Jordan Belfort without fiction. Real or painted Wolf of Wall Street?

Not every criminal has a life interesting enough to be adapted into a film. But Jordan Belfort, also known as Wolf from Wall Street, maybe "to boast" really impressive "achievement". His life would be enough to make not one, but several films. It had everything: big money, beautiful women, lavish life. Eventually, his story was put on paper and then made into a film. Danny Porush (Belfort's right-hand man), who was portrayed on screen as Donnie Azoff, recalled that a book is a distant relative of truth, while a film is a distant relative of a book. It's worth remembering this when you learn the story of the titular fraudster.

I have already mentioned that the movie deviates slightly from the truth. This is the case, for example, when throwing dwarfs at a target. Danny Porush himself recalled that midgets were at parties, but they weren't humiliated like that. However, the story about paying $10 for a girl to shave herself bald was true. Porush mentioned that no one at the company called him anything The Wolf of Wall Street, or even the wolf itself. This does not mean that the entire book and film were the author's invention. True stories also include smuggling money to Switzerland and the one about the debut of the Madden company. It is also true that he was encouraged to continue working on Wall Street by his first boss, Mark Hanna (played in the film by Matthew McConaughey), who believed that the key to success was... cocaine and prostitutes.

Jordan was not a cautious man and liked to enjoy life. Of course, there is the other side of the coin - he lived at the expense of people from whom he embezzled money. Ultimately he ended up in prison. A book brought him a second life "Wolf from Wall Street", which turned out to be a bestseller. However, the real fame came from Martin Scorsese's film of the same title. Leonardo DiCaprio played a great role there.

Interestingly, the film was financed by one of the creators of the great Asian fraud, which we have already written about in Forex Club - Low Tek Jho. Belford achieved his success thanks to his charisma and sales skills, and thanks to them he earns his living today because he is a motivational speaker. Learn the true story of The Wolf of Wall Street.

Where did the nickname come from? Wolf from Wall Street?

Belford supposedly owes its iconic nickname to aggressive sales and the wild culture that prevailed in the city Stratton oakmont. It was this company that became the center of the scam organized by Jordan Belfort. The success may be surprising because it was not a sophisticated fraud. He did not go the way of Bernard Madoff, but he cheated on much poorer people. This is, firstly, because he did not have enough reputation to enter the appropriate circles. Secondly, richer people asked more uncomfortable questions and did not need to buy an unknown company to become rich.

Stratton Oakmont operated on the fringes of the law throughout the period. It did not deal with analytical coverage of companies. They used telephone calls to encourage people to invest in penny stocks with very low liquidity. It was Jordan Belfort who significantly raised the organization of the so-called “penny stock boiler room”. However, before this happened, our hero started very calmly.

From dreams of a stable job to a sales career

Jordan Belfort in 2017. Source: wikipedia.org

Jordan was born on July 9, 1962 into a Jewish family. He grew up wealthy because his parents were accountants. After graduating from high school with his friend Elliot Loewenstern he made $20 selling summer ice cream at a local beach. His sales skills and directness helped in this. He spent the money he earned on tuition at the University of Maryland. He wanted to become... a dentist. Quite an unusual interest for a future fraudster. He eventually gave up on the idea and went to study biology at American University.

After graduating, he decided not to work in his profession. His sales activities were much better. As a result, he began his career as a meat and seafood seller. Even though he made good money on sales, he spent even more. The company grew and employed another 7 salespeople. Financial management was failing. Despite the increase in revenues, the company declared insolvency and took Belfort with him, who also became bankrupt.

The future did not look bright, but parents came to the rescue. Thanks to their network of contacts, he became an intern at LF Rothchild, where he worked “brokerage activities”. His job was to call potential customers and establish contacts. He would then forward the phone to more experienced salespeople who would finalize the orders. Jordan wanted to develop in this company, but there was an external shock that hindered his further development. After Black Monday in 1987 LF Rothchild had financial problems, which resulted in a reduction in employment, including the dismissal of young Belfort. Despite the sad start, Jordan continued to try to find a job in the financial industry. As a rule, he worked in second-rate institutions with shady activities. Perhaps exposure to such an environment caused him to become a fraud. It was in the late 80s that he tried drugs for the first time, which later influenced his further fate. However, the beginnings of addiction seemed pleasant. He was even more outspoken and coped with stress better. While working "for someone else", he saw that he was not using his full potential.

Going your own way

Stratton Oakmont Inc. logo Source: Wikipedia.org

He decided to try his hand at it and started his own company. In 1989, Stratton Oakmont was established and operated as a typical "boiler", but they presented themselves to customers as a serious financial institution. The company itself was created through the collaboration of Belfort, Danny Porush and Kenneth Greene. It is worth describing how the three mentioned met each other. Kenneth is Jordan Belfort's colleague at Investors Center. In turn, with Danny, the story of the meeting is more interesting. The Wolf of Wall Street became acquainted with Nancy Porush, who was the wife of his future partner. Initially, Jordan confronted Nancy for giving up her seat on the bus. The two mentioned liked each other very quickly.

The three partners started their business under the license of Stratton Securities. Thanks to their sales talents and lack of morals, they were able to buy Stratton Securities out of their profits after just 6 months. They renamed the company Stratton Oakmont because it sounded more prestigious and would make it respected by customers.

The scheme of operation was as follows. In the beginning, customers were offered good companies, and then they called with a "special opportunity". The offer usually concerned low-liquid companies, which were referred to as so-called "Penny stock". The shares were sold by Stratton or appointed people, and the buyers were ordinary investors. There was no widespread internet back then. At first, the defrauded customers did not know that there were more such people. There was also no way to easily verify Stratton. So they could operate in a similar way for many years.

The company was growing like a weed. The 90s were the golden age of the USA, which benefited from both the opening of the Eastern Bloc economies to capitalism and the increasingly profitable trade with China. The economy was growing rapidly and so were Americans' incomes. Capital flowed to the stock exchange, where fortunes were created. This encouraged the middle class to look for great opportunities to become millionaires. Companies such as Stratton took advantage of this booming climate.

A big problem for the company was acquiring great salespeople. Jordan decided that it was best to train young people who wanted to make money quickly and offer huge incentive bonuses. Except that he organized really wild parties, with alcohol, drugs and escort ladies. This motivated the "young wolves" to sell even better. This overmotivation later backfired because the salespeople were very aggressive towards customers. Secondly, the rapid growth of the organization meant that employee turnover was very high.

Stratton's problems would certainly be less if the owner and senior managers knew moderation. Unfortunately, it was completely different. The more they earned, the more they wanted to have. This pushed them into increasingly risky practices. They wanted to earn more, but the market of low-liquidity companies had its problems. As a result, they decided to start operating on the IPO market. They contacted companies that wanted to debut on the stock exchange and offered them attractive conditions. Their services were usually used by small companies that did not want to be represented by large financial institutions. In exchange for helping to place the shares, Stratton received remuneration. During the debut, sellers urged people to buy shares, presenting the emerging companies as a huge investment opportunity. While operating on the IPO market, the company placed shares worth $1 billion. This meant that Stratton operated in the small-cap segment because the average issue did not exceed $30 million.

Stratton is helping revolutionize the internet

For many, this headline may seem shocking. How is it possible that Stratton could be committed to positive change while itself being a company that hurts people? Well, coincidences often rule the world. So it was this time. The beginning of the 90s was the time of the wild Internet. Regulators also had problems because the law did not adapt to the new times. The story that prompted law reform had a surprising beginning.

In 1994, Prodigy owned a BBS (Bulletin Board System) called Money Talk. There an anonymous user said that Stratton Oakmont is breaking the law when conducting its IPO. It was a slap in the face for Belfort's company and he immediately filed a lawsuit against Prodigy, claiming that the owner of BBS is responsible for the content published by users because he can delete vulgar posts himself. The court agreed with Stratton's opinion. However, internet supporters reported that this would hamper the development of this communication tool. Moreover, it is contrary to the court's judgment from 1991. In response to the internal contradiction of the regulations new regulations were introduced, which was Communications Decency Act of 1996 The act itself did not stand the test of time, but Article 230 permanently changed the Internet. The article states that the provider or user of an interactive computer service cannot be treated as a publisher. This confirmed that there can be freedom of expression on the Internet. Itself Section 230 is called “26 words that created the Internet.”

Steve Madden – one of Stratton's most important clients

Not all of Stratton's debuts were 100% fraud. One of the examples of companies that achieved market success was Steven Madden Ltd. It doesn't mean everything was fine either :-). On the contrary. However, before we describe the history of this company, it is worth describing how Stratton acquired this client. Contrary to appearances, there is no fascinating story behind it.

Steve Madden knew Danny Porush as a child. Steve initially sold his shoes from his car. Steve's starting capital was $1000. Within a few years, the company was increasing its revenues, but it needed money for further development. After much persuasion, he was convinced by Jordan and Danny that it was worth debuting on the stock exchange. Belfort immediately hit it off with Steve. Common interests, i.e. drugs and partying, helped in this. Ultimately, Jordan decided to leave Stratton to develop Steve Madden Ltd. However, the partnership did not last long. The reason was the Wolf of Wall Street's increasing addiction to drugs, which meant that he could not effectively help in the development of the company. The story didn't end rosy for Steve. He was accused of manipulating stock prices, money laundering and other financial frauds. Ultimately, he was sentenced to several years in prison and was forced to leave his position as CEO. Interestingly, even before his conviction, he changed his position to creative director with a salary of $700. He also received a salary in prison. After returning from prison, he returned to his company and quickly developed it. Currently, its capitalization is over $000 billion.

Steven Madden Ltd. Source: TradingView

Drug run amok

While working at Stratton, Belfort became addicted to  methaqualone, which was sold as 'Qualude'. Jordan took it in huge doses. When he didn't have access to it, he turned to other drugs. While drinking, he did not avoid alcohol, which made him even more unpredictable.

Belfort himself liked it when there were no limits. This applied to both parties and life. Luxury houses, a yacht, a helicopter and sports cars were for him "must have". He drew patterns from films and series such as Wall Street, Pretty Woman and Miami Vice. For example, he bought a Ferrari only because he saw it on an episode of Miami Vice, where Don Johnson drove it. Huge amounts of money allowed him to fulfill his consumer desires. The problem was that he often abused drugs and alcohol, which meant that his fantasy was not tempered by common sense. This is what happened when, completely stoned, he landed a helicopter in his garden or dropped off his daughter in such a state. He could have a great time, but his family, his business and his health suffered. The drug of choice was Quaaludes, which was the regular drug sold in the US for many years. However, in 1984 it was withdrawn from sale due to numerous side effects. One of them was amazing experiences while taking the drug and greater boldness. This made it easier for Jordan to make love conquests, which over time became one of the reasons for the breakdown of the marriage.

Many examples of "fantasy" can be found in the book and movie The Wolf of Wall Street. One of the most interesting cases was the sinking of the luxurious yacht Nadine, which was built for Coco Chanel in 1961. It sank off the coast of Sardinia because Belfort disobeyed the captain and decided to sail despite strong winds. Due to strong waves, the bow hatch was broken, which led to the sinking of the ship. The people were saved by Italian divers from a special naval unit. Of course, Jordan wasn't sober at the time.

Belfort was married twice. The first wife was Denise Lombardo, but due to incompatibility of personalities, they divorced. However, he did not despair for long - at a party he met a beautiful model who, although born in the United Kingdom, grew up in Brooklyn. The relationship was very stormy. Belfort became more and more immersed in it with each passing year drug run amok. During their relationship, he cheated on his wife many times. Eventually they divorced, among others. because of his drug addiction. Despite this, they remained on good terms. The two children stayed with Nadine.

Investigation and imprisonment

Stratton Oakmont was under the supervision of the newly formed body that it was NASD (National Association of Securities Dealers), now known as FIRA. Finally, in December 1996, the NASD banned the expansion of its activities. However, this was not the end of blows against Belfort. In 1999, he was charged with securities fraud and money laundering. Ultimately, he was sentenced to 4 years in prison. He was released from prison after 22 months. The punishment was supposed to be longer, but Belfort decided to cooperate with law enforcement authorities. As a result, he gave testimony that incriminated subordinates, partners and some outsiders.

Apart from the prison sentence he also had to return $110,4 million for people who have been cheated on stock investments. Of course, his revenues were not large enough for him to be able to repay all his liabilities. He had to agree to taking half of his income from paid work. The number of Stratton customers defrauded was 1513. Part of the funds were obtained from the sale of real estate, thanks to this approximately $10 million went to investors. Of course, it was a drop in the ocean of needs. Back in 2009, The Wolf of Wall Street negotiated that he would repay $10 a month for the rest of his life. In addition, Belfort declared that he would allocate all income from conferences and motivational speeches in the USA to repay his debts. He declared his sincere desire to return the funds to the victims, but in 000, federal prosecutors filed complaints that Belfort was not fulfilling his obligations.

The book that changed his fate

In short, in 1999 Belfort was finished. No one was interested in the life of another financial fraudster. In prison, he met Tommy Chong, who shared a cell with him. After hearing the story, he strongly encouraged him to write a book. Chong convinced Jordan to pursue a career as a motivational speaker.

It was only the book The Wolf of Wall Street that made Jordan Belfort come out of the shadows and back into the spotlight. The advance for writing the book alone was $500. His work became a bestseller and attracted the attention of Hollywood. A real war began to take over the rights to the film. The next milestone was the film The Wolf of Wall Street with a great role by Leonardo Di Caprio. As a result, invitations to meetings, conferences and lectures began to appear like mushrooms after the rain. Jordan was also able to expand his business as a motivational speaker. His story, although ethically reprehensible, fascinated many people.

Cover of the second book by Jordan Belfort. Source: Amazon.com

According to prosecutors who investigated the Jordan Belfort case the book contains a lot of made up information that was written to make it more exciting. In 2017, our hero wrote another book called “Way of the Wolf: Straight Line Selling: Master the Art of Pesuasion, Influence and Success”. The book describes in detail the sales techniques that were used by Stratton Oakmont to increase trading in certain stocks.

It is worth dwelling for a moment on his career as a motivational speaker. During his speeches, he often talks about his drug addiction and his drug-free journey. He regularly raises ethical issues related to his history. In addition, he shows his sales skills. Interestingly, the scammer himself fell victim to another scammer. In 2021, Jordan was robbed of $300 in kryptowalutach by a hacker.

Summation

Jordan Belfort, on the one hand, was a great salesman and motivator, and on the other, the person responsible for the tragedies of over 1500 people. After all, he didn't only steal from the rich. One of the customers paid for purchases with a credit card, which resulted in huge financial problems. It didn't matter to Belfort, what mattered was the money. Similarly, he was not a person who was very attached to people. This is proven by the fact that he decided to cooperate with the police just to reduce the sentence. Nowadays he talks about conversion and being more moral, but it's possible that it just sells very well. Watching a movie Wolf from Wall Street please note that many of these stories did not happen and were added to make the movie more exciting. This is definitely not the real Wolf of Wall Street. There are many more investors who have been able to earn huge amounts of money in the market using their intellect, charisma and unconventional thinking. Why aren't they talked about so much? Their stories just aren't that Hollywood.