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 Time Abraham Lincoln Stopped a Murder Trial in its Tracks

Abraham Lincoln as a lawyer, circa 1847
Abraham Lincoln as a lawyer, circa 1847

One day at the end of May, 1841, William Trailor hopped into a one-horse buggy and began the long journey to Springfield, Illinois, where he planned to reunite with his brothers Henry and Archibald. Joining him was his friend and housemate, a handyman named Archibald Fisher.

In Springfield, the men decided to go for a walk after lunch. But as the afternoon wore on, the brothers somehow lost sight of Fisher. When they returned to Archibald's Springfield home for supper, Fisher wasn't there. The brothers looked briefly for Fischer, but may have assumed he was still out enjoying himself.

But when Fisher failed to show up the next morning, the brothers began to feel uneasy. They spent the day in a fruitless search for the missing man. The same was true of the following day. William eventually left Springfield without him.

According to the local postmaster, rumors circulated that Fisher had died and left William with a large sum of money. True or not, the local postmaster knew about William's trip to Springfield and alerted the postmaster in that city of a possible crime. News of the missing man (and William’s supposed financial windfall) quickly spread.

Within days, all of the Trailor brothers would be arrested—charged with the disappearance and murder of Archibald Fisher.

 

Nobody could find the body. “Examinations were made of cellars, wells, and pits of all descriptions, where it was thought possible the body might be concealed,” wrote Abraham Lincoln, then a young defense lawyer in Springfield. “All the fresh, or tolerably fresh, graves at the grave-yard were pried into, and dead horses and dead dogs were disinterred.”

As locals searched for Fisher’s corpse, both Springfield’s mayor and the Illinois state attorney general ruthlessly interrogated Henry Trailor. For three days, Henry maintained his innocence. But he also began to show signs of cracking. “The prosecutors reminded him that the evidence against him and his two brothers was overwhelming, that they would certainly be hanged,” William H. Townsend wrote in the American Bar Association Journal in 1933, “and that the only chance to save his own life was to become a witness for the State.”

With that bait, Henry confessed: He claimed that his brothers, Archibald and William, had clubbed Fisher to death and had taken all of his money. Henry insisted that he had taken no part in the murder. Rather, he had simply helped his brothers dump the body in the woods.

News of Henry’s confession ignited the public's curiosity, prompting hundreds of people to rush to the forest where Fisher’s body was reportedly hidden. “The story related by Henry Trailor aroused the most intense public indignation, and the murder became almost the sole topic of conversation,” Townsend wrote. “Business was practically suspended as searching parties and amateur detectives scoured the woods and by-ways.”

There, in a dense thicket, investigators found buggy tracks and signs that something large had been dragged through the grass. A nearby pond was partially drained and a dam destroyed, despite protests from the dam's owner. Yet the body continued to elude investigators. The public became antsy.

“It was generally conceded that only a speedy trial and swift punishment could allay the clamor of the populace for the blood of the prisoners and avert the disgrace of a lynching,” Townsend wrote. By June 18, the murder trial had already begun—and a conviction seemed assured.

The courtroom, muggy from the summer humidity, was packed with spectators. Called to the stand, Henry Trailor repeated his confession, claiming that he had helped dispose of Fisher's body. Additional evidence was provided by a local woman who had seen two of the Trailor boys walk into the woods with Fisher—only to see them return alone. Furthermore, investigators claimed they had found human hair in the area near the buggy tracks. The tracks themselves, they noted, had led suspiciously to the pond, as if somebody had tried to dump something.

When the prosecutor rested his case, it seemed like there was no hope for the Trailor brothers.

But the defense had a secret weapon—a 32-year-old lawyer named Abraham Lincoln. The future president calmly stood up and called his one and only witness to the stand.

 

Dr. Robert Gilmore was a widely respected physician in those parts of Illinois. Sitting in the sauna-like courtroom, the doctor patiently explained that he knew Archibald Fisher well—the man had twice lived in his home. Years ago, Gilmore explained, Fisher had suffered a serious head injury from a gun-related accident and had never fully recovered his wits. The poor man was prone to spells of amnesia, blackouts, and derangement. It was very possible that Fisher had just wandered off.

Dr. Gilmore then calmly told the court that he had proof to back up his theory, and proceeded to drop a bombshell: Archibald Fisher was alive and staying in his home.

The courtroom murmured in shock.

Dr. Gilmore continued. Fisher had suffered from a terrible bout of memory loss and had no recollection of his time in Springfield. In fact, Fisher had wandered all the way to Peoria before regaining his senses. The only reason the man had failed to show up to the courtroom today was because his health prevented it.

Lincoln scanned the crowd with glee. “When the doctor’s story was first made public, it was amusing to scan and contemplate the countenances and hear the remarks of those who had been actively engaged in the search for the dead body,” he would later write in a letter, “some looked quizzical, some melancholy, and some furiously angry.”

At first, many were skeptical of the doctor’s claims, but officials were quick to confirm that Fisher was indeed alive. He’d eventually show up to court, later explaining how, indeed, he had no memory of ever visiting Springfield.

To the prosecution's great embarrassment, much of the evidence was proven bunk: It was soon discovered that the controversial path in the forest was, in fact, created by children who had been building a rope swing; meanwhile, the hairs in the woods belonged to a cow. It also became awfully clear that Henry Trailor had been coerced into making a false confession—when the officers had threatened Henry's life, Henry told them what they wanted to hear instead.

All of the charges would be dropped and the men's lives spared. “We have had the highest state of excitement here for a week past that our community has ever witnessed,” Lincoln would write after the trial.

In fact, the case enchanted Lincoln so much that he tried to immortalize the events in a short story written in the style of the true-crime genre. The future president, of course, was justifiably proud of the outcome: It wasn't every day that a single surprise witness helps solve a mystery and saves two people from the hangman's noose.

 

To read Lincoln's own account, check out this excerpt at Smithsonian.

How to Keep Holiday Packages Safe from 'Porch Pirates'

iStock.com/txking
iStock.com/txking

Despite an increase in easy-to-install surveillance cameras and smart doorbells that monitor home activity, package thefts are on the rise. A 2017 survey from InsuranceQuotes.com found that 25.9 million Americans experienced at least one instance of a delivery going missing from their porch, up from 23.5 million in 2015. Frustrated homeowners have set traps and even left boxes full of dog poop in an effort to dissuade—or at least penalize—these brazen thieves, who have been labeled "porch pirates."

Unfortunately, these porch pirates aren't often caught. Security cameras won't do much good once the package has disappeared. And while giving them a box of feces might feel like vigilante justice, spending the holidays handling poop isn't exactly a win. Fortunately, there are some other ways to practice package theft prevention.

The Kansas City Star imparted some pertinent advice from officials at the United Parcel Service (UPS): Packages should be sent to where recipients are, not to where they are not. For most people, that means finding an alternative to getting packages at home when they're away during the day.

One option is to have deliveries sent to your place of business. If workplace policies prevent that, you might want to ask a neighbor if they can keep an eye out and either stash your item in their home or use a spare key to deposit it inside for you.

Don't trust or know your neighbors? Consider finding a UPS branch that's able to receive packages on your behalf. Items are stored securely at their affiliated locations until you come and pick them up in person. The service has 9000 locations across the country, both mailing centers and third-party channels like grocery stores. The service also has UPS Access Points, which are self-service lockers that remain locked until you arrive to pick up packages. You can search the UPS website to find an Access Point location near you.

If you're expecting packages from the United States Postal Service (USPS), you can open a post office box, though there's typically an annual fee for that service. USPS also offers Informed Delivery, a phone app that tracks your package and notifies you when it's arrived. Informed Delivery allows you to communicate with the carrier to offer directions on the best place to leave the package. They might, for example, be willing to deposit your items in an unlocked garage and then lock the door before leaving.

Amazon has a service with a similar premise. Their Key Smart Lock Kit allows you to control access to your door locks, including granting access to delivery drivers. The catch? The feature isn't available in all areas. Neither is Amazon Locker, which consists of storage lockers where packages can be left, though it's worth a look to see if any are available in your area.

If you've taken measures to protect your purchases but still come home to a missing stack of boxes, you should report the theft to authorities and to the U.S Postal Inspection Service. (UPS encourages you to contact the sender.) The odds of retrieving your items are probably going to be slim, but at least both entities will have data that may help them catch thieves in the future. If you report the item as stolen to Amazon, they may replace it at no cost to you. Another alternative is seeing if your homeowner's insurance covers theft of items around your home's exterior. Your deductible is probably too steep to make a claim of missing socks worthwhile, but a package worth hundreds or thousands of dollars is another story.

[h/t The Kansas City Star]

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