Retail Gangster: The Insane Real-Life Story of Crazy Eddie

By Gary Weiss

Hachette Books, 2022 336 pages, $29.00.

Reviewed by Christopher Faille

Independent journalist Gary Weiss has devoted much of his working life to the interface of crime and commerce. For example, he has written about the Mafia presence on Wall Street. He has also written about the morality of actively managed mutual funds. (His conclusion is that the difference between those two presences is not as great as one might hope.)

Now Weiss’s attention turns to another crime/commerce interface: the rise and fall of Eddie Antar, the man behind “Crazy Eddie’s.” Weiss brings his own gifts—a penchant for exhaustive research and a remarkably straightforward style—to bear upon a very complicated and twisty tale.

This story opens simply: Antar became a part owner of an electronics store in 1969. He became its majority owner two years later. The store was in Brooklyn, N.Y., on

King’s Highway. At first it was known as “Sights and Sounds,” but it acquired the name “Crazy Eddie’s” in 1973.

Antar skimmed off much of the sales tax money. This was easy—in the 1970s most retail transactions were still in cash. He stashed the money away as unreported funds, what Syrians and Syrian immigrant families in the United States call “nehkdi.” In time, the family nehkdi made its way from hiding places above loose ceiling tiles or inside mattresses to proper though distant bank accounts … in particular, much nehkdi found a way to Bank Leumi in Israel.

Radio, Television, and a Tagline

In 1975, radio stations in the New York metropolitan area began running ads, in which Jerry Carroll read copy about Crazy Eddie’s “insane” prices in a frenetic yet precisely enunciated way that soon became Carroll’s own ticket to television and to immortality. To this day, men and women who lived in the northeastern United States in the late 1970s and most of the 1980s, if shown a picture of Carroll in character, will laugh and recite the easy-to-remember tagline: “his prices are in-SANE.”

Carroll became a celebrity, and the chain expanded rapidly. Crazy Eddie’s became a four-state concern, with stores in New York, New Jersey, Connecticut, and Pennsylvania. Carroll’s schtick was remarkable enough to draw Hollywood’s attention. A mermaid passing as a human watches one of these ads in a scene in the 1984 fantasy film Splash. In the early ‘80s Eddie’s younger cousin, Sam Antar, became the de facto CFO. The actual title came later.

Crazy Eddie’s Goes Public

Our simple story became a good deal more complicated when the company went public, in 1984, and chicanery in the valuation of its inventory was employed to enhance its value. Companies overstate their inventory’s value for a lot of reasons—most often because a higher inventory may reassure potential lenders or the purchasers of company equity.

But many companies that engage in finangling for such reasons discover that the practice feeds on itself. To understand why, consider the basics of preparing a profit-andloss statement for a retail business. There must be numbers for the inventory at the start of the period covered by the statement, numbers for the purchases over the course of the year, and numbers for the inventory at the year’s close.

Here are some made-up numbers for a hypothetical annual statement for a widget merchant in 1984:

1. Inventory Dec. 31, 1983, $20,000 in widgets. 2. Inventory Dec. 31, 1984, $40,000 in widgets. 3. Purchased from widget manufacturers in 1984, $30,000.

In this case, the first and third figures likely allow you to make a rapid mental calculation: the store had a total of $50,000 worth of widgets available for sale in 1984. Presumably, it either sold them or it still has them. (We will ignore issues of depreciation and damage since taking account of them would change nothing in what follows.)

In this case, the cost of goods sold is $10,000. Starting inventory plus purchases minus ending inventory yields the COGS figure. This figure is then subtracted from revenues to determine gross profit. Then, other deductions need to be made for salaries, overhead, and other expenses to realize the net profit.

This simple exposition should indicate that if the owner of a widget store can inflate the ending inventory number, he can inflate the profit numbers. If our owner could plausibly pretend the ending inventory was $42,000, then his COGS falls from $10,000 to $8,000. If everything else on the books is left unaffected, this will mean he will record $2,000 more in profit than the facts justify.

The Antars did a lot of finangling with ending inventory figures. I will spare my readers the mechanics of it—they can get that from Weiss.

Feeding on Itself

But now, I submit that we can see why such finagling feeds on itself. Here are the three key figures for the following year:

1. Inventory, Dec, 31, 1984, $42,000. 2. Inventory, Dec. 31, 1985, $44,000. 3. Purchase from widget manufacturers in 1985, $20,000.

We’re starting with $42,000 because we postulated that the company had inflated its own ending inventory from the previous year to that point in order to lower its COGS. The ending inventory of one year simply is, definitionally, the starting inventory for the next. The other two numbers are made up.

We use the same formula as before.

Starting inventory ($42,000) + purchases ($20,000) – ending inventory ($44,000) = $18,000.

This is the COGS our firm will have to subtract from revenue.

If it hadn’t cooked the books the year before, the COGS would be better. It would be:

$40,000 + $20,000 – $44K = $16,000. As before, a lower COGS means higher profit numbers.

The gist of it is that by pumping up your ending inventory by $2,000 one year, you have lowered COGS for that year (as desired if you are showing these numbers to potential lenders/investors), but you have raised COGS for the following year (which is bad news.) You find the next year that you have put yourself $2,000 behind. The temptation will be to phony up your ending inventory again, by at least the $2,000 necessary to avoid this. Usually by more.

By degrees, then, a firm that begins fudging the books one year finds itself driven to ever more inventive fudging in the years to come. As Weiss puts it, inventory frauds become “hungry rattlesnakes that [need] to be fed, lest they strike and kill.”

The Warranty-Fraud Subplot

At this time, too, the company was deeply immersed in warranty fraud. One employee, Dave Panoff, who held the title “director of service,” seems to have been hired chiefly as a director of warranty fraud. As Weiss explains, “If customers brought in an item for repairs that had an expired warranty, [Panoff would] give the unit back to them, tell them they were out of luck, and file a claim with the manufacturer anyway. He would alter the date of purchase so that the manufacturer would be forced to pay for the repairs. “

Given this and other tricks of the warranty-fraud trade, for several years, more than 40 percent of the claims Crazy Eddie made to manufacturers were shams. The shams reaped $400,000 a year for the company.

In addition, by 1986, the Antars were bringing much of the long-hidden nehkdi, those never-paid sales taxes, back from Israel (with a weigh-station in Panama), entering it into the books as new revenue. All this new revenue helped impress Wall Street analysts and boosted the stock price.

A Losing Cause

In early 1987, an FBI agent served a subpoena on Dave Panoff, asking for the production of all records relating to warranty claims.

Panoff consulted with the key Antar family members, and they decided to turn over to the feds only innocuous records, dragging their feet on those that would be incriminating, hoping that the U.S. Attorney’s Office would grow bored. Disingenuous as it sounds, this cross-fingers-and-run-outthe-clock strategy is employed with some frequency by real and alleged white collar criminals. The Antars and Panoff had, fortuitously, closed down their warranty-fraud operation shortly before receiving service of the subpoena. This is why they had some innocuous records they could offer.

By early 1987, though, Crazy Eddie’s had passed its prime as a retailing force. It wasn’t merely the unraveling inventory fraud and the closedown of the warranty frauds that was hurting the company by then. It was the increased competition with The Wiz, Newmark & Lewis, and other players in the discount electronics arena. This was the era of answering machines and VCRs. The electronics business was expanding in exciting and profitable ways, and this attracted new entrants.

The company’s stock prices went into decline, and that inspired shareholder lawsuits. Many of these lawsuits, filed in May 1987, extrapolating from recent headlines, asserted the theory that the Antars were deliberately depressing the price so that they could buy the company (with friendly assistance from Canadian financier Marc Belzberg) and take it private. In essence, the theory ran, Antar was buying back shares he had sold into the market when the company was worth three times as much a year before, cheating outsider shareholders in the process.

The SEC and NJ DA

The theory was not wrong, but it missed the key point. The talks with Belzberg about taking the company private were the result of the Antar family’s desperate desire to hide the truth about accounting and warranty fraud, a truth of which the plaintiffs’ lawyers were still at this point ignorant.

The private lawsuits excited the attention of the Securities and Exchange Commission, which announced its own inquiry in June. The inquiry became an investigation that fall, though, and by that time—presumably somebody had squealed—the SEC disclosed to the Antars that it suspected them of overstating values in their financial statements. The SEC was now hitting the target the plaintiffs’ lawyers had missed. The friendly taking-private talks with Belzberg failed. But the low stock prices did invite a takeover—a hostile one.

The hostile offer came from Elias Zinn, who was working with management consultant Victor Palmieri and Palmieri’s turnaround specialist Robert Marmon. The Zinn-Palmieri forces won control at a shareholders’ meeting in November 1987.

Although systematic document destruction had made things difficult for the new Zinn-Palmieri bosses, in time they discovered that the actual value of the whole chain’s inventory was only $75 million. The last numbers filed with regulators by the old management had put the value of the inventory at $126.7 million.

The new bosses made this shocking shortfall public, and this stimulated the U.S. Attorney’s Office for New Jersey to expand its own investigation. It had been looking specifically, as we’ve mentioned, at the warranty-fraud matter. Now it was looking at the broader arc of the company’s rise-and-fall.

Several New Names and an Extradition

On June 15, 1988, without fanfare, Antar traveled to Israel. Eleven days later, still there, he registered as an immigrant. His second wife joined him there in July, and she, too, filed papers to become an immigrant. As Weiss notes, many Jewish immigrants in Israel Hebraize their names. Weiss adopted a new name for Israeli purposes: in time, he would adopt several. But for this first new name, oddly, he, “Scotlandized.” He entered himself into the records of the Israeli government as “Alexander Stewart.” Then he came home to the United States.

The SEC filed lawsuits in September 1988 against Eddie Antar and Sammy Antar as the principals, demanding the disgorgement of illegal profits and treble damages. Several others (including Panoff) were charged with related accounting frauds.

The Zinn/Palmieri turnaround effort had by this time collapsed. In October 1988, Crazy Eddie’s entered chapter 7 liquidation proceedings.

In February 1990, upon sensing that the criminal investigation of the case was coming to a head (Sam Antar was at this point a cooperating witness), Eddie Antar fled the country—specifically, to the country where Alexander Stewart was already listed as an immigrant.

Antar made this trip, though, under the name Harry Shalom. Sometime thereafter he also adopted the name “David Cohen,” using a phony passport that made him out to be Brazilian.

It wasn’t until June 1992, though, that a federal grand jury in Newark indicted Eddie

Antar for conspiracy to commit securities fraud and on related charges.

Israel extradited Antar the following January.

Final Twists in the Story

Antar was tried before Hon. Nicholas Politan. He was defended by Jack Arsenault, a highly regarded criminal defense attorney who had very little with which to work, in an effort to infuse “reasonable doubt” into the jury box.

Among much else, Arsenault argued that Antar was innocent because he had allowed his company to be taken over, bought out by Zinn and Victor Palmieri. If he had been guilty, Arsenault said, Antar would have “fought until his last breath” to remain in control. That would have given him continued possession of the records that the prosecution had used against him during the trial.

That argument did not help. The verdict was guilty. At a sentencing hearing in 1994, Judge Politan made the following comment in speaking to the prosecutor: “My object in this case from day one has always been to get back to the public that which was taken from it as a result of the fraudulent activities of this defendant and others.”

On appeal from the verdict and sentence, Antar lawyers took these words as an admission by Judge Politan that he had prejudged the case—that “from day one” he had presumed the defendant’s activities had been fraudulent.

The appellate panel agreed. Antar was entitled to a new trial. But the new trial judge was to be Hon. Harold Ackerman. Weiss describes Ackerman as “at least as tough as Politan,” and as a man who could get “good and mad when the occasion demanded” in a way that could manifest itself in the sentence. Antar didn’t risk it. He pleaded guilty in 1997, received a sentence of up to eight years, and was released from prison two years later. I can recommend this book to many lawyers. If you are, or are ever likely to become, engaged in either the defense or the prosecution of white-collar criminals, Weiss offers important material on the recent history of that field.

Even if you don’t see any such possibility as likely, the book offers lessons about everything from securities law to forensic accounting and to Israel’s law of return: Those lawyers to whom these lessons may prove valuable already know who they are.

Best of all, it is a rippin’ good story, full of well-told drama. 

Christopher Faille has written on a variety of legal, regulatory, and financial issues for decades. He was an early reporter with Lipper HedgeWorld and has contributed to Forbes, Hedge Fund Law Report, and Alternatives Watch.

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