Fraud Talk: The Insane, Real-Life Story of Crazy Eddie Antar

Eddie Antar founded the Crazy Eddie electronics retail chain in Brooklyn, New York, which rose to prominence across the New York-New Jersey area throughout the 1970s. Operating undetected for years, Eddie’s business practices were grounded in fraud from the very beginning. In Episode 124 of Fraud Talk, Gary Weiss, author of “Retail Gangster: The Insane, Real-Life Story of Crazy Eddie,” discusses this wide-ranging fraud case and ultimate unraveling with ACFE Chief Training Officer John Gill, J.D., CFE.

In this excerpt from episode 124, John Gill and Gary Weiss talk about the insurance scheme Eddie committed but was never caught for.

John: It was like, well, if he had a water leak, why not take advantage of that? Let’s get some of this merchandise that we can’t sell, we’ll put it down. There’s like, well, if it wasn’t enough water still left, they would get a hose out and they would hose it down. Here’s a quote I like from the book, it says, “Eddie had limits when it came to insurance fraud. He never started a fire in one of his stores, never faked a robbery, or sabotaged his own plumbing.”

Some would remember how furious Eddie was when he learned about a fire that occurred in one of the other stores. It’s like, he didn’t torch the place. What got him mad was not that the plant burned down, but that his partner hadn’t insured it for fire damage. They missed out on spiking enhanced windfall. Its like, well, if it had burned down, they could have claimed all this extra merchandising and insurance proceeds, but it didn’t take out any insurance coverage on it.

It was interesting to me that that was his line. It’s like, “Well I’m not going to break the pipe on purpose, that would be wrong,” but if the pipe happens to break, then he saw nothing wrong with throwing all the merchandise he could possibly fit in the basement down in the basement to collect on the covers. It’s such an odd line to me that he seemed to take pride that he– “Well, I didn’t commit insurance fraud really, because I didn’t break the pipe, I just happened to– a few extra boxes fell in, huh, so be it.”

Gary: Yes. They used to call it spiking the claim. You got a claim, let’s make the most of it. In fact, he used to keep water-locked merchandise that he had previously submitted for claims. He used to keep them in a special warehouse, and then he’d throw them out. Not only would he bring poor-selling merchandise and dump it in the basement if there was a flood or whatever, but he’d take a merchandise that he previously had submitted for claims that were these moldy boxes and he dumped the moldy boxes in.

He had a crooked insurance adjuster working with him. You really need an insurance adjuster in those types of commercial claim. He had his crooked insurance adjuster who he paid under the table and who would, in turn, pay the other guy under the table. He was never caught for that. In fact, what seemed remarkable about Eddie is that he wasn’t caught for the majority of the crimes that he committed. Not for the insurance fraud, which was blatant. The warrant of claims were part of his initial criminal complaint, so it was kind, but it was not big.

He was never really caught up short for the warranty claims. The sales tax fraud was really significant. It was a big, big money maker. Back in the ’70s, when he was doing this, he started to do this by ’70s and ’80s, it was so much crime going on in New York City of all kinds, that it just was part of the background noise of crime in New York at the time. That’s one of the reasons he was able to get away with it. That, and I think the fact that he didn’t, as you point out, he didn’t deliberately rob his own stores or create conditions, he just took advantage of them.

Download the transcript SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners