Crazy Eddie Case Analysis

Topics: Fraud, Financial statements, U.S. Securities and Exchange Commission Pages: 2 (726 words) Published: October 31, 2011
In Crazy Eddie Case, a former CPA, Sam E. Antar, was a key individual who helped Eddie Antar mastermind one of the largest securities frauds uncovered during the 1980s. Sam admitted that he had no empathy whatsoever for investors because he never concerned about morality or the suffering of those victims. Next I’ll analysis Crazy Eddie Case from ethical perspective and use Ethical Decision Making Model to evaluate Sam’s possible behaviors. 1. Frame the ethical issue: Should Sam join his cousin and become a willing participant in the massive fraud? 2. Gather all the facts:

(1)Eddie had financed Sam’s college degree in accounting and hired him to serve as the CFO. (2)Eddie kept skimming cash from his private business to avoid taxes. That money was divided among relatives. (3)After Crazy Eddie went public, in order to keep posting impressive operating results to maintain upward trend in the stock price, Eddie asked Sam to help design, manage and conceal the company’s fraudulent schemes. 3. Identify the stakeholders and obligations:

(1)Sam: he should consider the consequences of his actions on others. (2)Eddie: Sam’s cousin, who hired him, trusted Sam and expected Sam to help him commit fraud. (3)Investors: expect an earning from investment and hope the stock price of Crazy Eddie can rise. (4)SEC: has a right to expect a reliable financial report. (5)Customer: has a right to buy products with good quality and reasonable price. 4. Identify the relevant accounting ethics standards involved in the situation: (1)Honesty---fully and fairly disclosing the company’s financial condition in prepared financial statements. (2)Integrity---acting in accordance with principled behavior; not being swayed to do what another party induces you to do if you know it’s wrong. (3)The Public Interest---when there is conflict of interests, shareholders’ interests must be considered. 5. Identify the operational issues: (1) Is it possible for Sam to persuade Eddie to stop...
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