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Crazy Eddie Fraud Case

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At the age of 20 years old, Anta opened up his very first store, Crazy Eddie. Crazy Eddie was an electronics store that specialized in low prices and a party atmosphere. The business did very well in its startup years and began to grow. Not long after Anta opened up his first store, he opened up another. From the get go, Anta had the mind of fraud.

He was not going to play by the rules. He started business by skimming money Off Of cash sales before they hit the register.

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The less cash he had to report, the less taxes he had to pay. With his tight knit family working for him, the skimming got to the point for every $5. 00 brought in, $1 was taken out. By the time the second store was up and running, Anta had profited hundreds of thousands of dollars from skimming. He paid his family under to table cash from the money taken from these illegal profits.

Anta quickly realized the best way to make his assets larger was through inventory.

Since Anta sold his products at such low costs, manufacturers darted withholding shipments. He started obtaining inventory through family connections in the underground market. Anta would buy damaged or used products and repackage them to kick as if they were brand new and sell them as if they were never opened. Anta also dabbled in insurance fraud. He made many claims of floods or fires at his stores. When the insurance agent would come out to assess the damage, Anta would stack up empty boxes with water all over then or burn marks.

He walked away with hundreds of thousands of dollars from these claims that he pocketed and distributed to his family. After opening a few more stores, Anta realized that it was only a matter of time until he got audited. He knew he didn’t have half the inventory he claimed he did on the books, so he paid for his cousin, Sam Anta, to get a degree in accounting. After graduation, Sam got a job at the CPA firm that audits Crazy Eddie. With someone on the inside, Eddie would know when they were going to be audited and could adjust inventory as needed. By 1978, Eddie was reaping millions of dollars from skimming.

He would hide cash in safety deposit boxes, walls, ceilings, everywhere. He got to the mint that he was out of places to hide the cash. He started making monthly trips to Tell Aviva, Israel where he could deposit the cash into various accounts without being detected. Soon enough, he had his wife and other family members coming with him to help transport the money. In 1984, Eddie Anta decided he wanted to go public. After lots of research, he realized he had to go through a very detailed audit. He got old of Sam Anta and had he arrange an inexperienced auditor to do the stores.

By this time he has inventory from other stores brought to his main store where he an show the auditor it. He would open a few boxes to show the auditor a sample of the inventory and have an employee count it for him. While the auditor was distracted he took his inventory count worksheets and changed numbers to make them bigger. He also stole a schedule of where his next stop was, so they could transfer the inventory to the next store for the next inventory count. Auditor deems that Crazy Eddie is a thriving company of 13 stores and allows them to go public.

After the initial public offering, Eddie Anta is able to open 26 new stores, throughout the trim-state area. He cashed out $40 million worth of his own shares. By this time, the company is built on nothing. They have no inventory and no money. Eddie starts to stress and begins cheating on his wife. In 1 984, his wife and sister caught him red handed with his mistress. This cases massive turmoil between the tight knit family and even bigger problems within the stores as the gap between what they actually have and what they claim to have widens. Sam Anta knew he it was only a matter of time until Eddie gets caught and tries to talk to him.

Eddie cashes out another $30 million of his own shares. This gives Crazy Eddie a bad look and people start to question the legitimacy of the business. A new company comes in a buys Crazy Eddie through a hostile bid and quickly realizes all of the lies Eddie built it on. There was $80 million worth of nonexistent merchandise. By the time the police got involved Eddie had fled for Israel with suitcases full of cash. After Sam becomes a target, he confesses and tells the police all of the fraud Eddie had committed. By now there is an international man hunt.

Two years go by when Eddie Anta travels to Geneva o withdraw money from an account he had hidden. He is stunned to learn the account had been frozen. Switzerland authorities recognize him and the account and contact the US authorities right away. By this time Anta fled back to Israel where he was finally arrested by a female officer. Eddie Anta eventually plead guilty to 1 7 charges of fraud in the United States. He owes $1 50 million in fines and restitution and almost $1 billion in civil lawsuits. He was sentenced to 8 years in federal prison and was released in 1 999 after only serving 6 years.

Cite this Crazy Eddie Fraud Case

Crazy Eddie Fraud Case. (2018, Mar 20). Retrieved from https://graduateway.com/crazy-eddie-fraud-case-essay/

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