The “Crazy Eddie’s” cash scam that landed owner in jail
When you think of massive frauds, you tend to think of banks and financial institutions being ripped off by greedy CEOs or staff.
Scams coming out of retail outlets are rare.
One of the reasons for this is that retail outlets don’t tend to have access to the same enormous amounts of money as banks.
Nonetheless, it has happened in the past.
One of the biggest scams of the era originated out of an electronics store in Brooklyn in the 1970s.
The original store went on to become Crazy Eddie’s, which became one of the biggest chains in the region with around 40 stores.
The firm became very well-known around the area, with its famous catchphrase “our prices are insane!”
It was owned by Eddie Antar, who funded the expansion with one of the biggest frauds seen at the time.
Eddie turned out to be well-versed in the practice of “skimming”, which is hiding money from cash sales from the company’s accountants to avoid paying tax.
That was just the start, with more and more schemes to elevate the company’s income devised.
One involved manipulating inventory levels.
More inventory than needed was ordered, and then staff would inflate of the excess on the books to make the company look more profitable than it actually was.
As the fraud grew, so did the attempts to cover it up.
Fake documents were created, and real, incriminating, documents were shredded.
In 1987, when thousands of pieces of merchandise were ordered and delivered to a warehouse.
Executives then staged a burglary, claiming all the items had been stolen.
They were never stolen, and the executives had simply created a paper trail to make it look like the inventory levels appear lower than they were.
Crazy Eddie’s Downfall
Despite the cover-ups, the fraud was eventually uncovered.
Irregularities in accounting were found by auditors and the Securities and Exchange Commission (SEC) got involved.
Eddie Antar was sentenced to eight years in prison and fined $250,000 in 1997 for falsifying the Crazy Eddie chain’s books and committing securities fraud.
He fled to Israel for two years but was extradited and faced trial.
He was also subject to numerous other fines.
He died in 2016 aged 68.