In the 1970’s “fair trade” laws allowed manufacturers to require retailers to sell merchandise at the same price to avoid price competition for their products (Antar, 2011). This type of regulations force Eddie Antar to look for a different alternative in order to remain in business. It appears as if his only options were to purchase overseas and overstock from other retailers. Crazy Eddie stores had one goal in mind; sell a product to every customer that walked into their stores. Greed and personal gain was the main reason why the Antar family was able to commit fraud for 17 years without questioning until shortly after the company made its IPO. It is estimated that a fraud scheme of more than $120 million took place throughout …show more content…
Antar and Ronnie Gindi each owned 1/3 of the store named Sights and Sounds (renamed Crazy Eddie) which was located in Brooklyn, New York. During those times, “fair trade” laws were forcing small retailers into going out of business. In order to have a profitable business, for more than a decade Eddie Antar and family recurred to make several decisions that marked them for life. Misleading actions from everyone “employed” at Crazy Eddie’s resulted in a lucrative adventure for many that in the end only punished a few.
The company’s marketing strategy appeared to be one of their most valuable assets. Its message was simple: “Shop around. Get the best prices you can find. Then go to Crazy Eddie and he’ll beat it! Crazy Eddie’s Prices are Insane!” (Antar, 2011). The strategy appeared to attract a lot of customers and the Antar’s were determine to make their business extremely profitable by all means necessary.
The FBI (n.d.) defines white collar crime as a form of lying, cheating and stealing thousand, millions and even billions of dollars from investors as a result of a fraud scheme. As Antar (2011) describes, the evolution of the Crazy Eddie crime drama illustrates how petty, easily rationalized criminal infractions can escalate into serious and complex frauds and conspiracies, without so much as a thought given to concepts such as morality, ethics and …show more content…
However, only two weeks after the takeover it was discovered that over $40 million of inventory were nowhere to be found, marking the beginning of the end of Crazy Eddie. In June 1989, following the takeover, the new owners of the company filed for Chapter 11 – Bankruptcy (Mock, 2004). In September 1989 the SEC commenced an enforcement action against Antar and others (SEC, 1997). Eventually the SEC and the FBI were able to identify fraudulent activities performed by the Antar family and its associates:
• Falsifying the books and records of Crazy Eddie in order to make the company’s financial performance appear stronger that it actually was.
• Falsely overstating inventory by approximately $2 million in 1985.
• Artificially inflating inventory counts, resulting in overstating of inventory by approximately $10 million.
• Depositing outside money into Crazy Eddie’s bank accounts to be perceived as retail sales.
• At the end of fiscal year 1987 inventory counts were artificially inflated by falsifying count sheets.
• The primary purpose in perpetrating these fraudulent schemes was to increase price of Crazy Eddie stock to public investors.
On July 16, 1990, the SEC obtained a judgement for $73,496,432, plus interest, against Eddie Antar in the United States District Court for the District of New Jersey and the SEC was able to recover assets from accounts Eddie Antar had in Switzerland, Israel, Liechtenstein,