‘Crazy Eddie’ Conviction Helps Those With Claims to His Stash
NEWARK, N.J. (AP) _ The conviction in the Crazy Eddie stock fraud case, one of the nation’s largest, doesn’t close the books on company founder Eddie Antar.
In fact, it opens the floodgates for the government and angry stockholders seeking the tens of millions of dollars the former discount electronics tycoon hid away.
So far, about $60 million has been located in banks and real estate around the world by the U.S. Securities and Exchange Commission. Nobody knows how much more might be found.
Lawyers and investigators involved in the case are certain, however, that the stash doesn’t approach the judgments already rendered against the former fugitive - at least $280 million.
That means U.S. District Judge Nicholas Politan, who presided over the trial of Antar and his brothers, will have to divide the money.
Antar, 45, was convicted Tuesday on all 17 counts he faced, including racketeering, conspiracy, stock fraud and mail fraud. Mitchell Antar, 37, was found guilty on six of eight charges, but another brother, Allen, 43, was acquitted on all six charges he faced.
The jury had deliberated for six days after hearing from 23 witnesses - only three for the defense - in a trial that began June 15.
The chain grew from a single store in New York City to 43 stores in the 1980s, becoming the New York area’s largest electronics retailer and extending from Connecticut to Pennsylvania. It blanketed the region with commercials in which a pitchman shouted about ″INSAAAAAAAANE″ prices.
Unopposed dissident stockholders deposed the Antar clan in 1987, only to find a $45 million inventory shortfall. Government inquiries followed. The chain entered Chapter 11 bankruptcy protection and closed its last store in 1989.
Because of the racketeering conviction, Eddie and Mitchell Antar face a forfeiture hearing in which U.S. Attorney Michael Chertoff is seeking about $60 million of illegally obtained assets. The same jury is to hear that phase of the case Aug. 4.
The jury’s forfeiture award goes to the government, but federal law provides for those with claims against the Antars to petition for a share.
Among those who already have judgments:
-The defunct Crazy Eddie Inc., $150 million to pay bondholders and vendors.
-Deborah Rosen Antar, Eddie’s first wife, $29 million won after she reopened their 1985 divorce. A lawyer for shareholders, however, believes she is due nothing, arguing she participated in the fraudulent enterprise.
-The SEC, whose $73 million judgment is approaching $90 million because of interest since 1990. ″It’s our position that all that money should be given to creditors, primarily the shareholders,″ SEC attorney Richard E. Simpson said Wednesday.
The SEC’s court-appointed bloodhound is the Roseland law firm of Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, which has earned more than $1 million in fees so far.
A class-action lawsuit by 10,000 shareholders was settled in June for $42 million. The money is to be paid by about 50 defendants, including Mitchell and Allen Antar and their father. Others include about 15 former directors of the company and the accounting firm of KPMG Peat Marwick.
The shareholders are still seeking a judgment against Eddie Antar, who didn’t settle.
Shareholder attorney Howard Sirota said his experts estimated that investors lost $425 million when the company collapsed.
A sentencing date for the Antars will be set after the forfeiture hearing. Several witnesses who testified against them as part of plea bargains, including cousin Sam E. Antar, Crazy Eddie’s former chief financial officer, are also due to be sentenced.