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No Redemption

Submitted by ilene on 10/06/2010 21:52 -0400

This is my first interview with Sam, which was originally published at Phil's Stock World in May. He talks about the criminal mind and how to understand crime by taking morality out of the equation.

No Redemption

"Homo sum, humani nihil a me alienum puto." Terence

Interview with Sam Antar, by Ilene, part 1.

Crazy Eddie 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 life destruction 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, I reasoned, and you don’t even have to be aware of it to suffer its assaults on your psyche. Sam’s probably plagued with guilt. 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.

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 being 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 pretty 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.

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 victims. 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?

Sam: Yes.

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.

In effect, we were selling a bill of goods to investors. We didn't care and didn't feel badly about it.

Ilene: Do you feel badly about it now?

Sam: If I told you I did, would you believe me?

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

Sam Antar Interview, Part 2: Humanity, or the lack thereof

[Videos here.]

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."

Read No Redemption II here.

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Thu, 10/07/2010 - 10:57 | 632158 Kobe Beef

"Committing white collar crimes, for money. We enjoyed being criminals, and enjoyed the money. We had no empathy for the people we hurt. We didn’t even need the money, just wanted more."

So-- Do we inscribe this above the US Capitol building, above the Federal Reserve building, Goldman Sachs, Bank of America, or Citigroup headquarters??

They all can't use the same motto. Any suggestions?

Cheers,
Beef

Thu, 10/07/2010 - 15:26 | 633345 ilene

I think we can make that inscription, that there's a culture of crime that has overtaken various industries, corporations, and government, where even criminal acts (certainly unethical ones) are able to be rationalized away. How much is rationalized away vs. how the actors are is question I don't know the answer to, but it's a fascinating subject.

Thu, 10/07/2010 - 17:03 | 633679 blindman

the fed and the mic.

the root, those bastions of "civilization".

Thu, 10/07/2010 - 00:01 | 631296 RockyRacoon

White collar crime is all about confidence.

Why does the Fed and the "confidence" in the dollar come to mind?

Then there are inflation "expectations".

It's a national level shell game of confidence, the more nefarious definition.

Thu, 10/07/2010 - 02:12 | 631457 Hephasteus

And just as tight knit. Same thing with milatry. They develope such strong bonds with each other everybody else is sweater fuzz because they have so much confidence from so many people watching thier back.

To a psychologist they look like they have an attachment disorder because they are so brutal and uncaring to everyone either physically or psychologically. But it's just because they have such strong core attachments to their groups that everybody else just becomes victims to the core group needs.

Wed, 10/06/2010 - 23:59 | 631292 williambanzai7

Tnx for these posts. The Crazy Eddie debacle seems quaint in today's environment. This is what really angers me. The system is one big giant swindle.

First we had Milken Boesky Crazy Eddie, etc. All chump change.

Then we had Enron and Global Crossing, which was a major bump in size.

Now we have Wall Street USA.

Thu, 10/07/2010 - 04:28 | 631525 ilene

That's so true, I want to write about that next.

Thu, 10/07/2010 - 04:43 | 631529 williambanzai7

Let me know if you need any visual aids.

Thu, 10/07/2010 - 15:20 | 633315 ilene

Thanks!

Wed, 10/06/2010 - 23:06 | 631180 TheGreatPonzi

I have personnally more respect for the Mafia than for the FED crime syndicate.

Don Corleone seems less dangerous for our liberties than Al Maestro Greenspan or Mugabe Bernie.

Wed, 10/06/2010 - 22:40 | 631129 Minion

You can really see it in his eyes.

Wed, 10/06/2010 - 22:05 | 631049 ilene

Sam answered some of the comments on his last post, and sent them to me to post, here:

by Theta_Burn
on Tue, 10/05/2010 - 13:42
#626764

Nice, bought alot of components from these guys, of course with the extended warranty.....which is why to this day i dont bye an extended warranty...

http://www.youtube.com/watch?v=uCGsqBn9pog&feature=related

since we are all feeling a bit nostalgic....

http://www.youtube.com/watch?v=0i-uOIuWfUE

Those were the days....

Antar response:

I am glad you got wise about extended warranties. Specifically in the case of consumer electronics, they are a big profit center for the retailer and provide little value for the consumer.

by doolittlegeorge
on Tue, 10/05/2010 - 13:49
#626803

You mean "beware of compliments that aren't genuine." I read a very well written Sam article on SA earlier in the year when it looked like the SEC would actually do something vis a vis Goldman. It did not pass. Sam had a great piece on what the SEC can really do "when going after small fry" like himself. Having been targeted as well although not by the SEC "it's a lonely place confronting the Federal Government." But it's also an irretrievably negative place which even the Feds admit "basically accomplishes nothing." Now of course Arther Anderson was obliterated by the Feds due to Enron at a cost of a couple hundred thousand great jobs. The same could be said apparently of KPMG and "a few hotties around the office." Okay. And you're point is? We need better audits of business? REALLY??? That's it? Now "thank you for a good post."

Antar response:

The decision to destroy an entire accounting firm (Arthur Anderson) due to the actions of a relatively few corrupt partners and employees was a dumb politically motivated decision. It’s an example of how political expediency under the guise of being “tough on crime” can destroy the livelihoods of tens of thousands of honest hard working employees.

Dear Mr Antar,

First, I would like to say that you are to be commended for you efforts in helping to combat fraud.

Second, I don't think you should be too hard on yourself given the monumental thievery that continues to run rampant on Wall Street.

Keep up the good work, there are plenty of rascals standing on line to get to swindler hell light years before you.

Sincerely,

WilliamBanzai7

PS: Which do you think are more useless, auditing firms or rating agencies? For me its a toss.

PPS: Why don't you spend a little time examining what the hell AIG's auditors were doing. For example, how is it that AIG had a surprise off the books stash of billions of negotiable securities in the vault (according to Sorkin)? It is frustrating that the whole AIG situation just got white washed.

Antar response:

It’s not an issue of being hard on myself. What happened simply happened. It is what it is. Can’t change the past. In their current state, both audit forms and rating agencies are useless.

by Almost Solvent
on Tue, 10/05/2010 - 14:58
#627085

Ratings Agencies are more useless.

Auditing firms can do it right, if they actually do what it is they are supposed to do, whereas ratings agencies are whores and could not exist if they actually rated based on underlyng fundamentals. Subprime? A+++

Antar response:

The problem is under-qualified auditors combined with a culture of pleasing the client and rating agencies that did not properly evaluate earnings quality.

by downrodeo
on Tue, 10/05/2010 - 14:28
#626974

"I do not seek or want forgiveness for my vicious crimes from my victims. I plan on frying in hell with other white-collar criminals for a very long time.

Hopefully, this blog post can get me into heaven, though I doubt I will ever get there."

Lol, more like this! If there is one thing that will win you favor points with God, it's self deprecation.

Antar response:

“God is a comedian, playing to an audience too afraid to laugh.” --- Voltaire

by pitz
on Tue, 10/05/2010 - 14:47
#627045

Why are these "auditors" still in business?

They have no credibility. Every last one of PwC, KPMG, and Deloitte probably should be shunned by the investment community.

Antar response:

Each one of the big four accounting firms primarily exist to sell hope to investors on the integrity of financial reports.

No Redemption

No Redemption

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