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.”

The Medieval Woman Who Made a Living Pretending to be Joan of Arc

Joan of Arc as painted by Jean-Auguste-Dominique Ingres
Joan of Arc as painted by Jean-Auguste-Dominique Ingres
Hulton Archive/Getty Images

It didn’t take long after Joan of Arc was executed in May 1431 for the rumors to start. Although plenty of witnesses watched as she was burned at the stake in the marketplace in Rouen, France, Joan’s status as a revered military and religious figure seemingly encouraged people to believe that she hadn’t actually died.

Joan’s executioners anticipated this. After her body was burned, they raked back the coals to prove that she was dead, then set her remains aflame twice more. Finally, they threw the charred results in the Seine to prevent relics from being collected.

But in a country grieving a national heroine, the idea that Joan had escaped death persisted.

At first, a story circulated among the populace that someone else had been burned in her place and that the real Joan had fled. Others said it was Joan in the flames, but she’d been spared by God and escaped. Within a few years, women began to appear around France pretending to be Joan, or at the very least acting as if they were "inspired" by her. They claimed prophecies and visions, and collected gifts and attention, though in most cases their ruse didn't last long.

By far the most famous, and successful, was a woman whose real name was Claude des Armoises. Her ploy would last four years. It earned her a great deal of cash—and almost ensnared the King of France himself.

The False Maid

Claude is said to have begun her career in deception by posing as a male solider in Pope Eugene IV’s army, where she killed two men in fighting around 1435 during a rebellion in Rome. The next year, she started laying the groundwork for her Joan of Arc scheme.

She began with the real Joan’s family: In May 1436, she met Joan’s brothers, Pierre and Jean, and convinced them that she was their departed sister—or at least, got them to publicly agree to the idea. Claude is said to have strongly resembled Joan, and it's possible the men were blinded enough by grief to think that Claude was really their kin. As the 19th-century French writer Anatole France described the scenario, "They believed, because they wished to believe." But other scholars note the brothers may also have agreed to the deceit because they knew there was money to be made.

Claude did her research: She cut her hair short and frequently wore men’s clothes, like the real Joan. She almost always spoke in Christian parables, which lent a mystical, legendary quality to her image—and also effectively clouded facts. After all, you wouldn’t want to disturb a poetic, holy anecdote by asking for clarification.

All of this worked. When the brothers d’Arc brought their so-called sister to meet some noblemen, the men were so impressed they provided her with a horse, a hooded cloak, and a sword. The 19th-century French historian Jules Quicherat noted that she rode the horse expertly, lending even more credence to her story (not just any peasant girl could ride a horse, while Joan had relied on hers during battle). The group then visited towns across the northeast of France, collecting horses and jewels along the way. Upon arriving in Arlon, the party was deluged with more gifts by the Duchess of Luxembourg, and the group set up camp there.

In this way, Claude and her supposed siblings traveled around the continent living the good life at other people’s expense during the summer of 1436. Princess Elizabeth de Luxembourg and Duchess Elisabeth von Görlitz in particular were great benefactors of the three, while the Comte de Virnenbourg was said to have fallen in love with Claude (as Joan). He even made her the head of a military unit he sent to Cologne to provide support for a candidate for the bishopric of Trier.

But in Cologne, things turned sour. The 15th-century Dominican friar Johannes Nider described her activities: "There was a young woman, who from time to time took on the behavior of a male, and who was running around armed and with wildly flowing clothes, as soldiers in the pay of a nobleman do." What's worse, Nider said, "She also let herself be seen dancing with men. And she used to drink and to carouse."

In other words, her behavior was beginning to attract the wrong kind of attention.

It didn't help that Claude sometimes performed minor feats of magic: tearing a large cloth and then making it whole again, or smashing a glass against the wall and somehow restoring it to one piece. An inquisitor in Cologne, suspecting witchcraft, began an investigation and sent men to fetch her, but she escaped with help from the Comte de Virnenbourg. The inquisitor responded by excommunicating her—for witchcraft, wearing men's clothes, and supporting the wrong candidate for the bishopric.

But Claude, or Joan, was relatively safe in France—at least for the time being. She married a knight, Robert des Armoises, and is said to have born him two sons. In 1439 she turned up in Orléans, the site of Joan’s renowned siege, where she was celebrated with a series of lavish suppers and a gift of cash, in honor of "the good she had done for the city during the siege," according to the town's records.

But by then, Claude must have been getting nervous. She left early from a dinner in Orléans, one source notes, "As the wine drawn for her was drunk, in her absence, by Jean Luilier, the very tailor who had made clothes for the true Maid [Joan of Arc] in 1429. Possibly the false Maid fled from a misgiving as to an encounter with her tailor, who of all men would have been able to detect an imposture."

The net was starting to close in. A few months after her lavish dinner in Orléans, Claude was finally called to meet King Charles VII himself.

The Secret Sign

The French king had heard about this alleged Joan, but he was suspicious. So he decided to set up a test for her.

At the palace, Claude was met by a man claiming to be the king, while the real Charles watched from afar. But Claude knew—perhaps from royal gossip—that the real king wore a soft boot on his ulcerated leg, which this man did not. She called his bluff, going to the true king instead.

Charles was astounded. Saluting her, he said, “You are welcome back, in the name of God, who knows the secret that is between us.”

At this, Claude fell to her knees. She knew that she didn't know the king's secret, and confessed to being an imposter.

We don’t know what the secret was either, except that it was a reference to a clandestine sign that Joan of Arc and Charles shared when they first met in 1429, and which had to do with his legitimacy to the throne. Historians have long debated what this sign may have been; little seems clear except that whatever it was, it helped the real Joan earn the king's trust.

Claude was exposed at last. But she and Joan's brothers weren't punished for their lies; instead, Claude was sent back to her husband in Jaulny to live out the rest of her life.

Afterlives

Claude was not the first false Joan, and she wouldn't be the last. Years after Claude confessed, a woman named Jeanne la Féronne appeared and began claiming to be the Maid of Orléans. She didn't last long as long as Claude, and was soon sent to the pillory for false revelations.

As for how all these women managed to pull the wool over a gullible public's eyes, the scholar Dick Berents writes, "it was apparently extremely difficult to obtain certainty about anything in 15th-century society, even about a person's death." Furthermore, he theorizes, when a popular figure dies violently, it can be hard for their followers to adjust. "People would rather believe that a person continues to live," he notes.

About 15 years later, in July 1456—a few years after the Hundred Years’ War finally ended—a retrial declared the real Joan of Arc innocent and annulled her sentence. She would be made a saint in 1920, and remains the only person in history to be both condemned and canonized by the Catholic Church.

How British Spies Used a Cupcake Recipe to Stop Terrorists

iStock.com/400tmax
iStock.com/400tmax

In 2011, Arabian Peninsula-based Al-Qaeda members published a 67-page English-language magazine called Inspire in an attempt to recruit new terrorists. Instead, they might have inspired a new generation of bakers.

In the United States and United Kingdom, intelligence agencies knew the magazine was being launched well in advance. The also knew the magazine would be digital-only and could be downloaded as a PDF by anybody with an internet connection. For months, the U.S. Cyber Command planned on attacking the publication's release, crippling it with a hail of computer viruses. "The packaging of this magazine may be slick," one counterterrorism official said, "but the contents are as vile as the authors."

Their plans, however, were blocked by the CIA, which asserted that targeting the magazine "would expose sources and methods and disrupt an important source of intelligence," according to The Telegraph. So as progress halted in the U.S., British agents cooked up their own plans.

It involved treats.

At the time of the magazine's launch, the UK Government Communications Headquarters and the Secret Intelligence Service, or MI6, successfully hacked the computers distributing the mag and tinkered with the text. They removed articles about Osama bin Laden and deleted a story called "What to expect in Jihad." Elsewhere, they destroyed the text by inserting garbled computer code.

One sabotaged story was an article by "The AQ Chef" called "Make a Bomb in the Kitchen of your Mom," which explained how to make a pipe bomb with simple ingredients that included sugar. The new code, however, contained a sweet recipe of a different kind.

Instead of the bomb-making instructions, the article contained code leading to an article called "The Best Cupcakes in America," hosted by the Ellen DeGeneres Show website [PDF]. The page featured recipes for "sweet-toothed hipsters" and instructions for mojito-flavored cupcakes "made of white rum cake and draped in vanilla buttercream" (plus Rocky Road and Caramel Apple varieties!).

Two weeks later, the magazine's editors found the errors and fixed the edition—but, presumably, not until some bad guys discovered that "the little cupcake is big again."

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