Sunday, January 21, 2007

An Open Letter to KPMG, PricewaterhouseCoopers, Deloitte & Touche, Ernst & Young, and other Accounting Firms Subject to Inspections by the PCAOB

It is evident that the Public Company Accounting Oversight Board (PCAOB) is either in some cases unwilling or unable to release certain important information relating to its inspection reports of your audits. You are great firms staffed with good people who are much more moral than me.

Why not voluntarily release the nonpublic portions of such inspection reports? In addition, why not release how many actual inspections the PCAOB actually conducts of your firms on an annual basis? Why not provide the public with the percentage of how many of your audits result in deficiency citations by the PCAOB?

If I can publicly discuss my past deceitful sinful criminal actions in the starkest of terms surely you great people who are much better than me can voluntarily disclose such information about the effectiveness of your audits?

Other respectable people have called for the more transparency from the PCAOB and have apparently been ignored.

Do you have can we say more transparency than a convicted felon? It takes courage or maybe just some balls, too.


Sam E. Antar (former Crazy Eddie CFO & convicted felon)

Special Compliments to the following Blogs covering this issue:

The CFO Blog by Alix Nyberg Stuart: How the PCAOB Shields the Big Four

The CFO Blog by Tim Reason: EY, KPMG, and the Meaning of Failure

The D & O Diary by Kevin LaCroix: The PCAOB's Audit Inspection Reports

Notions on High and Low Finance by Floyd Norris: Accounting Games

Note: I am sure countless others have covered this topic too.

Wednesday, January 17, 2007

Sam E. Antar and Judd Bagley from Communicate on DealBreaker Blog

The following communications were made between Judd Bagley Director of Social Media for and I, in comments to a post made on the DealBreaker Blog entitled "Judd Bagley: All Class" by Bess Levin on January 16, 2007.

Sam to Judd


Would you and Pat engage me in a public debate in front of a public audience over the issues of in a public forum?

Sam E. Antar (former Crazy Eddie CFO & convicted felon)


Judd to Sam

I'll gladly discuss either the substance of (speaking for myself only), or the essence and theory behind the project I'm heading up for, but I won't be the one to publicly speak about the state or direction of the company itself.

Email me if either of the first two interest you (or if you just want to go to lunch and sound like an interesting fellow).

Judd Bagley

Sam to Judd


If you are against naked short sellers and illegal manipulation of the markets I am with you too.
However, many people are genuinely concerned about Overstock's ability to ever achieve profitability.

There are others that question some of your tactics in handling dissent. No one in this world is sinless (no insult intended) including you, Gary, or anyone else reading this post. My sins are much greater than every here.

However, there are accusations that you guys may have crossed the line. Even if you guys did not cross the line, your public image is being negatively affected by your actions.

I speak from the experience of my own ruthless actions. If I am a little bit emotional about it, maybe it is because people do not seem to learn from history.

I was an arrogant criminal that smeared my critics at every possibility if necessary. However, I did not have the internet in my time. I did it with whispers and phone calls.

My point is Judd, you may think that I wish you and Pat ill, but I really do not. My hope is that you consider your actions very carefully and reflect on them and judge whether they are in the best interests of

Hopefully, my comments would scare some sense into you guys from the perspective of what I see as a situation spinning out of control.

America is the greatest country ever conceived and comebacks are possible. We are the most forgiving nation on this planet. led by Pat Byrne can turn this situation around, if this side-show stops. Everyone makes mistakes (just never make mistakes of my caliber). You cannot become successful without making mistakes. You become successful by learning from them.

Please be careful not to make mistakes that you cannot recover from like mine. Even big mistakes that are less than criminal mistakes are errors that you do not want to make.

Please carefully consider my advice on this matter and think about it carefully.

Thank you for responding to my post and I will get back to you soon. I am traveling over the next several days.


Sam E. Antar (fomer Crazy Eddie CFO & convicted felon)

Monday, January 15, 2007 An Arsenal of Intimidation and Fear

I have often spoken and written about how white collar criminals use your humanity against you. They take your good traits such as trust and use them as weaknesses to be exploited.

Another tool of the white collar criminal is fear and intimidation. As a criminal I would use it as an effective technique to exploit people to effectively commit my crimes.

There is a public company called led by its CEO Patrick Byrne. Mr. Byrne it seems knows all about fear and intimidation of his critics. has a Director of Social Media Judd Bagley. Mr. Bagley finally admits after many months to running an anonymous web site, which if you read it, is nothing but a smear machine spewing many lies about critics of, in his “spare time.”

Mr. Bagley now admits to anonymously posting e-mail messages on internet message boards which he claims were objective.

There are serious questions that Patrick Byrne’s actions and those of Judd Bagley acting in concert with him taken together may constitute illegal actions under our securities laws.

If they claim as they say they are to be against the actions of illegal market manipulators so am I too. However, if they are using that as a ruse to cover up what may very well be their own possible illegal activities shame on them and their will be hell to pay and not from me but from the justice of our courts.

Link to Gary Weiss Blog January 12, 2007: Judd Bagley Fesses Up

Link to January 12, 2007: Sleazy McSleaze Admits to Sleaziness by John Carney

Link to NY Times February 25, 2006: Overstock's Campaign of Menace by Joe Nocera (subscription required)

Note: I have been openly critical of Mr. Byrne's and Bagley's actions and have posted my remarks in various forums using my real name and not any anonymous handle as has always been my practice and policy. At least now it seems Mr. Bagley has come to my level in this regard too.

I fully expect to be the next target of their smear campaign. So I have a personal message for Mr. Byrne and Bagley:

Am I next my dear pals? I know I am a sinful human being even today. Take your best shot. The question my dear friends is not my sins but yours.

Sunday, January 14, 2007

The Real Story of Crazy Eddie's "Lowest Price" Guarantee

There has been much fanfare about Crazy Eddie’s legendary commercials and so-called “lowest price” guarantee. A recent New York Times article by Hal R. Varian, published on January 11, 2007, entitled “Rethinking Why Crazy Eddie Wouldn’t Be Undersold, and Other Mysteries,” discusses the issue of low price guarantees, including Crazy Eddie’s sales policy.

The New York Times article was discussed in the Economist’s View Blog in a post entitled “Van Harian: Crazy Eddie’s Low Price Guarantee” by Mark Thoma. I posted a comment which was carried as a separate blog item by Mark Thoma entitled “Crazy Eddie’s “Culture of Deceit.” My response is below:
Professor Hal R. Varian: My name is Sam E. Antar. I am Eddie Antar’s cousin and the former CFO of Crazy Eddie. I helped mastermind at Crazy Eddie's one of the largest securities frauds of the 1980’s. Much attention has been paid to Crazy Eddie’s famous price policy – “Shop around. Get the best prices you can find. Then go to Crazy Eddie's and he'll beat it!” Even more attention has been paid to its legendary commercials featuring Jerry Carroll.
However, many people do not know the real story behind Crazy Eddie’s aggressive sales tactics. Yes, we “offered” the best price and at times it was sometimes true. However, most customers never purchased the items that they initially came into Crazy Eddie to buy. We had an entire procedure built around Crazy Eddie lingo code words, described below, to maximize profits for the company.
The first sales person that a customer encountered would attempt to "SW" or "switch the customer" by persuading them to purchase a more profitable item that purportedly offered a “better value.”
If the initial salesperson could not "SW" the customer, he would “TO” the customer by letting another more experienced sales person “take over” the sales pitch. The "TO" sales person would attempt to persuade or "guide" the customer to purchase more profitable merchandise.
If the customer was still insistent on buying the merchandise that they had originally intended to purchase, rather than lose the sale, we would sell them those same items. However, our sales people would pressure customers to purchase high profit margin accessories and long term warranty contracts to increase profits on each sale.
If the merchandise was not in stock, we would sneak the display item off the shelf and “lunch it” or repackage it and sell it as brand new.
Finally, if a customer decided not to purchase a product for any reason after going through various phases of our sales process, Crazy Eddie had a “NAD” or “nail at door” policy where a sales person located at the exit would try to “kosher” the customer.
The Crazy Eddie Empire was built on deceit. The massive financial fraud that followed was based on a culture of deceit the permeated from the Antar family that ruled Crazy Eddie.
There are many lessons to be learned from the Crazy Eddie frauds. Specifically as it relates to your commentary I would suggest something I learned in my first day in economics class, “There Ain't No Such Thing As A Free Lunch.”
Company’s have costs and must earn a profit. Yes, some companies can make money more efficiently than others. However, as a former criminal I can assert that old line, “If it looks too good to be true, it is probably is.”
Respectfully, Sam E. Antar (former Crazy Eddie CFO & ex-felon)

In later comments to other reader questions on his blog I posted the following:

The point about “low price guarantees” that people need to understand from the retailer’s point of view in that it is a game of averages no different than hoping people do not send in mail-in price rebates.
Most consumers who are complacent in knowing they have such a guaranty will not investigate further or be willing to accept the retailer’s “credibility.”
As a criminal, I learned to use people’s humanity against them. White collar criminals consider good traits, such as trust, as weaknesses to be exploited in the execution of their crimes.
While not all deceitful conduct rises to the level of criminality, it would be wise to assume that the level of a deceitful person’s effectiveness is measured by the trust of the person being misled.
I do not mean to say that “low price” guarantees are inherently deceitful. However, if such guarantees were 100% exercised it would be a complete impossibility to maintain such guarantees, since prices would dwindle down to zero.
Sam E. Antar Former Crazy Eddie CFO & Convicted Felon

Final Note: I recommend reading both Professor Hal R. Varian's article and other writings found here. Professor Mark Thoma's blog "Economist's View" is recommended reading.

Quoted From The New York Times Article:

...three economists, Maria Arbatskaya, Morten Hviid and Greg Shaffer, have recently published a paper in the International Journal of Industrial Organization called, “On the Use of Low-Price Guarantees to Discourage Price Cutting,” that looks closely at some empirical evidence. (A prepublication version of the paper can be downloaded from

Wednesday, January 10, 2007

Open Letter to Public Company Accounting Oversight Board

Dear Public Company Accounting Oversight Board:

According to Section 104 of the Sarbanes-Oxley Act you are required to “conduct a continuing program of inspections of registered public accounting firms.”

I am trying to determine how many such inspections you conduct with your limited resources by each individual accounting firm and the scope of each inspection. In addition I would like you to provide the public with the percentage of how many such inspections result in audit deficiency citations by each firm. If you can further classify such audit deficiency citations by degree of seriousness as it relates to the total number of inspections conducted that too would be appreciated.
If you have any questions, please call me (my phone number is listed on my web site

The public needs to know the relative quality of the audits of public companies by the accounting profession. After reviewing your web site I believe that inadequate data exists to make such a determination.

The inspection reports are too vague to get any meaningful quantifiable information as to the overall quality of audits conducted by individual firms. For example there is no direct information on any of the inspection reports that tells of the total amount of audit inspections conducted. It only gives the total amount of field offices visited.

I sent you an e-mail requesting certain information below:
  • Does the PCAOB release statistical information as to how many such inspections are conducted? (By each Auditor and overall)
  • Does the PCAOB release statistical information as to the scope of the inspections done? (By each Auditor and overall)
  • Does the PCAOB release statistical information as to the percentage of inspections that result in deficiencies? (By each Auditor and overall)
  • Does the PCAOB release statistical information of the possible or potential economic impact of deficiencies as a percentage of each audit and total audits inspected? (By each Auditor and overall) (By each Auditor and overall)
  • Would the PCAOB release any of the above information if available? (By each Auditor and overall)
  • Would the PCAOB release any statistical analysis as to the overall quality of the audits it inspects? (By each Auditor and overall)

I received the following reply from you:

The PCAOB has determined what information is to be made public via the public portions of the inspection reports, which can be found on the PCAOB’s website: and the annual report it issues.
Thank you

After receiving the e-mail I found out that the PCAOB in its Annual Report does release the total number of inspections but does not break down the information by individual firm. It is impossible to derive that information by individual firm since the PCAOB does not provide individual audit firm inspection amounts. The PCAOB should have such information readily accessible.

As an entity that is supposed to promote transparency in financial information I find such an answer both unsatisfactory and appalling. I do not believe you need to be lectured by an ex-felon whose very actions helped contribute to the creation of the Sarbanes-Oxley statute and your agency.

However, you should know that unlike most CPAs (many of whom serve in your entity) who passed the CPA exam being members of the (300 club with the curb) my average was 91.25% so I know a little bit about accounting. From my experience as a criminal I know a lot about white collar crime and your reason for being.

If I sound a little upset at you I am. Please do not play the side step with a felon like me who knows the game all to well. Be forthright and present your information front and center. If it is hidden some where on your website show it up front.

Now if it’s the law that is preventing such disclosure write a letter to Congress and change it. It should take about a week to get your people together to get the signatures. You have had years to do it. If the data is available it takes one of your people about a couple of days with an Excel spreadsheet to put it on your website front and center so every can read it and analyze it without going around circles.

Others are questioning your constitutionality. I have been a staunch ally. Maybe we should start from square one. If that actually happens, God help us all.


Sam E. Antar (former Crazy Eddie CFO & ex-felon)

Tuesday, January 09, 2007

Financial Fraud: We Don’t Want These Companies to List Here

Let the markets with less “regulation” have them - those companies that do not want to meet our standards of corporate governance, accounting, and internal controls. We do not want them or need them here.

The London Market in particular with lower standards attracted these companies and now look what has happened to them.

An article in the New York Post entitled “Brits Get Bit” by Paul Tharp says:

London is paying a steep price for poaching a slew of new stock listings from Wall Street last year - financial fraud in the United Kingdom rose 40 percent.

Later the article reports:

British market watchers believe that shrewd charlatans, whose financial tricks are well known to U.S. authorities, are having a field day in the laid-back London scene.

The article is based on a report by BDO Stoy Hayward.

Remember all that talk about IPOs going overseas because of the regulatory burdens of the US markets. Many like the Paulson Committee Capital Markets Regulation blamed Sarbanes-Oxley.
Others like financial journalist Herb Greenberg said in his Market Blog in a commentary entitled "Why a Slow Down in IPOs May not be Bad" perhaps we are better off not letting certain companies go public in the US:

Has anybody stopped, for just a moment to ask whether fewer IPOs might actually be a good thing? Seriously, maybe some of these companies shouldn't go public in the first place, especially if they fear or don't want to pay for laws that are attempting to crack down on skullduggery.

Kevin LaCroix said in the D & O Diary Blog in his commentary entitled “Is London’s Light Touch Attracting Fraudster’s:

…perhaps the U.S. securities markets may be better off without at least some of the companies that are avoiding the U.S. exchanges’ tougher listing requirements

Perhaps Jack Ciesielski said it best in the AAO Blog in his commentary entitled "Known By The Company You Keep":

So - is worth it to be in that particular game? If you’re known by the company you keep, it might be a lot more costly to try to pacify the kind of stuff that’s moved to London. Investors should be thankful that seedier companies have found the U.S. markets too difficult to easily game because of Section 404.

May I say that it drives me “insaaane” as a former criminal when I see many of my victims and potential victims taking steps that would undermine the protections they require to prevent white collar crimes that may harm them?

The great American capitalist economic machine requires integrity in financial reporting.