The December 24 issue of Fortune magazine has an article on Sam E. Antar, the man most widely known as the former CFO of Crazy Eddie, a New York City electronics retailer that went down in flames in 1987 after the discovery of massive fraud being perpetrated by Sam and his cousin Eddie.
The story begins:
Sam E. Antar is a convicted felon, and he will not let anyone forget it for a minute. Whenever you find yourself starting to think of him as merely a fast-talking yet charming New York character, he’ll come out with something like: “I had no remorse whatsoever as a criminal. I had no concern about any other human being. I enjoyed being a criminal.”
Sam now flies around the country on his own dime, teaching students, auditors, lawyers, and law enforcement about white collar crime. He doesn’t take any money for his presentations, and doesn’t even allow organizations to reimburse him for travel costs. This is a service he wants to provide to help combat white collar crime.
The Crazy Eddie fraud cost investors an estimated $145 million, making it one of the largest public company frauds of its time. Sam says that the accounting fraud included cash receipts skimming, money laundering, and the counting of bogus inventory.
The article goes on to recount Sam’s crimes:
At Crazy Eddie he says he had little trouble burying accounting shenanigans where inexperienced or lazy auditors wouldn’t see them. Sam E . and others at Crazy Eddie pumped up the company’s same-store sales with bogus receipts, for instance, and used a variety of devices to count inventory that didn’t exist. Investors who relied on the disclosures blessed by those auditors saw big pops in same-store sales.
As a result, Sam E.’s disdain for financial pros runs deep. Most Wall Street analysts are in his estimation wimps: “They don’t ask the right questions.” Accountants: “Most of these people don’t even get any training in fraud.” Corporate audit committees: “They’re less qualified than the inadequately trained auditors.” And the financial press: “You guys are easily intimidated.” As for antifraud laws, Antar says that Sarbanes-Oxley is good as far as it goes, but he doubts that it does much to intimidate dedicated fraudsters.
The article goes into greater detail about the Crazy Eddie fraud and life after it was uncovered. It’s a must-read.