White Collar Wednesday – The Real Wolf of Wall Street, Jordan Belfort

White Collar Wednesday

Reviewing White Collar Crime – Cases that made history (or in this case, a great movie).

Since the Oscars just happened (sorry Mr. DiCaprio), I thought it would be interesting to look at the real Wolf of Wall Street, Jordan Belfort story.

In the 1990’s Belfort founded the Brokerage firm, Stratton Oakmount.  Belfort employed over 1,000 brokers at its peak before the Securities and Exchange Commission shut down the company.  With his partner, Danny Porush, Jordan Belfort profited by using a “pump and dump” scheme. His brokers pushed stocks onto their unsuspecting clients, which helped inflate the stocks’ prices, and then the company would sell off its own holdings in these stocks at a great profit.

The U.S. Securities and Exchange Commission sought to end Stratton Oakmont’s shady stock operation in 1992, claiming that the company had defrauded investors and manipulated stock prices. Two years later, Belfort found himself out of the brokerage business. Stratton Oakmont had reached a settlement with the SEC, which included a lifelong ban from working in the securities industry for Belfort and a fine for the company.

The National Association of Securities Dealers ejected Stratton Oakmont from its Association in 1996, and the company was ordered to be liquidated to pay off its numerous fines and settlements the following year. Belfort was indicted in 1998 for securities fraud and money laundering which resulted in investor losses of approximately $200 million.

Belfort and his partner, Danny Porush decided to cooperate with authorities and wore wires, surreptitiously recording dozens of former and current business colleagues and friends, with whom they had been engaged in fraud for years.

Their cooperation proved to be extremely valuable to law enforcement, contributing to dozens of convictions of other significant wrongdoers.

They each received substantially reduced prison terms from the court as reward for their assistance in prosecuting others.

Belfort was able to serve only 22 months of a four year sentence.  Before the plea deal he faced a possible 20-30 year sentence.

Belfort has reportedly paid $14 million of the $110 million fine against him.