Former Fraudster Sam Antar Talks About Life as a White-Collar Criminal
For those of you who don’t know, Sam Antar of Crazy Eddie fame is a big fan of this site. He wrote the below article on his blog the other day and it made me think of everything that went on in the mortgage industry during the boom. It’s a good read. I have also attached the link to the Canadian TV interview Sam Antar did. It interesting to watch because of the questions the Marcia McMillan asks. It’s apparent the Canadians take a different attitude toward white-collar crime than we do here in the US.
Sam Antar, White Collar Fraud
Last Friday evening, Marcia MacMillan from CTV News Channel (a 24-hour news network in Canada) interviewed me and asked me what it’s like to be a white-collar criminal and what role, if any, did morality play in my decisions to commit crime.
Reflecting on my own white-collar criminal mind leaves no doubt that money is not the only motivating force compelling hardcore criminals to commit crimes. There was also a passion for the act, a sense of accomplishment, that made me enjoy committing my crimes. It is perhaps the same positive feelings of success that law-abiding citizens experience for a legitimate job well-done.
To better understand the behavior of white-collar criminals, take morality out of the equation. During my years at Crazy Eddie, we never had a single conversation about the morality of our actions. We did not give a damn about right and wrong.
Hardcore criminals don’t question their unethical and immoral conduct. Laws, morality, and ethics are weaknesses of other people. They don’t factor in except by limiting society’s behavior. In our society, morality dictates that people are entitled to the benefit of the doubt. Ironically, the “benefit of a doubt” limits the behavior of law-abiding citizens while giving criminals greater opportunity to commit their crimes. After all, no one likes to be called “a paranoid” or “impolite.”
Our late President Ronald Reagan used to say “trust, but verify.” That initial trust gives criminals the freedom to take steps to evade detection. For example, Joseph T. Wells, founder of the Association of Certified Fraud Examiners, described certain steps I took during Crazy Eddie’s audit to successfully execute my crimes:
Crazy Eddie’s auditors were provided a company office during their examination. They had a key to lock the desk—which they kept in a box of paperclips on top of the desk in full view. After the auditors left for the day, Eddie’s cohorts would unlock the desk, increase the inventory counts on the workpapers and photocopy the altered records. Were the auditors stupid? No, just too trusting. After all, no one wants to think the client is a crook. But it happens all too often. That’s why the profession requires auditors to be skeptical.
I took advantage of our auditor’s initial trust of management and rigged their audit verification of our books and records. Crazy Eddie’s auditors were unable to find any irregularities because we knew exactly what they were looking at. By the time they got around to verifying our financial reports it was too late because we cheated by taking countermeasures to evade detection of our crimes.
The lesson of the Crazy Eddie fraud is, “Don’t trust, just verify. Be very skeptical.” Learn to exercise “professional paranoia.”
Forensic Accounting and Fraud Examination, 1st Edition by Mary-Jo Kranacher (York College, City University of New York), Richard Riley (West Virginia University), Joseph T. Wells (Association of Certified Fraud Examiners)
I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980’s. I committed my crimes in cold-blood for fun and profit, and simply because I could.
If it weren’t for the efforts of the FBI, SEC, Postal Inspector’s Office, US Attorney’s Office, and class action plaintiff’s lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.
There is a saying, “It takes one to know one.” Today, I work very closely with the FBI, IRS, SEC, Justice Department, and other federal and state law enforcement agencies in training them to identify and catch white-collar criminals.
Recently, I exposed financial reporting violations by Overstock.com (NASDAQ: OSTK) as an independent whistleblower which resulted in the company restating its financial reports for the third time in three years. The Securities and Exchange Commission is now investigating Overstock.com and its CEO Patrick Byrne for securities law violations (Details here, here, and here).
In addition, the SEC is now investigating possible GAAP violations by Bidz.com (NASDAQ: BIDZ) after I alerted them about the company’s inventory accounting practices.
I do not own Overstock.com or Bidz.com securities long or short. My exposure of confirmed financial reporting violations by Overstock.com and possible financial reporting violations by Bidz.com was a freebie to securities regulators to get me into heaven, though I doubt that I will ever get there.
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.