Stockholders’ Class-Action Lawsuit Settled
NEWARK, N.J. (AP) _ Stockholder lawsuits stemming from the failure of the New Jersey-based consumer electronics chain Crazy Eddie Inc. have been settled for around $60.5 million, lawyers for the plaintiffs announced Monday.
The names of the approximately 50 defendants were not made public but lawyers involved in the case said the list includes about 15 former directors of the company; the large accounting firm of KPMG Peat Marwick; Samuel Antar, the father of the chain’s founder, Eddie ″Crazy Eddie″ Antar; and two of Eddie’s brothers, Mitchell and Allen Antar.
The lawsuits included class actions filed on behalf of 10,000 Crazy Eddie stockholders and bondholders in federal court in Brooklyn in 1987 and 1988, alleging they were the victims of securities fraud.
Eddie Antar was not a party to the settlement, and claims against him brought by the same plaintiffs remain outstanding. He also faces other outstanding claims, including a $73 million-plus interest judgment against him owed to the Securities and Exchange Commission. He also is awaiting trial June 15 in federal court here on criminal securities fraud charges stemming from an illegal scheme to boost the value of the company’s stock before it went public in the mid-1980s.
Under the terms of Monday’s agreement, all claims will be dismissed against all settling defendants, who denied liability, in exchange for payment of up to $42 million in the class action lawsuits.
Also included in the settlement were individual lawsuits filed by Elias Zinn and his company, Entertainment Marketing Inc., the Oppenheimer-Palmieri Fund, and the bankrupt Crazy Eddie Inc., which sued on behalf of its creditors.
In exchange for dropping their claims, these plaintiffs will receive $18.5 million, divided as follows: $7.5 million to Elias Zinn and his company, $7 million to Oppenheimer-Palmieri, and $4 million to Crazy Eddie, Inc.
″We got as much as we could at this stage without a trial,″ said Howard Sirota, the lead attorney for the plaintiffs in the class-action case.
The settlement must be approved by U.S. District Judge Eugene Nickerson in Brooklyn. A hearing has been set for May 27, Sirota said.
The settlement was announced through a brief statement issued by lawyers for the plaintiffs, who agreed with the defendants not to discuss the details of the case.
Sirota said the individual awards to the 10,000 stockholders and bondholders will be based on a formula that includes the number of shares owned and their purchase price.
KPMG Peat Marwick was the company’s auditor at the time the company went public. Barbara Kraft, a spokeswoman for the company, said the defendants were under a ″strict order of confidentiality″ not to discuss the terms of the agreement.
Another auditing firm, Penn & Horowitz of New York, was also among the defendants, lawyers in the case said. Penn & Horowitz preceded Peat Marwick as Crazy Eddie’s auditor.