Goldman Sachs, Crazy Eddie and ‘the kiss of death’
Any of you remember Crazy Eddie, the New York City discount chain that landed in bankruptcy after its original owners were sent to jail for all manner of business fraud? Okay, it wasn’t as huge as Enron, but when Crazy Eddie went under many New Yorkers mourned not just the loss of a decent outlet for TVs but the awful commercials in which Eddie Antar bellowed that prices were INSAAAAANE!
Well, according to the former Crazy Eddie CFO — a convicted felon who now helps the good guys capture white-collar bad guys – Goldman Sachs may have responded too hastily to the SEC charges relating to the deal it helped to construct with hedgie John Paulson. (If you haven’t read about the SEC fraud charges, WAKE UP! read the details here or click on any of my many numerous headline pulls in the right-hand column.)
In his post, Sam Antar explains both the psychological and legal tactics that the feds use to trap their prey.
Back in the day as the criminal CFO of Crazy Eddie, I received a surprise subpoena from the SEC late Friday afternoon. I had to wait until Monday before my attorneys had time to advise me on a course of action.
The “kiss of death” message is deliberately sent on Fridays to chill the bones of criminals. Some criminals wait in anxiety during the weekend until Monday to consult with their attorneys about what to do next. Other criminals or SEC targets like Goldman Sachs don’t want to wait until Monday. So they make rash decisions and major errors in prematurely reacting to the “kiss of death” message to their own peril and find themselves in legal quicksand.
Goldman Sachs chose not to wait until Monday and fully digest the implications of the SEC complaint. After a relatively short consultation with its attorneys, the company hastily issued a detailed press release later Friday afternoon that I believe will land it into deeper potential trouble. …
(h/t The Big Picture)
Indeed, Goldman appears to have been caught completely off guard by the Friday announcement — even though it had received a Wells notice in July 2009, indicating that it was a target of an active investigation. The WSJ reports tonight that Goldman responded to the Wells notice in September. In March, Goldman contacted the SEC to check on the status of the investigation but no one responded to the request for an update. And apparently, Goldman didn’t mind that the lawyers at the SEC weren’t returning its phone call.
In his blog post, Antar zeroes in on Goldman’s assertion that the suit has no basis in “law and fact.” Big mistake if it turns out the suit really does have a basis in law and fact. After his surprise indictment, Antar says he tried to cover up his tracks and ended up in much worse trouble; indeed, covering his tracks proved to be more troublesome than the original misdeeds. Antar warns that if Goldman’s knee-jerk statements turn out to be untrue or misleading, their troubles would only deepen.
And that’s not all Antar has to share with readers. It seems Antar and Goldman have something else in common besides the kiss of death. And that is Richard E. Simpson the SEC lawyer handling the Goldman litigation. Simpson was the man Antar took to calling the “Pit bull” for his ferocious and unrelenting pursuit of justice. He’s a formidable adversary even for the likes of Goldman Sachs.