Crazy Eddie: The popular electronics chain that scammed America
thehustle.co
thehustle.co
Surprising moment of honesty there.
The fraud is a distinctly pre-21st century one, relying as it does on handling large amounts of cash while operating parallel books. Then pivoting to stock fraud to take in a bigger pie from investors.
I mean, I'm not sure that either of these have exactly gone out of fashion.
I once spoke with tax auditors of Pornhub (while they casually audited our company), many years ago, it seemed like a pretty intense headache.
https://www.irs.gov/payments/general-faqs-on-new-payment-car...
This is always a funny video clip about electronic payments making low level shenanigans more difficult. The game nowadays is to do it legally, and getting involved in the political machinery.
They were pretty advanced at this in the 19th century already.
Sooner or later you end up with an Enron, Madoff, or even a Theranos.
That is not how I remember it. To insinuate VCRs and stereos should not have been sought after in the 1980's is silly. Most people had no interest in a cellular phone. They wanted TVs. The author's comment begs the question, "Was Mark Dent in NYC buying electronics in the 1980s."
Crazy Eddie defrauded investors but generally, as I remember it, they were honest toward their customers. To be trutthful, I was not much of a Crazy Eddie customer. I only bought from them a few times. I chose to buy from their competitors, other electronics dealers in NYC with "low, low" prices and price guarantees. Like Crazy Eddie, these shops focused on volume.
Anyone remember places like 6th Ave electronics. Prices were published, in their newspaper ads. In theory one could take one of these ads to Crazy Eddie if that was one's preference for where to shop. Apparently 6th Ave imploded even faster than Crazy Eddie. There is a Wikipedia page devoted to the subject.^1
To some perhaps these places felt like they were being run by "hustlers". As a customer, I never found them to be dishonest, they were just barebones operations. No salesmanship, no BS. The price is low, the stock is here, take it or leave it. The educated consumer was their best customer.
However I see marked differences with how people today use the word "hustle", e.g., this website. Today, customers are the target of "tech" company deception and investors are the enablers. It is unlikely these 1980s era electronics shops had wealthy investors backing them like "tech" companies have today. They had to make money in the present to stay in business. Their employee salaries were paid from revenues or loans, not investment rounds. If they failed to make money, eventually they went bankrupt. They had skin in the game.
I don’t think it’s fair to compare a growth company to this:
> There was just one major problem... Crazy Eddie had been lying about its numbers since its inception
"You must spend money to make it", this adage is true since the very inception of monetary value.
Not sure this is a great comparison.
They also double dip and both Amazon and Whole Foods accept SNAP benefits/EBT, after a 20% discount, I’m sure it’s a significant amount, after they are the largest employer of SNAP beneficiaries in many states.
If you and I have that privacy, benefits recipients should as well.
That is great if you want to protect the privacy of the businesses, but businesses disclosing the total they make from these programs has nothing to do with privacy of individuals.
If Amazon and Whole Foods had to disclose they made $1B each from SNAP last year, there is clearly no privacy concerns linked to individuals involved. There is absolutely no information of the individuals involved.
Not even the industry has attempted to make privacy arguments, which again are publicly available if you wanted to learn about it and are limited to concerns of being “stigmatized” if the public learns how much the businesses make from these programs and fear that disclosures would hurt negotiations with landlords.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
"Honest Eddie," on the other hand-- stay away from that guy.
https://bezprawnik.pl/czy-media-expert-celowo-denerowal-ewel...
Reminds me of the themed Fry's Electronics stores.
[1]: https://www.seattletimes.com/business/frys-electronics-execu...
https://www.youtube.com/watch?v=BmF2lCXV8lQ
I remember the bait and switch was big with these stores. The stuff they advertised was not in stock, but they tried to sell you what they did have.
I'm surprised they didn't discover what Sir Alan Sugar had: that you could make more money on house branded stuff made in Hong Kong.
Like without the IPO I would suspect they could have gone on for many many years basically skimming and scamming the government, maybe with some eventual consequences and fines but most likely being able to pay their way out of it.
https://www.cbsnews.com/news/feds-open-criminal-probe-of-gol...
"Goldman Sachs to Pay Record $550 Million to Settle SEC Charges Related to Subprime Mortgage CDO, CBS 2010"
The amount of fraud committed was far greater than that, and there were no criminal charges involving jail time for any of the culprits. Kind of like doing armed robbery at a bank, getting away with $100K, then being fined $50k for the crime with no jail time. A profitable business model in other words.
Iceland at least held theirs accountable.
https://www.independent.co.uk/voices/iceland-has-jailed-26-b...
People frequently would say they were going to make $X/yr where that number came from the amount of money they expected the home to go up, not actual income on a W2. Banks were selling the loans so they often didn't care to get real documentation of income either.
That's a documented risk the lender knew about and encouraged.
They thought they could get away with it because they believed real estate could only go up, so if the borrower defaulted the lender could get the house and still make money.
I remember my wife being adamant about a fixed rate mortgage while the banker was being super pushy about doing a 5 year arm. About a month after we got our house, we started getting the letters, "Your loan was sold to Bank XYZ, your new loan holder is ABC company." Literally every month our loan was getting sold multiple times.
Then Wells Fargo started calling about re-financing our mortgage around late 2006. We were like, "Huh? We're on a fixed rate." and the guy was like, "Says here your 5-year ARM you signed is expiring in 2008 and your rate is going to go way up."
Alarm bells started going off. We made an appointment to sit down with the guy at Wells Fargo. Sure as shit, the guy who was pushing us to do a 5 year ARM falsified our loan papers. Inflated a bunch of our assets to get us qualified for a bigger loan that we didn't need. He put us into a 5 year adjustable rate that was set to increase wildly in 2008. We refinanced and got our mortgage into a fixed rate again. We talked to an attorney about suing them, but by then the crisis was starting to gain some real steam and the company who did our original loan had already been out of business for six months.
I read the mortgage agreements carefully. I didn't write them, and the contracts allowed this.
A side effect was each refi came with a home appraisal, paid for by the mortgage company. Every year, my property tax valuation went way up, every year I appealed, attached the bank appraisal, and got it back down.
They did very illegal things. They lied, flat out lied, to their customers about what was in the financially engineered structures. Lied.
That is a crime (in civilised jurisdictions, and in the USA)
They misrepresented these products. The learnt that the ratings agencies had made a mess of the rating too late, they were on the books. So they sold them as fast as they could, lying to the customers.
It does not matter if the customer was a hedge fund, a bank, or you. Lying about financial products is a crime.
That’s how you get this kind of crap: “How much do you make? It varies, I made 50k last year. That’s going to be a little tough, hmm let’s say next year went well, how much could you make? I don’t know 60-70k. Great 70k is going to make this all very smooth.”
The applicant assumes he’s being clear when getting a loan from the company he’s talking to. Meanwhile the company is only interested in selling Fake AAA bonds and just needs warm bodies to sign some paperwork.
Loan industry operates on “victim blaming” philosophy. If you give money to someone who could not afford the loan you are on the hook. That’s reasonable.
People have such a school-house view of how the world works.
I think one important difference is that the story in the OP is fraud directly against individual retail investors (and the government, to be fair), whereas the Goldman story is a conflict between two hedge funds and an investment bank.
That seems important for the subtext of what you're saying.
Living in Manhattan in 1983, when the cable installers came to hookup service, they offered us brand new TVs at about half the price of Crazy Eddie's stores - from what little I could find out, it seems they'd been recruited by Eddie's warehouse workers to push fell-off-the-truck / out-the-backdoor sales of Eddie's inventory.
I'd bet that there were a lot of the appointments that bit on that offer. I was not surprised to see Eddie's rapidly declining in the following year. You just can't survive with truckloads of your inventory going missing every day...
And reading about how he paid employees 'off the books', no surprise they were also freelancing off the poorly controlled inventory flow.
Wait. Retailers weren’t always open on Sunday?
This scheme was common up till the mid nineties. Since then it has been relaxed, but it is still regulated.
One of the reasons listed for the regulation is the protection of 'Mom & Pop' stores.
A silly motivation. Smaller-scale businesses on the "convenience store" model are more likely to provide extended opening hours than any large store operation. That's as close to "Mom & Pop" as it gets.
I talked about the 80s and 90s and a healthy work/life balance was still a political talking point at the time.
(To be clear, I'm not saying everything was great in the days of "all women are house wives" but it would have been nice if the stigma of a house husband went away instead, rather than the actual turn out of "both adults must work").
It was almost an inevitably. Especially for the middle class, I would imagine that both sides of the couple working provided a substantial boost in economic mobility. Or at least a perceived one. At that point its just keeping up with the joneses.
That is a lot of left radicals and only 1 religious party.
And many others besides.
Really, why would you even try to argue something that is pretty much settled history at this point in time? The Netherlands historically had a very strong religious streak running through it and one of the last vestiges of their direct influence on Dutch society is the 'Winkelsluitingstijden' law.
NL is percentage wise (or rather, was) one of the countries were religion was 'on the way out', unfortunately that trend seems to have first stabilized and is now reversing. It's a pity because personally I think religion should have absolutely no place in politics or organized society, though I do believe that people should be free to practice whatever religion they want as long as it does not negatively affect others.
As you mention, it's the religious intolerance that one finds disturbing, not religion (of any kind) itself. It is fairly rare to have one without the other these days, it would seem. The phenomenon is not limited to NL alone, I think.
Gelderland (where my family is from) is definitely more religious than say Amsterdam, but far less than the South of Limburg or the 'Bible Belt'. At the same time, those are all various offshoots of Christianity, whereas if you were to look at Islam you will find the opposite, it is strongly represented in the big cities, where there is hardly any Christian offshoots left (and if they are they are dying).
Churches are disappearing, Mosques are rising up everywhere, and I'm not sure if the longer term will find NL with a more tolerant version of itself or if it will regress at some point.
I'm generally a fan of longer opening times, but having a day where everyone but entertainment and hospitality has free time simultaneously seems very healthy for both families and society at large.
Unless, of course, they are in a train station. This loophole seems to be _heavily_ exploited.
It used to be heavily regulated in Canada (or at least Manitoba) until very recently as well, like some time in the last 20 years or so. I remember when Wal-Mart first entered Canada, they had a really hard time in some places because labor laws and blue laws prevented them from being open 24/7.
During certain hours (such as, past 8PM on weekends), groceries are only allowed 4 employees. Which is almost impossible in those very large groceries. For many groceries, they just assume this is part of doing business, they would rather pay the fine than angering customers with long lines.
https://www.economie.gouv.qc.ca/bibliotheques/conformite/ouv...
Used to? Hell, in Texas, you cannot buy alcohol until after noon on Sundays. Still. Today, er, yesterday, but you get the point.
Liquor stores (which also sell beer/wine) are not allowed to be open on Sunday, period.
Note this pertains to off-premise (i.e., stores, not bars) only. Bars, you're free to get sloshed to your hearts desire on any type of alcohol and as early as 10AM on Sundays.
Blue laws around vices (specifically around the sale of alcohol) are still commonplace in the US.
However, Bergen County, NJ, still has the rare Sunday blue law that applies to everyday consumer goods -- you can purchase food and medicine on Sunday (and even alcohol after noon, per a state-wide vice blue law), but everything else is prohibited. If you visit a big-box store like a Costco or Walmart that sells both food and goods, large swaths of the store will be closed down on Sunday.
https://www.wnyc.org/story/assessing-bergen-countys-blue-law...
there are some exemptions such as airport shops, petrol or motorway service stations, etc.
the main reason there are still legal restrictions on sunday trading are advocacy groups such as "Lord's Day Observance Society" and the "Keep Sunday Special" campaign.
A state I lived in as a child allowed grocery stores, restaurants, and pharmacies to be open on Sunday, but not much else. Restaurants were also allowed to sell alcohol on Sunday, while liquor stores weren't. A local restaurant took advantage of this double loophole and put in a drive-through booze window that they only opened on Sunday.
This is arguably a big factor for both Chick-fil-a and liquor stores that are prevented state-wide from opening on Sundays (in the US)
But for others, definitely that's the case. And it's been this way for so long I'm sure it's just a known and we're essentially tethered to Hamilton via transit and highways so there are a ton of options just a few minutes further down the road.
It stood out to me because in California most everything was open on Sundays. So it seemed to be more of an East Coast thing.
When stores first started opening on Sundays it was usually for only limited hours. I remember everything shutting down around 4-5pm on Sundays when I was a kid. That's not really the case anymore. When I was a teenager in the late 90s I was paid $1 more an hour on Sundays.
This was published in the NY Times in 1986
https://www.nytimes.com/1986/10/19/nyregion/sunday-shopping-...
>Similar changes are being felt throughout the region and indeed in most parts of the nation. Like New York, many other states in recent years have struck down legal restrictions that prohibited the sale of most goods on Sundays. The curbs, called blue laws, date from colonial New England, with the observance of the Sabbath being their main purpose.
Don't have much to add here beyond the fact that I worked there in the 2012-2013 strech and a little beyond. Run about as spartan as could be, no LP but millions of dollars worth of equipment that were there ripe for theft and fraud with nearly zero oversight. (fraud was rampant in the store - can honestly say I never engaged, but I was offered the opportunity multiple times).
It's literally every single time. Internet "bubble", housing "bubble", "Affordable Care Act" fraud, and the mountain of other frauds committed before and since; including all the various "recovery act" type of Government fraud where the same class of people who commit the fraud and cause the damage, are then the primary beneficiaries being rewarded with billions, approaching trillions now. And that's without even touching on the murderous fraud of the type like the deliberate fraud of the Iraq war.
Just look at the common complaints today regarding work-life, wages, and even supposed staff shortages (the claims of which themselves are fraudulent); they all are directly linked to things like this guy knocking yet another section of the wall out through Sunday workdays that was then never reverted/rolled-back even after the fraud was revealed. Is Chick-fil-A really just a fluke in how efficient and happy it's employees are in spite of the fact that they shut down on Sundays? I sure don't ever think so.
Enron
The Sarbanes–Oxley Act of 2002
The bill was enacted as a reaction to a number of major corporate and accounting scandals, including those affecting Enron, Tyco International, Adelphia, Peregrine Systems, and WorldCom. These scandals cost investors billions of dollars when the share prices of affected companies collapsed, and shook public confidence in the US securities markets.[3]
https://en.wikipedia.org/wiki/Enron_scandal#Sarbanes-Oxley_A...
I mean, maybe it's coincidence and they both just came up with the same name, but that also doesn't seem likely.
[1] https://www.ksl.com/article/260958/a-look-at-super-dell-scha...
The prices are insane!
They actually had decent prices and merchandise. There definitely wasn't any apparent fraud or malfeasance on the consumer level.
Guess that will be an article for next year.
I also believe they purchased an Apple IIe from them far earlier but I can't be certain.
I do remember when the PSU for the C128 failed, they gave us a new one no charge.
Oh the memories: https://www.youtube.com/watch?v=Ml6S2yiuSWE
I've never, ever understood people pointing out "reposts" like it's some kind of shameful dirty act.