Convictions Overturned in Electronics Chain's Stock Fraud Case
Apr. 13, 1995
NEWARK, N.J. (AP) _ An appeals court overturned stock-fraud convictions against the founder of the Crazy Eddie electronics chain and his brother, saying the trial judge displayed ``a high degree of antagonism'' related to another case against them.
The three-judge panel of the U.S. Circuit Court of Appeals ordered a new trial before a new judge for Eddie and Mitchell Antar. The ruling Wednesday cited, in part, remarks District Judge Nicholas Politan made during sentencing April 29, 1994.
``My object in this case from day one has always been to get back to the public that which was taken from it as a result of the fraudulent activities of this defendant and others,'' Politan said at the time.
The appeals court said Politan's goal was to enforce several rulings he had made during a related civil case against the Antars and Crazy Eddie brought by the Securities and Exchange Commission.
``The district judge, in stark, plain and unambiguous language, told the parties that his goal in the criminal case, from the beginning, was something other than what it should have been and, indeed, was improper,'' said Circuit Judge Morton I. Greenberg, writing for the panel.
``It is difficult to imagine a starker example of when opinions formed during the course of judicial proceedings display a high degree of antagonism against a criminal defendant,'' Greenberg wrote.
In 1990, Politan had found Antar in contempt for not returning $52 million the SEC alleges was obtained through insider trading and transferred to Israel. Antar fled the country, and Politan later ordered a $73 million default judgment _ $52 million plus interest.
His lawyer said during trial that the flight and millions held under false names was to protect Antar's assets during divorce proceedings.
Although the panel said Politan should have excused himself for the criminal trial, they added, ``Being familiar with the judge and his work, we are not prepared to say the district judge was biased.''
A message left for Politan was not immediately returned.
Known for loud commercials in which a frenzied pitchman boasted of ``INSAAAAAAAANE'' prices, Crazy Eddie grew from a single store in Brookly, N.Y., into a four-state chain.
The Antars were found guilty of a scheme begun in the early 1980s to inflate stock prices for the chain. Both were convicted in July 1993 of racketeering and stock fraud from which prosecutors said they pocketed more than $80 million from selling overvalued stock.
Both men are expected to make applications for bail.
Antar family members were overjoyed at the appeals court decision.
``This is the best Passover gift that parents or anyone could have,'' said Allen Antar, a brother who had been acquitted at the trial but is still facing related SEC charges along with their father, Sam M. Antar.
Eddie Antar's wife, Deborah Ehrlich Antar, was reached at her New York City home after speaking with her imprisoned husband.
``Eddie is very, very emotional about the news. He's feeling very thankful,'' she said. ``He just appreciates very much that the court has seen the truth in this case.''
Eddie Antar was sentenced to 12 1/2 years in prison and ordered to repay $121 million to bilked investors. A shareholder's lawyer estimates the restitution equaled a little more than a fourth of what investors lost.
Mitchell Antar was sentenced to four years in prison and ordered to pay $3 million in restitution _ the amount the government contends he made through sales of the falsely inflated stock.
The federal Securities and Exchange Commission began investigating the business in August 1987, after dissident stockholders staged an uncontested takeover and quickly discovered a $45 million inventory shortfall. The chain was liquidated in 1990 and investors were left holding worthless stock.