Today, i teach law enforcement agencies, professionals, and businesses how to identify fraud and train them to catch the crooks. Crazy eddie fraud case the elements of fraud triangle, diamond and fraud pentagon are present in the fraud case of crazy eddie. Eddie antar, the reclusive entrepreneur who at crazy eddie inc. You were assigned to test the clients yearend inventory cutoff procedures.
This is an old article from 2000 but the sidebar at the end describing how the electronics store crazy eddie committed massive financial fraud is fascinating. May 16, 2012 sam antar, former cfo of crazy eddie, a massive fraud in the 1980s, has been following green mountain coffee roasters gmcr for a long time. The crazy eddie fraud may appear smaller and gentler than the massive billiondollar frauds exposed in recent times, such as bernie madoffs ponzi scheme, frauds in the subprime mortgage market, the aig bailout, and goldman sachs failure to disclose. Sep 12, 2016 eddie antar, who started the crazy eddie chain with insane. Eddie antar, who started the crazy eddie chain with insane. The fraud began almost immediately, with the management of crazy eddie underreporting the firms taxable income via skimming cash sales, paying employees in cash to avoid payroll taxes and. You selected 30 invoices entered in the accounting records near yearend. Sam antar, one of the architects of the crazy eddie fraud of the 1980s, has examined the current state of politics and has made an important decision hes going back to crime after the sec took down the crazy eddies scam, antar has spent his time working as a whistleblower. Crazy eddie case analysis essay 722 words bartleby. When the crazy eddie electronics store chain collapsed in 1987, its founder, eddie antar, and three other principals all family members were accused of swindling millions in investors money in one of the largest stock fraud cases ever brought by the securities and exchange commission. While one might expect banks to be liable for these losses, revisions in the uniform. How to detect and prevent financial statement fraud how to detect and prevent financial statement fraud i table of contents i. The company started out as a small, familyowned business, but eddie soon found that he could really clean up by taking his company public and making a fortune off the sale of stock.
The antars had inflated inventory numbers to increase crazy eddie s profits as a public company. The tight knit antar family ruling crazy eddie had virtual absolute control over all aspects of the business. Antar, was a key individual who helped eddie antar mastermind one of the largest securities frauds uncovered during the 1980s. Sam antar, 57, is a felon and former certified public accountant who helped perpetrate one of the largest securities frauds of the 1980s at crazy eddie, a chain of electronics stores based in new. Oct 11, 2010 i am a convicted felon, former cpa, and former criminal cfo of crazy eddie. I am a convicted felon, former cpa, and former criminal cfo of crazy eddie. Crazy eddie fraudster sam antar to return to crime. Aug 19, 2009 inside the mind of a financial criminal. Three major components of fraud triangle consist of rationalization, an opportunity for fraud and pressure to commit fraud. And experience has shown it is the asset of choice in financial fraud cases.
Crazy eddie executed its business without taking into account. Study 38 terms fraud chapter 12 flashcards quizlet. Nov 27, 2015 crazy eddie electronics was a regional electronics chain in new york city that was failed due to massive fraud committed by its management. Eddie antar, who started the crazy eddie chain with.
Antar eddie s father, and ronnie gindi a first cousin in 1969. The original predecessor company to crazy eddie was ers electronics, which was founded by eddie antar, sam m. Crazy eddie involved in fraud through incentives, opportunity and rationalization. Compute key ratios and other financial measures for crazy eddie during the period 19841987. The closing of crazy eddie began in march 1989, as the company shuttered 17 of its 43 stores. Crazy eddie fraudster says sec cant keep up marketwatch. Beautiful uncancelled scarce certificate from the crazy eddie inc issued in 1989. Fraud comes in many shapes and sizes and its growing faster than ever. Investors accuse bishop eddie longs megachurch of fraud conspiracy.
There are numerous ways to classify financial statement frauds. Is in the few days prior to the clients fiscal yearend and is in the first few days of the new year. The company also reported lacking morality and excuses. Check fraud is the most dominant form of payment fraud, representing 45 percent of all payment fraud losses, surpassing credit card fraud, ach fraud and wire fraud. The company appeared to be bulletproof and invisible on wall street but soon resulted in huge losses to. They believed that the difficulties crazy eddie faced were rooted in poor management, and therefore represented a quick turnaround opportunity. Dec 06, 2008 decades after their crimes, crazy eddie and sam e. Spindler and grinbergs allegations of fraud at crazy eddie were at least partially verified. How to detect and prevent financial statement fraud. Crazy eddie electronics was a regional electronics chain in new york city that was failed due to massive fraud committed by its management. Major selfdealing transactions and related party transactions by family members.
Sep 07, 1989 eddie antar, the reclusive entrepreneur who at crazy eddie inc. Antar mitchell antar eddie antar allen antar sam m. When eddie antar was charged with insider trading and securities fraud, he decamped for israel. Antar fled to israel in february 1990, but was returned to the united states in january 1993 to stand trial. Planet money on todays planet money, we get the inside scoop on the crazy eddie scam of the 70s and 80s from sam antar, crazy eddie s cfo. Count 5 charged the defendants with mail fraud, in violation of 18 u. He has pointed out red flags of fraud over and over, and the current problem is with the level of inventory. Journal of forensic and investigative accounting volume 9. In the crazy eddies case, the auditors inadvertently may have contributed to the fraud by the way the. He lives in a small apartment with his wife beatrice and her niece catherine who they both treat as a daughter.
This item has the signatures of the companys president and secretary and is over. Feb 19, 2019 the fraud began almost immediately, with the management of crazy eddie underreporting the firms taxable income via skimming cash sales, paying employees in cash to avoid payroll taxes and. His 1993 conviction on fraud charges was overturned, but he eventually pleaded guilty in 1996. Eddie antar, the founder of the crazy eddie electronics retail chain known for its hugely popular tv commercials in the 1970s and 1980s, and later brought down by a massive fraud scheme, died. The company started out as a small, familyowned business, but eddie soon found that he could really clean up by taking his company public and making a. I n d i c t m e n t count one wire fraud conspiracy. Confessions of a whitecollar criminal cuny podcasts. In 1997, antar was sentenced to eight years in prison and was subject to numerous. These elements are present in crazy eddies case where the management had pressure to maximize. View notes 1 8 crazy eddie from acct 202 at queens college, cuny. In one of the cases in the textbook, eddie antar, the ceo of the crazy eddie electronic stores in the new jersey area, took fraud to a higher level. Edward antar, founder of the crazy eddie discount electronics chain, conspired to inflate the companys. After being convicted of tax offences in 1990, he started on a second career as a property developer. Planet money on todays planet money, we get the inside scoop on the crazy eddie scam of the 70s and 80s from sam antar, crazy eddies cfo.
Antar, the companys chief financial officer, is working for the. Eddie was convicted of conspiracy, racketeering and securities and mail fraud and ultimately sams testimony sent him to prison. Sam antar, former cfo of crazy eddie, a massive fraud in the 1980s, has been following green mountain coffee roasters gmcr for a long time. Investors accuse bishop eddie longs megachurch of fraud. But with the likes of darrell issa and michele bachman representing the republican party, antar has decided to.
Phishing the illegal practice of attempting to steal an identity by setting up a website and encouraging people to input credit card or other personal information. Crazy eddie antar engaged in stock fraud upi archives. The auditors disagreed with recommendations by crazy eddie s outside counsel law firm paul, weiss, rifkind to provide more detailed disclosure on crazy eddie sales to transshippers and other issues. Dictionary, 2011 2 much of crazy eddies fraud can be attributed to the overstatement of inventory and the understatement on accounts payable, not to mention the vast number of executives who were involved in the scheme. If the auditors would have done a risk assessment prior to engaging with the client they would have identified a risk with so many family members employed at the company. Eddie antar was eventually charged with a series of crimes. The success and growth rate of crazy eddie was not normal. There were several red flags in crazy eddies financial statements. In the crazy eddie fraud, the change of a single word from purchase discounts and trade allowances are recognized when received to recognized when earned allowed sam e. Crazy eddie founder guilty of fraud the new york times. The two were a the helm of a huge fraud called crazy eddies. He was a cpa, and he was the cfo of crazy eddie, and he.
Jun 07, 20 overpaying taxes and overstating income is the way to go if you want to commit fraud at a publicly traded company. Specific audit procedures, if performed, could have led to the detection of the following accounting irregularities. Issue 1, januaryjune, 2017 712 in 1987, texas businessman elias zinn and his business partner victor palmieri took control of crazy eddie. The company appeared to be bulletproof and invisible on wall street but soon resulted in huge losses to many investors and employees of the retail chain. How to detect and prevent financial statement fraud crazy eddie crazy eddie announces the grand opening of a brand new store.
Jul 29, 2014 sam antar, 57, is a felon and former certified public accountant who helped perpetrate one of the largest securities frauds of the 1980s at crazy eddie, a chain of electronics stores based in new. Clever check fraud gangs constantly try new techniques to beat the banking system and steal money. The twoway he took the electronics chain from one store in brooklyn, n. Combating increasing fraud during the covid19 pandemic jason zirkle, cfe, acfe training director, discusses the latest fraud schemes emerging as a result of the covid19 pandemic, how to protect yourself from these nefarious scams and how fraud examiners can help their communities during this time of uncertainty. I dont expect many of you to recognize the name because even i was still a teenager when he was executing massive securities fraud. Thecrazyeddiefraud crazyeddie consolidatedbalancesheet inthousands assets currentassets. Section 41, for mailing a false sec filing to a shareholder.
Edward ormus sharrington davenport born 11 july 1966 is a convicted english fraudster, socialite, and property developer the selfstyled lord, nicknamed fast eddie came to prominence in the late 1980s as the organiser of the controversial gatecrasher balls for wealthy teenagers. The collusion of key personnel at cray eddies made it very difficult for auditors to uncover the fraud. Counts 6 through 16 charged eddie with substantive securities fraud arising from the sale of stock, in violation of 15 u. This historic document was printed by american banknote company and has an ornate border around it with a vignette of the crazy eddie logo. Assume that you were a member of the crazy eddie audit team in i 986.
Weinstein, aka edward weinstein, aka eddie weinstein, and others, orchestrated and executed a real estate investment fraud scheme, pursuant to which they raised funds from victims for specific real estate transactions and used material portions of the raised. Identify and briefly explain the red flags in crazy eddies financial statements that suggested the firm posed a higherthannormal level of audit risk. The play is about an italian family, the carbones and centres around eddie carbone in particular. In the crazy eddie fraud, the change of a single word from purchase discounts and trade allowances are recognized when received to. Sam antar, a selfdescribed convicted felon, takes credit for helping mastermind the crazy eddie securities scheme, one of the largest fraud. Analysts often do not ask the important questions and are too quick to accept managements representations. The chain was started in 1971 in brooklyn, new york, by businessmen eddie and sam m.
Morris, which presents my views on sarbanes oxley and other needed reforms. Antar please take the time to read my enclosed letter to secretary nancy m. Panama pump auditors reduce the cost of an audit, sometimes free, in hopes of being compensated by taking on more lucrative non auditing work. Phishing often purports to present a legitimate web business and asks the customer to give personal information in order to receive fictitious products. The antars had inflated inventory numbers to increase crazy eddies profits as a public company. Red flags investigated in this blog are often reported to appropriate government agencies as a whistleblower. This is an old article from 2000 but the sidebar at the end describing how the electronics store crazy eddie committed massive financial fraud is fascinating there are numerous ways to classify financial statement frauds. Dozens of class action lawsuits were filed against the antar family alleging a massive fraud at crazy eddie. Is in the few days prior to the clients fiscal year.
Crazy eddie reported lacking rationalization but confirmed that incentives and opportunity were working. Crazy eddie case 1 running head crazy eddie case 1. Weinstein, aka edward weinstein, aka eddie weinstein, and others, orchestrated and executed a real estate investment fraud scheme, pursuant to which they raised funds from victims for specific real estate transactions and used material portions of the raised funds for other purposes without disclosing these. Antar, and was previously named ers electronics ers stood for eddie, rose and sam. Overpaying taxes and overstating income is the way to go if you want to commit fraud at a publicly traded company. Eddie pleaded guilty to one count of racketeering conspiracy. In an unprecedented event, the cousins, who together masterminded one of the broadest and largest running whitecollar crime operations, confront the past and each other with the.
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