The Story Behind the Story of Crazy Eddie - The Untold Crazy Eddie Story or Rather Unheard Story From Transcripts and Other Documents
More Cover-Up Information
On December 15, 1987 (six weeks after the hostile takeover of Crazy Eddie by new management) Marvin Gersten, who was the attorney for Sam M. Antar (Crazy Eddie Antar's father), Mitchell Antar (Eddie's brother), Allen Antar (Eddie's brother), and Ben Kuszer (Eddie's brother in law) told new management that "...Eddie gave Sam E. direct orders to doctor the records." (Source: Memorandum from Akin Gump Law Firm investigating Crazy Eddie fraud)
At that time, I was lying under oath to the SEC and stonewalling the government investigations, despite deep family differences relating to Eddie Antar's marital issues and family infighting that resulted.
Arnold Spindler and Abe Grinberg already came forward to investigators to gain immunity from prosecution. However, they were "Trojan Horses" allied with Sam M. Antar's faction of the family and they were helping to separate their Antar allies from the conspiracy. These witnesses never disclosed to the government facts about skimming and other major issues.
On November 27, 1987 Arnold Spindler testified to the SEC that in July of 1987 (months after Sam M. Antar, Allen and Mitchell were thrown out of Crazy Eddie by fellow co-conspirators due to infighting) that he met with Allen and Mitchell Antar and testified as follows:
I told both of them that I was going to the S.E.C. and telling them everything I knew about what we're doing to the company for the last two years. Everybody at that point was very curious as to exactly what had been going on at the company for two years.
Nobody at least at that meeting appeared to have the vaguest idea of what had been going on. Mitchell had been the most surprised. Allan as usual accepted everything stoically.
S.E.C. Question: Do you recall ever discussing any of the items mentioned earlier with anyone other than Allan and Mitchell Antar?
Spindler Answer: Well their father Sam knows.
S.E.C. Question: Did Allan of Mitchell ask you not to come to the S.E.C.?
Spindler Answer: No. The only question that was ever raised is are you sure you know what you're doing? I said yes.
Curiously Arnold Spindler who was working for Crazy Eddie's main competitor Nobody Beats the Wiz at the time had the following to testify that day:
S.E.C. Question: Who has subsequently learned that you're giving here giving testimony?
Spindler Answer: My immediate superior Tasso Kokin knows where I am, and the gentleman who owns the company I work for. He knows where I am....His name is Marvin Gemayel. Note: Correctly spelled - Marvin Jemal
Download Copy of Pages from Arnold Spindler's Testimony to the S.E.C.
Note: This download may take extra time due to file size.
See the article "Footnote to Crazy Eddie Case: You Talk, You Walk" on the Recent Articles page of this web site about how two early government witnesses perjured themselves protected one faction of the Antar family. It stated in part:
One of those officers who came in early and testified before the SEC now faces perjury charges (Note: Abe Grinberg later pleaded guilty). 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.
Eventually Abe Grinberg pleaded guilty to lying to the SEC. He admitted to lying about his knowledge $90,000 in cash payments that Allen Antar received from Zazy International after leaving Crazy Eddie.
Arnold Spindler, who was never charged with perjury, also admitted to receiving cash payments from Sam M. Antar. Spindler, who had been the first person to inform the government about the Crazy Eddie frauds, was never used as a witness by the government at any trial. Under examination in a civil deposition, he admitted under questioning to receiving money from Sam M. Antar after leaving Crazy Eddie.
Hell Hath No Fury Like a Woman's Scorn!
How Eddie Antar's first wife Debbie Rosen Antar (Debbie #1) testified in a divorce case fraud deposition about Antar family illicit business activities and about how all sides of the Antar family conspiracy tried to cover up her blunder. She even tried to back track that testimony later on.
However, her signature was later found on secret family bank accounts in Israel with Eddie Antar, Sam M. Antar, Mitchell Antar, Rose Antar, and Ben Kuszer. Later a copy of her deposition mysteriously appears at the home of the father in law of the Chairman of the Class Action Litigation Howard Sirota.
They say it started with the famed "New Year's Eve" massacre on December 31, 1983. Mitchell's wife Robin and Eddie's sister Ellen took Debbie Rosen Antar to Manhattan by car to show Eddie going out with his girl friend (and future wife Deborah Ehrlich Antar - Debbie #2).
Eventually there was a divorce and later there was a lawsuit to overturn the divorce settlement on the basis of fraud. Simultaneously, the Antar family was bickering and back stabbing while committing one of the largest securities frauds of its time.
Trying to explain it all in the criminal trial I testified, "Money was the glue that held them all together." Michael Chertoff, the US Attorney said to the jury, "They say that blood is thicker than water. In this family money is thicker than blood."
Around April 1987, (in the heart of the financial fraud) Debbie #1 served Eddie Antar with a lawsuit to overturn her divorce settlement on the basis of fraud. Family members and others were purged from the company or left as a result.
On November 6, 1987, the remaining factions of the Antar family lost control of Crazy Eddie in a hostile takeover. Investigations by the government and others into the Crazy Eddie fraud were heating up. In addition, Eddie was fighting a legal battle with Debbie #1. His attorneys took depositions of her.
It was a "cat and mouse game" and sort of a "game of chicken." Both having been knowledgeable to many of the same frauds were now playing a very dangerous game. Her father in law, Sam M. Antar usually accompanied her to the depositions to make sure she did not say too much. Eddie, though his attorneys would try to "egg her on."
While Sam M. Antar and other members of the family were secretly trying to lay blame of the fraud on Eddie and his allies, one secret could bring everyone down - the skimming fraud. (I had not yet begun to cooperate with the government yet.)
One day Sam M. Antar did not show up with Debbie and she said the following below (excerpts from deposition):
In the late '70s when he started bringing money over to deposit money in banks in Israel, and he didn't want other people to know he would tell me, and it was a dangerous thing....he trusted me.
He deposited money in Israel and he was excited about it....We were rich. We had a lot of money over there....He put money over there....Millions of dollars.
He told me, and I was there once when he strapped the money onto his body, and he wanted to know if it was concealed. And he was telling me what he would do, and he was excited that there was all this money we had and how rich we were, and gaining tremendous interest....
He told me he was depositing it in Israel....It occurred through the early '80s....
I just know there were numerous times that money was deposited in Israel.
I remember Eddie describing this testimony to me. He felt it was the "real beginning of the end." After her testimony Marvin Gersten (Sam M. Antar's attorney) remarked to her, "What are you trying to do? Put your whole family in jail."
An SEC attorney asked the Court Reporter (who was present for the deposition) months later about this and the he responded hearing "loud" side discussions after her testimony.
The SEC and other investigators tried to get a copy of her transcript (after I began cooperating and let them know of its existence) but Debbie #1 obtained a Court Order sealing access to it.
One day, Howard Sirota's (He was Chairman of the Crazy Eddie Class Action Litigation) father in law opened the door to his house to get his morning newspaper. On top of the morning newspapers was a copy of Debbie Rosen Antar's divorce testimony. It said "compliments of 'Lamont Cranston' for Howard Sirota and the SEC" - a still unidentified source.
Later the government would find her name and signature appearing on a secret Israel bank account with Eddie Antar, Sam M. Antar, Mitchell Antar, Rose Antar, and Ben Kuszer. In addition the bank had copies of their passports and other signed documents from them. The bank statement in Israel would say "No Mail" which meant that no mail would come to the United States to avoid detection. They had over $8 million in that account alone. Bank deposits occurred through the 1980's.
When Crazy Eddie issued a prospectus for its initial public offering on September 13, 1984, Debbie Antar was listed as receiving a salary of over $100,000. Was it for advice on "concealing" money "he strapped the money onto his body?"
The investing public thought her salary was aggressive tax planning - shifting of income to a lower tax bracket among family members.
The Antar Money Trail - The Hague Convention: How some of the Antar's thought they won a crucial court ruling but lost
The Securities and Exchange Commission and the Civil Plaintiff's attorneys had new damning information about Eddie Antar and his immediate family. They never knew about the skimming before Crazy Eddie went public. They never knew about the secret family bank accounts in Israel.
On March 8, 1989, after stonewalling the government for almost two years since losing control of Crazy Eddie in a hostile takeover I finally decided to cooperate with investigators. They were initially hostile towards me for good reason. I had lied under oath, caused others to lie, and destroyed countless documents. I protected both family factions by protecting myself in the cover up - initially not knowing of the ultimate betrayal of my close relatives.
When the government initially tried to corroborate my information, the Antar's did not comply and resisted subpoenas for information concerning secret bank accounts in Israel.
The government and the civil plaintiffs sued the Antar's under the Hague Convention for the release of bank documents from Israel.
By this time, Eddie already fled the country to avoid Judge Politan's court orders. Bank Leumi was ordered to turn over the bank records in Israel with the names and signatures of Sam M. Antar and Rose Antar (his wife) taken out.
When the documents were delivered, although their specific names were omitted, the passport numbers and social security numbers of Sam M. Antar and Rose Antar were still there - next to Eddie Antar, Debbie Antar (Debbie #1), Mitchell Antar, and Ben Kuszer.
Lessons for Takeover and Turnaround Artists:
Never Take Over a Retailer in a Hostile Takeover
Never Conduct a Hostile Takeover in a Business You Know Little About
Always Conduct Due Diligence before Taking Over a Company
We were in the midst of a hostile takeover for control of Crazy Eddie from a partnership formed by Oppenheimer-Palmieri Group and Entertainment Marketing. Victor H. Palmieri who was considered a "turn around" specialist at the time had enjoyed a great reputation built on his experience with the Penn Central Rail Road. However, Mr. Palmieri and his team lacked retailing experience. Their partner was led by Elias Zinn whose company Entertainment Marketing) was a wholesaler and he was not known for his retailing acumen.
We had a "sit down" meeting in August 1987 attended by Crazy Eddie Antar, Victor H. Palmieri, Elias Zinn, high paid attorneys for both sides, and me. Mr. Palmieri demanded that we cede control of the company. He said, "I am taking control of the company." Eddie Antar responded with a grin as he stared at Victor Palmieri straight in the face and said, "You just might get it. You don't know what you're getting into."
Ultimately Mr. Palmieri and Mr. Zinn after taking over Crazy Eddie found out about a massive fraud. Their multi-million dollar investment because worthless. Mr. Palmieri and Mr. Zinn rode straight into a hurricane.
Robert Marmon, who took over my position as CFO, later described his interaction with me as reported in the New Jersey Record by the Associated Press in an article entitled: "Witness Describes Financial Disarray, 'Crazy' Eddie Books a Shambles, He Says" on June 17, 1993:
He met with Sam E. Antar, Eddie Antar's cousin, who was then the chief financial officer. "He put his arm around me and said, `the creditors will only get 50 cents on the dollar, so `blank' them,’” Marmon testified, adding that "blank" was a profanity. Marmon recalled not knowing what to think.
When Marmon returned three days later as chief financial officer, he discovered that the file folders in Sam E. Antar's office had been emptied and their tabs pulled off. There were no budget plans or computer runs, shocking omissions at a company with $352 million in sales. Marmon did find, however, a five-year employment contract that Sam E. Antar had signed a few weeks earlier for $160,000 a year, plus benefits.
"The word that kept coming to mind . . . was `chutzpah,'" Marmon said. Sam E. Antar and others with employment contracts were fired anyway. Sam E. Antar sued, but "he got zero," Marmon said.
A week later, Marmon got another shock: an inventory he ordered came up $45 million short. The inventory, conducted at more than 40 Crazy Eddie stores and the warehouse found just $75 million in merchandise instead of the expected $120 million, he said. Crazy Eddie issued a news release to inform investors and the public of the shortfall, he said.
Robert A. Marmon later recalled his experience in an article entitled "Up To and After the Fall …Confessions of a Turnaround Specialist" in an article he published on a website for his consulting business (see link to website below excerpt):
One evening in 1989 after a discussion about discovering the massive fraud at "Crazy Eddie Inc” (a now liquidated consumer electronics company in the northeast U.S.) he simply said, "You ought to write it down”.
I didn't. I made a few notes; sure I would never forget the phone call from my MIS director that Sunday morning in November 1987. During that call he informed me of the results of the complete inventory we took immediately after the takeover. Based on Crazy Eddie's audited public financials, I expected to hear him say about $120 million. He said $75 million. Oops.
About two weeks before that phone call the Oppenheimer-Palmieri Fund had "won" a proxy fight that led to the takeover of Crazy Eddie. Nobody was more surprised by this "victory" than the guys in the $1,200 suits that Victor Palmieri had become enamored with in the mid-80's. Many of them right out of Drexel Burnham. In any case they were expecting a long drawn out fight to wrest control from the Antar family. At the eleventh hour the family threw in the towel. (We soon found out why.)
The Oppenheimer-Palmieri Fund was a venture capital fund (number crunchers, "deal-doers") that suddenly found themselves about to take over a public company with thousands of employees and 43 stores in four states. Victor and the Oppenheimer-Palmieri people approached The Palmieri Company (Victor's original turnaround/asset management vehicle) and tapped my boss and mentor Peter A. Martosella, Jr. (the best executive, mentor, and teacher I have known) to serve initially as a Director and I was pulled off a client site to serve as Chief Financial Officer. (This episode deserves its own chapter. It was an unbelievable experience. The lessons for the unwary were profound. The characters and events would make bad fiction...but it was all real. FBI agents with GUNS in my office. Firing former “Mossads”. $30 million refund from the IRS for purposely overpaying taxes … and eventually I was the federal government’s first witness. Two hours direct. Five hours cross. Long jail terms for the bad guys and it really is not over yet.)
Some people in the new management group taking over Crazy Eddie ignored the warning signs. They knew about the SEC investigations began that summer. Others like Robert A. Marmon who took over as CFO did not know. Robert A. Marmon would write me in an e-mail on July 21, 2006:
I knew nothing about the lead up to the Palmieri effort or about what the Feds were investigating. I was in his turnaround business doing real work, not the "green mail" business.... I had ten days notice to come up to speed. In turn around you must determine the facts and starting points yourself ... that's why it's called turnaround.
However, Marmon possessed "professional paranoia." He decided to take an inventory shortly after the takeover, based on the following reasons in an e-mail received on July 13, 2006:
The reason I found the fraud is that I did not believe a single thing about your financials or you.
I had far too much experience to agree to sign a 10Q unless I knew for certain what the hell I was starting with. 10 (b) (5) says, among other things "....knew, or should have known, ... the information was false, incomplete or misleading. The folks on my side thought I would sign the Q thirty days after I was there!!
No *&^(*&^ing way!
I told them if they did not let me count every f'ing thing in the place, they could sign the Q!
I took it a step further: I made them buy thousands of "blue dots" and paste them on everything that was counted ... So unlike your inventories, in mine, the stuff was only counted once!!
Robert A. Marmon explained his reasoning as follows in an e-mail dated on July 21, 2006.
So not believing anything on the books was simply SOP for me. My approach would have been the same in any start-up. However, this was the first time that approach uncovered felons.
If Mr. Marmon did not take an inventory a few days after the takeover, the prosecution of the Crazy Eddie conspirators would have been much more difficult. He continued to write in that e-mail:
Unfortunately...Zinn and Victor "won". If I had waited until February to take inventory, the issues of when everything went south would have been forever clouded and you and the family and you would have had wonderful defenses: "Not us! Them! We've been audited every year!!" ... your only hope remaining was that the inventory would be delayed until February. Unfortunately for them, Zinn and Victor "won". If I had waited until February to take inventory, the issues of when everything went south would have been forever clouded and you and the family and you would have had wonderful defenses: "Not us! Them! We've been audited every year!!" ... your only hope remaining was that the inventory would be delayed until February.
Robert A. Marmon was absolutely correct in his street smart and professional assessment.
Link to RPF Inc. (Robert A. Marmon's) Website
Even sophisticated "takeover artists" heed this time tested advice - Let the buyer beware! Do not assume anything. Have professional paranoia! You cannot afford to "trust and verify." Do not trust and verify - you should not trust and verify. The criminal always, yes always, has the initiative. The criminal has to be successful once, you must be successful every time. Does this argument sound familiar? We use some of the same logic in the war on terror too.
A Lighter Moment When Crazy Eddie Bankruptcy Attorneys Tested my Credibility about Skimming:
One afternoon Howard Hawkins an attorney representing the Crazy Eddie Bankruptcy Trustee asked me during a meeting (when I was cooperating with them) on how many $20 dollar bills fit into a certain sized brief case.
I responded, “Between $175,000 to $180,000.”
He said, “You are wrong. It was $182,000.”
I told him, “Close enough, besides I hadn’t bagged that kind of money for almost 8 years and my memory had faded a little."
Eddie Antar Jail House Discussion Recounted by Former Attorney Justin Feldman from Knonish, Lieb, Weiner, Hellman in an Interview With The SEC Historical Society on June 22, 2004 (excerpt from interview):
There was a hearing on extradition and I did go on his behalf to speak to the Minister of Justice, insisting that it was not an extraditable offense under the treaty, and went to see him in the jail and it was pathetic. He was shackled. I mean, believe me, you don't want to go to one of those Israeli jails.
In the interview he says to me, "I don't understand any of this." He said, "That stock came out at eight dollars. It went to sixty, seventy, eighty, whatever the number was. Nobody lost money." I said, "Eddy, and then it went to zero." "Well, people were foolish in holding it." [laughter] I said, "Eddy, my wife," who he liked, "Linda, and her mother and her brother lost money." "I'm sorry to hear that."
I left him in the jail, go out to the courtyard. I'm about to leave the premises, a guard comes running and says, "He wants to talk to you again." I go back to the door of the jail and he says, "Justin, I promise you, if you get me out of this, I'll give Linda back her money." [laughter]
How the Antar Family Tried to Use an Innocent Misquote in an Article against Me
On October 26, 1998 Accounting Today in an article written by Glenn Cheney entitled “How Crazy was Crazy Eddie?” contained the following quote:
Antar denies he feels any regret, but he reports that is sentencing was a sham.
I had just given a speech to the Association of Certified Fraud Examiners and Mr. Cheney the reported had interviewed me after hearing my presentation.
Soon afterwards, just having lost the SEC Civil Case the Antar defendants who read this article filed a motion in Federal Court to have the Crazy Eddie case overturned.
After learning of the lawsuit I obtained taped copies of the presentation and interviews and sent them to the SEC.
What I had said was that during the commission of my crimes I had felt no remorse. I never said that I had no remorse afterwards. The quote should have said, "Antar denies he felt any regret...."
I never said my sentencing was a sham but I did characterize it as admittedly light.
While my exceptional assistance to the government was taken into account by the Judge, I have always felt that crimes deserved prison time. This analysis does not mock the Judge but is an honest opinion of my sentencing. In fact it is tribute to the kindness and greatness of our system of justice and the Judge's ultimate wisdom in his faith in my character.
On September 6, 1999 an article written by Tim O’Brien written in the New Jersey Law Journal entitled “Latest Move vs. Crazy Eddie's CFO? In-sane! Less-than-contrite remarks form no basis for reopening SEC case against Antars” explain the rest of what had happened (excerpts):
So, when his relatives got wind of Sam E. Antar's less-than-contrite comments before the group, published in the magazine Accounting Today, they tried to use the information to reopen a case that cost them $28 million.
In his Aug. 25 opinion, Ackerman not only denied the motion, he belittled the arguments at every turn. He specifically rejected the defense claim that Sam E. Antar was bragging about his central role in pulling off the massive scheme, finding that he was in fact offering solid tips on how to detect and root out fraudulent practices.
For his part, Sam E. Antar, now in the real estate business, says he is delighted with Ackerman's ruling. "I never said anything of the kind about my sentence," he says. "What I said in my talk was that any witness, once he starts telling the truth, you can be redeemed."
Antar also says that he would never mock his admittedly sweet sentence. "I wouldn't treat Politan that way. He could have slammed me, given me three to four years, but he didn't. It hurts me on a personal level that someone would say I said something about Politan that wasn't true."
When Politan sentenced Antar, he took note of the fact that he had cooperated with the government in 1989 and testified at trials and numerous depositions for 29 months without any deal. He was represented by Anthony Mautone of the West Orange firm of Mautone & Horan.
As for whether Antar has regrets for his crucial role in cooking the books, Ackerman noted that the defense never asked Antar that question during four days of depositions nor during Antar's cross-examination at trial. Antar agrees. "I was on the stand 10 days, and I must have been deposed 45 times all together, but nobody ever asked. I am sorry."
Ackerman found that the motion by the Antar relatives failed every requirement under Rule 59. Not only was there no newly discovered evidence, but what was presented could have been discovered in time for the trial by reasonable due diligence.
Moreover, the judge concluded that the so-called new evidence was merely an attack on Antar's credibility, which are not grounds for a reconsideration under the rule. Besides, Ackerman added, the defense did attack Antar's credibility on cross, but he found Antar to be truthful at the trial.
In fact, Ackerman said he found Antar's lecture consistent with his testimony, noting that Antar laid out, again, many details of how the company officials skimmed millions and juggled accounts to paint favorable financial statements and year-to-year comparisons during three IPOs.
Says Sam E. Antar today: "They the defense called it bragging, but all I said was that from 1979 through 1987 I was a cold-blooded thug, but I'm not a thug now. I gave a 45-minute speech, to help people like FBI agents, investigators and auditors. And I wasn't paid a cent either."
Keep careful records of interviews you give since reporters are human and can make innocent mistakes. Your enemies are watching. I do not have any animosity for Mr. Cheney and Accounting Today for their fine article despite an inadvertent error.
See Part 10 - Sarbanes Oxley and Crazy Eddie