Wall Street Crime And Punishment: The Rise And Fall Of Crazy Eddie - SPDR S&P 500 (ARCA:SPY)

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Wall Street Crime and Punishment is a weekly series by Benzinga's Phil Hall chronicling the bankers, brokers and financial ne’er-do-wells whose ambition and greed take them in the wrong direction.

If you were living in the New York metropolitan area during the 1970s and 1980s, you probably remember the commercials for the Crazy Eddie electronics retail chain. They were impossible to miss: More than 7,500 spots featuring a frenetic, motor-mouthed spokesperson bombilating frenetically about the “in-saaaaaaaaane” discounts offered by the store.

Crazy Eddie was never the biggest retail operation in the region. At its peak, there were only 43 locations spread across four states.

But the ubiquity of the commercials made it seem more prominent than it actually was, and the excess attention eventually brought harsh spotlights on the financial chicanery perpetrated by its chief executive, Eddie Antar.

An Audacious Start: Eddie Antar was born in Brooklyn, New York, on Dec. 18, 1947, the grandson of Syrian Jewish immigrants. Antar was an intelligent youth but found school boring, dropping out at 16 to work odd jobs before setting up a small stand at New York’s Port Authority in the heart of Manhattan where he sold portable televisions. While Antar belatedly realized he had the wrong product line in the wrong location, he used the experience to sharpen his sales skills.

By 1969, Antar saved up enough money to go into business with his father Sam and cousin named Ronnie Gindi, creating a retail operation called ERS Electronics. They opened an electronics store in the Kings Highway business shopping district in Brooklyn called Sights and Sounds.

At the time, small and independently-owned electronics retailers operated at a significant disadvantage against major chains due to the fair trade laws of the era that enabled manufacturers to establish a single standard retail price all retailers needed to list. To stand out from the competition, Antar challenged the laws by marking down his merchandise, thus offering a discount absent elsewhere in this retail sector.

Some manufacturers got wise to this and refused to do business with Antar, but he circumvented their boycott by purchasing excess stock from other businesses and obtaining products through grey-market channels from overseas sources.

The stress was great and Gindi eventually lost interest in the enterprise, selling his one-third of the business to Antar.

But how could the store remain afloat financially through its seemingly reckless discounting? As Antar’s father Sam would later recall in an interview, the lo-fi nature of old-school retailing work enabled them to put their ethics on hold.

“Back then, most customers paid in cash,” he said. “If we don’t disclose the sale, we keep the sales tax. That’s a good cushion to be able to afford to beat the competition.”

Sights and Sounds began to attract bargain hunters from outside of Brooklyn and Antar turned into something of a one-man, in-store comedy show, going so far as taking the shoes of cash-strapped customers who wanted to buy stereos for deposits and jokingly preventing shoppers from leaving unless they made a purchase.

Antar’s shtick was so amusing that his first wife Deborah came home one evening in 1971 with a story about how one of her co-workers was talking about his shopping trip to Sights and Sounds.

The co-worker, who was unaware of Deborah’s connection to the store, talked happily about dealing with a salesperson that he dubbed “Crazy Eddie.” At that point, Antar decided to change the name of Sights and Sounds to Crazy Eddie.

An Advertising Assault: The fair trade law that initially stifled Antar and other smaller businesses was repealed in 1972. Antar’s aggressive discounting and colorful personality enabled him to prepare for a business expansion — he moved to a larger store on Kings Highway, then opened a location in the Long Island town of Syosset in 1973 and in the heart of Manhattan in 1975.

Antar recognized how his larger competitors used advertising to their advantage, and in 1972 he began marketing his business over the airwaves via WPIX-FM, a popular music station that mixed rock oldies with current Top 40 hits. Antar created an ad copy script that would be read live on the air by Jerry Carroll, one of the station’s disk jockeys. But Carroll decided to improvise, reading the copy in a mock-frenzied manner and creating a new closing line with “Crazy Eddie — his prices are in-saaaaaaaaane.”

Rather than be upset by the deviation to the script, Antar was ecstatic with Carroll’s flippant approach as his delivery stood out wildly from the other advertising running on the station. Antar contracted Carroll to be his on-air pitchman for radio, and in 1975 Carroll was brought in front of the cameras for a television campaign.

It was through the television commercials Crazy Eddie became the center of consumer attention. For the next 10 years, the commercials offered endless variations on the same set-up: Carroll wore the same outfit — a dark blazer and a turtleneck sweater — and stood surrounded by displays of the electronics being peddled.

Each commercial ran about 30 seconds, but Carroll spoke so rapidly that it seemed he was trying to cover 60 seconds of a script in half of his allotted time.

Carroll’s physical delivery was comically spastic, with flailing arms, bulging eyes and the most manic smile this side of the Joker.

He would inevitably challenge shoppers to “shop around, get the best prices you can find, then bring ’em to Crazy Eddie and he’ll beat ’em.” And each commercial ended with Carroll stretching his arms out while proclaiming, “Crazy Eddie — his prices are in-saaaaaaaaane.”

There would be a few variations to the presentation, including a Christmas season ad campaign and a “Christmas in August” summertime effort with Carroll dressed in a Santa suit while being pelted with Styrofoam snowballs and papery snowflakes.

A couple of movie spoof spots put Carroll in parodies of “Casablanca,” “Saturday Night Fever,” “Superman” and “10,” and one ad had a man in a gorilla suit grunting dialogue while subtitles offered simian-to-English translations.

Not So Funny: After the commercials came on in full force, Crazy Eddie generated $350 million in annual revenue during its prime years.

But as Crazy Eddie grew, Antar’s approach to business became more problematic: cash payments were not recorded, the sales tax was pocketed and employees received off-the-books pay rather than paychecks that clearly deducted federal and state taxes.

Antar helped finance his cousin Sam Antar’s college education and brought him on as a chief financial officer, but Sam would later recall this was not done out of love of family.

“The whole purpose of the business was to commit premeditated fraud,” Sam recounted in an interview with MentalFloss.com. “My family put me through college to help them commit more sophisticated fraud in the future. I was trained to be a criminal.

"People have a certain idea of Crazy Eddie — in reality, it was a dark criminal enterprise.”

Antar initially kept his ill-gotten gains hidden within his home, but later began sending the money far into the world. Offshore bank accounts in Canada, Gibraltar, Israel, Liberia, Luxembourg, Panama and Switzerland were set up, and by the early 1980s, Antar and his family were skimming upwards of $4 million annually in unreported income and unpaid taxes.

Eventually, the graft became too big to easily hide. The solution, Antar theorized, was not to hide but to be in the greatest spotlight imaginable: Antar decided to take Crazy Eddie public.

Hello, Wall Street: Crazy Eddie conducted its initial public offering on Sept. 13, 1984, taking the NASDAQ symbol CRZY. The popularity of the television commercials helped bring in the initial wave of investor interest, while gourmet-level cooked books gave the phony impression of a well-run retail operation.

Two years after first trading at $8 a share, Crazy Eddie stock was at a split-adjusted $75 per share.

Why Antar believed he could continue with his shenanigans amid the added scrutiny given to public companies is a mystery, but by 1987 he found himself in lethal shoals.

The increased retail competition saw Crazy Eddie’s sales decline, resulting in a tumbling stock price.

Antar announced his resignation in December 1986, but four months later he shocked shareholders by revealing he never stepped down — and while still at the helm, he sold off his shares in the company, gaining about $30 million in the transaction.

The company had begun planning to go private when an outside investor group successfully agitated to take over what they believed to be a struggling but respectable company. But when their auditors came in, they were flabbergasted to find grossly exaggerated inventories of up to $28 million, $20 million in phony debit memos to vendors and sales reports that were closer to fiction than accountancy.

The chain went bankrupt in 1989 and was forced to shut down its retail network. Federal and state investigations overwhelmed what remained of the Crazy Eddie and Antar was hit with an endless flurry of lawsuits.

"By any measure, this is a staggering securities fraud," said Michael Chertoff, the U.S. Attorney for New Jersey, who accused the Antars of creating "a giant bubble" rather than a successful business.

By 1990, Antar disappeared after failing to appear at a court hearing. He obtained a phony U.S. passport issued to “Harry Page Shalom” and left the country. After a two-year global search, he was located in 1992 in a Tel Aviv suburb living under the name Alexander Stewart.

Antar was brought back to the U.S. to find his cousin Sam Antar had taken a plea deal with federal prosecutors and agreed to testify against him in court.

“There’s no better motivator than a 20-year prison term,” Sam Antar stated. “I didn’t cooperate because I found God. I cooperated to save my ass.”

In July 2013, Antar was found guilty of 17 counts of fraud and sentenced to 12½ years in prison. Two years later, his verdicts were overturned on appeal.

Rather than face the stress of another trial, Antar pleaded guilty to federal fraud charges in May 1996 and was sentenced in 1997 to eight years in prison.

The Legend Lives On: Antar was released after four years in prison and federal law enforcement officials managed to find more than $120 million from his offshore bank accounts, which was repaid to investors.

Several attempts occurred over the subsequent years to revive the Crazy Eddie brand, first as a brick-and-mortar retailer and then as an e-commerce venture, but all of these efforts failed.

In June 2019, Jon Turteltaub, the director of the “National Treasure” film franchise, announced plans to make a biopic about Antar. But that project has yet to come to life.

Many of the Crazy Eddie commercials can be found on YouTube, and marketing experts consider them to be among the most imaginative and successful examples of television advertising.

Antar stayed out of the public light after leaving prison and died of complications from liver cancer on Sept. 10, 2016. He never publicly spoke about his past, although in a brief late-life exchange with a Newark Star-Ledger reporter he acknowledged the unique impact he had on retailing.

“Everybody knows Crazy Eddie,” he said. “What can I tell you? I changed the business. I changed the whole business.”

(Photo of Jerry Carroll from a Crazy Eddie commercial courtesy of Cinema Crazed.)

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