Ex-Crazy Eddie CFO Joins Einhorn in Slamming Green Mountain

Therefore, Antar says, "Green Mountain may have been aware of material weaknesses in internal controls as early as June 2010 and not on Nov. 19, 2010, when it first admitted to such problems." While the numbers have since been restated, Antar notes in a recent blog post that the numbers still don't add up.

5. In February of this year, allegations from former employees about deceptive practices were filed in a lawsuit against Green Mountain, including accusations that the company deliberately violated Generally Accepted Accounting Principles (GAAP) and prematurely recognized income on the shipment of products to M. Block and Sons, its primary fulfillment vendor. Antar notes that the complaint "effectively describes M. Block, in what is known in fraud investigation circles, as a "black box entity" used by fraudsters to play shell games with inventory and inflate income."

Antar says "back in the day at Crazy Eddie, we took advantage of our cozy relationship with certain third-party entities and effectively used them as 'black box entities' to help us inflate our earnings." Interestingly, Einhorn summarizes findings of interviews with several Green Mountain and M. Block employees. According to Einhorn: "The research shows that Green Mountain and M. Block are potentially engaged in a variety of shenanigans that appear designed to mislead auditors and to inflate financial results."

And there's more, including the suggestion of questionable ethical practices and other accounting irregularities relating to reserves. I suggest you check out Antar's blog, which has information about Green Mountain. Antar has offered management the opportunity to debate the issues in an open forum. He's even sent several letters to SEC Chairman Mary Schapiro, detailing what he believes are violations and questionable financial reporting.

"The numbers just don't add up," Antar says. "Could it be stupidity? Yeah, sure, but there are so many violations here, I just have to believe that something is wrong."

Antar says he has no vested interest in the demise of Green Mountain. He says he has no position in the stock and, according to his Web site, "my investigations of these companies are a freebie for securities regulators to get me into heaven, though I doubt I will ever get there. My past sins are unforgivable."

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