Retail gangster, p.18
Retail Gangster, page 18
Shortly after they were hired, the Felders wrote Eddie a letter in which they advised him that they were representing Debbie. Precisely what else they said is not known, but its effect on Eddie was immediate. He reacted by placing a frantic series of threatening phone calls to Mitchell and Ben Kuszer, who were vacationing with their families in Acapulco, and other family members. His message was blunt. Debbie was to be stopped, “or they will all go down.” For the first time in his life, Eddie Antar was afraid.
Debbie had chosen the worst possible month in the life of her ex-husband to sic ferocious, determined matrimonial lawyers on him. It is sheer happenstance—just one of those little points of convergence that happen in the universe—that at the very time she inserted that bayonet into his solar plexus, another one was being placed there by the US Attorney for the District of New Jersey. Within a day or so of learning that Debbie had hired the Felders, Eddie was put on notice that Crazy Eddie was the subject of a criminal investigation into an old, reliable moneymaker.
An FBI agent named Terrence Flynn was the bearer of that horrifying news, serving a subpoena on Dave Panoff that demanded he produce all records pertaining to warranty claims. Eddie knew perfectly well that he had authorized Panoff to con the manufacturers when he was hired, and told him “rip their eyes out” after the IPO. Not only was Panoff a key member of the inner circle—not only a newly appointed, Bible-sworn board member—but he ran the reeps warehouse fraud in addition to his warranty thievery. These were things that he had done for Crazy Eddie at Eddie’s instructions.
Panoff had every right to feel both terrified and vindicated. He had ordered an end to the warranty fraud only a few months earlier, after Sharp Electronics had gotten wise to the scamming and confronted him. He later recalled: “They came into our repair center. They basically said: ‘Look, we know what you’re doing with this. We really need you to stop.’” What no one knew at the time was that someone had gotten sloppy. Panoff or one of his people had submitted claims to manufacturers for units that they didn’t make.
The Sharp meeting bothered Panoff immensely. “There was something about that whole meeting that got me very nervous. At the time I realized what we were doing was dangerous, and I figured at that point it made sense to stop the whole thing.” Panoff immediately “shut the whole thing down.” It had been a neat moneymaker, reaping $400,000 a year for the company, but Panoff felt it was far too risky. That was a good call, even though it was too late. Sharp and possibly other manufacturers had already complained to the FBI. It was in the hands of the bureau’s satellite office in Hackensack, the North Jersey town where Flynn was based.
Solomon convened a meeting with Office of the President members Sammy, Mitchell, and Ike Kairey. Since the warranty fraud scheme had ceased, it was decided that they would give the feds only recent records. They would use the excuse that “we had the other records in more of a long term storage situation and asked them for more time to present them.” The hope was that when the FBI and US Attorney’s Office looked at the papers provided, which were innocuous, “they wouldn’t proceed with the investigation.” That strategy was put into motion, and everybody kept their fingers crossed.
Business was tanking, but Eddie and his lieutenants were too distracted to care. “The profitability of Crazy Eddie was going down the tubes. There was no direction,” Sammy recalled a few years later. At the same time, family friction “was making things very, very very difficult. The company was starting to come apart.” Sammy felt like he was “talking to the walls” when he tried to get the brothers to cooperate with each other.
Eddie had his own plans. In February or March 1987, he confided to Sammy that he was moving his money out of the country “in case anything happens.” He didn’t elaborate, but he realized that the frauds they were committing were not enough to turn the company around. Comp-store sales were horrid. In the fiscal year ending on March 1, 1987, they were down 5.3 percent to 6.3 percent compared to the year before, though the company reported only a 2 percent decline thanks to their fakery.
As the fiscal year came to an end, Eddie decided to engage in a last-ditch inventory-enlargement scheme. Unfortunately, the reliable warehouse manager Dave Neiderbach was gone. The chaos and pressure had pushed him out the door, and he was replaced by an employee of unknown reliability. Eddie and Sammy decided to inflate the inventories in the stores instead. All the Crazy Eddie outlets had stockrooms. Now they were going to be stuffed with merchandise, but only on paper. Sammy was joined in that endeavor by his deputy, Eddie Gindi, as well as Mitchell and trusted employees Arnie Spindler and Abe Grinberg. Just before the fiscal year ended on March 1, the group stayed late and altered store inventory numbers, with Spindler and Grinberg advising them on the best products to change on the inventory sheets. Sam M. pitched in as well.
In past inventory padding, Eddie’s people had gone to great lengths to watch the auditors. Neiderbach had his guys follow them around, noting what boxes they were counting, and Arnie Spindler had cleverly kept a copy of their test-count list during the year-earlier inventory enlargement. Sammy discovered yet another simple way of keeping track of those nuisances. The auditors kept their paperwork in a locked box at the Crazy Eddie offices. He noticed they put the key every night in a small box of paper clips. “After the auditors left after doing whatever work they did during the day, I took the key. I opened the box. I saw which items they had supervised on those stores they had supervised and we changed the items they hadn’t supervised.”
New board member Dave Panoff was reluctant to participate in the scheme, but he had no choice. He had taken an oath on the Bible, after all. Sammy and Kairey implored him to pitch in. Panoff recounted: “I remember him [Kairey] saying, ‘Eddie’s going to be crossing the goal line with the football. Don’t you want to be on the team when that happens?’” Panoff suited up and got in the game.
Team Eddie had successfully boosted inventories by $15 million to $20 million, but their labors weren’t over when the fiscal year ended. The auditors hung around for weeks afterward, continuing their work on the year-end numbers, which would be published in an annual report (a “10-K”) in late April. Sometime during that month, Sammy overheard a conversation among the accountants in which they expressed concern about the inventories in five stores they hadn’t supervised. The numbers reported there seemed awfully high, they grumbled. Sure they were high. The figures on the inventory sheets had been altered.
Something had to be done to prevent the auditor griping from getting out of hand. After consulting Mitchell, Ike, and Abe Grinberg, a decision was reached. Sammy later recounted: “We decided to overship those five stores with merchandise. ‘Ship them to the gills,’ it was called. Just ship them, ship them, ship them merchandise until the stores were bursting with merchandise in case the auditors wanted to do a recount of those stores.” When those stores ran out of space in the stockrooms, store clerks and salesmen piled up boxes of merchandise on the sales floors. Customers could barely squeeze through all the stacks. The stockrooms were so tightly packed that the clerks couldn’t go in to pull out products people wanted to buy. But it didn’t matter. Eddie ordered still more unwanted merchandise, truckful after truckful, which was crammed into the stores.
All this cramming and falsification kept Crazy Eddie from going under, but just barely. When the financial results were announced for the fiscal year ending March 1, 1987, they showed pretax earnings of $20.6 million when the real number was a loss of somewhere between $20 million and $25 million. Even though they had turned red ink into black, their profits were still abysmal even after they were faked, 22 percent less than the year before. In the fourth quarter, which included the all-important 1986 Christmas season, profits were down 90 percent from 1985. Crazy Eddie was clinging to solvency by its fingernails. Nothing seemed to work anymore. The home shopping network was a flop, even with Jerry Carroll at the helm. His fast-talking patter didn’t work in one-hour segments. He couldn’t ad-lib that long, so every word had to be scripted.
Just a few months earlier, it had seemed as if Crazy Eddie was surrounded by Teflon. Bad news never seemed to stick. Now it seemed as if Eddie and his company were swathed in flypaper.
After hiring the Felders, Debbie retained the services of professional security personnel. She didn’t like to call them “bodyguards,” but that’s precisely what they were. She went for the best, or at least the best-known, people she could find, hiring a private detective firm recently established by Richard “Bo” Dietl, a retired NYPD detective with a long and colorful career. During his fifteen years as a cop, he had made fourteen hundred arrests and received sixty citations for heroism. Among his exploits was helping to catch the perpetrator of the Palm Sunday Massacre, a gruesome 1984 mass murder in which eight children and two women were shot to death in East New York. A tough cop like Dietl could certainly handle the slippery and ill-tempered Eddie Antar. Dietl’s firm was hired to serve Eddie with the lawsuit papers and to protect Debbie from any outburst that might result. Debbie would be protected 24/7 by three shifts of Dietl’s men, all retired or off-duty police officers.
Dietl’s men began work on April 22, 1987. That night, one of his people served the papers on Eddie while he was dining with Sammy and other pals at his favorite restaurant, Lusardi’s, on the Upper East Side. Eddie could see at a glance from the papers shoved in his hands that Debbie had gone and done it, all his threats notwithstanding. She wanted the separation agreement quashed. She wanted her “equitable,” and she had hired lawyers known for outcomes that were more than equitable.
Retribution came quickly. Just by coincidence, Debbie’s mom had come to her daughter’s house in Brooklyn that evening. Lillian Rosen had been with Crazy Eddie for years, starting under Uncle Eddy as a clerk, and had since been elevated to supervisor of Crazy Eddie’s payroll department. At about one o’clock in the morning, Eddie called Debbie. “What is your mother’s number?” he asked. Debbie summoned her mom to the phone, but by the time she got there, Eddie had hung up. Ten minutes later, Sammy got on the phone with Lillian. She directly reported to him. Don’t show up at work, he told her. She was fired. “We were both very upset about these actions,” Debbie recalled.
Even though it was clear by now that Debbie was no longer willing to be his doormat, Eddie was not about to skulk off in silence. He sought another opportunity to browbeat his ex-wife, a desperate if not delusional attempt to get her to withdraw her lawsuit.
Two days later, Debbie came home at about four in the afternoon accompanied by one of Dietl’s men, an off-duty detective. Lillian was there and so was Eddie, standing in the vestibule at the entrance. He had come to pick up the kids. Two or three of the children were already in Eddie’s limo. The bodyguard’s presence outraged him. After all, he hired guys like this to guard his stores. And here were off-duty cops being used against him! And in the house he had paid for! His house! “He started calling the man that I was with a moron, and he kept saying it over and over, maybe forty-some-odd times, moron, moron, moron.”
“Eddie, what is it that you want?” Debbie asked.
“I want you,” he said.
“You want to take the children, go with the children. If you want to go take them to eat, take them to eat. If you want them to stay with you, take the children,” she replied.
Eddie was stunned that his ex-wife did not seem to care that he “wanted” her. Her sales resistance was infuriating.
“It is you that I want. It is you I want to talk to. I want to talk to you,” he kept repeating, while interjecting his opinion that the stone-faced plainclothes officer standing next to her was a moron. Ostensibly he had come to take the children with him as allowed by his unlimited visitation rights, but that was now inoperative. Eddie kept repeating, “I don’t want to take the children. I want you, you, you.”
“How can you do this?” he whined before shifting to a threat. “You are going to be sorry.”
During this colloquy, Debbie’s mom quietly called Dietl’s office, whose number was conveniently located near the telephone. The ex-NYPD star swiftly arrived at the house with a colleague, a moonlighting cop, and told Eddie to take it easy. Eddie was not used to people talking to him like that. He was not about to take it easy, and he was unimpressed by the caliber of security personnel Debbie had hired. “I know who you are,” Eddie told Dietl. He was not intimidated by a bunch of rent-a-cops, no matter how many massacres they had solved. The two men argued.
“There is going to be fuckin’ trouble, and you all are going to be sorry. She is going to be sorry,” Eddie grumbled.
As the argument escalated, someone called the local precinct, and before long a squad car pulled up in front of the house. Two cops emerged. One was a captain, an insanely high rank to deal with a minor and thus far nonviolent domestic dispute, but this involved a VIP. Actually two VIPs, Eddie and the well-publicized retired detective Debbie had hired. Eddie was no more impressed by the arrival of police brass than he had been by Dietl’s men. By now the kids in the limo had gone back into the house. Eddie didn’t want to visit with them anymore.
One of the cops advised Eddie that if he didn’t calm down, he would arrest him for harassment. Eddie responded rudely, telling the officer that he was part owner of the house and had every right to be there to see his children. While one of the cops asked Eddie if he had ever learned manners, the other one, the captain, noticed the presence of the children. He took them aside and asked if Eddie had harassed them. The younger girls said no, but one of the older girls answered in the affirmative and signed a complaint, pressing charges against her father. Despite that, Eddie wasn’t arrested. The cops left.
“How can you bring this garbage into the house?” Eddie asked, referring to Dietl’s men.
“Look at the garbage that you live with,” one of his older daughters replied. Debbie told her to shut up.
Three days after the confrontation with Dietl and New York’s Finest, Debbie sought an order of protection to prohibit Eddie from coming into her houses. His attorneys pledged that he would no longer do so. The petition was withdrawn, but Eddie was furious about it, furious about the promise his lawyer had to make, furious about Dietl. His manhood had been challenged, and not ineffectively. He was determined to exact retribution no matter the consequences, no matter how self-destructive it would be.
Lillian’s firing was the beginning of a purge. People in the upper ranks of the company had to go if they were insufficiently loyal or too close to Debbie. Getting rid of her mother was actually Sammy’s idea—she had given herself a raise and bonus without asking him—but the rest were a product of Eddie’s suspicions and paranoia. Eddie’s father and brothers were on the hit list. He was certain that they had egged on Debbie, manipulating her to sue him. It was irrational behavior. The family needed to stick together. But Eddie didn’t care. He had been humiliated in his own home. He didn’t live there anymore, but that didn’t matter.
Ousting Sam M. was sticky. He quit the board but wouldn’t budge beyond that. He was on the payroll as executive vice president, a position with no defined responsibilities that paid $196,000 a year. This was nowhere near the $600,000 Eddie paid himself, thanks to the doubling of his pay the board generously approved the previous September and continued after he stepped down as CEO. Still, $196,000 (about $500,000 in 2022 dollars) was good money, and Sam M. wasn’t getting off that gravy train without a fight.
If Sam M. believed Eddie wouldn’t fire his own father, he had underestimated his son. He was an officer of the company, so Eddie couldn’t dump him unless he obtained board approval. Surely Eddie wouldn’t wash the family’s dirty laundry in public, would he? Yes, he would. He created a special “executive committee” of the board to do his bidding. Taking no chances, he named himself chairman. The other two members were newly elected board member William H. Saltzman, who had been Eddie’s divorce lawyer, and the ever-somnolent James Scott. They met, thought hard about it, and did what Eddie wanted, eliminating Sam M.’s position on May 4, 1987. The full board upheld that decision, unanimous except for Mitchell, who opposed his dad’s discharge, and Eddy, who had a board seat and was still on the payroll as treasurer. He abstained.
Mitchell could see that he was a goner himself. He tried a boardroom maneuver to stave off the inevitable. Sometime in May he met with outside director Jim Scott at a diner in Paramus, an atypical location for a corporate tête-à-tête. It must have seemed to Scott as if he was meeting with a Columbia student afraid of flunking out and not a top official of a company. Mitchell floated several ideas. Perhaps he could become CEO? That was one. Scott expressed regret that he could not be of any help, and the meeting ended inconclusively.
Eddie proceeded to fire Allen without severance. Bouncing Mitchell presented a problem because of all the empty titles he held, but his brother saved him the trouble and quit. He had now lawyered up. When Mitchell resigned at the June 5 board meeting, he came with his lawyer and dropped off a letter outlining his grievances against Eddie. The letter said, “Eddie’s relationship with my family has been acrimonious and has resulted in a series of very disturbing developments involving the company.” He didn’t specify what those “disturbing developments” were. He went on to complain that he had not been consulted about major decisions despite being a member of the Office of the President. Then Mitchell got to the crux of the matter: money. Eddie had denied him severance, just as he had done with Allen. “I am sure that the board will consider my long association with the company in dealing with issues of severance, compensation, and the like. My resignation is without prejudice to any rights I may have had vis a vis the company,” Mitchell’s missive concluded, ending on an unpleasantly lawyerly note.
