Crazy eddie fraud pdf

How to detect and prevent financial statement fraud crazy eddie 12. Eddie antar, the president, ceo and major shareholder of the company. Today, i teach law enforcement agencies, professionals, and businesses how to identify fraud and train them to catch the crooks. Identify specific audit procedures that might have led to the detection of the following accounting irregularities perpetrated by crazy eddie personnel.

Manipulating balance sheet accounts is an additional favored method of overstating earnings or presenting a. Antar, was an employee of crazy eddie from 1971 to 1987, when he resigned from the company. Introduction revenues are not the only method the fraudster uses to commit financial statement fraud. Pdf summary of worldcom accounting scandal ahnaf sadat. They believed that the difficulties crazy eddie faced were rooted in poor management, and therefore represented a quick turnaround opportunity. Real issues and cases, ninth edition, uses realworld cases to acquaint you with the work environment of auditors. Jun 15, 2017 the accountant, crazy eddie and the panama pump. How to detect and prevent financial statement fraud. The show featured a showdown between eddie antar and sam antar, cousins who perpetrated a massive corporate fraud for years. The closing of crazy eddie began in march 1989, as the company shuttered 17 of its 43 stores. The auditors disagreed with recommendations by crazy eddie s outside counsel law firm paul, weiss, rifkind to provide more detailed disclosure on crazy eddie sales to transshippers and other issues.

Eddie antar, who started the crazy eddie chain with insane. The other truetolife accounting fact in the movie is their description of the crazy eddie eddie antar fraud scheme where the profits were first understated and then overstated. Most empirical studies find that longer audit tenure. Antar helped mastermind one of the largest securities frauds uncovered during the 1980s. Antar eddie s father, and ronnie gindi a first cousin in 1969. Ppak 29 usakti grogol 2016 summary case crazy eddie. We use your linkedin profile and activity data to personalize ads and to show you more relevant ads. Howard street jewelers, inc inclass handout canvas rocky mountain electric inclass handout canvas. Sep 12, 2016 antar was the force, if not the face, behind the crazy eddie electronics chain whose pitchman dominated the airwaves in the 1970s and 80s with a motormouth delivery and the tagline, these. Nov 23, 2010 to better comprehend the nature of the present action, it is important to take note of the prior criminal action against two central figures in the alleged fraud at crazy eddie.

Lessons from the crazy eddie fraud 2 lessons from the crazy eddie fraud in the accounting field, efforts to determine the costs of occupational fraud. Spindler and grinbergs allegations of fraud at crazy eddie were at least partially verified. Antar, one of the largest securities frauds of its time this securities fraud cost investors hundreds of millions of dollars, cost many people their life savings, jobs and careers, cost creditors. When asked if he has forgiven himself for the crimes, sam says he will never forgive himself.

Interestingly, the mastermind behind the scheme, eddie antar, died just one month before the release of. Antar eddies father, and ronnie gindi a first cousin in 1969. The antars had inflated inventory numbers to increase crazy eddies profits as a public company. In the next section, we provide a brief overview of the changes in auditors responsibility for fraud detection over the years. Integrating the behavioral sciences component into fraud and forensic accounting curricula sridhar ramamoorti the most incomprehensible fact about the universe is that it is comprehensible.

Apr 03, 2016 how to detect and prevent financial statement fraud crazy eddie crazy eddie announces the grand opening of a brand new store. Nov 27, 2015 crazy eddie electronics was a regional electronics chain in new york city that was failed due to massive fraud committed by its management. Our research divided them into five principal, but related, types. Coso fraud reports and studies protecting investors. There are numerous ways to classify financial statement frauds. The twoway he took the electronics chain from one store in brooklyn, n. Financial fraud from tulip mania to bernie madoff by david sarna is a comprehensive history of financial fraud through the centuries and the author aims at teaching the readers lessons on how to spot attempted financial fraud and how to wisely invest, avoiding such fraud. Understand the environment of corporate finance understand the important forms of business organization sole proprietorship partnership companies one of the important aspects of your job as a finance manager is to understand the external environment in which you operate. Thats the same crazy eddie who committed one of the most outrageous financial statement frauds in history. Dictionary, 2011 2 much of crazy eddies fraud can be attributed to the overstatement of inventory and the understatement on accounts payable, not to mention the vast number of executives who were involved in the scheme. Crazy eddie was a consumer electronics chain in the northeastern united states.

Sep 12, 2016 eddie antar, who started the crazy eddie chain with insane. The fraud began almost immediately, with the management of crazy eddie underreporting the firms taxable income via skimming cash sales, paying employees in cash to avoid payroll taxes and. The business did very well in its startup years and began to grow. Crazy eddie case analysis essay 722 words bartleby. It also helps you to recognize the red flags that often accompany problem audits. Analysts often do not ask the important questions and are too quick to accept managements representations. There were several red flags in crazy eddies financial statements. This report contains the summary of the analysis of fraudulent financial reporting conducted in the mid1980s by the national commission on fraudulent financial reporting known as the treadway commission and its related recommendations of solutions to reduce the occurrence of such fraud. Crazy eddie fraudster sam antar to return to crime thanks. When the company started experiencing financial difficulties, sam and eddiealong with others on the management. In the crazy eddie fraud, the change of a single word from purchase discounts and trade allowances are recognized when received to. Comeback king eddie murphy, 58, brings down the house in this funky.

Crazy eddie involved in fraud through incentives, opportunity and rationalization. How to detect and prevent financial statement fraud crazy eddie. Feb 19, 2019 the fraud began almost immediately, with the management of crazy eddie underreporting the firms taxable income via skimming cash sales, paying employees in cash to avoid payroll taxes and. This section also examines real fraud cases, such as enron, crazy eddie, adelphi and worldcom. From charles ponzi, the father of the ponzi scheme, to crazy eddie, this books talks about the crimes committed by these fraudsters and the consequences of those crimes. They did it, and youre strapped in for quite a ride. Occupational fraud offenders sam sam antar was the chief financial officer for crazy eddies electronics, a chain of stereo and television stores on the east coast. Damon and crazy british driver bale who want their underdog ford motors team to humiliate the snooty italian ferrari team at le mans. Issue 1, januaryjune, 2017 712 in 1987, texas businessman elias zinn and his business partner victor palmieri took control of crazy eddie. Inside the mind of a hardcore whitecollar criminal valdosta state.

When i was 14 years old i started working for crazy eddie. The company appeared to be bulletproof and invisible on wall street but soon resulted in huge losses to many investors and employees of the retail chain. The commissions complaint alleges that eddie antar, sam m. The effects of auditor tenure on fraud and its detection. Count 1 of a superseding indictment charged all the defendants with conspiring to conduct or participate in the affairs of crazy eddie through a pattern of racketeering activity in violation of 18 u. The original predecessor company to crazy eddie was ers electronics, which was founded by eddie antar, sam m. Crazy eddie founder guilty of fraud the new york times. Financial statement fraud improper asset valuation. Antar, allen antar, and benjamin kuszer violated section l7a of the securities act and section 10b of the exchange act and rule lob5 thereunder in sales of crazy eddie securities while in.

Classic case studies in accounting fraud ohiolink etd. The crazy eddie fraud is also an example of both fraudulent financial reporting and misappropriation of assets. At the age of 20 years old, anta opened up his very first store, crazy eddie. Cases such as enron, worldcom, crazy eddie, and madoff investment securities. Unable to sustain his fraudulent business practices, cofounder eddie antar. Jun 07, 20 overpaying taxes and overstating income is the way to go if you want to commit fraud at a publicly traded company. Crazy eddie announces the grand opening of a brand new store. Crazy eddie on cnbc fraud files forensic accounting blog. Albert einstein, physics nobel laureate the most comprehensible fact about human behavior is that it is. Founder of crazy eddie chain pleads guilty in stock fraud. The initial fraud perpetuated by eddie antar, the titular eddie in crazy eddie, was basic. Seven brooklynbased electronics retailers operating more than 40 web sites are.

You can order presentationready copies for distribution to your colleagues, clients or customers, please click here or use the reprints tool that appears next to any article. Crazy eddies vendors were convinced to ship merchandise to the company prior to yearend, but not to bill for it until after yearend, thus. Compute key ratios and other financial measures for crazy eddie during the period 19841987. The antars had inflated inventory numbers to increase crazy eddie s profits as a public company. The final speaker of the day was william nealon, a senior consultant for the mis training institute. The effects of auditor tenure on fraud and its detection abstract we examine the strategic effects of auditor tenure on the auditors testing strategy and the managers inclination to commit fraud. I strongly believe the auditors should have detected the fraud sooner. Frankensteins of fraud covers the following criminals and their activities. Thecrazyeddiefraud crazyeddie consolidatedbalancesheet inthousands assets currentassets. Antar, one of the largest securities frauds of its time this securities fraud cost investors hundreds of millions of dollars, cost many people. I have expressed my opinions within the context of the crazy eddie fraud so as to offer insight into fraudulent techniques for which no reform has. After the sec took down the crazy eddies scam, antar has spent his time working as a whistleblower. Not long after anta opened up his first store, he opened up another.

However, in some of the biggest corporate failures across the globe, fraud was involved. Eddie antar, the founder of the crazy eddie electronics retail chain known for its hugely popular tv commercials in the 1970s and 1980s, and later brought down by a massive fraud scheme, died. Crazy eddie case 1 running head crazy eddie case 1. This chapter discusses how, during the 1980s, sam e. Dec 06, 2008 last night the crazy eddie story was shown on business nation, in a short but interesting segment.

The crazy eddie fraud may appear smaller and gentler than the massive billiondollar frauds exposed in recent times, such as bernie madoffs ponzi scheme, frauds in the subprime mortgage market, the aig bailout, and goldman sachs failure to disclose. Crazy eddie retail chain owner, eddie antar, dead at 68. After analyzing crazy eddies balance sheet, income statement, and ratios many questions came to mind. Sam was also the nephew of the stores founder and ceo, eddie antar. Jul 29, 2014 sam antar, 57, is a felon and former certified public accountant who helped perpetrate one of the largest securities frauds of the 1980s at crazy eddie, a chain of electronics stores based in new. Identify and briefly explain the red flags in crazy eddies financial statements that suggested the firm posed a higherthannormal level of audit risk. Journal of forensic and investigative accounting volume 9. Red flags investigated in this blog are often reported to appropriate government agencies as a whistleblower. Crazy eddie was an electronics store that specialized in low prices and a party atmosphere. He has pointed out red flags of fraud over and over, and the current problem is with the level of inventory. Insider trading and securities fraud of crazy eddie. May 16, 2012 sam antar, former cfo of crazy eddie, a massive fraud in the 1980s, has been following green mountain coffee roasters gmcr for a long time. Dozens of class action lawsuits were filed against the antar family alleging a massive fraud at crazy eddie.

The chain was started in 1971 in brooklyn, new york, by businessmen eddie and sam m. Crazy eddie was convicted of white collar crime through fraud triangle. Jerry carroll started doing these hilarious ads in 1975. Ernie explained how these frauds were perpetrated, the impact they had, and current updates on the fraudsters involved. Sep 07, 1989 eddie antar, the reclusive entrepreneur who at crazy eddie inc. Crazy eddie went public in 1984 and a longlasting financial statement fraud was not discovered.

This is an old article from 2000 but the sidebar at the end describing how the electronics store crazy eddie committed massive financial fraud is fascinating. The crazy eddie fraud may appear smaller and gentler than the massive billion dollar frauds exposed in recent times, such as bernie madoffs ponzi scheme. I thank you for soliciting contributions to the roundtable discussion and hope that this initiative and others like it will do much to prevent accounting fraud and the economic injury it causes. In a wickedly entertaining film about attempted marriage fraud. In addition to describing the fraudulent activities that were perpetrated in these cases, this course will use these fraud cases as valuable sources of information and lessons that can promote fraud prevention and detection through internal controls. There were various red flags in crazy eddies financials, which should have raised concerns amongst the auditing team. Abuse is the charging of services that are not medically necessary.

Crazy eddie wasnt so crazy after all the successful. Oct 11, 2010 i am a convicted felon, former cpa, and former criminal cfo of crazy eddie. Oct 07, 20 i strongly believe the auditors should have detected the fraud sooner. The auditors disagreed with recommendations by crazy eddies outside counsel law firm paul, weiss, rifkind to provide more detailed disclosure on crazy eddie sales to transshippers and other issues. Identify and briefly explain the red flags in crazy eddies financial statements that suggested the audit posed a higherthannormal level of audit risk. Crazy eddie reported lacking rationalization but confirmed that incentives and opportunity were working. Fraud comes in many shapes and sizes and its growing faster than ever. The crazy eddie fraud may appear smaller and gentler than the massive billiondollar frauds exposed in recent times, such as bernie madoffs ponzi scheme. Antar, and was previously named ers electronics ers stood for eddie, rose and sam. Sam antar, one of the architects of the crazy eddie fraud of the 1980s, has examined the current state of politics and has made an important decision hes going back to crime.