Crazy Eddie
Encyclopedia
Crazy Eddie is the name of a consumer electronics
retailer conducting business through the internet and by telephone. The venture is the most recent to be doing business under the Crazy Eddie name, with the most well known (and later infamous) being a chain of retail stores that operated throughout New York, New Jersey, Pennsylvania, and Connecticut for nearly twenty years.
Crazy Eddie was started in 1971 in Brooklyn, New York
by businessmen Eddie and Sam M. Antar as ERS Electronics, named after Eddie, his cousin Ronnie (Ronnie Gindi, a partner), and his father Sam. The chain rose to prominence throughout the Tri-State Region as much for its prices as for its memorable radio and television commercials, featuring a frenetic, "crazy" character played by radio
DJ Jerry Carroll (who copied most of his shtick from early TV-commercial pioneer, used car and electronics salesman Earl "Madman" Muntz). At its peak, Crazy Eddie had 43 stores in the chain, and earned more than $300 million in sales.
In February 1987, the U.S. Attorney for the District of New Jersey commenced a federal grand jury investigation into the warranty billing practices of Crazy Eddie. In September of that year, the United States Securities and Exchange Commission
initiated an investigation into alleged violations of federal securities
laws by certain Crazy Eddie officers and employees. Eddie Antar was eventually charged with a series of crimes.
Unable to sustain his fraudulent business practices, co-founder Eddie Antar cashed in millions of dollars worth of stock and resigned from the company in December 1986. Crazy Eddie's board of directors lost control of the company in November 1987 after a proxy battle with a group led by Elias Zinn and Victor Palmieri, known as the Oppenheimer-Palmieri Group. The entire Antar family was immediately removed from the business. The new owners quickly discovered the true extent of the Antar family's fraud, but were unable to turn around Crazy Eddie's quickly declining fortunes. In 1989, the company declared bankruptcy
and was liquidated
. Crazy Eddie became a known symbol for corporate fraud in its time, but has since been eclipsed by the Enron
, Worldcom and Bernie Madoff accounting scandals.
Antar fled to Israel
in February 1990, but was returned to the United States in January 1993 to stand trial. His 1993 conviction on fraud
charges was overturned, but he eventually pleaded guilty in 1996. In 1997, Antar was sentenced to eight years in prison and paid large fines. He was released from prison in 1999.
, moved to New York from Aleppo
, Syria
. Murad and Tera worked in their market stalls alongside Arabs, including Egyptians
, other Syrians
, as well as Turks
. Eddie's father Sam Antar was a retailer, and it was no surprise to the family that Eddie followed in his father's and grandparents' footsteps.
The predecessor to Crazy Eddie was a consumer electronics store called Sight and Sound. It was a property of ERS Electronics, a company owned by Sam M. Antar, his son Eddie Antar, and Eddie's cousin Ronnie Gindi. Sight and Sound, located on Kings Highway in Brooklyn, opened its doors in 1969 and offered electronics at regular prices. Due to his extremely aggressive sales techniques, Eddie quickly became known as "Crazy Eddie." Despite his technique, or perhaps owing to it, within 18 months the store (as well as Eddie and Ronnie) was nearly bankrupt.
Eddie Antar bought out Gindi's one-third ownership stake of Sight and Sound, and Sam M. Antar retained his one-third stake but left the day-to-day operations to Eddie.
In 1971, the Sight and Sound store on Kings Highway was renamed Crazy Eddie. Eddie continued his high-pressure sales tactics with the renamed Crazy Eddie store, but this time met with success. Eventually, Eddie closed that location and moved to a bigger store, just a few blocks from Sight and Sound's old location. In 1973, Antar opened the second Crazy Eddie location in Syosset, New York. A third followed in 1975, located in Manhattan
. That year, Antar established a corporate headquarters in Brooklyn, New York.
An essential part of Crazy Eddie's success was its advertising campaign. In 1972, WPIX-FM late-night disc jockey
Jerry "Dr. Jerry" Carroll ended a live commercial with the now-famous slogan, "Crazy Eddie, his prices are IN-SA-A-A-A-A-ANE!" Antar called in and told Carroll to say the line the same way every time.
Beginning in 1975, Carroll starred in a series of humorous television commercials, each ending with the same frenetic slogan. Among the more memorable promotions featured by Crazy Eddie was the annual "Christmas
in August" sale. In the 1980s, more than 7,500 unique radio and television ads were aired in the Tri-State Region. Carroll's acting was so convincing, and he became so identified with the company that many people thought he was actually Crazy Eddie. One commercial spoofing Superman implied that Carroll really was Crazy Eddie; this drew the ire of Warner Communications
, the parent company of the distributor
of the Superman film series, who sued the chain over the commercial. Eddie Antar countered by threatening to stop selling Atari
video games and systems at Crazy Eddie stores; Warner
Communications was Atari's parent at the time and Crazy Eddie was its largest customer. The suit was eventually settled.
The commercials were so memorable that HBO's news parody
series Not Necessarily the News
created a parody TV commercial featuring a caricature of Oliver North
(from the then-infamous Iran-Contra affair
), known as "Crazy Ollie", selling used weapons at bargain prices. Carroll and the commercials became significant 80s icons, with the commercials often appearing in the background of films of the time, including Splash
.
. The Antars deliberately falsified their books to reduce (or eliminate) their taxable income. They also paid employees off the books, and regularly skimmed thousands of dollars (in cash
) earned at the stores. For every $5 Crazy Eddie reported as income, $1 was taken by the Antars. In 1979, the Antars began depositing much of this money (hundreds of thousands of dollars) in Israeli bank accounts. The Antar family skimmed an estimated $3 million to $4 million (US) per year at the height of their fraud. In one offshore bank
account, the family deposited more than $6 million between 1980 and 1983.
By 1983, it was becoming more and more difficult to hide the millions of illicit dollars. The Antars decided that the way to cover up their growing fraud was to take the company public
. In preparation, Eddie Antar initiated a scheme in 1979 to skim less each year. Since more income was actually being reported, this had the effect of showing drastically increasing profit margins. While the company's actual profits (taking into account skimmed profits) from 1980 to 1983 increased approximately 13%, reported profits rose nearly 171%.
Despite the misgivings of people closely associated with Crazy Eddie, the company held its initial public offering
on September 13, 1984 (symbol
: CRZY). Shares of the company sold initially for $8. By early 1986, Crazy Eddie stock
was trading at more than $75 per share (split adjusted).
Eddie recruited his cousin, Sam E. Antar (known as Sammy), to assist the company with its fraud. Sammy earned a degree in accounting
in 1980, and served his apprenticeship with Penn and Horowitz, Crazy Eddie's auditor. In 1986, he was named CFO
of the company. Sammy was informed that there was a $3 million deficit from the previous year's inventory fraud that needed to be hidden. Additionally, he was instructed to find ways to show a 10% growth in sales.
One of Sammy's major schemes was a money laundering
operation later known as the Panama Pump — money that the Antars had deposited in Israeli banks was transferred to bank accounts in Panama
. These accounts, opened under false names, then drafted payments to Crazy Eddie. This money was largely used to inflate same-store sales figures for the company.
As a public company, Eddie, Sammy, and others engaged in increasing amounts of inventory fraud to increase reported profits and inflate the value of Crazy Eddie stock. For the fiscal year ended March 1, 1985, Crazy Eddie falsified inventories by $3 million. The next fiscal year, that amount increased to between $10 and $12 million.
By 1987, Sammy's goal was no longer to show higher profitability, but rather to cover up previous frauds. In fiscal year 1987, they falsified inventories between $22.5 and $28 million. In addition, Crazy Eddie booked $20 million in phony debit memos or charge backs to vendors that reduced accounts payable.
As the company's fraud became harder to cover up, the public perception of Crazy Eddie as a commercial success began to change. By October 1986, the company's stock value had dropped to $17.50 per share. In December, Eddie Antar announced his resignation as president and CEO. In April 1987, it was announced that Eddie had in fact retained his role as president but had fired, among others, his father Sam M. Antar. But by then Eddie had already cashed out his share of Crazy Eddie stock, worth between $25 million and $30 million.
By the spring of 1987, the company's stock had plummeted below $10 a share. Additionally, earnings fell 20 percent from the previous year. The franchise did show a 34 percent sales increase, but this was mainly the result of 13 new store openings. In May 1987, Eddie began proceedings to take the company private
again.
Before that could happen, Houston
-based businessman Elias Zinn and management consultant Victor Palmieri initiated a hostile takeover
. With Palmieri's backing, Zinn purchased $17.5 million worth of Crazy Eddie stock, which represented 7½ percent of the outstanding shares. Once rumors of a takeover started, financial analysts began to more closely examine Crazy Eddie's financial situation. What they discovered was that while most stockholders in the company had lost money since 1984, Eddie Antar had sold 6.5 million shares worth $74 million. A flurry of stockholder lawsuits were filed against the Antar family.
Eddie and Sammy briefly attempted to counter-offer Zinn's takeover, but Zinn quickly topped their funds. The Antars' bid was dropped, and Zinn became the new owner of Crazy Eddie on November 6, 1987. He immediately removed the rest of the Antar family from any positions of power. When Palmieri's financial analysts completed their preliminary audit, a few weeks after the takeover, they estimated that Crazy Eddie's inventory was short by $40 to $50 million. The final figure was $80 million.
s to the entire Antar family.
By June 1988, Crazy Eddie's suppliers were demanding the liquidation
of the company, so they could recover money owed to them. In 1989 they would get their wish. The closing of Crazy Eddie began in March 1989, as the company shuttered 17 of its 43 stores. On June 6, 1989 Crazy Eddie was served with a petition by five of its creditors, who had not been paid a total of $860,000 they were owed, which sought to have the company forced into bankruptcy. The company originally planned to fight the petition and file for dismissal, but fifteen days later Crazy Eddie voluntarily filed for Chapter 11
bankruptcy protection. Company president and CEO Peter Martosella cited problems created by the creditors' position (which he termed "ill-advised"), but said business would be conducted as usual at the remaining 26 stores and that Crazy Eddie was still a strong franchise. The company vowed to stay in business but despite Martosella's assertions Crazy Eddie continued to falter. By the fall of 1989, sales were continuing to fall and stores were unable to keep items stocked due to lack of supplier interest in the company. Faced with these facts, Crazy Eddie management decided that the chain was not worth saving. Soon after Crazy Eddie began going-out-of-business sales, but store supply remained minimal even when leftover merchandise from stores that had shuttered was sent to others that were still in operation. By the end of the year the remaining 26 Crazy Eddie locations closed and the chain ceased to exist. In a period of three years Crazy Eddie had gone from one of the hottest and most lucrative retailers in the United States and trading at $75 per share to bankruptcy and liquidation.
Based on information gathered over the course of its investigation, the SEC charged Eddie Antar with securities fraud
and illegal insider trading
on September 6, 1989. In January 1990, a Federal district judge ordered Antar to repatriate more than $50 million he had illegally transferred to Israel. He was also ordered to appear in court to explain what had happened with the money. When he failed to appear, an arrest warrant
was issued. Eddie surrendered to U.S. Marshals
a week later, but was released and ordered to appear at a second hearing. When he failed to appear at that hearing, a second arrest warrant was issued and his assets were frozen.
Eddie Antar fled to Israel using a fake passport
and the alias
David Jacob Levi Cohen, and purchased a townhouse in the city of Yavne
. After Eddie left the country, Sammy offered to testify for Federal prosecutors in exchange for immunity. Sammy pleaded guilty to three felonies. However, he avoided jail time for his testimony, and was instead sentenced to six months of house arrest
, 1,200 hours of community service
, three years of probation
, and was given more than $10,000 in fines. As of 2009, Sammy was an advisor for government agencies and businesses investigating fraud.
Eddie Antar was arrested near Tel Aviv
in June 1992. While being held in Israel, Eddie was charged with Federal racketeering
conspiracy. He was extradited to the United States in January 1993, and pled not guilty to the charges brought against him. Eddie Antar's fraud trial began in June, and was prosecuted jointly by U.S. Attorneys
Paul Weissman and Michael Chertoff
. On July 20, 1993, Eddie Antar was found guilty on 17 counts of fraud. His brother, Mitchell, was found guilty on three counts, and acquitted on two.
In April 1994, Eddie Antar was sentenced to 12½ years in prison for racketeering and stock fraud. Antar's lawyers immediately filed an appeal, citing what they believed was bias on the part of the presiding judge. In April 1995, the verdicts against Eddie and Mitchell were overturned by a Federal appeals panel. Chertoff, calling Eddie "the Darth Vader
of capitalism
," vowed to begin a new trial.
Antar eventually pled guilty to Federal fraud charges in May 1996. In February 1997, he was sentenced to eight years in prison
. He was ordered to pay more than $150 million in fines, in addition to the more than $1 billion in judgments against him, stemming from various civil suits. Efforts to recover additional money from the Antar family on behalf of defrauded stockholders continue to this day.
In 1998, the grandchildren of Eddie, Allen, and Mitchell Antar revived the Crazy Eddie electronics chain with a store in Wayne, New Jersey
, and as an online Internet venue, crazyeddieonline.com. The revived company retained the slogan "his prices are insane" and brought Jerry Carroll, who by this time had founded his own ad agency, back as spokesman. Despite plans to expand the chain to a potential ten stores, the new Crazy Eddie did not expand beyond the Wayne store and in 1999 the only store in the revived chain closed.
Eddie Antar returned to the company in 2001, which by this point had been doing business solely as an Internet and buy-by-phone business for over a year. He relaunched the website as crazyeddie.com and once again hired Jerry Carroll to do its advertising. By 2004 crazyeddie.com had disappeared again, and after a brief attempt to revive the online retailer in 2005 Crazy Eddie ceased to exist once again. The Crazy Eddie trademark
and associated intellectual property
were then acquired by Texas
-based firm Trident Growth Fund. In July 2006, Trident attempted to auction off the brand and the domain name crazyeddie.com on eBay
, to limited success. The auction ended without the reserve price being met, the highest bid being $30,100 (US
).
On March 3, 2009, it was announced that Brooklyn-based businessman Jack Gemal had bought the rights to the Crazy Eddie name and quickly launched a new online Crazy Eddie venture at pricesareinsane.com. Gemal was also reported to be scouting retail space for new Crazy Eddie retail locations, stating that he wanted to open fifty locations within the next two years. The online store, which was inactive for nearly eight months for reasons unknown, sells electronics, appliances, and accessories.
Consumer electronics
Consumer electronics are electronic equipment intended for everyday use, most often in entertainment, communications and office productivity. Radio broadcasting in the early 20th century brought the first major consumer product, the broadcast receiver...
retailer conducting business through the internet and by telephone. The venture is the most recent to be doing business under the Crazy Eddie name, with the most well known (and later infamous) being a chain of retail stores that operated throughout New York, New Jersey, Pennsylvania, and Connecticut for nearly twenty years.
Crazy Eddie was started in 1971 in Brooklyn, New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
by businessmen Eddie and Sam M. Antar as ERS Electronics, named after Eddie, his cousin Ronnie (Ronnie Gindi, a partner), and his father Sam. The chain rose to prominence throughout the Tri-State Region as much for its prices as for its memorable radio and television commercials, featuring a frenetic, "crazy" character played by radio
Radio
Radio is the transmission of signals through free space by modulation of electromagnetic waves with frequencies below those of visible light. Electromagnetic radiation travels by means of oscillating electromagnetic fields that pass through the air and the vacuum of space...
DJ Jerry Carroll (who copied most of his shtick from early TV-commercial pioneer, used car and electronics salesman Earl "Madman" Muntz). At its peak, Crazy Eddie had 43 stores in the chain, and earned more than $300 million in sales.
In February 1987, the U.S. Attorney for the District of New Jersey commenced a federal grand jury investigation into the warranty billing practices of Crazy Eddie. In September of that year, the United States Securities and Exchange Commission
United States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
initiated an investigation into alleged violations of federal securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...
laws by certain Crazy Eddie officers and employees. Eddie Antar was eventually charged with a series of crimes.
Unable to sustain his fraudulent business practices, co-founder Eddie Antar cashed in millions of dollars worth of stock and resigned from the company in December 1986. Crazy Eddie's board of directors lost control of the company in November 1987 after a proxy battle with a group led by Elias Zinn and Victor Palmieri, known as the Oppenheimer-Palmieri Group. The entire Antar family was immediately removed from the business. The new owners quickly discovered the true extent of the Antar family's fraud, but were unable to turn around Crazy Eddie's quickly declining fortunes. In 1989, the company declared bankruptcy
Bankruptcy in the United States
Bankruptcy in the United States is governed under the United States Constitution which authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States." Congress has exercised this authority several times since 1801, most recently by adopting the Bankruptcy...
and was liquidated
Liquidation
In law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation...
. Crazy Eddie became a known symbol for corporate fraud in its time, but has since been eclipsed by the Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
, Worldcom and Bernie Madoff accounting scandals.
Antar fled to Israel
Israel
The State of Israel is a parliamentary republic located in the Middle East, along the eastern shore of the Mediterranean Sea...
in February 1990, but was returned to the United States in January 1993 to stand trial. His 1993 conviction on fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
charges was overturned, but he eventually pleaded guilty in 1996. In 1997, Antar was sentenced to eight years in prison and paid large fines. He was released from prison in 1999.
Beginnings
Eddie Antar’s grandparents, Murad and Tera Antar, who were Syrian JewsSyrian Jews
Syrian Jews are Jews who inhabit the region of the modern state of Syria, and their descendants born outside Syria. Syrian Jews derive their origin from two groups: from the Jews who inhabited the region of today's Syria from ancient times Syrian Jews are Jews who inhabit the region of the modern...
, moved to New York from Aleppo
Aleppo
Aleppo is the largest city in Syria and the capital of Aleppo Governorate, the most populous Syrian governorate. With an official population of 2,301,570 , expanding to over 2.5 million in the metropolitan area, it is also one of the largest cities in the Levant...
, Syria
Syria
Syria , officially the Syrian Arab Republic , is a country in Western Asia, bordering Lebanon and the Mediterranean Sea to the West, Turkey to the north, Iraq to the east, Jordan to the south, and Israel to the southwest....
. Murad and Tera worked in their market stalls alongside Arabs, including Egyptians
Egyptians
Egyptians are nation an ethnic group made up of Mediterranean North Africans, the indigenous people of Egypt.Egyptian identity is closely tied to geography. The population of Egypt is concentrated in the lower Nile Valley, the small strip of cultivable land stretching from the First Cataract to...
, other Syrians
Syrian people
The Syrian people are the inhabitants and citizens of Syria. Syrians are tied together by geography, linguistic heritage, religion, and similar Eastern Mediterranean ethnicities...
, as well as Turks
Turkish people
Turkish people, also known as the "Turks" , are an ethnic group primarily living in Turkey and in the former lands of the Ottoman Empire where Turkish minorities had been established in Bulgaria, Cyprus, Bosnia and Herzegovina, Georgia, Greece, Kosovo, Macedonia, and Romania...
. Eddie's father Sam Antar was a retailer, and it was no surprise to the family that Eddie followed in his father's and grandparents' footsteps.
The predecessor to Crazy Eddie was a consumer electronics store called Sight and Sound. It was a property of ERS Electronics, a company owned by Sam M. Antar, his son Eddie Antar, and Eddie's cousin Ronnie Gindi. Sight and Sound, located on Kings Highway in Brooklyn, opened its doors in 1969 and offered electronics at regular prices. Due to his extremely aggressive sales techniques, Eddie quickly became known as "Crazy Eddie." Despite his technique, or perhaps owing to it, within 18 months the store (as well as Eddie and Ronnie) was nearly bankrupt.
Eddie Antar bought out Gindi's one-third ownership stake of Sight and Sound, and Sam M. Antar retained his one-third stake but left the day-to-day operations to Eddie.
In 1971, the Sight and Sound store on Kings Highway was renamed Crazy Eddie. Eddie continued his high-pressure sales tactics with the renamed Crazy Eddie store, but this time met with success. Eventually, Eddie closed that location and moved to a bigger store, just a few blocks from Sight and Sound's old location. In 1973, Antar opened the second Crazy Eddie location in Syosset, New York. A third followed in 1975, located in Manhattan
Manhattan
Manhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
. That year, Antar established a corporate headquarters in Brooklyn, New York.
Advertising
Disc jockey
A disc jockey, also known as DJ, is a person who selects and plays recorded music for an audience. Originally, "disc" referred to phonograph records, not the later Compact Discs. Today, the term includes all forms of music playback, no matter the medium.There are several types of disc jockeys...
Jerry "Dr. Jerry" Carroll ended a live commercial with the now-famous slogan, "Crazy Eddie, his prices are IN-SA-A-A-A-A-ANE!" Antar called in and told Carroll to say the line the same way every time.
Beginning in 1975, Carroll starred in a series of humorous television commercials, each ending with the same frenetic slogan. Among the more memorable promotions featured by Crazy Eddie was the annual "Christmas
Christmas
Christmas or Christmas Day is an annual holiday generally celebrated on December 25 by billions of people around the world. It is a Christian feast that commemorates the birth of Jesus Christ, liturgically closing the Advent season and initiating the season of Christmastide, which lasts twelve days...
in August" sale. In the 1980s, more than 7,500 unique radio and television ads were aired in the Tri-State Region. Carroll's acting was so convincing, and he became so identified with the company that many people thought he was actually Crazy Eddie. One commercial spoofing Superman implied that Carroll really was Crazy Eddie; this drew the ire of Warner Communications
Time Warner
Time Warner is one of the world's largest media companies, headquartered in the Time Warner Center in New York City. Formerly two separate companies, Warner Communications, Inc...
, the parent company of the distributor
Warner Bros.
Warner Bros. Entertainment, Inc., also known as Warner Bros. Pictures or simply Warner Bros. , is an American producer of film and television entertainment.One of the major film studios, it is a subsidiary of Time Warner, with its headquarters in Burbank,...
of the Superman film series, who sued the chain over the commercial. Eddie Antar countered by threatening to stop selling Atari
Atari
Atari is a corporate and brand name owned by several entities since its inception in 1972. It is currently owned by Atari Interactive, a wholly owned subsidiary of the French publisher Atari, SA . The original Atari, Inc. was founded in 1972 by Nolan Bushnell and Ted Dabney. It was a pioneer in...
video games and systems at Crazy Eddie stores; Warner
Communications was Atari's parent at the time and Crazy Eddie was its largest customer. The suit was eventually settled.
The commercials were so memorable that HBO's news parody
Parody
A parody , in current usage, is an imitative work created to mock, comment on, or trivialise an original work, its subject, author, style, or some other target, by means of humorous, satiric or ironic imitation...
series Not Necessarily the News
Not Necessarily the News
Not Necessarily the News was a satirical sketch comedy series that ran on HBO from 1983 to 1990. It featured sketches, parody news items, commercial parodies, and humorous bits made from overdubbing or editing actual news footage. It was based on the British series, Not the Nine O'Clock News...
created a parody TV commercial featuring a caricature of Oliver North
Oliver North
Oliver Laurence North is a retired U.S. Marine Corps officer, political commentator, host of War Stories with Oliver North on Fox News Channel, a military historian, and a New York Times best-selling author....
(from the then-infamous Iran-Contra affair
Iran-Contra Affair
The Iran–Contra affair , also referred to as Irangate, Contragate or Iran-Contra-Gate, was a political scandal in the United States that came to light in November 1986. During the Reagan administration, senior Reagan administration officials and President Reagan secretly facilitated the sale of...
), known as "Crazy Ollie", selling used weapons at bargain prices. Carroll and the commercials became significant 80s icons, with the commercials often appearing in the background of films of the time, including Splash
Splash (film)
Splash is a 1984 American fantasy romantic comedy film directed by Ron Howard and written by Lowell Ganz and Babaloo Mandel. The film was nominated for an Academy Award for Best Original Screenplay. The original music score was composed by Lee Holdridge...
.
Fraud
Almost from the beginning, Crazy Eddie's management was engaged in various forms of fraudFraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
. The Antars deliberately falsified their books to reduce (or eliminate) their taxable income. They also paid employees off the books, and regularly skimmed thousands of dollars (in cash
Cash
In common language cash refers to money in the physical form of currency, such as banknotes and coins.In bookkeeping and finance, cash refers to current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately...
) earned at the stores. For every $5 Crazy Eddie reported as income, $1 was taken by the Antars. In 1979, the Antars began depositing much of this money (hundreds of thousands of dollars) in Israeli bank accounts. The Antar family skimmed an estimated $3 million to $4 million (US) per year at the height of their fraud. In one offshore bank
Offshore bank
An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction that provides financial and legal advantages. These advantages typically include:...
account, the family deposited more than $6 million between 1980 and 1983.
By 1983, it was becoming more and more difficult to hide the millions of illicit dollars. The Antars decided that the way to cover up their growing fraud was to take the company public
Public company
This is not the same as a Government-owned corporation.A public company or publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets...
. In preparation, Eddie Antar initiated a scheme in 1979 to skim less each year. Since more income was actually being reported, this had the effect of showing drastically increasing profit margins. While the company's actual profits (taking into account skimmed profits) from 1980 to 1983 increased approximately 13%, reported profits rose nearly 171%.
Despite the misgivings of people closely associated with Crazy Eddie, the company held its initial public offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
on September 13, 1984 (symbol
Ticker symbol
A stock symbol or ticker symbol is a short abbreviation used to uniquely identify publicly traded shares of a particular stock on a particular stock market. A stock symbol may consist of letters, numbers or a combination of both. "Ticker symbol" refers to the symbols that were printed on the ticker...
: CRZY). Shares of the company sold initially for $8. By early 1986, Crazy Eddie stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
was trading at more than $75 per share (split adjusted).
Eddie recruited his cousin, Sam E. Antar (known as Sammy), to assist the company with its fraud. Sammy earned a degree in accounting
Accountancy
Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in...
in 1980, and served his apprenticeship with Penn and Horowitz, Crazy Eddie's auditor. In 1986, he was named CFO
Chief financial officer
The chief financial officer or Chief financial and operating officer is a corporate officer primarily responsible for managing the financial risks of the corporation. This officer is also responsible for financial planning and record-keeping, as well as financial reporting to higher management...
of the company. Sammy was informed that there was a $3 million deficit from the previous year's inventory fraud that needed to be hidden. Additionally, he was instructed to find ways to show a 10% growth in sales.
One of Sammy's major schemes was a money laundering
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
operation later known as the Panama Pump — money that the Antars had deposited in Israeli banks was transferred to bank accounts in Panama
Panama
Panama , officially the Republic of Panama , is the southernmost country of Central America. Situated on the isthmus connecting North and South America, it is bordered by Costa Rica to the northwest, Colombia to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south. The...
. These accounts, opened under false names, then drafted payments to Crazy Eddie. This money was largely used to inflate same-store sales figures for the company.
As a public company, Eddie, Sammy, and others engaged in increasing amounts of inventory fraud to increase reported profits and inflate the value of Crazy Eddie stock. For the fiscal year ended March 1, 1985, Crazy Eddie falsified inventories by $3 million. The next fiscal year, that amount increased to between $10 and $12 million.
Collapse
Only months after Crazy Eddie's IPO, the once tight-knit Antar family began to crack. Eddie Antar started fighting with his wife and former high school sweetheart, Debbie. He began having an affair with another woman named Debbie. They were caught by Eddie's wife and sister on New Year's Eve 1984. Crazy Eddie's troubles began almost immediately afterward; the scam had relied extensively on family members helping keep up the appearance that it was an immensely successful company.By 1987, Sammy's goal was no longer to show higher profitability, but rather to cover up previous frauds. In fiscal year 1987, they falsified inventories between $22.5 and $28 million. In addition, Crazy Eddie booked $20 million in phony debit memos or charge backs to vendors that reduced accounts payable.
As the company's fraud became harder to cover up, the public perception of Crazy Eddie as a commercial success began to change. By October 1986, the company's stock value had dropped to $17.50 per share. In December, Eddie Antar announced his resignation as president and CEO. In April 1987, it was announced that Eddie had in fact retained his role as president but had fired, among others, his father Sam M. Antar. But by then Eddie had already cashed out his share of Crazy Eddie stock, worth between $25 million and $30 million.
By the spring of 1987, the company's stock had plummeted below $10 a share. Additionally, earnings fell 20 percent from the previous year. The franchise did show a 34 percent sales increase, but this was mainly the result of 13 new store openings. In May 1987, Eddie began proceedings to take the company private
Privately held company
A privately held company or close corporation is a business company owned either by non-governmental organizations or by a relatively small number of shareholders or company members which does not offer or trade its company stock to the general public on the stock market exchanges, but rather the...
again.
Before that could happen, Houston
Houston, Texas
Houston is the fourth-largest city in the United States, and the largest city in the state of Texas. According to the 2010 U.S. Census, the city had a population of 2.1 million people within an area of . Houston is the seat of Harris County and the economic center of , which is the ...
-based businessman Elias Zinn and management consultant Victor Palmieri initiated a hostile takeover
Takeover
In business, a takeover is the purchase of one company by another . In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.- Friendly takeovers :Before a bidder makes an offer for another...
. With Palmieri's backing, Zinn purchased $17.5 million worth of Crazy Eddie stock, which represented 7½ percent of the outstanding shares. Once rumors of a takeover started, financial analysts began to more closely examine Crazy Eddie's financial situation. What they discovered was that while most stockholders in the company had lost money since 1984, Eddie Antar had sold 6.5 million shares worth $74 million. A flurry of stockholder lawsuits were filed against the Antar family.
Eddie and Sammy briefly attempted to counter-offer Zinn's takeover, but Zinn quickly topped their funds. The Antars' bid was dropped, and Zinn became the new owner of Crazy Eddie on November 6, 1987. He immediately removed the rest of the Antar family from any positions of power. When Palmieri's financial analysts completed their preliminary audit, a few weeks after the takeover, they estimated that Crazy Eddie's inventory was short by $40 to $50 million. The final figure was $80 million.
Legal battles
In the meantime, a longtime Crazy Eddie associate named Arnie Spindler, who left the company after Eddie Antar engineered the firing of his father Sam, brothers Allen and Mitchell and others after a family rift, had provided investigators with information concerning Crazy Eddie's fraudulent business practices. Spindler implicated Eddie and Sammy, but stated the rest of the family was clean. Regardless, the SEC served subpoenaSubpoena
A subpoena is a writ by a government agency, most often a court, that has authority to compel testimony by a witness or production of evidence under a penalty for failure. There are two common types of subpoena:...
s to the entire Antar family.
By June 1988, Crazy Eddie's suppliers were demanding the liquidation
Liquidation
In law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation...
of the company, so they could recover money owed to them. In 1989 they would get their wish. The closing of Crazy Eddie began in March 1989, as the company shuttered 17 of its 43 stores. On June 6, 1989 Crazy Eddie was served with a petition by five of its creditors, who had not been paid a total of $860,000 they were owed, which sought to have the company forced into bankruptcy. The company originally planned to fight the petition and file for dismissal, but fifteen days later Crazy Eddie voluntarily filed for Chapter 11
Chapter 11, Title 11, United States Code
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
bankruptcy protection. Company president and CEO Peter Martosella cited problems created by the creditors' position (which he termed "ill-advised"), but said business would be conducted as usual at the remaining 26 stores and that Crazy Eddie was still a strong franchise. The company vowed to stay in business but despite Martosella's assertions Crazy Eddie continued to falter. By the fall of 1989, sales were continuing to fall and stores were unable to keep items stocked due to lack of supplier interest in the company. Faced with these facts, Crazy Eddie management decided that the chain was not worth saving. Soon after Crazy Eddie began going-out-of-business sales, but store supply remained minimal even when leftover merchandise from stores that had shuttered was sent to others that were still in operation. By the end of the year the remaining 26 Crazy Eddie locations closed and the chain ceased to exist. In a period of three years Crazy Eddie had gone from one of the hottest and most lucrative retailers in the United States and trading at $75 per share to bankruptcy and liquidation.
Based on information gathered over the course of its investigation, the SEC charged Eddie Antar with securities fraud
Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
and illegal insider trading
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
on September 6, 1989. In January 1990, a Federal district judge ordered Antar to repatriate more than $50 million he had illegally transferred to Israel. He was also ordered to appear in court to explain what had happened with the money. When he failed to appear, an arrest warrant
Arrest warrant
An arrest warrant is a warrant issued by and on behalf of the state, which authorizes the arrest and detention of an individual.-Canada:Arrest warrants are issued by a judge or justice of the peace under the Criminal Code of Canada....
was issued. Eddie surrendered to U.S. Marshals
United States Marshals Service
The United States Marshals Service is a United States federal law enforcement agency within the United States Department of Justice . The office of U.S. Marshal is the oldest federal law enforcement office in the United States; it was created by the Judiciary Act of 1789...
a week later, but was released and ordered to appear at a second hearing. When he failed to appear at that hearing, a second arrest warrant was issued and his assets were frozen.
Passport
A passport is a document, issued by a national government, which certifies, for the purpose of international travel, the identity and nationality of its holder. The elements of identity are name, date of birth, sex, and place of birth....
and the alias
Pseudonym
A pseudonym is a name that a person assumes for a particular purpose and that differs from his or her original orthonym...
David Jacob Levi Cohen, and purchased a townhouse in the city of Yavne
Yavne
Yavne is a city in the Central District of Israel. According to the Israel Central Bureau of Statistics , at the end of 2009 the city had a population of 33,000.-History:...
. After Eddie left the country, Sammy offered to testify for Federal prosecutors in exchange for immunity. Sammy pleaded guilty to three felonies. However, he avoided jail time for his testimony, and was instead sentenced to six months of house arrest
House arrest
In justice and law, house arrest is a measure by which a person is confined by the authorities to his or her residence. Travel is usually restricted, if allowed at all...
, 1,200 hours of community service
Community service
Community service is donated service or activity that is performed by someone or a group of people for the benefit of the public or its institutions....
, three years of probation
Probation
Probation literally means testing of behaviour or abilities. In a legal sense, an offender on probation is ordered to follow certain conditions set forth by the court, often under the supervision of a probation officer...
, and was given more than $10,000 in fines. As of 2009, Sammy was an advisor for government agencies and businesses investigating fraud.
Eddie Antar was arrested near Tel Aviv
Tel Aviv
Tel Aviv , officially Tel Aviv-Yafo , is the second most populous city in Israel, with a population of 404,400 on a land area of . The city is located on the Israeli Mediterranean coastline in west-central Israel. It is the largest and most populous city in the metropolitan area of Gush Dan, with...
in June 1992. While being held in Israel, Eddie was charged with Federal racketeering
Racket (crime)
A racket is an illegal business, usually run as part of organized crime. Engaging in a racket is called racketeering.Several forms of racket exist. The best-known is the protection racket, in which criminals demand money from businesses in exchange for the service of "protection" against crimes...
conspiracy. He was extradited to the United States in January 1993, and pled not guilty to the charges brought against him. Eddie Antar's fraud trial began in June, and was prosecuted jointly by U.S. Attorneys
United States Attorney
United States Attorneys represent the United States federal government in United States district court and United States court of appeals. There are 93 U.S. Attorneys stationed throughout the United States, Puerto Rico, the U.S. Virgin Islands, Guam, and the Northern Mariana Islands...
Paul Weissman and Michael Chertoff
Michael Chertoff
Michael Chertoff was the second United States Secretary of Homeland Security under President George W. Bush and co-author of the USA PATRIOT Act. He previously served as a judge on the United States Court of Appeals for the Third Circuit, as a federal prosecutor, and as assistant U.S. Attorney...
. On July 20, 1993, Eddie Antar was found guilty on 17 counts of fraud. His brother, Mitchell, was found guilty on three counts, and acquitted on two.
In April 1994, Eddie Antar was sentenced to 12½ years in prison for racketeering and stock fraud. Antar's lawyers immediately filed an appeal, citing what they believed was bias on the part of the presiding judge. In April 1995, the verdicts against Eddie and Mitchell were overturned by a Federal appeals panel. Chertoff, calling Eddie "the Darth Vader
Darth Vader
Darth Vader is a central character in the Star Wars saga, appearing as one of the main antagonists in the original trilogy and as the main protagonist in the prequel trilogy....
of capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
," vowed to begin a new trial.
Antar eventually pled guilty to Federal fraud charges in May 1996. In February 1997, he was sentenced to eight years in prison
Prison
A prison is a place in which people are physically confined and, usually, deprived of a range of personal freedoms. Imprisonment or incarceration is a legal penalty that may be imposed by the state for the commission of a crime...
. He was ordered to pay more than $150 million in fines, in addition to the more than $1 billion in judgments against him, stemming from various civil suits. Efforts to recover additional money from the Antar family on behalf of defrauded stockholders continue to this day.
Revival attempts
Shortly after the chain closed in 1989 a New Jersey-based investment group led by Alex Adjimi bought the rights to the Crazy Eddie trademark and announced in January 1990 that they had purchased the leases on Crazy Eddie's Brooklyn flagship store and another in East Brunswick, New Jersey. The intent of Adjimi's group was to reopen the chain, but nothing ever came of the attempt.In 1998, the grandchildren of Eddie, Allen, and Mitchell Antar revived the Crazy Eddie electronics chain with a store in Wayne, New Jersey
Wayne, New Jersey
Wayne is a Township in Passaic County, New Jersey, United States, located less than from midtown Manhattan. As of the United States 2000 Census, the township had a total population of 54,069....
, and as an online Internet venue, crazyeddieonline.com. The revived company retained the slogan "his prices are insane" and brought Jerry Carroll, who by this time had founded his own ad agency, back as spokesman. Despite plans to expand the chain to a potential ten stores, the new Crazy Eddie did not expand beyond the Wayne store and in 1999 the only store in the revived chain closed.
Eddie Antar returned to the company in 2001, which by this point had been doing business solely as an Internet and buy-by-phone business for over a year. He relaunched the website as crazyeddie.com and once again hired Jerry Carroll to do its advertising. By 2004 crazyeddie.com had disappeared again, and after a brief attempt to revive the online retailer in 2005 Crazy Eddie ceased to exist once again. The Crazy Eddie trademark
Trademark
A trademark, trade mark, or trade-mark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or...
and associated intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
were then acquired by Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
-based firm Trident Growth Fund. In July 2006, Trident attempted to auction off the brand and the domain name crazyeddie.com on eBay
EBay
eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...
, to limited success. The auction ended without the reserve price being met, the highest bid being $30,100 (US
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
).
On March 3, 2009, it was announced that Brooklyn-based businessman Jack Gemal had bought the rights to the Crazy Eddie name and quickly launched a new online Crazy Eddie venture at pricesareinsane.com. Gemal was also reported to be scouting retail space for new Crazy Eddie retail locations, stating that he wanted to open fifty locations within the next two years. The online store, which was inactive for nearly eight months for reasons unknown, sells electronics, appliances, and accessories.
See also
- Nutty Nathan'sA Firing OffenseA Firing Offense is a 1992 crime novel and the debut from author George Pelecanos. It is set in Washington DC and focuses on marketing executive Nick Stefanos as he investigates the disappearance of a colleague. It is the first of several Pelecanos novel's to feature the character and the first of...
- Madman MuntzMadman MuntzEarl William "Madman" Muntz was an American businessman and engineer who sold and promoted cars and consumer electronics in the United States from the 1930s until his death in 1987. He was a pioneer in television commercials with his oddball "Madman" persona – an alter ego who generated publicity...
- Malfunctioning Eddie