Tuesday, August 30, 2022

An Entertaining and Compelling Tale of a Corporate Crook

By Herb Greenberg (View Archive)

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I sometimes get asked to read pre-publication versions of new books but often don't have time or an interest in the topic, so I politely pass...

But when Gary Weiss asked me to read the so-called "galleys" of his new book on the notorious electronics chain Crazy Eddie, in hopes that I would write a promotional blurb, I jumped at the opportunity.

And not just because I'm mentioned in it...

I just knew it would be good.

After reading Retail Gangster: The Insane, Real-Life Story of Crazy Eddie, I blurbed...

This would be a remarkable work of fiction, except this tale of one man's audacious addiction to fraud is true. Retail Gangster is destined to go down as a classic in the annals of public-company fraud. With his history of tracking gangsters, there was nobody better to tell that story than Gary Weiss.

I've known Gary for ages – going all the way back to his days as a reporter at BusinessWeek. We've kept in touch on and off throughout the years.

Gary spent a good part of his career chasing the mob, so the Crazy Eddie story was a natural...

For anyone unfamiliar, Crazy Eddie was a consumer electronics chain that was prominent across the Tri-State area in the 1970s and '80s. The company was known for its commercials, with the tagline... "His prices are insane!"

Not that they always really were insane, because ads notwithstanding Crazy Eddie was a high-pressure, bait-and-switch fraud. It was also an accounting fraud, a tax fraud, an insurance fraud, and ultimately, after it went public... a securities fraud.

Unlike Crazy Eddie, public company frauds don't generally start out as frauds...

Usually, in an effort to impress Wall Street, these businesses cheat a little here and a little there to make the numbers look better than they really are... thinking they'll get from here to there before anybody notices.

Except, like any addiction, once hooked – unless the business somehow really takes off – they can't stop... and, presto, another fraud is born.

Crazy Eddie was different. Led by the late Eddie Antar, its founder and CEO, the company started as a criminal enterprise with the express intention to deceive.

And therein lies the beauty of this tale, and why I think it will stand the test of time as required reading for any student of corporate fraud, ranking up there with my friend (and FraudFest co-coordinator) Frank Partnoy's classic, The Match King: Ivar Kreuger, the Financial Genius Behind a Century of Wall Street Scandals.

Both Krueger and Antar were swindlers, with 50 years separating them...

Krueger was more highbrow by appearance and nature, doing his swindling in the 1920s and 1930s – largely by cornering the match (as in matches to light things) market.

Antar, who was more lowbrow, launched Crazy Eddie in the early '70s. Along the way, he unintentionally disrupted how consumer electronics were retailed... which ironically ultimately played a key role in doing him in. Or as Gary explains in Retail Gangster...

Crazy Eddie's competitors, large and small, had a major advantage: they were not mired in accounting fraud.

The only reason Antar could be a disrupter was because he was cheating – early on, pocketing the sales taxes... later on, inflating insurance claims by reusing the same damaged, often water-logged equipment over and over whenever the company needed extra money and there was a "flood" in a store.

Antar wound up going to prison for years. It's quite the story, which Gary covers well.

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The book also brought back memories for me and helped fill in a few cracks I had been curious about...

I first met Eddie through his estranged cousin (and former Crazy Eddie CFO) Sam E. Antar, who is also an accountant. In fact, Eddie paid his tuition at Baruch College to learn the craft.

Sam, who was part of the fraud, turned state's witness and put Eddie in jail.

He has spent much of the rest of his life trying his best at repenting, by using his savant-like accounting skills to turn the table on other white-collar fraudsters. That's how I met him – as a source. (He was a colorful one, at that.) Though we haven't talked in a few years, we later became friends.

It was while I was doing work with CNBC in 2007 that I had this idea: bring Sam and Eddie together for the first time since the trial in the early 1990s. Sam, who doesn't shy from confrontation, didn't hesitate to sign on.

But Eddie... He had been a fugitive for two years. It seemed highly unlikely he would go along with it. The two hadn't talked to each other in nearly 20 years, but also because Eddie went to prison and Sam hadn't.

After a bit of nudging by our producer and me, Eddie agreed...

With cameras rolling, we met in a suite at the Sherry-Netherland hotel in New York...

I had a mental image of Eddie being this swashbuckling character. But instead, when he arrived, he was shuffling and seemed physically meek, talking almost in a whisper. He had just come from Best Buy, where he had tried to find a tape recorder so he could record the session. He had trouble getting help at the store... and once he got the tape recorder, he couldn't quite figure out how to use it.

All I could think of was the irony – Eddie Antar... Best Buy... Can't find a salesperson... Doesn't know how to use a tape recorder.

Once the interview started, the meek, shuffling Eddie with his scruffy beard and ill-fitting clothes turned into... Eddie. He was shrewd, with a quiet – almost manipulative – control, at times admonishing Sam...

There it was... the boss and his subordinate. That was like lighting a match under Sam, who – despite assuring us this wouldn't devolve into mayhem – unleashed years of raw pent-up anger... so much that at one point Eddie threatened to leave. (Candidly, until I read Retail Gangster, I thought his outbursts were an act.)

After an intervention by our producer and me, Eddie stayed...

As Gary relates in the book...

Their face-off lasted hours, but only brief excerpts were aired on June 27, 2007.

One exchange that made the cut showed Sammy leaning to within inches of a somber, wan Eddie, gesturing with a pointed finger and shouting, "You brought us up to be crooks, Eddie. Everything I became came from you." Eddie looked helplessly at the interviewer, journalist Herb Greenberg, making a gesture of exasperation as if Sammy was a lunatic.

Eddie turned to Sammy but did not look him in the eye. "You didn't just learn from me," he said softly. "You learned – we learned the culture. So it's not that I taught you. You knew the culture."

What's clear from the book is that early on, Eddie learned how to cheat customers. Later on, he cheated the system... and eventually, he cheated investors.

But it was a separate interview Eddie did with me for a column I used to write for the Wall Street Journal where he conceded something I've always thought about these crooks, when he said... "I thought I was smarter [than everybody else]."

And that's the point...

They all do, but they never really are... and they almost always get caught.

As always, feel free to reach out via e-mail by clicking here. I look forward to hearing from you.


Herb Greenberg
August 30, 2022

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Herb Greenberg

Herb Greenberg is a senior editor at Empire Financial Research. Previously, he was the co-founder of Pacific Square Research and Greenberg Meritz Research & Analytics – both independent, short-biased investment research firms. Greenberg spent more than 40 years as a financial journalist at some of the country's leading newspapers, websites, and broadcast media, where he covered almost every industry. He served as senior stocks commentator at CNBC and was financial correspondent at the Chicago Tribune. He also spent 10 years as the daily business columnist for the San Francisco Chronicle, during which time he started his five-year run as Fortune's monthly Against the Grain columnist and was the morning business reporter for San Francisco's KRON-TV. When the Internet and online media were still emerging, Greenberg was one of the first mainstream journalists to make the shift online, when he became senior columnist at TheStreet. He later shifted to the same role at MarketWatch. When Dow Jones bought out MarketWatch, he added a weekend investor column for the Wall Street Journal to the mix. Earlier in his career, Greenberg was a reporter at Crain's Chicago Business and a business reporter for the St. Paul Pioneer Press. He also spent a year as an analyst at a risk arbitrage firm. Greenberg holds a bachelor's degree in journalism from the University of Miami and completed the Herbert J. Davenport Fellowship at the University of Missouri.

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