Magazine article Business Credit

Symposium Brings Together Criminals, Law Enforcement, and Creditors

Magazine article Business Credit

Symposium Brings Together Criminals, Law Enforcement, and Creditors

Article excerpt

LAS VEGAS -- NACM's Loss Prevention Department hosted its first annual Loss Prevention Symposium here in September, bringing law enforcement officers, convicted white-collar criminals, and credit managers together for two days of intense seminars and lectures.

Symposium organizers Todd Sheffer, NACM Loss Prevention senior investigator, and Rob Lawson, NACM Loss Prevention director, sought to educate credit and law enforcement professionals about dangers in today's business climate, and declared the event a success.

Highlights of the event included cases studies by law enforcement officials; an overview of bankruptcy remedies as presented by a bankruptcy judge; and a former credit criminal describing how he did it. In one presentation, Richard Simpson, counsel for the SEC Law Enforcement Division, told the story of Crazy Eddie Inc., a consumer electronics store in New York, NY. Famous for their TV commercials featuring the slogan, "Our prices are insane!", the store gained further notoriety following revelations of fraud.

Crazy Eddie Inc. went public in September, 1984 and Eddie Antar quickly began cooking the books of his company to increase perceptions that his was a growth company that would eventually become a billion dollar business.

"Eddie (Antar) wasn't satisfied with the prices that Crazy Eddie stock was getting, so he started manipulating the records of Crazy Eddie Inc. to raise the price of the stock, which he would then unload at an inflated price," said Simpson.

The fraud started on a small scale, with Antar and others skimming cash from stores to avoid paying sales and income tax. According to Simpson, store employees were often paid in cash, also to avoid paying taxes. Antar and his associates would take cash from the till to pay for trips, and other personal activities. As the company became more successful, Antar and his associates discovered they couldn't spend all the cash. So they opened a bank account in Israel and would hand-deliver large sums of American dollars to the Israeli bank.

Simpson showed a deposit slip from the Israeli bank for a $600,000 cash deposit made in May, 1983, which brought the account balance to nearly $7 million. Antar reportedly would strap cash to his body and stuff suitcases full of money for transport to Israel. Antar was also said to store large amounts of cash at home, including one report of $200,000 found under a bed, and a false ceiling where money was also stashed.

"There's no period of time that this company was empirically honest," said Simpson.

When auditors took an inventory of Crazy Eddie warehouses and stores, they expected to find $130 million in merchandise. …

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