Crazy Eddie, Inc. financial scams case
Crazy Eddie was an American store chain work by the Antar family, which has been established as being a private company in 1969 in Brooklyn, New York simply by businessmen Eddie and Mike M. Antar. The fraud at Crazy Eddie was one of the longest running in modern days, lasting by 1969 to 1987. Crazy Eddie became a well-known symbol pertaining to corporate scams in its period, but features since been eclipsed by Enron, Worldcom and Bernie Madoff accounting scandals. Beginning of scams
The fraud began nearly immediately, with all the management of Crazy Eddie underreporting taxable income through skimming funds sales, paying out employees in cash to avoid payroll fees and confirming fake insurance claims for the company's carriers. Eddie Antara, the CEO of the firm who was the mastermind in the fraud, was skimming money from revenue taxes that he just partially remitted to the authorities, while using portion of the money to give steep discounts to consumers. Much of the rest of the money this individual used to account a running lifestyle, whilst secreting a fortune at home and abroad. He also repackaged used and damaged electronics and sold again them to buyers as new. When gadgets companies declined to supply him because he was selling these products to his customers below list price, he instead sourced the products from suppliers in other countries for the gray industry. He applied massive revenue promotion technique to promote his company's name and goods. The television ad of the firm was greatly popular that period. The company began to grow swiftly and had several branches country wide. As the chain grew in size, the Antar friends and family started planning an initial community offering (IPO) of Crazy Eddie and scaled backside the fraud so that the business would be even more profitable and get a bigger valuation through the public market. This strategy was obviously a success and Crazy Eddie went open public in 1984 at $8 per discuss. The final stage of the Crazy Eddie scam began following your IPO and was motivated by a aspire to increase earnings so the inventory price could move higher and the Antara family could sell the holdings as time passes. Management right now reversed the flow of skimmed cash and transferred funds from secret bank details and safety deposit packing containers into firm coffers, booking the cash while revenue. The scheme also involved pumping up and creating phony products on hand on the ebooks and reducing accounts payable to boost income at the company. Concealment of fraud
The electronics sequence used the young, unskilled, undereducated and under qualified auditors for the audit purpose. The chain surely could fool fresh auditors simply by showing all of them inventory inventory rooms filled up with empty bins of consumer electronics gear, when distracting associated with attractive feminine workers so they wouldn't bother to look at what was inside or in back of the piles of containers. They had an idea that in case the auditor was wearing a suit, it was sure he was not going to get it dirty simply by moving the boxes. Eddie Antar was your mastermind at the rear of the various strategies and appointed his family to work on the electronic devices chain to help aid and abet the fraud. Eddie Antar taken care of his cousin Sam At the. Antar to master accounting therefore he could eventually act on the developing company's small auditing firm, Penn and Horowitz. In 1981, Mike passed the CPA exam with a 90% and have scored in the best 1% near your vicinity. He later on became the Penn and Horowitz Industry�s CFO in 1986. All the family associates were certain together with a culture of crime and were functioning as a team intended for commitment and concealment of crime. Direct exposure of scam
The corporation was making so much cash that Eddie Antar was having trouble locating places to put it. He ran out of hiding locations in his workplace and home, and eventually commenced traveling to His home country of israel and Switzerland to deposit the money in secret bank accounts. However , the scheme began to unravel when ever his better half found out having been cheating on her behalf, and the family members took sides in the dispute. The fraudulence was finally uncovered in 1987 after...
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