The Popular Electronics Chain Crazy Eddie That Scammed America

The popular electronics chain Crazy Eddie that scammed America


Crazy Eddie was a consumer electronics chain in the United States. The Crazy Eddie chain was launched in 1971. Eddie and Sam M. Antar in 1971. The chain became prominent throughout the region for its prices as well as its memorable radio and television commercials, with a frenetic, "crazy" character played by radio DJ Jerry Carroll. . At its peak, Crazy Eddie had 43 stores in four states and reported more than $ 300 million in sales.

Unable to sustain his bogus business practices, co-founder Eddie Antar cashed in millions of dollars in shares and resigned from the company in December 1986. Crazy Eddie’s board of directors approved the sale of the company in November 1987. The entire Antar family was immediately removed from the business. The real depth of the Antar family's fraud was immediately revealed by the new owners.

In February 1987, the U.S. Attorney's Office began an investigation by a federal grand jury into Crazy Eddie's financial activities. In September of that year, the United States Securities and Exchange Commission launched an investigation into alleged violations of federal securities laws by certain Crazy Eddie officials and employees. Eddie Antar was eventually charged with several crimes.

Antar escaped to Israel in February 1990 but was extradited to the US in January 1993 to face justice. His 1993 conviction for fraud was overturned, but he eventually pleaded guilty in 1996. In 1997, Antar was sentenced to eight years in prison and subjected to numerous fines. He was released from prison in 1999. 

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Commercials of the popular electronics chain Crazy Eddy

Crazy Eddie stores were known for their commercials, in which Jerry Carroll was a star. The relationship between the two sides began in 1972 when Carroll was a radio disc jockey known as “Dr. Jerry ”on WPIX-FM. Antar paid for the commercial on the air, and Carroll read the chain's slogan "his prices are crazy" in an exaggerated and frenetic way.

In 1975, Carroll began appearing in television commercials for Crazy Eddie. For most of the next fifteen years, Carroll ran commercials in the same frantic way as for radio. One of his memorable promotions was Crazy Eddie’s annual “Christmas in August” sale, where he would dress up in a Santa costume and make a commercial while stage workers pelted him with fake snowballs.


During the 1980s, more than 7,500 unique radio and television commercials were broadcast in three states. Carroll’s acting became so identified with society that many people thought he was Crazy Eddie.

Crazy Eddie was also known for notable rock bands appearing in stores, including all four Queen members at their Manhattan location on Tuesday, July 27, 1982.

How Crazy Eddie electronics chain scammed America

Crazy Eddie's management has dealt with various forms of scamming almost from the beginning. The Antares deliberately forged their books to reduce their taxable income. They also paid employees and regularly grabbed thousands of dollars (in cash) earned in stores. 

For every $ 5 Crazy Eddie reported as income, $ 1 was taken by Antari. In 1979, the Antares began depositing much of that money - hundreds of thousands of dollars - into Israeli bank accounts. It is estimated that the Antar family took off $ 3 to $ 4 million a year at the height of the scam. In one offshore bank account, the family deposited more than $ 6 million between 1980 and 1983.

By 1983, it was becoming increasingly difficult to hide millions of illegal dollars. Antari has decided that the way to cover up its growing fraud is to bring the company out to the public. In preparation, Eddie launched a plan in 1979 for fewer downloads each year. Because higher income was reported, this resulted in a drastic increase in profit margins. While the company’s actual profits increased by approximately 13% between 1980 and 1983, reported profits increased by almost 171%.

Despite suspicions from people closely associated with Crazy Eddie, the company held its initial public offering on September 13, 1984 (former symbol: CRZY). The company’s shares were initially sold for $ 8. In early 1986, shares of Crazy Eddie were traded at more than $ 75 per share.

Eddie hired his cousin, Sam E. Antar, to help the company in its scam. Sam graduated in accounting in 1980 and did his studies with Penn and Horowitz, Crazy Eddie's auditors. In 1986, he was appointed Chief Financial Officer of the company. Sam has been informed that there is a $ 3 million shortfall from last year’s inventory fraud that needs to be hidden.

In addition, he was instructed to find ways to show sales growth of 10%. One of Sam's big schemes was a money-laundering operation later known as the Panama Pump - money that Antari deposited in Israeli banks was transferred to bank accounts in Panama.

As a public company, Eddie, Sam, and others have been involved in increasing amounts of stock fraud to increase reported profits and inflate Crazy Eddie’s stock value. For the fiscal year that ended March 1, 1985, Crazy Eddie forged $ 3 million in inventory. The following fiscal year, that amount increased to between $ 10 million and $ 12 million.

The collapse of the popular electronics chain Crazy Eddie


Just months after Crazy Eddie’s IPO, Antar’s marriage to his wife Debbie became unstable as a result of frequent quarrels. Then he started an affair with a younger woman. The couple was caught by Eddie's wife and sister on New Year's Eve 1984. Crazy Eddie's problems started almost immediately after that; the scam relied heavily on family members who helped maintain that it was an extremely successful company.

By 1987, Sami Antar's goal was no longer to show greater profitability, but to cover up previous scams. During fiscal 1987, they counterfeited between $ 22.5 million and $ 28 million.

By October 1986, the value of Ludi Edi’s stock had been reduced to $ 17.50 per share. In December, Eddie announced his resignation as president and CEO. In April 1987, it was announced that Eddie had retained his role as president, but had, among others, removed his father, Sam M. Antar. But by then, Eddie Antar had already opened his share of Crazy Eddie, worth between $ 25 million and $ 30 million.

By the spring of 1987, the company’s stock was worth less than $ 10 per share. In addition, earnings decreased by 20% compared to the previous year. The franchise showed a 34% increase in sales, but this was mainly the result of the opening of 13 new stores. In May 1987, Eddie initiated proceedings to re-establish the company as a private company.

Houston businessman Elias Zinn and management consultant Victor Palmieri have launched a hostile takeover. With Palmieri’s support, Zinn bought Crazy Eddie shares worth $ 17.5 million, representing 7.5% of the shares outstanding.

After rumors of a takeover began, financial analysts began to examine Crazy Eddie’s financial situation more closely. What they found is that most of the company’s shareholders have lost money since 1984, Eddie sold 6.5 million shares worth $ 74 million. A raid of shareholder lawsuits has been filed against the Antar family.

Eddie and Sammy Antar briefly tried to oppose Zinn’s takeover, but Zinn quickly surpassed their means. Antar’s offer was completed, and Zinn became the new owner of Crazy Eddie on November 6, 1987. He immediately fired the rest of the Antar family from any important business.

When Palmieri’s financial analysts completed a preliminary audit a few weeks after the takeover, they estimated that Crazy Eddie’s stock was missing by $ 40 million to $ 50 million. The final figure was $ 80 million.

By June 1988, Crazy Eddie's suppliers were seeking liquidation of the company, so they could repay the debt they owed; In 1989, their wish came true. Crazy Eddie’s closure began in March 1989, when the company closed 17 of its 43 stores. On June 6, 1989, Crazy Eddie was handed a petition by five of his creditors, who were not paid the total $ 860,000 they owed, demanding that the company go bankrupt.

The Trial of Crazy Eddie

Based on information gathered during the investigation, the SEC on September 6, 1989, accused Eddie Antar of securities fraud and illegal insider trading. In January 1990, a federal district judge ordered Antara to return more than $ 50 million he had illegally transferred to Israel. He was also ordered to appear in court to explain what happened to the money.

After he did not show up, an arrest warrant was issued. Eddie surrendered to US marshals a week later, but was released and given a new court date. When he did not appear at that hearing, another arrest warrant was issued and his property was frozen.

Eddie fled to Israel using a fake passport and bought a townhouse in the town of Yavne. After Eddie fled the country, Sam offered to testify for federal prosecutors in exchange for immunity. Sammy pleaded guilty to three felonies.

Eddie Antar arrest warrant

 

However, he escaped jail in exchange for his testimony and was instead sentenced to six months of house arrest, 1,200 hours of community service, three years of probation, and a more than $ 10,000 fine. Since 2009, Sam has been an advisor to government agencies and companies investigating fraud.

Eddie was arrested in June 1992 on charges of federal conspiracy to racketeer and extradited to the United States in January 1993. His trial began in June 1993, with US attorneys Paul Weissman and Michael Chertoff prosecuting him jointly.

Eddie was found guilty of seventeen counts of fraud on July 20. His brother Mitchell was found guilty on three counts and acquitted on two counts. Eddie was sentenced to 12 years in prison.

Antars' attorneys immediately filed an appeal, citing what they considered to be the bias of the presiding judge. In April 1995, the Federal Appeals Chamber overturned the verdicts against Eddie and Mitchell.

electronics chain Crazy Eddie that scammed America - Eddie and Marshals

Eddie Antar eventually pleaded guilty to federal charges of fraud in May 1996. He was convicted to eight years in jail in February 1997. He was also ordered to pay more than $ 150 million in fines, along with more than $ 1 billion in verdicts against him resulting from various civil lawsuits. Efforts to recover additional money from the Antar family on behalf of deceived shareholders ended in 2012.

How to avoid being scammed by the popular electronics chain

As the popularity of electronic devices has grown, so has the number of scams targeting consumers who are looking to buy them. The most common scams involve fake or counterfeit products, and they can be found at any electronics store. Here are some tips to avoid being scammed when buying electronics:

1. Do your research. Before you buy any electronic device, do your research to make sure it’s a legitimate product. Check online reviews, compare prices, and look for any red flags that might indicate a scam.

2. Be wary of deals that seem too good to be true. If you find an incredible deal on an electronic device, there’s a good chance it’s a fake or counterfeit product. Be extra cautious of deals that are significantly lower than the competition.

3. Pay with a credit card. If you do end up being scammed, paying with a credit card will give you additional protection. Most credit card companies will refund your money if you’ve been scammed.

4. Keep your receipts. If you pay with cash, make sure to get a receipt that includes the store’s name and address. This will be helpful if you need to file a police report.

5. Know your rights. In most countries, you have a 14-day window to return a product if it’s not what you expected. Make sure you understand the return policy before you make your purchase.

Following these tips will help you avoid being scammed when buying electronics. Remember to do your research and be cautious of deals that seem too good to be true. Paying with a credit card and keeping your receipts can also help you protect yourself in case of a scam.

Final thoughts

It's safe to say that Crazy Eddie was one of the most notorious scams in American history. The electronics chain swindled millions of dollars from consumers and investors, and eventually went bankrupt.

Today, Crazy Eddy is nothing more than a cautionary tale. But its story is still worth telling because it offers a rare glimpse into the mind of a con artist and the lengths to which he was willing to go to defraud the American public.

Jasmin K.

SEO Blogger Tips The main goal of this site is to provide quality tutorials, tips, courses, tools, and other resources that allow anyone to work online and master digital marketing.

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