Criminal is the first of its kind. A show about people who’ve done wrong, been wronged, or gotten caught somewhere in the middle. Hosted by Phoebe Judge. Part of the Vox Media Podcast Network.
Fri, 17 Mar 2023 08:00
In the 1980s, the discount electronics chain store Crazy Eddie was so famous, its commercials were parodied on "Saturday Night Live." So when the family business began selling its company shares on Wall Street — making millions — nobody questioned its success. Gary Weiss’ book is Retail Gangster: The Insane, Real-Life Story of Crazy Eddie. Say hello on Twitter, Facebook and Instagram. Sign up for our occasional newsletter, The Accomplice. Follow the show and review us on Apple Podcasts: iTunes.com/CriminalShow. Listen back through our archives at youtube.com/criminalpodcast. We also make This is Love and Phoebe Reads a Mystery. Artwork by Julienne Alexander. Check out our online shop. Episode transcripts are posted on our website. Learn more about your ad choices. Visit podcastchoices.com/adchoices
Hi, it's Phoebe. I want to tell you about another podcast you might like. Intuit, hosted by Sam Sanders from our colleagues at Vulture and New York magazine. On the show, Sam sits down twice a week with very funny and smart people to talk about the movies, shows, and music. They can't stop thinking about and unpack why they matter. It's a show that will make you rethink the pop culture you consume every day. Listen to Intuit with Sam Sanders every Tuesday and Friday wherever you get your podcasts. It's not the Fourth of July. It's not Thanksgiving. It's not even Christmas. It's better than all those. It's crazy any day. Say big big big bucks during crazy and it's crazy any day sale crazy any as prices are insane. The crazy edit commercials were forever blasting 24 hours a day, particularly at night. And if you were an insomniac, maybe you'd see 14 crazy Eddie commercials in the course of an unit because they were they were they were constant. They were everywhere. Crazy Eddie was a chain store that sold discount electronics. It ran over 7,000 radio and TV commercials in the late 1970s and 80s. Edison came up with lots of great ideas but nothing is great ads. A new crazy Eddie Edison New Jersey Superstore. Almost all the commercials followed a simple formula. They started disc jockey named Jerry Carroll standing in front of some assortment of electronics wearing a gray turtleneck under a black blazer. He repeated the same catch phrases over and over. Crazy Eddie. His prices are insane. Crazy Eddie. Light up your life with prices that are insane. Crazy Eddie. His prices are horribly insane. At its peak, crazy Eddie had 43 stores in four states across the Northeast. Crazy Eddie was known for its sales. If you saw something listed for a lower price at another store in the city, you were encouraged to bring the evidence to crazy Eddie. Salesmen were known to match prices right there on the floor. Author and journalist Gary Weiss. It became almost a symbol of New York to us or an extent. And crazy Eddie was more popular and they did they did polls market research and they found that crazy Eddie had greater visibility than President Reagan did than the mayor of New York had catched it at the time. In 1977, the village voice ran an article titled Crazy Eddie Revealed. It said, beyond repetition, way beyond annoyance. In fact, into the shimmering realm of the pop cult has arrived the Crazy Eddie commercial. Even if you're among the people who hate them, you must admit they've become famous. The article asked, who is Crazy Eddie anyway? No one from the company offered a direct answer. They seemed to encourage the mystery. The director of advertising said quote, I suppose in the past, there was a Crazy Eddie. He continued, there are several eddies among the people who work here and own the place. But in reality, there is only one Crazy Eddie. Eddie was peculiar. You know, he was a peculiar guy. He was very superstitious. Eddie Antar declined to do interviews with the press. He often refused even to be photographed and more the same old sweater for years. People knew to expect Eddie to bring his dog to important meetings. A German shepherd named Sugar. One person who worked with him told The New York Times, if Eddie and the dog don't like the deal, it's a problem. He had a gym in his office. He used to, you know, greet visitors hanging upside down from gravity boots. He was eccentric. He was magnetic. Eddie Antar ran the business with members of his family, including his younger cousin, Samy Antar, who said he started working for the company when he was 14. If there's a question that I don't want to answer because it's a personal question or something like that, you know, I'll just say it. Okay. Okay. Don't just don't be shy. Don't worry about it. Samy Antar worked for Crazy Eddie for over 15 years. His last title was Chief Financial Officer. Tell me about your relationship to Crazy Eddie. Crazy Eddie Antar was my first cousin and my mentor. What was your relationship to him growing up? Well, you ever see happy days with the funds? Yeah. Well, he was like the funds. He was the cool guy. He was a tough guy. He used to work out with weights. He was like a very big figure in the community and in neighborhood. Did you see him becoming successful as when you were a teenager and think, you know, that's something I'd like to be when I grow up. I'd like to have the same type of power and finesse and ability to make things happen. Yes, but we were expected to work within the family business. So my whole life was based upon capitalism and trip and real ship making money and that was the way that I was taught. As Samy put it, it wasn't about right and wrong. I'm Phoebe Judge. This is criminal. Eddie Antar's first experience selling electronics was on the streets around Times Square. As a teenager in the 1960s, he made money scamming torfs. Samy Antar told Gary Weiss that Eddie could sell a $25 camera for $250. That was where Eddie learned, you know, that they art of being a super salesman to really to really sell the hard sell. And when he reached the age of 21, Eddie was set up in business by his father. I'm a place called Kings Highway. Not Times Square. I'm Kings Highway. That's a place in Brooklyn. That's where your clientele were all very, very tough customers. They were tourists. The store was called sites and sounds. You wanted to sell Sony, you wanted to sell Bose, you wanted to sell the top quality products. And he wanted to sell them at discount, you know, that was his only possible competitive advantage. But back in those days, the fair trade laws, they would basically determine the retail prices in the stores. In effect, in most states, they outlawed discounting. The fair trade law that govern New York State allowed manufacturers, not the retailers, to set them in a prices for their products. This ended up raising the prices of goods like electronics across the city. Gary Weiss says Eddie got around the law by buying electronics from a place in the Bronx called Corner Distributors. It was an authorized dealer with brands like Sony. But its main business was not an electronics. It was a front for an illegal gambling operation. So Eddie could get the name brand authorized equipment. And then he could resell it for whatever price he wanted. Eddie had a whole spiel to give his Eddie taught his salesman on how to sell products. He used, it was more than just hard sell. It was, it was what today would be called consumer fraud. I guess in those days it was both consumer fraud as well. One of the many techniques that he had, if you came in for a Sony product, for instance, he would try to switch you to a lower price product. Now it might seem actually like like he's doing your favor and he doesn't want you to spend for Sony. But he actually made more money. He actually had a higher profit margin on the lower price product. So he engaged in bait and switch. The name brand equipment was just supposed to lure you in. Here's Sammy Antar. 90% of the customers that walked into a crazy Eddie store did not walk out with the product that they initially intended to purchase. It was a three way system we called like the three musketeers. Sammy says a customer would have to go through three sales people before they were allowed to buy the thing they came for. If something was out of stock, the crazy Eddie salesman would do something called blunching. They'd say, do you look, the guys going out to lunch? It was like a code. Anyone working at the store knew what they had to do when they heard the word lunch. They take this display model. They bring it out to the back. They'd repackage it using, you know, all the great, you know, the wonderful tape and whatever they did. A wonderful, ever repacketing it and bring it out. You say, here's the final Sony that we have in the back. Actually, they had taken the display model. It might have been poured over by 400 customers and they tried to sell it to you as new. Eddie would then upsell customers on accessories and offer them worthless extended warranty contracts. According to state law, Eddie also charged sales tax on all merchandise. But he wouldn't report all his sales. So we ended up with extra cash. Courtesy of who? Courtesy of the New York State Sales Tax Department. Now, that also gave us room to discount where other competitors were lower abiding. We weren't. So we had the edge. So crazy Eddie was a discounter that gave the best prices but was subsidized by income tax evasion. My first year, I got a $1,500 bonus at 14 years old in 1971. What is that worth today? Yeah. That's the kind of money that I was making for Eddie. Sites and Sounds was renamed Crazy Eddie in 1973. The next year, it opened a second location on Long Island. The two stores did so well that a year later, a Crazy Eddie opened in Manhattan. It was on 6th Avenue in Greenwich Village. He knew that he had expand. He needed the Manhattan crowd. He needed the baby boomers who thrived on music. It was this was the Woodstock generation. This was the generation where music was sort of gave voice to a certain attitude. So you had to be like, you needed great equipment to listen to these people. So no matter how anti-establishment you were back in those days, no matter how much of a rebel you were, you needed to spend out the money. You had to pay the capitalist money to give you the products that you needed to set you could lock yourself in your room and blast all that music. At the retail level, Crazy Eddie, knew how to exploit that market better than anyone else. Crazy Eddie released its first television commercial with the Disjockey Jerry Carroll in 1976. At the time, Gary White says, you could buy overnight commercial slots for as little as $10. The company's director of advertising told him that Crazy Eddie's strategy was repetition, quote, drumming it in. In the late 70s, Crazy Eddie released a commercial where Jerry Carroll appeared on a dance floor. He was dressed like John Travolta in Saturday Night Fever, which had just come out. At one point, you know, the Crazy Eddie commercials had become so popular and so well known that that you read that James Brown wanted to be spokesperson. Yeah, James Brown, the godfather of salt. Can you imagine that? He was huge in the 60s. But no, they actually turned him down. They stuck with Jerry Carroll. They stuck with the Screamer commercials. The commercials made Jerry Carroll a sort of celebrity. When a new Crazy Eddie store opened a new jersey in 1978, around 20,000 people stood in line for a chance to meet him and get a free t-shirt. And then it just started multiplying stores, a store here, a store there, a store here, a store there. As the chain expanded, they kept evading taxes. But that wasn't all they were doing. At the time, you know, temperature, winter's got really cold in New York or in the New York State metropolitan area. Now, most retailers to avoid floods keep the water running at a little level so that the water doesn't freeze inside the pipes and cause the pipes to burst from the water pressure. Well, we didn't do that because we wanted, there was merchandise that we couldn't return to manufacturers. It was damage merchandise. So the best way to take care of that was to make sure it was underwater in a flood. So any time there was a rainstorm, we would take the merchandise, we'd move the unsolvable merchandise from various stores and make sure that that store had a flood. They submitted insurance claims for the damage merchandise. Now, after we were paid for these goods by the insurance company, we put the merchandise inside and saved it for the next flood. That was called flood goods. So rain was a good thing. Yes, rain was a good thing. Storms were even better. We didn't believe in setting fires because that was too dangerous. We were, you know, kind of gentle, a kind of crooks, so to speak, in that regard. We'll be right back. Samy Antar had been working for his cousin for years. One in the fall of 1975, Eddie paid for him to go to Baruch College. He needed a person with accounting knowledge within the family, kind of like a concierge, I come like Tom Hague and the lawyer on the Godfather. He needed somebody who didn't have family to advise you on accounting matters and that would be me. I used to read the Wall Street Journal and Barons and the Wall Street transcript, regularly. I mean, I was fascinated by Wall Street and numbers and statistics, baseball, even baseball statistics. So Eddie saw that in me and for me, accounting was a natural. At Baruch, Samy told Gary Weiss he attended lectures by the professor Abraham J. Brillowff. Brillowff was known as an accounting critic. His writing exposed the way his companies could create fraudulent profits in their books. Brillowff now awards ethics prizes in his name. But Brillowff made a different impression on Samy. You realize first of all, you have to learn how to do things right before you learn how to do things wrong. So it was kind of like I started to learn and I started to pick up weaknesses. I started to pick up things like I learned that audits of public companies by external accounting firms are really not meant to catch fraud. They really meant to take sampling of the information that they get and make sure that there's no unintentional errors in the numbers. It's not looking for intentional errors in numbers. As Samy learned more about accounting, the end time started talking about an idea they had for the future of Crazy Eddie. Around 1979, there was two directions we can go. We could either be a private company, you know, garden variety income tax evaders and vile false insurance claims, a go in the other direction, Wall Street. The idea was to take Crazy Eddie public, selling shares of the company to outside investors could be a quick way for the Antares to make a lot of money or a Samy put it. We could unload our stock at inflated prices on unsuspecting victims. It's much more profitable to screw investors, to steal from investors, and it is to steal from the IRS and the Vade taxes. So far, Eddie had been under reporting Crazy Eddie's profits. He'd pay less in taxes and store the extra cash at his house or send it out of the country. Here's Gary Weiss. As Samy said, look, you know, you're taking all this money out of the business because you don't want to pay taxes on it. Okay, that's understandable. But you're shooting yourself in the foot. You're cutting into your profits and you want your profits to grow. The higher the company's profits, the higher its stock price. Samy had a plan for how to increase profits. He told Eddie to stop skimming money, but to do it gradually so it would look like business was steadily growing. It caused the profit numbers to be grossly inflated. It was one year that profits were actually up 2%. But because of this manipulation, because of the way he was reducing the skim systematically, he changed a 2% increase to a 35% increase. It was a wonderful idea. It was of course. It was a felony. It was a security fraud, but nobody thought about that. And then tell explain to me what you needed to do to convince Wall Street that they should buy into Crazy Eddie. Wall Street did not to bride on Wall Street. They look at numbers and see that the numbers are going up and that's what they care about. Crazy Eddie had a good reputation. It was well known. Its commercials were even made fun of on Saturday Night Live. Hi, I'm Crazy Edelman. The discount psychiatrist and my prices are absolutely insane. Hey, what do you see here? I see prices so low that it's practically criminal. It's enough of a steal to satisfy your club domainiac. And talking about it. You know, in those days, when we were talking in the 1980s, this is before Enron, this was before the big scandals of the early 2000s and so forth. So, now the CEO is doing well. The CEO was trusted. The company was trusted. Did anyone ever show any suspicion? No, no. I wouldn't say any credible suspicion. I mean, you were still pretty young as you were doing all of this. Did you ever think to yourself, I'm a little over my head here. You know, I think I have a idea that's going to make us a lot of money. But maybe this is maybe I'm taking on too much. No, never ended my mind. Remember, no criminal in prison today expected to end up there. Yes, we take, we take calculated risks. We take steps to avoid those risks coming to fruition. But at the end of the day, no criminal expects to end up in prison. In September 1984, Crazy Eddie had its initial public offering, its IPO. Its symbol on the New York Stock Exchange was CRZY. The shares sold out. What was the day of the IPO like? I was exciting. It was exhilarating. It was a moment for me personally as a moment of triumph. And the family was very proud of me. Do you remember what your cousin said to you? Remember what Crazy Eddie said to you? We're going to go places. You're coming with us to usual nonsense. You know, usual pep talk nonsense. But he said you had done a good job. Yes. So now that the company is public, what do you have to do to maintain this whole scheme that you've got going on? Well, remember, we started off as God in Variety Income Taxi Vaters and understated our income. From 1979, we were still God in Variety Income Taxi Vaters, for understating our income by less money each year. So by the time we got to 1984 and came out where our numbers, those are reasonably legitimate numbers. Probably the most honest numbers that we reported were in 1984. So we could have stopped the fraud at that point and had the perfect crime. But the Antares didn't stop. We'll be right back. In 1985, someone from Sony told The New York Times, the rules in the New York market are simple. If you want to be visible, you've got to be in Crazy Eddies. Sammy Antares says that for a few years after its IPO, Crazy Eddie was actually doing well. But, you know, Eddie and his dad and his family got greedy and I was more than willing to help. So as numbers started to come in, they wanted to start boosting the numbers. And that's where we started to get in trouble. Sammy kept inflating Crazy Eddie's profits and the stock price skyrocketed. He says that over the first three years the company was public, the family made over $90 million from selling their shares. But eventually, the company's real profits slowed. Was there a moment when you realized that this had all gotten too big, that this had gotten out of control? Yes, in 1987, when we start losing money. And I have to understate the losses. I realized then it was going to crash. So I started taking steps not to cook the books. In fact, instead of losing, say, 10 million, I put 15 million in losses. Okay. So this way, we can gain some ground on the fraud. Sammy suddenly had to do the opposite of what he'd done for years. Now we had to overstate Crazy Eddie's losses to try to bring the exaggerated numbers closer to reality. As Gary Weiss put it, it was like letting air out of balloon so it didn't pop if you stuck in a pin. The stock price dropped by more than half. But there was someone who still believed in the value of Crazy Eddie, a businessman based in Texas named Elias Zinn. Elias Zinn had also made his money selling discount electronics. But he was very different from Eddie Antar. Gary Weiss writes that he loved to give interviews to the press. He encouraged the media's nickname for him. Easy. And in 1987, he told the Wall Street Journal, I want to run Crazy Eddie. I think it's a gold mine. The Antars had inadvertently given Elias Zinn an opening to take over their company. The stock price was low because Sammy over reported losses. The Antars had also sold too many of their own shares. Sammy says they had, quote, milk the company dry. It was the perfect opportunity for someone to buy enough shares to become the majority owner. But Elias Zinn and his business partners didn't know what they were getting into. And we tried to stop them from taking over the company without telling them of course there's a fraud, but we couldn't. Not without admitting to years of fraud. We were croat because we would have victims of our own success. The people that took over Crazy Eddie thought that they were buying the goose that laid the golden egg for a penny. And eventually they took over the company. They bought enough stock, more than the Antars had, and they took over the company and tossed us out. After the takeover, the new chief financial officer of Crazy Eddie went into Sammy Antars office to look for paperwork about the company's finances. There was nothing there. Filing cabinets were empty. Even the labels had been taken off empty folders. The new owners set out to check the inventory of every Crazy Eddie store in warehouse. So yeah, they come in and they take over the company. Oh my goodness, look at this. There's not a, the warehouses don't have all the merchandise that they were supposed to have. They were stunned. Gary White says that by their own count they had found that Crazy Eddie's merchandise was worth $75 million. But the company had put that number at over $126 million. All the stores are still operating, but now they're operating by people who realize that it's a fraud. The company is suffering. The stock prices collapsed. It comes out in the media that there's probably a fraud going on. Behind the scenes, behind the scenes, Sam E. Antar, the cousin, is under a lot of pressure. He's the CFO. He's the chief financial officer of the company. So he naturally comes under suspicion. Obviously, there's accounting fraud going on. He's the chief accountant. Sammy was brought to Washington to testify in front of the SEC. He told us rather than plead the fifth, I thought I could lie. He denied everything. Now I'm on my own. Now I was lying under oath and protecting the family and getting audits to lie under oath and I destroyed documents. Eddie meanwhile is not smart. Eddie does not support Sammy. Sammy is going into debt to pay off his bills to pay his lawyers. So Sammy Antar, in the great tradition of corporate crime and organized crime, he becomes an informant. Why did you decide to inform on crazy Eddie to the FBI? Well, first of all, I'm the hero. The reason why I decided to turn on Eddie was not because I had this moral awakening. I didn't see, you know, I didn't find God. I didn't find morality. I didn't all of a sudden become an ethical person. I didn't all of a sudden start feeling sorry for my victims. It was simply, it was simply an issue where Eddie was going to hang me out to dry. And I didn't want to go to prison for 20 years with a wife and three young children at the time. So it wasn't the moral decision. It was because I wanted to save my own ass. Remember the first time that you talked to Eddie knowing that you were an informant. Was it hard to do? Was it hard to be playing both songs? No, it was actually fun at the time. Because it was kind of like, you know, there was so much, I was so upset with the position that this thing put me into that it was actually something I wanted to do. Sammy says it seemed like Eddie knew something was going on. Do you remember that once Eddie made him change into a bathing suit when they met at a friend's house. Eddie wanted to make sure he wasn't wearing a wire. Sammy told the FBI everything he could remember. There was an FBI guy's name was Paul Hayes. Very, very, you know, like a lieutenant Colombo. He asked questions, but he understood human psychology and motivation. And after a while, Paul Hayes became my new father figure other than Eddie. So I did things not only to save my ass, but to but the police pull to make Paul Hayes proud of me, so to speak. And that started the process of feeling guilty. It didn't happen a little at once. I didn't one day wake up, but once I was exposed to different people with a different set of values, right? I started to start feeling empathy. The process of empathy, I took a while. It didn't happen right away. In October 1989, a Sammy continued to work with the government. Crazy Eddie declared bankruptcy. Any remaining crazy Eddie stores were ordered closed. Eddie Antar was charged with what the SEC called, quote, massive financial fraud. But the trial wouldn't begin until 1993, because Eddie Antar fled the country to Israel. It took almost three years for the government to get him back to the United States. What was it like when you finally had to face Eddie in court? Nothing was, I just looked right through him. And that was I looked at him, but I looked through him. Were you angry at him? I mean, were you angry at him? Yes, I was really upset. Of course, because, because he could have guided me in a different way. He could have exercised real leadership and taken responsibility because he and of course, I'm not going to exclude these other members of his family made all the money. But they didn't. They left me out the hang. Were you angry at him for not when you were 14 years old, say, saying to you, hey, this is the way I'm doing it. Don't don't do this with your life. Don't don't don't scan me. Yes, I said to him, you brought us up to be crooks. Sammy Antar pleaded guilty to conspiracy to commit securities fraud, conspiracy to commit male and wire fraud, an obstruction of justice. He didn't serve any jail time. Eddie Antar served nearly seven years. Some time after he was released in 2001, Eddie Antar released an office in warehouse space in New Jersey. It was over 6,000 square feet. He used it to reopen Crazy Eddie as an internet distributor of electronics. He hired Jerry Carroll to tape a new set of commercials. People aren't going to worry about buying from Crazy Eddie. He told the New York Times because they remember the great service they got in the stores over the years. Crazy Eddie always meant great service above everything. It didn't work. In September of 2016, Eddie Antar died at the age of 68. A Wall Street Journal reporter wrote, I experienced a whiff of something resembling nostalgia at the news of Mr. Antar's passing. He evoked a less slick and knowing era in the life of the city. And in the New Yorker, someone wrote, in this age of Dwayne Reads and Chase Banks on every corner, I'm wistful for Crazy Eddie. Gary Weiss's book is Retail Gangster, the insane real-life story of Crazy Eddie. We'll have the link on the website. Criminal is created by Lauren Spore and me. Nidia Wilson is our senior producer. Katie Bishop is our supervising producer. Our producers are Susanna Robertson, Jackie Sajiko, Libby Foster, Lily Clark, Lena Silicin, and Megan Canaine. Our technical directors were all buyers, engineering by Russ Henry. Julian Alexander makes original illustrations for each episode of Criminal. You can see them at this is criminal.com. We're on Facebook and Twitter at Criminal Show, an Instagram and Criminal underscore podcast. And we're also on YouTube, where you can go back and take a listen to some of our favorite past episodes. That's at youtube.com slash criminal podcast. Criminal is recorded in the studios of North Carolina Public Radio wunc. We're part of the Vox Media Podcast Network. Discover more great shows at podcast.voxmedia.com. I'm Phoebe Judge. This is Criminal.