Monday, June 25, 2007

The Fraud was INSANE!

CNBC's "Business Nation" program has a fascinating segment Wednesday night -- a "reunion" of sorts between Eddie Antar, mastermind of the Crazy Eddie stock fraud of the 1980s, and his nemesis and cousin, former Crazy Eddie CFO Sam Antar.

Sam, of course, has gone straight and is now working with regulators and law enforcement and exposing corporate chicanery and fraud. As Sam himself often points out, it takes a crook to know a crook. Recently he has employed his genius at ferreting our corporate wrongdoing by rooting out chicanery and accounting games at the red-ink machine.

In the CNBC segment, Sam confronts Eddie and engages in a heated exchange. Here is a New York Post article on the segment, and an article in Marketwatch by Herb Greenberg, who hosts the segment.

One interesting detail -- fully addressed in Sam's blog -- is the notion promoted by Eddie that, despite the massive nature of the Crazy Eddie fraud, it was a boon for consumers.

Responding to Eddie's contention that "you can't have a company that runs for 22 years that was a fraud," Sam observes that it is, indeed possible -- and happened:

At crucial times to Eddie and Antar and his father Sam M. Antar, Crazy Eddie’s sales were made up and not real. In 1986, we channeled about $2 million from funds previously skimmed as a private company (before we went public) and put the money back into the company to increase sales. A few days later, Eddie Antar and his father cashed out over $30 million in stock.

We sold merchandise to trans-shippers at a little bit above cost and at times even below cost to inflate our store level sales performance. Eddie Antar, his brothers, and brother-in-law laughed all the way to the bank as they continued to sell stock at inflated stock prices.

Crazy Eddie was an empire built on deceit. The company was rotten at its core.
© 2007 Gary Weiss. All rights reserved.


Wall Street Versus America was published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site,

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