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Jsmilla via YouTube

Crazy Eddie's Insanely Successful Criminal Enterprise

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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, New Yorkers had greater name recognition with the stores than with Ed Koch—their own mayor.  

“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.

itsdibble via YouTube

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.”

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iStock // Ekaterina Minaeva
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Man Buys Two Metric Tons of LEGO Bricks; Sorts Them Via Machine Learning
May 21, 2017
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iStock // Ekaterina Minaeva

Jacques Mattheij made a small, but awesome, mistake. He went on eBay one evening and bid on a bunch of bulk LEGO brick auctions, then went to sleep. Upon waking, he discovered that he was the high bidder on many, and was now the proud owner of two tons of LEGO bricks. (This is about 4400 pounds.) He wrote, "[L]esson 1: if you win almost all bids you are bidding too high."

Mattheij had noticed that bulk, unsorted bricks sell for something like €10/kilogram, whereas sets are roughly €40/kg and rare parts go for up to €100/kg. Much of the value of the bricks is in their sorting. If he could reduce the entropy of these bins of unsorted bricks, he could make a tidy profit. While many people do this work by hand, the problem is enormous—just the kind of challenge for a computer. Mattheij writes:

There are 38000+ shapes and there are 100+ possible shades of color (you can roughly tell how old someone is by asking them what lego colors they remember from their youth).

In the following months, Mattheij built a proof-of-concept sorting system using, of course, LEGO. He broke the problem down into a series of sub-problems (including "feeding LEGO reliably from a hopper is surprisingly hard," one of those facts of nature that will stymie even the best system design). After tinkering with the prototype at length, he expanded the system to a surprisingly complex system of conveyer belts (powered by a home treadmill), various pieces of cabinetry, and "copious quantities of crazy glue."

Here's a video showing the current system running at low speed:

The key part of the system was running the bricks past a camera paired with a computer running a neural net-based image classifier. That allows the computer (when sufficiently trained on brick images) to recognize bricks and thus categorize them by color, shape, or other parameters. Remember that as bricks pass by, they can be in any orientation, can be dirty, can even be stuck to other pieces. So having a flexible software system is key to recognizing—in a fraction of a second—what a given brick is, in order to sort it out. When a match is found, a jet of compressed air pops the piece off the conveyer belt and into a waiting bin.

After much experimentation, Mattheij rewrote the software (several times in fact) to accomplish a variety of basic tasks. At its core, the system takes images from a webcam and feeds them to a neural network to do the classification. Of course, the neural net needs to be "trained" by showing it lots of images, and telling it what those images represent. Mattheij's breakthrough was allowing the machine to effectively train itself, with guidance: Running pieces through allows the system to take its own photos, make a guess, and build on that guess. As long as Mattheij corrects the incorrect guesses, he ends up with a decent (and self-reinforcing) corpus of training data. As the machine continues running, it can rack up more training, allowing it to recognize a broad variety of pieces on the fly.

Here's another video, focusing on how the pieces move on conveyer belts (running at slow speed so puny humans can follow). You can also see the air jets in action:

In an email interview, Mattheij told Mental Floss that the system currently sorts LEGO bricks into more than 50 categories. It can also be run in a color-sorting mode to bin the parts across 12 color groups. (Thus at present you'd likely do a two-pass sort on the bricks: once for shape, then a separate pass for color.) He continues to refine the system, with a focus on making its recognition abilities faster. At some point down the line, he plans to make the software portion open source. You're on your own as far as building conveyer belts, bins, and so forth.

Check out Mattheij's writeup in two parts for more information. It starts with an overview of the story, followed up with a deep dive on the software. He's also tweeting about the project (among other things). And if you look around a bit, you'll find bulk LEGO brick auctions online—it's definitely a thing!

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Nick Briggs/Comic Relief
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What Happened to Jamie and Aurelia From Love Actually?
May 26, 2017
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Nick Briggs/Comic Relief

Fans of the romantic-comedy Love Actually recently got a bonus reunion in the form of Red Nose Day Actually, a short charity special that gave audiences a peek at where their favorite characters ended up almost 15 years later.

One of the most improbable pairings from the original film was between Jamie (Colin Firth) and Aurelia (Lúcia Moniz), who fell in love despite almost no shared vocabulary. Jamie is English, and Aurelia is Portuguese, and they know just enough of each other’s native tongues for Jamie to propose and Aurelia to accept.

A decade and a half on, they have both improved their knowledge of each other’s languages—if not perfectly, in Jamie’s case. But apparently, their love is much stronger than his grasp on Portuguese grammar, because they’ve got three bilingual kids and another on the way. (And still enjoy having important romantic moments in the car.)

In 2015, Love Actually script editor Emma Freud revealed via Twitter what happened between Karen and Harry (Emma Thompson and Alan Rickman, who passed away last year). Most of the other couples get happy endings in the short—even if Hugh Grant's character hasn't gotten any better at dancing.

[h/t TV Guide]

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