The most difficult crimes to deter, investigate, and prosecute are committed by organized crime groups who share the same race, religion, ethnic, and cultural backgrounds. The social cohesiveness of such criminal groups makes it relatively easy for them to coordinate their actions to effectively execute and cover up their crimes over long periods of time.
When most people think of organized crime, they think of violent criminal groups such as the Mafia. However, not all organized crime groups use violence in the execution of their crimes.
Some of the most effective organized crime groups consist of white-collar criminals who do not use any violence at all. Such organized white-collar criminal groups can be found among primarily family based businesses, even after such businesses become public companies because their management is dominated by well coordinated and cohesive family members.
Members of the Antar family, myself included, who committed the Crazy Eddie fraud, used a combination of deceit, charm, and distraction to effectively commit our crimes over an 18 year period. While we didn’t kill people, we were was just as brutal and caused just as much harm as if we were violent criminals. You can steal more with a smile than you can steal with gun.
I was recently interviewed by Ilene (syndicated blogger, editor at Phil's Stock World, and attorney) about the Crazy Eddie fraud and the mind, motivations, and techniques of white-collar criminals. [Sam Antar, The Brutality of Non-violent Organized White-Collar Crime Groups]
"Homo sum, humani nihil a me alienum puto." Terence
Sam Antar will tell you all about his crimes, in every last detail, while insisting he is and always will be a criminal, and will burn in Hell for the massive amounts of harm and destruction to lives he has caused.
My initial reaction was not to believe Sam, being sure, having never spoken with him before, and not knowing much about Crazy Eddie, that Sam was mistaken about burning in Hell. After all, he is now teaching others all about white collar crime and the perpetrators of those crimes. Guilt is such a deadly emotion, and you don’t even have to be aware of it suffer its assaults on your psyche. He’s probably plagued with guilt, I surmised. Which would mean he’s not a sociopath. Of course, I am not a sociopath and have no insight into the sociopathic mind. But I felt eager to learn. Besides, Sam warned me not to believe a word he said.
Before our interview began, Sam shared the basic tactics that white collar criminals use to exploit and scam their victims:
1. White collar criminals consider your humanity, ethics, and good intentions as a weakness to be exploited in the execution of their crimes.
2. White collar criminals measure their effectiveness by the comfort level of their victims.
3. White collar criminals build a wall of false integrity around them to gain the trust of their victims.
At this point, I was feeling comfortable with Sam, admiring his self-insight and commitment to telling the truth. So when Sam said that by the time he was finished with me, I’d be a paranoid schizophrenic and never trust another man again, I was again thinking he was wrong. Just like the ideal victim type I am.
Ilene: Sam, you wrote on your website “I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other family members mastermind one of the largest securities frauds uncovered during the 1980s. My responsibilities at Crazy Eddie included skimming, money laundering, insurance fraud, securities fraud, and a list of other criminal activities too long to list here.” Could you elaborate on what you were doing?
Sam: Committing white collar crimes, for money. We enjoyed begin criminals, and enjoyed the money. We had no empathy for the people we hurt. We didn’t even need the money, just wanted more.
It started when the company, Crazy Eddie, was a private company in 1969. As a private company, there’s no need to boost income - you want to keep reported income low because you have to pay taxes on it. So we skimmed money off the top. If someone paid cash for an item, which was more common back then than it is now, we wouldn’t report it to the IRS. By not declaring the income, we could avoid the sales tax and the income tax — we’d be way ahead.
As a public company, however, we had to do the opposite. We wanted earnings so it would appear as though the company was growing quickly. We wanted fictitious earnings.
Ilene: How do you create fictitious earnings?
Sam: Double counting inventory, overstating inventory, understating accounts payable, money laundering, and other methods.
Ilene: Did your auditors miss your accounting inaccuracies?
Sam: Public accountants that are sent out to audit public companies are typically young kids who do most of the leg work. In those days, they were mostly guys in their twenties, say 22 years old to 26 years old, perhaps even 30 years old. But basically younger guys.
I was a pimp and matchmaker for them and would set them up with young girls to distract them and keep them busy. You know, these guys think with their penises, not their heads.
You never tell an auditor they can’t have something. You just agree and don’t follow through. It wasn’t hard to distract them from their audits by pairing them with girls — these guys are like Pavlov’s dogs - throw women in front of these guys and they are very distractible.
Ilene: Did the girls know what you were up to?
Sam: Some did, some didn’t. You can steal more with a smile than with a gun.
Criminals are like females, we use charm and deceit to get what we want. White collar crime is all about confidence. White collar criminals are con men, they need to gain the confidence of their victim. They do this by smiling and flattering the victims. Here’s a politically incorrect example. How many guys have told you how great you are in order to get favors from you?
Ilene: I don’t know the number but you mean like romancing the victim?
Sam: Yes. Criminals use the same technique you see when a guy’s trying to pick up a girl. That’s how while collar criminals gain confidence - they’ll use flattery and tell many lies.
I started working from Crazy Eddie when I was 14 years old. I was essentially trained, from day one, to be an effective criminal within the family business.
Ilene: Do you think your criminal nature is genetic or environmental, or a combination?
Sam: I don’t know about the genetics, but there’s certainly environmental factors involved. My family is Sephardic Jews. My grandparents came to the United States in the early 1920s. They had been highly discriminated against in the past, in Syria, where my family is from.
We had to be insular to cope with the discrimination, and that helped build a culture of cohesion within our family. The same cohesiveness helped the community, the culture, survive living in Arab lands.
Likewise, organized crime groups commonly share the same social, ethnic and religious groupings. The members are bound together by religion and stature within the criminal group.
Ilene: Like the Mafia?
Ilene: But you didn’t kill people.
Sam: No, I didn’t kill people but I was just as brutal and caused just as much harm as if I did.
This was the life that I was brought up to be in, within an otherwise law-abiding community. However, in every tight-knit community there exists a criminal subculture that benefits from the cohesiveness of that community. The same cohesiveness that helped the community survive also helped the small criminal subculture within that community to be more effective and survive, too.
Social cohesion is like higher education, there are good sides of it, but education can be used for bad things, too. College helped me supplement my criminal ways so that I could become a better white collar criminal, with my acquired accounting skills.
Ilene: So your crimes grew progressively worse?
Sam: Yes. Most mom and pop retailers skim money off the top - we were a family of merchants, and skimming was normal at the time. My cousin Eddie started the company, and in this new business, not declaring income to the IRS, was normal.
Criminals are no different from regular people in that criminal behavior starts small. To understand criminal behavior, you have to take the morality out of the equation. Most people don’t prepare for failure. Like people don’t plan to go bankrupt, criminals also don’t prepare to get caught.
Skimming profits and cheating the IRS was a first step. Next was insurance fraud. So, for example, if someone stole a truck full of merchandise, we could report more merchandise stolen than was actually stolen to the insurance company. Who is going to believe the thief if he gets caught? Or if there was a flood that damaged some inventory, we could throw all the non-salable goods onto the damage list to increase our insurance proceeds.
Crazy Eddie functioned as a private company from 1969 to 1984. In 1980, we started preparing to go public. Our goal of minimizing profits switched to that of increasing profits and legitimatizing the company, "going legit." In effect, we committed securities fraud through the process of going legit by gradually reducing our skimming and increasing our reported profits.
Now, we wanted to show growth in earnings. Gradually and fraudulently, we reduced the amount of skimming to zero to inflate our growth rate. When we went public in 1984, our growth rate appeared much greater than it really was. By misrepresenting our growth in profits, we were committing securities fraud in addition to our other sins. We were portraying ourselves as a legitimate public company, until finally it all became unsustainable.
End of Part 1.
For a timeline of Crazy Eddie's evolution in crime, Sam writes:
(1) 1969-1979: Skimming and under reporting of income (tax fraud) prior to planning to go public
(2) 1980-1984: Gradual reduction of skimming to increase profit growth in preparation for initial public offering, known as committing securities fraud by going legit
(3) 1984-1987: As a public company, overstatement of income to help insiders sell stock at inflated prices by the following means:
• Money laundering to increase revenues and reported profits, known as the "Panama Pump"
• Fraudulent asset valuations to increase reported profits (inflating inventories)
• Timing differences to increase reported profits (accounts payable cut-off fraud)
• Concealed liabilities and expenses to increase reported profits (debit memo fraud)
• Improper financial statement disclosures to cover up crimes (changing disclosures to cover up fraud)
In "Straight Talk about Brutality of White Collar Crime from a Convicted Felon" Sam explains:
If you want to truly understand the brutal nature of white collar crime in all of its gory detail, please listen to my videotaped interview below that is featured on the Con Artist Hall of Infamy website. In part one and two of a series of chilling interviews with journalist Becca MacLaren, I discuss the basic tactics that white collar criminals use to exploit and scam their victims.
Sam Antar Interview, Part 1: The Rules of Criminality (click on title and scroll down for videos)
Sam Antar Interview, Part 2: Humanity, or the lack thereof
Thank you to Becca MacLaren and the Con Artist Hall of Infamy for permission to use the videos. The Con Artist Hall of Infamy was founded by Warren Hellman and Arthur Rock, "two billionaires with a fascination of white collar crime and a passion dedicated towards educating the public about the cold-blooded brutality of criminality."