The Fall of Crazy Eddie

Eddie Antar Wanted Poster

Eddie Antar’s success brings jealousy among his immediate family members

Crazy Eddie was tightly controlled by Eddie Antar and his father Sam M. Antar (co-founders of the company). The demise of Crazy Eddie was a direct result of internal rivalries, jealousies, and infighting among family members.

The original predecessor company to Crazy Eddie was ERS Electronics. The company was founded in 1969 by Eddie Antar, Sam M. Antar, and Ronnie Gindi (a first cousin). It operated under the name of Sights and Sounds.

In 1970, Sight and Sounds was engaged in a bitter legal dispute with manufacturers over fair trade practices and the company was losing money. Ronnie Gindi did not believe that the company would prevail in its dispute and become profitable in the future. Mr. Gindi sold his 1/3 share of ERS to Eddie Antar who afterwards controlled 2/3 of the company. Eddie Antar’s majority ownership of ERS ultimately set the stage for future conflicts between him, his father, and the rest of his immediate family.

During the early years, Sam M. Antar was looked upon as the patriarch of the tightly-knit Antar clan. He was the eldest son of my grandparents and the wealthiest family member. ERS eventually prevailed in its legal battle with manufacturers over fair trade practices. It was renamed Crazy Eddie and became a major commercial success.

Since Eddie Antar owned 2/3 of the company compared to his father’s 1/3 ownership, he became much wealthier than his father.

Eddie Antar was a very charismatic person compared to his stodgy “old school” father. Many family members and close friends felt more comfortable seeking advice and help from Eddie than from his father. Ultimately, Eddie Antar assumed the mantle of the de facto patriarch of the Antar clan due to his enormous wealth, leadership skills, and charisma.

Sam M. Antar was jealous of his son’s success and bitter that he lost his status as the leader of the Antar clan. Mitchell and Allen Antar (Eddie’s bothers) and Ben Kuszer (married to Eddie’s sister) sided with Sam M. Antar.

Mitchell and Allen Antar received generous salaries and benefits while working at the company. Ben Kuszer was Eddie Antar’s 50% partner in a highly profitable record and tape concession called Benel Distributors that operated in the Crazy Eddie stores. They all received a generous amount of cash compensation from the skimming of cash sales, too. However, they had no ownership of Crazy Eddie which was the major source of wealth for the Antar family.

Eddie’s brothers and brother-in-law felt that they would have to wait until Sam M. Antar died in the future to inherit a share of the company. With 5 daughters, Eddie Antar had no intention of giving away any of his ownership of the company to them.

Jealousy grew among family members at Eddie Antar’s relative success. Sam M. Antar hatched a plan to publicly humiliate his son Eddie in an effort to regain the mantle of patriarch of the Antar clan.

December 31, 1983: New Year’s Eve massacre

Eddie Antar was a ladies man and was not faithful to his first wife Debbie Rosen Antar (known as Debbie # 1). He had a mistress named Deborah Ehrlich (known as Debbie # 2).

On New Year’s Eve, Sam M. Antar was tipped off that his son Eddie planned on spending the night with Debbie # 2. Sam M. sent his daughter Ellen Kuszer and daughter-in-law Robin Antar (Mitchell Antar’s wife) to accompany Debbie # 1 to Manhattan and catch Eddie in the act of partying with his mistress.

Debbie # 1 confronted Eddie walking to a stretch limousine with Debbie # 2 and a huge street fight erupted between them. Afterwards, Eddie vowed revenge against his father and immediate family members for setting him up and deep rifts emerged within the Antar clan.

Money was the glue that kept the Antar clan together

Ultimately, Eddie Antar cooled down. Despite their internal rivalries, Eddie Antar and his immediate family had been engaged in a massive fraud for 15 years. The crowning achievement of their crimes was the planned public offering of Crazy Eddie stock several months in the future. The prospect of dumping huge amounts of stock at inflated prices on unsuspecting investors kept the Antar family together to continue committing more crimes, despite what happened on New Year’s Eve.

In preparation for that offering, Sam M. Antar gifted large amounts of his stock to his sons Mitchell and Allen, his son-in law Ben Kuszer, and their children. Eddie Antar gifted stock to his five daughters, but did not gift any of his stock to his brothers, sister, brother-in-law, or their children.

Eddie Antar and Debbie Rosen Antar (Debbie # 1) divorced shortly after the famed New Year’s Eve massacre and Eddie married his former mistress, Deborah Ehrlich (Debbie # 2).

Long dormant rifts among Antar family members come to the surface again

By early 1987, the Antar clan had sold most of their Crazy Eddie stock and pocketed approximately $90 million in proceeds. At that time, Crazy Eddie started losing money for the first time in almost two decades. The value of Crazy Eddie stock tanked from a split-adjusted price of $80 per share to around $5 per share. The remaining shares of Crazy Eddie stock held by the Antars had relatively little value.

The company’s future prospects were dim because of dropping consumer electronics prices and increased competition. The economic ties that kept the family together to continue committing crimes after the infamous New Year’s Eve massacre faded away.

In April 1987, Sam M. Antar urged Debbie Rosen Antar (Debbie # 1) to sue her former husband Eddie Antar for fraud and wanted the courts to void her divorce settlement.

Unlike 1984, where the family worked out its differences and cooperated for the sake of the business, Eddie purged his father, brothers, brother-in-law, and others closely allied with their faction from the company.

The family infighting was blamed for contributing to Crazy Eddie’s weak financial performance in 1987. Eddie and I heard rumors of a possible hostile takeover by parties interested in buying the company “on the cheap.” Investors had no idea that Crazy Eddie was a massive fraud.

Eddie and I were concerned that a hostile takeover of Crazy Eddie could ultimately expose the family’s frauds. We needed a friendly party to help us keep control of the company. Our plan was to raise outside money and take the company private with an unsuspecting third party in an effort to cover up our frauds. We would not have to invest a dime of our own money to take over the company, since the new investors and Wall Street investment banks could potentially bankroll a management-led takeover of Crazy Eddie.

In April 1987, I was approached by legendary businessman and billionaire investor Milton Petrie, who wanted to partner with us on a management-led buy-out of Crazy Eddie. A couple of weeks later, I was approached by another billionaire, Sam Belzberg, with a similar proposal. Ultimately, Eddie Antar chose Sam Belzberg as a partner to take over the company.

Eddie Antar and I believed that the unsuspecting Belzberg family would give us full latitude to run the business and to cover up our previous frauds. After our planned takeover of Crazy Eddie, we planned on merging the company with another consumer electronics retailer. We would blame any financial problems on the merger.

Eddie Antar makes a defensive move to take Crazy Eddie private

In May 1987, Eddie Antar and the Belzberg family announced a proposed takeover of Crazy Eddie at $7 per share. However, about a week later, Elias Zinn countered with a takeover bid at $8 per share. Zinn’s bid was not anticipated by us. We feared a hostile takeover of the company by Zinn and started a “scorched earth” policy to destroy all remaining evidence of fraud that we could find.

Eddie Antar’s  father and brothers send Arnold Spindler to SEC to rat out Eddie

In May 1987, Eddie Antar orchestrated the firing of Arnold Spindler and Abe Grinberg from the company. Spindler and Grinberg were close personal friends of Eddie’s brothers, Mitchell and Allen. Spindler and Grinberg later teamed up with Eddie’s father and brothers to orchestrate a plan to get revenge on Eddie for throwing them out of the company. They planned to blame Eddie and his allies remaining at the company for the frauds.

Both Arnold Spindler and Abe Grinberg contacted the Securities and Exchange Commission and told them about a massive fraud orchestrated by Eddie Antar at the company. However, they completely covered up the involvement of Sam M. Antar, Mitchell Antar, Allen Antar, Ben Kuszer, and their other allies in the Antar clan.

Spindler had worked for Crazy Eddie in the early days. He knew about the skimming of cash sales from Crazy Eddie as a private company. Eddie Antar, Sam M. Antar, Mitchell Antar, and Ben Kuszer shared secret numbered bank accounts in Israel. If the government found out about the skimming, it could bring down both warring factions of the Antar clan. Therefore, Spindler did not tell government investigators about any frauds involving skimming.

Both Arnold Spindler and Abe Grinberg only told government investigators about the various schemes orchestrated to inflate Crazy Eddie’s profits as a public company. However, they covered up the involvement of Sam M. Antar, Mitchell Antar, Allen Antar, and Ben Kuszer in those crimes. The government gave both Spindler and Grinberg immunity from their crimes in exchange for their testimony implicating Eddie Antar, me, and his other allies in a massive fraud.

New management takes over Crazy Eddie in a proxy fight and finds inventory shortages

During August 1987, Elias Zinn formed an alliance with famed turnaround artist Victor H. Palmieri and the Oppenheimer-Palmieri Fund, in an effort to take control of Crazy Eddie. Meanwhile, Eddie Antar and the Belzberg family could not obtain the expected backing from investment banks that they needed to fund a takeover of the company.

On November 6, 1987, Elias Zinn and his partners took over Crazy Eddie and dislodged the remaining faction of the Antar clan from power at the company. Sam M. Antar even voted his shares in support of the Zinn-Palmieri Group. For a while, it seemed like the perfect cover up.

About two weeks after taking over Crazy Eddie, new management took a physical inventory of all Crazy Eddie warehouses and stores. They soon discovered that over $40 million of inventory did not exist. The Antars had inflated inventory numbers to increase Crazy Eddie’s profits as a public company. Spindler and Grinberg’s allegations of fraud at Crazy Eddie were at least partially verified.

Dozens of class action lawsuits were filed against the Antar family alleging a massive fraud at Crazy Eddie. However, the main focus of the various lawsuits and government investigations initially centered on Eddie Antar and his allies, not his disgruntled family members, due to Spindler and Grinberg covering up their involvement in our fraudulent activities.

Problems faced by government investigators

At that time, Eddie Antar and I did not know that Spindler and Grinberg were talking to investigators and accusing us of fraud. It was inconceivable to us that Eddie’s father and brothers would set us up to take the fall for everyone’s crimes. I and other conspirators allied with Eddie Antar lied to government investigators about the existence of fraud at Crazy Eddie and tried to blame new management for orchestrating false allegations.

The government and civil plaintiff investigators faced a “perfect storm” of problems caused by document destruction, poor company records, poor audit documentation, and lying witnesses. The Antar family, who ruled Crazy Eddie for almost 18 years, regularly destroyed potentially incriminating documents. Sales register tapes, internal documents for merchandise purchased with cash, “off the books” payroll records, etc. were routinely destroyed. Copies of year-end inventories observed by the auditors were never saved. In fact, the auditors never kept copies of the full inventories themselves.

Some investigators had their doubts about the truthfulness of Spindler and Grinberg’s allegations. However, they had difficulty investigating such doubts in the absence of other cooperating witnesses and documents.

I throw in the towel

In early 1989, I finally learned from subpoenaed documents and testimony that Arnold Spindler and Abe Grinberg were providing false information to government investigators and covered up the involvement of Sam M. Antar, Mitchell Antar, Allen Antar, and Ben Kuszer in those crimes. I passed along that information to Eddie Antar and he started to distance himself from me. Eventually, he told me, “Sammy, you are on your own!” and stopped all contact with me.

On one side, Eddie Antar, my lifelong mentor, abandoned me. On the other side, my uncle Sam M. Antar and cousins Mitchell Antar, Allen Antar, and Ben Kuszer were setting me and Eddie up to take the fall for the frauds at Crazy Eddie. I learned that Eddie Antar had transferred most of his assets overseas and already obtained several phony passports. He was preparing to leave the country for good.

I fired my old attorney and hired Anthony Mautone to represent me in the criminal investigation and Jonathon D. Warner to represent me in the civil actions. On March 8, 1989, Mautone and I met with US Attorney Dan Gibbons and two FBI investigators in an effort to negotiate a plea bargain agreement. However, the prosecutors were very distrustful of me and did not want to negotiate an acceptable plea bargain agreement because I had previously lied to government investigators.

A June 1994 article in the New Jersey Law Journal “Footnote to Crazy Eddie Case: You Talk, You Walk” by Tim O’Brien recounts what happened next:

Because he [Sam E. Antar] initially lied to SEC investigators between the collapse of the company in late 1987 and the spring of 1989 – when Mautone brought him to the prosecutors – it took well over a year to convince the government that his version of what happened represented reality.

The skepticism of the prosecutors, the FBI, the SEC, and the civil lawyers… was compounded by the early testimony of company officials who, according to the SEC’s chief litigation counsel Simpson, lied under oath to protect key players.

One of those officers who came in early and testified before the SEC now faces perjury charges. Grinberg and Arnold Spindler, a Crazy Eddie buyer who were the first to come forward in late 1987, pointed a finger at those in the opposite camp after the Antar clan had split in two following Eddie Antar’s bitter divorce in the mid-1980s.

Aligned against Eddie Antar, the founder and chief executive officer of the company, were his father, Sam M. Antar, his brothers, Mitchell and Allen, and others, who were angered after Eddie Antar was caught cheating on this first wife.

Spindler and Grinberg exculpated Eddie Antar’s father and brothers, fingering not only Eddie but Sam E. Antar, who ran the books and dealt with the auditors, Peat Marwick Main & Co., now KPMG Peat Marwick.

“It took us almost two years to convince the government that they had the case upside down, and that they should trust Sam Antar after he lied through his teeth to the SEC during eight days of depositions early on,” says Mautone. He adds that he urged his client to cooperate with the U.S. Attorney’s office “naked, without any deal on blind faith.”

Jonathan D. Warner, who represented me in various civil actions brought by defrauded investors, took the depositions of Arnold Spindler and Abe Grinberg in order to prove that they were lying to government investigators. Grinberg and Spindler gave conflicting testimony and were forced to recant key aspects of their stories when confronted with damning documents, which I had initially withheld from investigators. Both Spindler and Grinberg later admitted to receiving cash payments from Sam M. Antar and Allen Antar to lie to government investigators.

In February 1990, Eddie Antar skipped town altogether and fled the country, rather than comply with a Court order. I continued providing key information to government investigators.

Based on my information, the government ultimately gained access to key documents in Israel which provided evidence of secret Antar family bank accounts through a treaty known as the Hague Convention. One account at Bank Leumi in Tel Aviv showed Eddie Antar, Sam M. Antar, Rose Antar (Sam M.’s wife), Mitchell Antar (Eddie’s brother), Ben Kuszer (Eddie’s brother-in-law), and Debbie Rosen Antar (Eddie’s first wife) as co-owners. Bank documents detailed almost $8 million in cash deposits from 1979 to 1983. This account was never disclosed on their tax returns and all deposits came from funds skimmed from Crazy Eddie.

In June 1992, Eddie Antar was captured in Yavne, Israel. That same day, FBI agents arrested Mitchell and Allen Antar. There was not enough evidence to bring criminal charges against Sam M. Antar, Ben Kuszer, and other family members due to massive document destruction and statute of limitations issues. Instead, the SEC brought civil actions against them in seeking to recover ill-gotten gains.

See Part 5 – Crazy Eddie Criminal Trial

Sam Antar