounced in November 1987, purchasing Crazy Eddie. Antar’s father informed his daughter and Antar’s wife, just before the IPO, that Antar would be on a date with his mistress in Manhattan. They caught him in the act, and a street brawl nearly broke out.
According to Antar’s cousin, Antar believed the sale would allow them to blame the fraud on the new owners. However, Zinn quickly discovered that $45 million in listed inventory was missing. Stores promptly closed, and the company declared bankruptcy in 1989. Worse, two disgruntled ex-employees joined forces with Antar’s father to file a fraud complaint with the SEC. The FBI began its investigation.
Antar fled the country in February 1990. Over the next two years, he traveled through Tel Aviv, Zurich, So Paulo, and the Cayman Islands on forged Brazilian and Israeli passports, with an estimated $60 million in his possession.
The ‘Darth Vader of capitalism’
On June 24, 1992, Israeli police stationed themselves outside an opulent home in a Tel Aviv suburb. Authorities, including the US Marshals Service and Interpol, became suspicious after discovering a money transfer between two names thought to be aliases for Antar.
Antar was arrested, and his home was raided, yielding $60k in cash, passports, birth certificates, and paperwork for forming a corporation without the assistance of a lawyer.
A year later, Antar faced a federal trial for defrauding investors from hundreds of millions of dollars in multiple stock and bond sales.
The United States Attorney’s Office for the District of New Jersey, led by future George W. Bush cabinet member Michael Chertoff, revealed details straight out of a Martin Scorsese film. Antar had used aliases such as David Boris Levy and Harry P. Shalom, established Liberian shell companies, and strapped $100,000 to his chest before boarding a plane.
The Antars were compared to the “Addams Family ” and the Ewing family from the TV show Dallas by the press. Nonetheless, the case was far from a foregone conclusion. There was no paper trail, and inventory fraud is a difficult concept to grasp. Antar might have avoided prosecution if he hadn’t rejected what he expected from his employees: loyalty.
Antar had abandoned Sam E. Antar under enormous pressure from the feds because he had orchestrated much of the fraud as Crazy Eddie’s financial manager before fleeing the US. Sam E. Antar pleaded guilty to two offenses in exchange for testifying and was the prosecution’s star witness in a weeks-long trial.
The US Attorney’s Office requested — and received — the maximum allowable sentence of 12.5 years at sentencing. Antar was ordered to repay investors $121 million.
“He’s like a Darth Vader of capitalism,” Chertoff said during the sentencing hearing.
However, his deception did not require any special knowledge of the laws. Anyone could have done it.
“It was completely brazen,” Paul Weissman, the US Attorney’s Office for the District of New Jersey prosecutor who also prosecuted Antar, told The Hustle. “It was about as simple as it gets.”
In 1999, Antar was released from prison. After his release, he apologized to and reconnected with his former marketing director, Larry Weiss, and together they launched CrazyEddie.com. Antar had no chance in a completely different world of consumer electronics. The business venture was a failure.
He agreed to interviews regularly before his death in 2016. He was out of prison and no longer in the spotlight. Antar, who blamed his crimes on his family, saw himself as a trendsetter rather than a fraudster.
“Everyone is familiar with Crazy Eddie. “What can I say?” In 2012, he told The Record. “I changed the company. “I completely transformed the company.”
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