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    Group PPT Group PPT Presentation Transcript

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