==========================================START OF PAGE 1====== SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION V. EDDIE ANTAR, SAM E. ANTAR, MITCHELL ANTAR, ISAAC KAIREY, DAVID PANOFF, EDDIE GINDI, AND KATHLEEN MORIN, Civil Action No. 89-3773 (JCL) (D.N.J.) LITIGATION Release No. 15251 / February 10, 1997 The Securities and Exchange Commission announced that the Honorable Harold A. Ackerman, United States District Judge for the District of New Jersey, sentenced Eddie Antar ("Antar"), formerly the Chairman and Chief Executive Officer of Crazy Eddie, Inc. ("Crazy Eddie") to a federal prison term of 82 months followed by 2 years of supervised release. Antar was sentenced pursuant to his plea of guilty to racketeering conspiracy in connection with his actions at Crazy Eddie. Antar's Guilty Plea In pleading guilty last May, Antar admitted under oath the following: ! That beginning before the time of Crazy Eddie's initial public offering in September 1984 and continuing up to 1987, Antar carried out various schemes to falsify the books and records of Crazy Eddie so as to make the company's financial performance appear stronger that it actually was; ! That in 1985 he caused the value of the inventory of Crazy Eddie reported to its auditors to be falsely overstated by approximately $2 million; ! That he caused the inventory counts to be artificially inflated by the falsification of count sheets or inventory tickets when Crazy Eddie took a physical inventory at the end of its fiscal year on March 2, 1986, thereby overstating the inventory by approximately $10 million; ! That, just before the year-end 1986, he caused approximately $2 million from outside sources to be deposited into Crazy Eddie's bank accounts in such a way that the money would be booked as proceeds of retail sales; ! That at the end of fiscal year 1987, when ==========================================START OF PAGE 2====== Crazy Eddie took a physical inventory, Antar again caused the inventory counts to be artificially inflated by the falsification of count sheets, thereby overstating the inventory by millions of dollars; and ! That his primary purpose in perpetrating these fraudulent schemes was to increase the price of Crazy Eddie stock to public investors. Enforcing the Commission's $73 Million Judgment In September 1989 the Securities and Exchange Commission commenced an enforcement action against Antar and others. In February 1990, Antar fled the United States to avoid incarceration for defying a court order that he repatriate $53 million that he had spirited overseas. On July 16, 1990, the SEC obtained a judgment for $73,496,432, plus interest, against Eddie Antar in the United States District Court for the District of New Jersey. For more than six years, Antar refused to comply with the Final Judgment. To enforce the Final Judgment, the SEC commenced a world- wide effort to locate and return Antar's ill-gotten assets to the United States for distribution to the victims of Antar's crimes. Using information sharing mechanisms with foreign securities authorities and other international evidence gathering mechanisms, the SEC and the Trustee began unprecedented actions in six foreign countries to secure Antar's ill-gotten gains; these efforts were critical to the success of this case, resulting in Antar's arrest in Israel and subsequent extradition to the United States, as well as the recovery of approximately $64 million. On two occasions, Antar has consented to the return of foreign-based assets. Near the conclusion of his 1994 sentencing hearing,1 Antar signed consents and directives for the return of nearly $53 million and thereby ceased his defiance of the February 1990 order requiring him to repatriate that amount, which he had spirited out of the country. Nevertheless, after March 1994, he persisted in his resistance to the Final Judgment by continuing to litigate against the SEC and the Trustee in England, Liechtenstein and Zurich, Switzerland. This litigation ended when, on December 13, 1996, he signed consents and 1 Antar was tried and convicted on a 17 count indictment in July 1993 and sentenced to twelve years imprisonment in April 1994. In April 1995, the Third Circuit reversed his conviction on the ground that the trial judge's remarks during sentencing created an appearance of bias. ==========================================START OF PAGE 3====== directives for the return of approximately $8.5 million that remained in Switzerland and Liechtenstein. Summary of the Foreign Enforcement Litigation Switzerland. In July 1993, the Trustee filed civil actions in Geneva and Zurich seeking to enforce the Final Judgment and to levy against approximately $48 million that Antar maintained in those two cantons. Antar opposed both actions. In November 1993, a trial court in Geneva held a full hearing on the merits. At his sentencing hearing in March 1994, Antar consented to the return of approximately $40 million that he had deposited in Geneva. Shortly thereafter, the Geneva court made public its decision recognizing the Final Judgment. Antar appealed the Geneva court s decision. But the Court of Appeal in Geneva upheld the lower court s determination that the Final Judgment was enforceable throughout Switzerland. On July 19, 1996, the Court of Appeal of the Canton of Zurich held that the SEC s Final Judgment was entitled to recognition there because of the previous decision in favor of the Trustee entered by the Court of Appeal in Geneva. On September 13, Antar filed a constitutional appeal of the Zurich decision to the Supreme Court of Switzerland. However, his appeal was rendered moot on December 13, when he signed consents and directives for the return of the money in Zurich. The total amount being returned from Zurich is approximately $8.7 million. Israel. On July 7, 1992, the SEC and the Trustee filed an action in Israel to enforce the Final Judgment against Antar. That action pertained to nearly $13 million under Antar s control. He opposed the action, and in May 1993, the Israeli court held a one-day trial on the merits. In March 1994, before the Israeli court issued a decision, Antar consented to the return of the $13 million. Liechtenstein. On July 20, 1992, the Trustee commenced a civil action in Liechtenstein. The Trustee sought to recover approximately $150,000 held at Bank In Liechtenstein in an account in the name of Conductive Corporation, a corporation in which Antar was sole shareholder. Efforts to recover these funds were rendered moot when Antar consented to the return to the United States of money from Liechtenstein. Canada. In 1992, the Trustee brought a civil action in Montreal seeking to enforce the Final Judgment against $1 million that Antar had deposited in bank accounts there. The Trustee won the case when Antar failed to file an answer to the complaint, and the $1 million was recovered and has been under the Trustee s control since 1993. United Kingdom. On July 8, 1992, the SEC commenced ==========================================START OF PAGE 4====== proceedings to enforce the Final Judgment in the United Kingdom. After four years of litigation, on June 11, 1996, the United Kingdom court ordered that Antar s defense be struck out, and the SEC be at liberty to enter final judgment against Antar. Judgment was entered on August 30, 1996. The SEC levied on the ill-gotten gains that Antar had in the United Kingdom and this money is now under the control of the Trustee. Proposed Distribution of $76 Million to Fraud Victims The Trustee is now in possession of almost $76 million recovered from Antar and others involved in this case. On September 23, 1996, the Commission filed a proposed Plan of Distribution to return these moneys to the victims of Antar's fraud. The Commission's motion seeking approval of the plan is pending before the court. The Commission's actions against Mitchell Antar, Sam M. Antar, Allen Antar and Benjamin Kuszer are still pending. Prior Litigation Releases dealing with this and related cases: 15008, 14431, 14053, 14028, 13958, 13776, 13764, 13734, 13723, 13649, 13509, 13281, 12995, 12723, 12548, 12356, and 12239.