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Crazy Eddie: The popular electronics chain that scammed America
- akeck 5y agoThe full saga: https://whitecollarfraud.com/crazy-eddie/crazy-eddie-saga-table-of-contents/ https://whitecollarfraud.com/crazy-eddie/crazy-eddie-saga-ta...
- StanislavPetrov 5y agoAs a kid who grew up in New York, I'll never forget those commercials. The prices are insane! They actually had decent prices and merchandise. There definitely wasn't any apparent fraud or malfeasance on the consumer level.
- blacklion 5y agoScammed America? Looks like, scammed investors. As far as I understand, clients of this electronic chain were not scammed at all, they get all goods they payed for.
- CSactuary 5y agoPosted on slashdot 13 hours before this…
- seattle_spring 5y agoGood thing it was posted here then, otherwise I never would have seen it. I've never, ever understood people pointing out "reposts" like it's some kind of shameful dirty act.
- ipaddr 5y agoShameful? No, informative. I haven't checked out slashdot for awhile it is good to know I'm not missing anything.
- mechanical_bear 5y agoIs there a point to that comment? Many of us don’t follow slashdot.
- TomVDB 5y agoSlashdot still exists?
- nunez 5y agolol sure does, though they're usually a few days behind
- JohnTHaller 5y agoIf you just want to know, it's Crazy Eddie.
- subpixel 5y agoThe Crazy Eddie story is most interesting to me as a window into the highly insular and particularly successful Syrian Jewish diaspora.
- the-dude 5y agoGuess who was of Syrian descent as well?
- marklar423 5y agoWho?
- daniel-cussen 5y agoHe's talking about Steve Jobs.
- microtherion 5y agoBut in Steve's case, only by nature (on his father's side), not by nurture.
- subpixel 5y agoAnd only Syrian, not Jewish.
- daniel-cussen 5y agoHe was Jewish on his biological mother's side.
- subpixel 5y agoNo, he wasn’t: http://www.jewornotjew.com/profile.jsp?ID=745 http://www.jewornotjew.com/profile.jsp?ID=745
- meatsauce 5y agoMy parents bought my first computer (Commodore 128 with printer) from a store in Queens. That singular act got me started down the road of programming and to some degree engineering. I also believe they purchased an Apple IIe from them far earlier but I can't be certain. I do remember when the PSU for the C128 failed, they gave us a new one no charge. Oh the memories: https://www.youtube.com/watch?v=Ml6S2yiuSWE https://www.youtube.com/watch?v=Ml6S2yiuSWE
- mwexler 5y agoIt's fun to see this story get rediscovered every 3-5 years. Electronics stores, like car dealerships, appeared to need showboating to stand out, and that appears to be the starter-drug for fraud in a surprising number of cases. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=crazy%20eddie&sort=byPopularity&type=story https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
- mbg721 5y agoWho could possibly have guessed that a guy named "Crazy Eddie" might not be entirely honest??
- jstarfish 5y agoI can appreciate self-disclosure. With him identifying as such, you're either going to get an insane deal or shanked, and should not be surprised by either outcome. "Honest Eddie," on the other hand-- stay away from that guy.
- skeeter2020 5y agosurprised he didn't claim insanity; seems like a slam dunk.
- marginalia_nu 5y agoIt's weird how this pattern repeats itself. Madman Muntz[1], who Crazy Eddie emulated, is an endlessly fascinating character as well. Less of a criminal, but still... [1] https://en.wikipedia.org/wiki/Madman_Muntz https://en.wikipedia.org/wiki/Madman_Muntz
- Inhibit 5y agoAlthough I'd argue Muntz, becoming a verb, probably achieved what Crazy Eddie claimed to have done.
- marginalia_nu 5y ago
- lqet 5y ago> Strangely, Crazy Eddie’s fraudulent history gave it an advantage. To provide the illusion of quickly increasing profits ahead of the IPO, the Antars simply reduced the amount of cash they were skimming.
- WrtCdEvrydy 5y agoThere was someone like this as well... a man who had a bookstore and invested all of their profit into expansion so when expansion was scaled back, they could easily report massive profits.
- alephnan 5y agoAre you suggesting it is the Prime customers or the investors who are being scammed ? I don’t think it’s fair to compare a growth company to this: > There was just one major problem... Crazy Eddie had been lying about its numbers since its inception
- sleepdreamy 5y agoAmazon is notorious for aggressively re-investing their profits which is why they're as massive as they are. They are constantly trying 30 different things at once. "You must spend money to make it", this adage is true since the very inception of monetary value. Not sure this is a great comparison.
- throwawaycities 5y agoI heard about this, apparently the owner also devised a scheme that paid his employees so poorly he was able to get the federal government to subsidize his workers food using programs originally designed for the unemployed and disabled persons. To perfect his fraud he expanded his book store to include groceries so that he could profit on the government subsidies directly by having his employees buy their food from him.
- m463 5y agoI wonder if his exit strategy involves escaping not only prosecution, but gravity itself.
- alephnan 5y ago> Crazy Eddie stores stayed open on holidays and Sundays, at a time when many retailers still followed a Chick-Fil-A schedule. Wait. Retailers weren’t always open on Sunday?
- Schiendelman 5y agoCostco Business Center isn’t open on Sunday! I nearly found out the hard way yesterday.
- onionisafruit 5y agoFrom my memory opening on Sundays slowly became the norm through the late 80s and early 90s in Texas.
- daniel-cussen 5y agoYeah it's tied to the rise of rent and the fall of wages.
- the-dude 5y agoIn The Netherlands, opening times were strictly regulated by law up to 1984 : no openings on Sunday, weekdays not later than 18:00 and Saturday no later than 17:00. This scheme was common up till the mid nineties. Since then it has been relaxed, but it is still regulated. One of the reasons listed for the regulation is the protection of 'Mom & Pop' stores.
- zozbot234 5y ago> One of the reasons listed for the regulation is the protection of 'Mom & Pop' stores. A silly motivation. Smaller-scale businesses on the "convenience store" model are more likely to provide extended opening hours than any large store operation. That's as close to "Mom & Pop" as it gets.
- the-dude 5y agoI don't get your POV. I talked about the 80s and 90s and a healthy work/life balance was still a political talking point at the time.
- mdorazio 5y agoWhat's interesting to me is that he started with a successful business model that really did change the industry for the better in a few ways (better hours, better customer service, etc.). The greed and sociopathy turned that into fraud.
- pjc50 5y ago> “We arrogantly committed our crimes simply because we could and we had no empathy whatsoever for our victims,” Sam E. Antar later wrote Surprising moment of honesty there. The fraud is a distinctly pre-21st century one, relying as it does on handling large amounts of cash while operating parallel books. Then pivoting to stock fraud to take in a bigger pie from investors.
- jefftk 5y agoIs it that surprising, given that he was testifying against his estranged son in exchange for leniency?
- scrozier 5y agoI was struck by the same line. No real reason to add the part about "no empathy." And it seems like something very close to empathy to understand that one had no empathy....
- cannonpalms 5y agoAt the time of that statement being written, he had taken a plea deal in exchange for testifying against his son.
- mritchie712 5y agoIt was likely written for him and he agreed to sign or say it
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- jhallenworld 5y agoIt's Christmas in August! https://www.youtube.com/watch?v=BmF2lCXV8lQ https://www.youtube.com/watch?v=BmF2lCXV8lQ I remember the bait and switch was big with these stores. The stuff they advertised was not in stock, but they tried to sell you what they did have. I'm surprised they didn't discover what Sir Alan Sugar had: that you could make more money on house branded stuff made in Hong Kong.
- quercusa 5y agoThe NYC camera stores were famous for this: "That Nikon lens is out of stock but we've got a Zeus lens for the same price and it's actually a better lens".
- technofiend 5y agoThis was also lampooned in Adam Sandler's movie Zohan, with electronic store employees proclaiming everything had "Sony guts!".
- carrja99 5y agoNot gonna lie... thought this was going to be about Radio Shack's rebranding as a crypto scheme. Guess that will be an article for next year.
- deleted 5y ago[deleted]
- rdiddly 5y agoNew York by 1987 seemed to have a jam-packed little hole in the wall electronics store in every block. Suddenly now I wonder if they were jumping on the Crazy Eddie bandwagon.
- photochemsyn 5y agoThis is a good story to compare and contrast with the 2008 subprime fraud cases, for example 'Crazy Lloyd Blankfein' of Goldman Sachs. https://www.cbsnews.com/news/feds-open-criminal-probe-of-goldman-sachs/ https://www.cbsnews.com/news/feds-open-criminal-probe-of-gol... "Goldman Sachs to Pay Record $550 Million to Settle SEC Charges Related to Subprime Mortgage CDO, CBS 2010" The amount of fraud committed was far greater than that, and there were no criminal charges involving jail time for any of the culprits. Kind of like doing armed robbery at a bank, getting away with $100K, then being fined $50k for the crime with no jail time. A profitable business model in other words.
- johnebgd 5y agoBanksters really got away with a lot in the States. Iceland at least held theirs accountable. https://www.independent.co.uk/voices/iceland-has-jailed-26-bankers-why-won-t-we-a6735411.html https://www.independent.co.uk/voices/iceland-has-jailed-26-b...
- okboomer9 5y agoNever hear anyone suggesting we start charging people who lied on their loan applications even though it was rampant. People frequently would say they were going to make $X/yr where that number came from the amount of money they expected the home to go up, not actual income on a W2. Banks were selling the loans so they often didn't care to get real documentation of income either.
- lupire 5y ago> were going to make That's a documented risk the lender knew about and encouraged.
- not2b 5y agoI've often seen this take, but what it misses is that at the height of the liar loan boom, those loan applications with the lies were often filled in by the loan originator, knowing it was a lie, and they would then sell that loan off as soon as it was issued. The borrower often didn't even know what was on the form. They thought they could get away with it because they believed real estate could only go up, so if the borrower defaulted the lender could get the house and still make money.
- bitwize 5y agoMy dad bought me my first computer, a Commodore VIC-20, from Crazy Eddie's when I was 5. When people ask me how I got started programming, I tell them the story of the VIC-20 from Crazy Eddie's, often having to explain what Crazy Eddie's was if the questioner is a millennial or younger. The chain and especially the commercials were part of the cultural landscape especially in the northeast, and were even parodied in television and movies.
- CPLX 5y agoThe decision to do an IPO for a company that was literally not paying payroll taxes and keeping profits in suitcases just has to go down as one of the worst criminal decisions in recorded history. Like without the IPO I would suspect they could have gone on for many many years basically skimming and scamming the government, maybe with some eventual consequences and fines but most likely being able to pay their way out of it.
- toss1 5y ago>>But Zinn immediately discovered $45m of listed inventory was missing. Living in Manhattan in 1983, when the cable installers came to hookup service, they offered us brand new TVs at about half the price of Crazy Eddie's stores - from what little I could find out, it seems they'd been recruited by Eddie's warehouse workers to push fell-off-the-truck / out-the-backdoor sales of Eddie's inventory. I'd bet that there were a lot of the appointments that bit on that offer. I was not surprised to see Eddie's rapidly declining in the following year. You just can't survive with truckloads of your inventory going missing every day... And reading about how he paid employees 'off the books', no surprise they were also freelancing off the poorly controlled inventory flow.
- fishtacos 5y agoSurprised to see Systemax/TigerDirect and the Fiorentino brothers, who were convicted of embezzlement, security fraud and tax evasion, wasn't mentioned. Perhaps because they didn't outright scam customers. (although I do think they with run-by-night 0-support AV crapware we bundled with everything we could as a value-added service, or pointless "optimization" services that did absolutely nothing). Don't have much to add here beyond the fact that I worked there in the 2012-2013 strech and a little beyond. Run about as spartan as could be, no LP but millions of dollars worth of equipment that were there ripe for theft and fraud with nearly zero oversight. (fraud was rampant in the store - can honestly say I never engaged, but I was offered the opportunity multiple times).
- par 5y agoTigerDirect! That really takes me back. I used to love skimming their catalogs.
- deleted 5y ago[deleted]
- smm11 5y agoThe 80s have not left us, to this day.
- seattle_spring 5y agoReminds me of Dell Schanze and Totally Awesome Computers [1] in Utah. [1] https://www.ksl.com/article/260958/a-look-at-super-dell-schanzes-life https://www.ksl.com/article/260958/a-look-at-super-dell-scha...
- rsynnott 5y agoHrm. So is Crazy Eddie in "The Mote in God's Eye" a reference to this, or are they both a reference to some prior thing?
- Metacelsus 5y agoI was wondering about this too.
- rsynnott 5y agoActually, I think there almost must be an earlier common origin. The chain started in 1971 in New York. The book was published in 1974, so probably written in 1973 if not earlier. Neither Niven nor Pournelle lived in New York or anywhere near New York, so it's unlikely to be inspired by the store (unless it became so instantly culturally relevant that everyone knew about it within a year or so, which seems unlikely)... I mean, maybe it's coincidence and they both just came up with the same name, but that also doesn't seem likely.
- janandonly 5y agoI never knew that the role of “Crazy Eddie” in the series The First Wave [1] was in fact based on a electronics chainstore… [1]. https://www.imdb.com/title/tt0160277/ https://www.imdb.com/title/tt0160277/
- marginalia_nu 5y agoOh man, I loved that show. Late 1990s Canadian sci-fi is just the perfect blend of cheesy and interesting.
- erichurkman 5y agoSo was Crazy Earnie's Emporium [0] from Brave Little Toaster! [0] https://www.youtube.com/watch?v=1glJgOtyM8k https://www.youtube.com/watch?v=1glJgOtyM8k
- frankfrankfrank 5y agoIt's kind of interesting how every single time that some kind of fraud damages the system, not only is there no effort to fix or revert back to an undamaged version, but the damage is simply allowed to grow and fester as copy-cat fraudster corporate types latch onto the barrier that was breached. It's literally every single time. Internet "bubble", housing "bubble", "Affordable Care Act" fraud, and the mountain of other frauds committed before and since; including all the various "recovery act" type of Government fraud where the same class of people who commit the fraud and cause the damage, are then the primary beneficiaries being rewarded with billions, approaching trillions now. And that's without even touching on the murderous fraud of the type like the deliberate fraud of the Iraq war. Just look at the common complaints today regarding work-life, wages, and even supposed staff shortages (the claims of which themselves are fraudulent); they all are directly linked to things like this guy knocking yet another section of the wall out through Sunday workdays that was then never reverted/rolled-back even after the fraud was revealed. Is Chick-fil-A really just a fluke in how efficient and happy it's employees are in spite of the fact that they shut down on Sundays? I sure don't ever think so.
- at-fates-hands 5y ago>> It's kind of interesting how every single time that some kind of fraud damages the system, not only is there no effort to fix or revert back to an undamaged version Enron The Sarbanes–Oxley Act of 2002 The bill was enacted as a reaction to a number of major corporate and accounting scandals, including those affecting Enron, Tyco International, Adelphia, Peregrine Systems, and WorldCom. These scandals cost investors billions of dollars when the share prices of affected companies collapsed, and shook public confidence in the US securities markets.[3] https://en.wikipedia.org/wiki/Enron_scandal#Sarbanes-Oxley_Act https://en.wikipedia.org/wiki/Enron_scandal#Sarbanes-Oxley_A...
- frankfrankfrank 5y agoSorry to break it to you. SOX has effectively been neutered, defanged, and amputated into little more than a male work type of grift to enrich people itself.
- bhartzer 5y agoI remember Crazy Eddie's very well. I was a teenager in the 1980s, and I still have the portable Sony Discman I got there for $100. I mowed a lot of lawns in order to save up for that Sony Discman from Crazy Eddie's.
- fortran77 5y agoTheir former CFO has an active twitter account and is fun to follow.
- 1vuio0pswjnm7 5y ago"If it seems odd that a purveyor of VCRs and stereos could make investors swoon, remember that this was the 1980s, and people were getting pumped about cellular phones that were roughly the size of microwaves." That is not how I remember it. To insinuate VCRs and stereos should not have been sought after in the 1980's is silly. Most people had no interest in a cellular phone. They wanted TVs. The author's comment begs the question, "Was Mark Dent in NYC buying electronics in the 1980s." Crazy Eddie defrauded investors but generally, as I remember it, they were honest toward their customers. To be trutthful, I was not much of a Crazy Eddie customer. I only bought from them a few times. I chose to buy from their competitors, other electronics dealers in NYC with "low, low" prices and price guarantees. Like Crazy Eddie, these shops focused on volume. Anyone remember places like 6th Ave electronics. Prices were published, in their newspaper ads. In theory one could take one of these ads to Crazy Eddie if that was one's preference for where to shop. Apparently 6th Ave imploded even faster than Crazy Eddie. There is a Wikipedia page devoted to the subject.^1 To some perhaps these places felt like they were being run by "hustlers". As a customer, I never found them to be dishonest, they were just barebones operations. No salesmanship, no BS. The price is low, the stock is here, take it or leave it. The educated consumer was their best customer. However I see marked differences with how people today use the word "hustle", e.g., this website. Today, customers are the target of "tech" company deception and investors are the enablers. It is unlikely these 1980s era electronics shops had wealthy investors backing them like "tech" companies have today. They had to make money in the present to stay in business. Their employee salaries were paid from revenues or loans, not investment rounds. If they failed to make money, eventually they went bankrupt. They had skin in the game. 1. https://en.wikipedia.org/wiki/Sixth_Avenue_Electronics https://en.wikipedia.org/wiki/Sixth_Avenue_Electronics
- deleted 5y ago[deleted]