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  • 1. Crazy Eddie: Fraud New York Family Style Presented By: <ul><li>Greg Drakulich </li></ul><ul><li>Denise Diaz </li></ul><ul><li>Maria Font </li></ul><ul><li>Angela Selimi </li></ul><ul><li>Adrienne Sommerfeldt </li></ul>
  • 2. Crazy Eddie: Fraud New York Family Style Introduction to Crazy Eddie and The Antar Family
  • 3. The Joey Butaffuoco of Corporate Criminals <ul><li>Eddie was not your typical corporate executive </li></ul><ul><ul><ul><li>As president of Crazy Eddie he committed scams that reverberated throughout New York City </li></ul></ul></ul><ul><ul><ul><li>The fraud did not start when Eddie was president of Crazy Eddie, from all accounts the seeds of fraud were planted earlier </li></ul></ul></ul><ul><li>Eddie Antar followed in the footsteps of his father entering the world of sales </li></ul><ul><ul><ul><li>He was a high School drop out from Abraham Lincoln High at age 15 </li></ul></ul></ul><ul><ul><ul><li>Eddie earned his nickname Crazy Eddie for his “unorthodox” sales techniques from a couple of girls from his high school </li></ul></ul></ul><ul><ul><ul><li>During the 1960’s his sales methods earned him $600 to $700 a week </li></ul></ul></ul><ul><ul><ul><li>He resolved to own his business before his twentieth birthday </li></ul></ul></ul>
  • 4. Crazy Eddie’s Stores <ul><li>The history of Crazy Eddie’s stores begins in 1969 </li></ul><ul><ul><ul><li>Eddie first became a one-third owner in Sights &amp; Sounds ERS </li></ul></ul></ul><ul><ul><ul><li>The store lost money due to its location </li></ul></ul></ul><ul><li>Eddie found a new location and gives his store a new name </li></ul><ul><ul><ul><li>Crazy Eddie’s Ultra Light and Linear Sound Experience was the name </li></ul></ul></ul><ul><ul><ul><li>Eddie’s frenetic pace and outrageous sales methods proved successful in the new location </li></ul></ul></ul><ul><ul><ul><li>He would stand guard at the door demanding to know why departing customers hadn’t bought anything </li></ul></ul></ul><ul><ul><ul><li>Soon after he had opened new stores and expanded to a corporate office </li></ul></ul></ul>
  • 5. Crazy Eddie’s Family Life Clashes With Business <ul><li>Crazy Eddie was sullen and lived in an alcoholic haze </li></ul><ul><ul><ul><li>He “became a sharp-tongued drunkard and braggart” </li></ul></ul></ul><ul><ul><ul><li>He would do anything to get peoples cash and he was not nice </li></ul></ul></ul><ul><li>The drunkenness and fast-paced lifestyle took a toll on his marriage to Deborah Rosen, later known as Debbie #1 </li></ul><ul><ul><ul><li>Eddie’s marital problems caused rifts within the family </li></ul></ul></ul><ul><ul><ul><li>Despite their differences the family kept doing business </li></ul></ul></ul><ul><ul><ul><li>The family cultivated an “us” versus “them” mentality which helped them accept fraud as part of their normal course of business </li></ul></ul></ul><ul><ul><ul><li>Consequently the tremendous turmoil clearly spilled over into the business </li></ul></ul></ul>
  • 6. The Family Business Grows <ul><li>Opportunity </li></ul><ul><ul><ul><li>While the business remained in family hands, they were able to commit fraud undetected </li></ul></ul></ul><ul><ul><ul><li>They cheated customers, the government and investors </li></ul></ul></ul><ul><ul><ul><li>They even cultivated in-house talent when Eddie paid for Sam E.’s education at Baruch College, he later became a CPA and the company’s CFO </li></ul></ul></ul><ul><li>Pressure </li></ul><ul><ul><ul><li>They had the pressure to live better, and show others in the community that the Antars were successful </li></ul></ul></ul>
  • 7. Crazy Eddie: Fraud New York Family Style The Rationalization Behind The Crazy Eddie Fraud
  • 8. What is Rationalization <ul><li>Definition of rationalization within the fraud triangle theory </li></ul><ul><li>“We had no rationalization…” said Sam E. Antar (Former CFO of Crazy Eddie) </li></ul><ul><li>Was there really no rationalization in a crime that lasted almost 20 years? </li></ul>
  • 9. Rationalization During the Skimming Stage <ul><li>“ I skimmed millions and millions of dollars. But I never lied, I never cheated anybody” Sam Antar (Eddie’s father) </li></ul><ul><ul><ul><li>Sam rationalizes his hard work is enough to justify the skimming </li></ul></ul></ul><ul><li>The government is not anybody </li></ul><ul><ul><ul><li>The Antar family does not recognize the government as a ruling body </li></ul></ul></ul><ul><li>“ Off the books” everybody does it </li></ul><ul><ul><ul><li>Thru skimming and paying employees “off the books” The Antar family evaded taxes and made their businesses profitable </li></ul></ul></ul>
  • 10. Fulfilling the Antar Family Tradition <ul><li>Eddie’s rationalization that a successful business equals making the sale (no matter what) </li></ul><ul><ul><ul><li>Eddie pressured customers into sales, even locked customers in the store until they bought something </li></ul></ul></ul><ul><li>First free standing electronics store </li></ul><ul><ul><ul><li>A good idea managed poorly </li></ul></ul></ul><ul><ul><ul><li>“There was everything wrong with how the family ran the business” Bob Marmon </li></ul></ul></ul>
  • 11. Going Public <ul><li>Let’s go public and make this “BIGGER” </li></ul><ul><ul><ul><li>Eddie’s rationalization behind making the company public </li></ul></ul></ul><ul><ul><ul><li>He was the biggest and the best Antar </li></ul></ul></ul><ul><li>Reduction in skimming </li></ul><ul><ul><ul><li>A false increase in sales, made this company an attractive investment </li></ul></ul></ul><ul><li>“ We could have stopped when we went public” </li></ul><ul><ul><ul><li>Sam E. Antar here describes what he calls “greed” and a quest for power. He still claimed that there was “No rationalization” </li></ul></ul></ul>
  • 12. Crazy Eddie Can Not Keep Up With the Fraud <ul><li>The Stock is falling </li></ul><ul><ul><ul><li>The decrease in the stock price arouses suspicions in investors and analysts </li></ul></ul></ul><ul><li>The Antar’s needed to commit more fraud to cover the fraud from before </li></ul><ul><ul><ul><li>The debit memo is just one of the many frauds to cover up the others </li></ul></ul></ul><ul><li>Eddie sells out his own </li></ul><ul><ul><ul><li>During his final year as president of Crazy Eddie, Eddie Antar sold his stock to get out before the price fell too low </li></ul></ul></ul>
  • 13. The End of the Antar Legacy <ul><li>There was rationalization, they just could not see it </li></ul><ul><ul><ul><li>The Antar family way of thinking went on for so long it clouded proper judgment </li></ul></ul></ul><ul><ul><ul><li>Their disregard for ethics was their rationalization </li></ul></ul></ul><ul><ul><ul><li>Thinking that there is nothing wrong does not mean that it is right </li></ul></ul></ul>

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