Essay: The Sales of Crazy Eddie Stores

Sample Essay

Eddie along with Sam devised a scheme to make more profits by taking the company public. The scheme entailed gradual decrease in skimmed amounts each year and paying salaries to employees on the record instead of paying cash to them under the tables.

The result of these activities was a phenomenal growth in the income of the company and when concerns were raised by the auditors on significant increase in salaries the company management satisfied the auditors by stating that they thought the employees were highly underpaid but were promised attractive benefits when the company started performing well. The company went public on September 13, 1984 and the fraud strategies shifted significantly from understating profits to overstating profits. The company with the help of Sam Antar inflated assets and understated liabilities to make the net income and financial position of the company more attractive to shareholders. The previous strategy was applied to evade taxes and the revamped strategy was applied to increase share value so the Antar family could benefit from selling their shares at high prices and earning millions of dollars. The sales of Crazy Eddie stores were also inflated by injecting cash into these stores which was skimmed under the previous strategy. As a result of this activity sales of some stores grew by almost 20%. The funds were transferred to fictitious accounts in Panama from other countries and then drawn from these accounts as bank drafts and eventually deposited into store accounts.

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