White-collar crook's tactics

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Criminals take advantage of your humanity, Detroit figure says

May 28, 2008|By Susan Tompor | Susan Tompor,Detroit Free Press

Sam E. Antar tells you straight out that white-collar criminals thrive by building a false wall of integrity.

"Yes, we go to church and to synagogue and to mosque and to temple," Antar told a group of money professionals at the CFA Society of Detroit earlier this month.

The criminal takes advantage of your humanity, he said, and considers it a weakness to be exploited.

Be sure to take those words to heart if you want to avoid getting scammed out of your nest egg. For the crook, humanity - and its very foundation - are nothing but a way to work you over.

"We are economic predators," Antar stated.

Lived, breathed fraud

Antar, 51, lived and breathed fraud as a certified public accountant and later as chief financial officer of the Crazy Eddie consumer electronics chain in the 1970s and 1980s. He now lists his occupation online as: convicted felon.

He has a Web site - www.whitecollarfraud.com. He has a blog where he shares his views about securities fraud, the accounting profession and Sarbanes-Oxley. And he does time by voluntarily working in forensic accounting and giving dozens of talks each year about the accounting scams used in the Crazy Eddie days.

He talks about the mind of the white-collar criminal. He does not charge for his speeches. He can afford to give speeches for free, he said, because he made money in real estate and because his wife is relatively wealthy.

He has spoken to the chartered financial analysts group in Detroit, law students and business students at Stanford University, an accounting group in Ohio and certified fraud examiners in Philadelphia and New Jersey.

Antar, who feared doing hard time, became the government's star witness in the Crazy Eddie stock fraud trial in the early 1990s. He faced 10 years in prison but ultimately spent six months under house arrest and paid $30,000 in fines.

Eddie (Crazy Eddie) Antar, Sam E. Antar's cousin, started with one store in Brooklyn and built a chain of more than 40 stores in metropolitan New York. The Crazy Eddie experience included high-pressure sales tactics, wild commercials and wild promises of low prices.

The Antar family made millions, and the company went public in 1984 with one of the hottest initial public offerings. Then a securities fraud case began unfolding in 1987, years before we heard of corporate cons like those at Enron Corp., Tyco International or WorldCom.

Eddie Antar ultimately served time in prison. Investors lost about $145 million. But roughly 35 cents on the dollar was recovered for shareholders, in part because scammed money was in overseas accounts, including in banks in Israel.

Watching Sam E. Antar talk to chartered financial analysts at Red Run Golf Club in Royal Oak, Mich., you could see some of the scam artist and showman. He began by saying that the audience could ask any question. Then, he talked - and showed tapes, including a CNBC interview with him and Eddie Antar - for more than 2 1/2 hours, leaving little room for questions.

He offered plenty of insight as he spilled his secrets about the Crazy Eddie days of repackaged merchandise sold as new, skimming cash, ceilings stuffed full of unreported cash and bad audits.

White-collar fraud works because young auditors are easy to scam. The Crazy Eddie chain duped investors and inflated its inventories, and company managers carefully arranged stacks of boxes to hide empty space in the warehouse. Young auditors wore suits to the audits, Antar said, and they were easily distracted.

"Nobody ever climbed over the boxes," he said.

When fraud is uncovered, he said, it's generally because insiders ultimately turn on cousins, ex-husbands and ex-bosses.

Founder Eddie Antar was married to a woman named Debbie and decided to take up with a girlfriend named Debbie. He later divorced the wife and married the girlfriend. But Antar family rivalries took advantage of that infidelity. His ex-wife charged fraud after her divorce settlement and ultimately hurt Eddie Antar in the government's investigation years later.

"There is no statute of limitations on the fury of a woman scorned," Sam E. Antar said.

'I lied about it'

He said he lied under oath for two years in depositions with federal regulators.

"You name it, I lied about it," Antar said in an interview.

His thoughts for investors:

The only way to read financial statements is to start at the bottom in the footnotes, where the real story is told. And he suggested digging up the statements from comparable quarters to see how those footnotes may have changed.

Most individuals should stick with mutual funds, he said, because they don't have time to keep up on individual stocks.

Several times, Antar suggested how important it is to be skeptical, ask questions and realize that white-collar criminals thrive by building a wall of integrity. He suggested that it's important that people be able to learn from the evilness of his crimes.

So, I asked him: Are you building that wall of integrity right now by doing all those free speeches about white-collar crime?

"Never know," he said, nodding.

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