Crazy Eddie's Insanely Successful Criminal Enterprise

Jsmilla via YouTube
Jsmilla via YouTube

For anyone living in the New York metropolitan area throughout the 1970s and 1980s, Crazy Eddie was inescapable. A chain of electronics stores that eventually spread to 43 locations across four states, the business bombarded consumers with print, television, and radio ads that guaranteed name brand products at major discounts. Disc jockey Jerry Carroll taped more than 7500 of the radio and television spots as a hyper salesman who promised that Crazy Eddie’s prices were “insaaaaane.” At one point, the stores had greater name recognition among New Yorkers than Ed Koch.

Koch was the mayor of New York at the time.

“Crazy Eddie” was Eddie Antar, the grandson of Syrian immigrants, who started a modest stereo shop in Brooklyn and parlayed it into a retail empire grossing $350 million annually. In addition to changing how electronics retailers advertised—pushing price above all else—Antar also paid his employees off the books, failed to report cash purchases, kept the sales tax, and later migrated to $145 million in securities fraud when his cousin, Sam Antar, graduated from college as a Certified Public Accountant (CPA).

“The whole purpose of the business was to commit premeditated fraud,” Sam tells mental_floss. “My family put me through college to help them commit more sophisticated fraud in the future. I was trained to be a criminal.  

“People have a certain idea of Crazy Eddie. In reality, it was a dark criminal enterprise.”

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A high school dropout at the age of 16, Eddie Antar wasted no time in exploiting the burgeoning world of consumer electronics. It was the late 1960s, and smaller, more portable transistors were about to usher in a new wave of products that would make Japanese brands like Sony and Panasonic household names. Before long, video game systems, VCRs, and camcorders would expand the market.

Initially, Antar sold televisions from a small stand at the Port Authority, grabbing attention by talking fast and eventually wearing customers down. “He was like Fonzie,” Sam says. “Very charismatic and very smart. You steal more with a smile than you do with a gun.”

By 1970, Eddie had learned from the failure of his first store, a tiny spot near Coney Island Avenue in Brooklyn dubbed Sights & Sounds ERS, and secured a better location for an outlet that he owned with his father, Sam Antar, and cousin Ronnie Gindi. The “crazy” adjective came from a customer who took note of Eddie’s salesmanship practices: He’d playfully bar patrons from leaving empty-handed and take their shoes as deposits for stereos; he even promised discounts to people who braved winter blizzards. Word spread of Eddie’s theatrical approach. More importantly, people began to realize he was gleefully ignoring federal guidelines concerning pricing.

Fair trade laws meant that manufacturers could insist on one standard retail price for all retailers. In theory, this meant consumers would always get the “best” deal no matter where they shopped—but Eddie marked his merchandise down anyway. It was the only way he could compete with larger chains that had huge ad budgets. When manufacturers refused to sell him inventory, he’d get it from grey-market suppliers with items intended for overseas sales or other businesses that had excess stock. (Stolen goods were a rare source. “Too risky,” Sam says.)

How could he afford to do it? By stealing. “As a corrupt private company, we had the advantage,” says Sam, who began his career in the family business as a stock boy at the age of 14. “Back then, most customers paid in cash. If we don’t disclose the sale, we keep the sales tax. That’s a good cushion to be able to afford to beat the competition.” Cash revenue was kept under beds, in floorboards, or deposited into Israeli banks.

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Despite Eddie’s covert criminality, his opposition to fair trade practices made him a hero in the eyes of consumers. In 1976, the remaining holdout states repealed the law, forcing manufacturers to sell to any retailer who could afford to pay their invoices.

While that may have leveled the playing field a bit, Eddie had another form of ammunition: advertising. Though his budget was small, the ad campaign cooked up by advertising director Larry Weiss featuring Carroll as a manic discounter was so memorable that Crazy Eddie’s name recognition began to surpass that of Coca-Cola in the tri-state area. Some local stations stayed on the air overnight simply because Antar had bought all the ad time. (According to Weiss, Eddie’s first spot on the radio cost $5. He never paid the bill.)

Between 1975 and 1984, Crazy Eddie recorded profits in the millions by using register skimming to under-report income; repair services were billed to manufacturers at three times their actual cost; and customers would often be flipped by one, two, or three salesmen trained in the Crazy Eddie method of coercion.

“You had one person with the customer, the Switch Over, or SO,” Sam explains. “The second would be the Take Over, or TO. If he failed, you’d call in the third, the NAD—the Nail ‘Em At the Door guy. It wasn’t just discounting. We tried to switch the customer to higher-margin items.” Sony, for example, might be a break-even sale; Crazy Eddie employees would try to convince customers buying a Sony receiver that they needed house-brand speakers or a subwoofer.

Some of this was plotted in a language unique to Eddie’s work culture. “We spoke a kind of Arabic pig Latin,” Sam says. “We had a dictionary that would be passed around. We wanted [employees] to feel like part of the family culture.” That culture that would soon grow to include securities fraud on a level never before seen in retail.

In 1980, Sam Antar graduated Baruch College of the City University of New York as a CPA and returned to Crazy Eddie full-time as its chief financial officer. By design, his education was to help the Antar family perpetuate fraud above and beyond skimming the register or selling inflated extended warranties.

In order to do that, they’d first have to go straight—even if it meant overpaying their income taxes. “We needed to report a higher profit before getting a higher public valuation,” Sam says. “So from 1980 to 1984, when we went public, that was my job. You legitimize the business in order to commit bigger fraud.”

By reporting sales previously conducted under the counter, Crazy Eddie was able to demonstrate growth even when sales were steady. They were also able to increase valuation by paying taxes well in excess of what they might have actually owed. “As an example, say we claim to sell $1 million with a 50 percent tax rate,” Sam says. “We pay $500,000 in taxes. If the company is trading at 30 times earnings, we’ve inflated the value—and it’s worth spending that $500,000.”

Crazy Eddie had another bit of misdirection prepared. At one point, Sam was able to secure a job with the company’s auditors without them knowing he still worked for the retailer. It helped to know auditor habits, like only looking at certain stores when conducting inventory checks. By boosting stock in those stores and claiming it was across the board, Crazy Eddie could claim $65 million in product they didn’t actually possess.

The amorality of the family business made for handsome profits. When Crazy Eddie went public in 1984, the stock shot from $8 a share to $79—and the Antars held much of it. More than $145 million was raised from investors who had no idea Crazy Eddie was misrepresenting its financial profile.

“We never spoke about right or wrong,” Sam says. “It was just the way we did things.”

Before long, some in the Antar family would speak up about their business practices. And when the finger-pointing was over, Crazy Eddie would find himself both in exile and owing $120 million in restitution.

Eddie Antar (R) after being arrested in Israel in 1992. Courtesy of Getty.

If it had been up to the auditors, Sam says, Crazy Eddie would probably still be in business. “They do the equivalent of finding typos in a Word document. They take a small sample and project it onto the financial situation as a whole. The companies they audit are called ‘clients.’ That language is important. It should be ‘target.’” Most fraud, Sam believes, is discovered by whistleblowers, not accounting firms, who he says employ young and inexperienced employees to navigate complicated financial inspections.  

That lackadaisical approach is what kept Crazy Eddie cooking books for nearly two decades. In 1987, after a steady decline in sales owing to other mass-discount retailers and overeager expansion, the company's stock price dipped, and the Antars found themselves subject to new majority shareholders who were puzzled by the imaginary inventory. Once the U.S. Securities and Exchange Commission got involved, it was a matter of time before Sam, Eddie, and Eddie’s father began vying for the best government deal possible while their franchise began to close its doors.

“There’s no better motivator than a 20-year prison term,” Sam says. He told the government the entire story, from the skimming to the stock fraud. “I didn’t cooperate because I found God. I cooperated to save my ass.”

Eddie Antar, who had fled to Israel for two years following the investigation, was extradited in 1992 and sentenced to 12-and-a-half years in prison in 1994; when his judge was criticized for bias that led to an overturned conviction in 17 counts including conspiracy and racketeering, he got eight years as part of a plea to avoid a retrial in 1996. Officials were able to retrieve more than $120 million in offshore accounts, which was repaid to investors. Because of his cooperation, Sam received six months of house arrest and the loss of his CPA license.

“It was really just the next business step,” he says. “I sold information to the government and got my freedom.”

After being released from his “vacation,” Sam began to get invitations to lecture at universities and private businesses about white-collar fraud. “My rap sheet became more important than my resume.”

He has since become a forensic accountant, advising businesses, law firms, and the FBI on the tricks used to perpetuate fraud on investors, all while stressing that he's not offering himself up as a “redemption” story. “It helps my credibility by not being apologetic for my crimes. Call me the criminal I was and probably still am. I might tell you I won’t commit another crime, but is it true? Or does it just help you sleep better at night?”

Sam hasn’t spoken to his cousin in years. (In 1994, Eddie told the Philadelphia Inquirer the skimming went toward a pension fund for workers and that his cousins were the “true masterminds” of the stock scam.) Jerry Carroll, who became famous for the television ads, has since adopted the habit of starting interviews by telling people he had nothing to do with the scheme. Citing “brand equity,” a licensee briefly tried reviving the brand in 2009, which Sam compared to resurrecting Enron. It never got off the ground.

In the end, Sam believes Crazy Eddie’s legacy comes down to two words: discount and fraud. For the Antars, no amount of legitimate success could equal the rush of beating the system.

“There’s a line in the Wall Street sequel about it not being about the money,” he says. And that was true. It was never about the money. It was about the game. And we enjoyed the game.”

Up in the Air: When 'Balloon Boy' Took Flight

John Moore, Getty Images
John Moore, Getty Images

It was like a Weekly World News cover come to life. On October 15, 2009, most of the major network and cable broadcasters interrupted their daytime programming to cover what appeared to be a silver flying saucer streaking through the air. Out of context, it was as though the world was getting its first sight of a genuine UFO.

Reading the scroll at the bottom, or listening to the somewhat frantic newscasters, provided an explanation: It was not alien craft but a homemade balloon that had inadvertently taken off from the backyard of a family home in Fort Collins, Colorado. That, of course, was not inherently newsworthy. What made this story must-see television was the fact that authorities believed a 6-year-old boy was somehow trapped inside.

As the helium-filled balloon careened through the air and toward Denver International Airport, millions of people watched and wondered if its passenger could survive the perilous trip. When the craft finally touched down after floating for some 60 miles, responders surrounded it, expecting the worst. The boy was nowhere to be seen. Had he already fallen out?

The brief saga that became known as the Balloon Boy incident was one of the biggest indictments of the burgeoning worlds of reality television and breathless 24/7 news coverage. It seemed to check off every box that observers associated with societal decline. There was the morbidity of a child speeding through the air without control; the unwavering gaze of news networks who cut away from reports on world affairs and even ignored their commercial breaks to obtain footage of an aircraft that measure around 20 feet wide and 5 feet high and resembled a bag of Jiffy Pop.

 

The boy in question was Falcon Heene, one of Richard and Mayumi Heene's three children. The couple had met in California and bonded over their mutual desire to get into the entertainment business. Richard dreamed of becoming a comedian; Mayumi played guitar. The couple married in 1997 and eventually relocated to Colorado; they got their first taste of Hollywood in 2008, when they made their first of two appearances on the reality series Wife Swap.

But Richard Heene wanted more. The avid tinkerer envisioned a show that followed his family around, while at the same time working on his new inventions—one of which was sitting in his backyard. It was essentially a Mylar balloon staked to the ground, which he would later describe as a very early prototype for a low-altitude commuter vehicle.

 sheriff's deputies seach a field for Falcon Heene before learning he had been found October 15, 2009 southeast of Ft. Collins, Colorado
Sheriff's deputies search a Colorado field for Falcon Heene before learning he had been found safe at home.
John Moore, Getty Images

It was this balloon, Bradford Heene told police in 2009, that his brother Falcon had climbed into just before it had taken flight. Earlier, Richard said, Falcon had been playing near the contraption and was scolded for potentially creating a dangerous situation. Now, Falcon was gone, the balloon was in the air, and Falcon's parents feared the worst. Mayumi called the authorities.

“My other son said that Falcon was at the bottom of the flying saucer,” Mayumi told the 911 dispatcher. “I can’t find him anywhere!”

As news cameras watched and the National Guard and U.S. Forest Service followed, the balloon reached an altitude of 7000 feet. Police made a painstaking search of the Heene household, looking for any sign of Falcon. After three passes, they determined it was possible he was inside the balloon.

Approximately one hour later, the balloon seemed to deflate. Authorities cleared the air space near Denver International Airport and greeted the craft as it landed, tethering it to the ground so no air current could hoist it back up and out of reach.

No one was inside the small cabin under the balloon, which left three possibilities: Falcon was hiding somewhere, he had run away ... or he had fallen out.

 

Not long after the craft had landed, a police officer at the Heene house decided to investigate an attic space above the garage. It had gone ignored because it didn’t seem possible Falcon could have reached the entrance on his own.

Yet there he was, hiding.

Elated, authorities explained to the media that they thought Falcon had untethered the balloon by accident and then hid because he knew his father would be upset with him.

Jim Alderden, the sheriff of Colorado's Larimer County, assured reporters that the Heenes had not done anything suspect. They demonstrated all the concern for their missing child that one would expect. Alderden stuck to that even after the Heenes were interviewed on CNN and Falcon appeared to slip up. When asked by Wolf Blitzer if he had heard his parents calling for him, the boy admitted that he had but was ignoring them “for a show.”

Though the Heenes seemed to scramble to cover up for their son's gaffe, Blitzer didn’t appear to register the comment at first. He came back around to it, though, insisting on clarification. Richard would later state that Falcon was referring to the news cameras who wanted to see where he had been hiding. That was the "show" he meant.

Alderden reiterated that he didn’t think the boy could remain still and quiet for five hours in an attic if he had been instructed to. But he admitted the CNN interview raised questions. After initially clearing the family of any wrongdoing, Alderden said he would sit down and speak to them again.

Within the week, Alderden was holding a press conference with an entirely different mood. He solemnly explained that the Heenes had perpetuated a hoax and speculated that they could be charged with up to three felonies, including conspiracy and contributing to the delinquency of a minor. Outlets had already tracked down an associate of Richard’s who detailed his reality series idea, with one episode devoted to the balloon.

 

Richard and Mayumi voluntarily turned themselves into authorities. They each pled guilty: Richard for attempting to influence a public servant and Mayumi for making a false report. In addition to paying $36,016 in restitution, Richard wound up with a 90-day jail sentence, 60 days of which was served on supervised work release. Mayumi got 20 days. Though they pled guilty, Richard maintained that he and his family had not perpetuated any kind of a hoax. In a 2010 video posted to YouTube, Richard said he only pled guilty because authorities were threatening to deport his wife.

Mayumi, meanwhile, reportedly told police it had all been an act (though critics of the prosecution argued that Mayumi's imperfect English made that confession open to interpretation). Mayumi later stated she had no firm understanding of the word "hoax."

Richard Heene and his wife, Mayumi Heene (R) are flanked by members of the media after they both plead guilty to charges related to the alleged hoax of the couple claiming that their son, Falcon Heene was last month onboard a helium balloon, at the Larime
Richard and Mayumi Heene surrounded by the media after they both plead guilty to charges related to the "Balloon Boy Hoax" on November 13, 2009.
Matt McClain, Getty Images

In addition to the fine and jail sentences, the judge also mandated that the family not seek to profit from the incident for a period of four years, which meant any potential for Richard to grab a reality show opportunity would be put on hold until long after the public had lost interest in the "Balloon Boy."

The Heenes moved to Florida in 2010, and soon after their three boys formed a heavy metal band—reputed to be the world’s youngest—dubbed the Heene Boyz. They’ve self-released several albums, and in 2014 even released a song called "Balloon Boy No Hoax."

Richard also peddles some of his inventions, including a wall-mounted back scratcher that allows users to alleviate itching by rubbing up against it. It’s called the Bear Scratch.

In October 2019, Robert Sanchez, a writer for 5280 magazine in Denver, profiled the Heenes and produced a smoking gun of sorts. Sanchez, who was allowed access to the Heene case file by Mayumi's defense attorney, discovered copies of Mayumi's notes about the events leading up to the flight. In one entry, she disclosed Richard had asked her about the possibility of letting the craft go off while Falcon remained in the basement, stirring up attention for the news networks. Later, when the saucer flew away, Richard was confused when Falcon wasn't downstairs. (He chose instead to hide in the attic.) That made the Heenes believe he might really be inside.

When confronted with the document, Mayumi told Sanchez she had made that story up in an attempt to "save" herself and her children, presumably from being separated in the ensuing legal struggle. In the Balloon Boy story, the saucer may have come crashing back to Earth, but the truth remains up in the air.

Ohio Bill Aims to Make Animal Cruelty a Felony

RalchevDesign/iStock via Getty Images
RalchevDesign/iStock via Getty Images

In Ohio, animal cruelty may soon be punishable by a minimum of nine months in prison.

As ABC 6 reports, a new bill introduced in the Ohio Senate would increase penalties for individuals found guilty of inflicting “unnecessary or unjustifiable” harm to a companion animal (the bill defines a “companion animal” as any animal kept inside a home and any dog or cat, regardless of where it’s kept).

The bill comes three years after Ohio lawmakers passed a law making animal cruelty a fifth-degree felony for first-time offenders. Prior to 2016, a first offense of animal cruelty was classified as a first-degree misdemeanor, a charge punishable by up to 180 days in jail and a $1000 fine.

This new bill would make animal cruelty a third-degree felony, meaning jail time and a fine of up to $10,000. It’s a critical change, according to Cleveland.com; reporter Andrew J. Tobias, who says fifth-degree felony convictions in Ohio rarely result in any jail time.

“There are just some atrocious acts of violence against pets, companion animals, that are literally receiving slaps on the wrist,” Senator Jay Hottinger, one of the bill’s sponsors, told Cleveland.com.

In January, two Florida congressmen introduced the PACT (Preventing Animal Cruelty and Torture) bill to classify animal cruelty as a felony under federal law. All 50 states have a “felony animal cruelty law on the books,” according to the Animal Legal Defense Fund, but each state is responsible for defining animal cruelty. The proposed PACT law would identify and ban specific behaviors in all states.

[h/t ABC 6]

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