Skip to main content

The real 'Wolf of Wall Street'

By Susan Harrigan, Special to CNN
updated 11:19 PM EDT, Fri October 25, 2013
Leonardo DiCaprio plays Jordan Belfort in the film
Leonardo DiCaprio plays Jordan Belfort in the film "Wolf of Wall Street."
STORY HIGHLIGHTS
  • Upcoming film stars Leonardo DiCaprio, playing Jordan Belfort as the "Wolf of Wall Street"
  • Susan Harrigan: The real "wolf" was a stock scammer who defrauded innocent investors
  • She says he has not fully paid restitution, but gained $1 million on movie rights to his book
  • Harrigan: DiCaprio recorded a video endorsing Belfort's motivational speaking

Editor's note: Susan Harrigan worked as a financial reporter for Newsday, The Wall Street Journal and several other newspapers. "Castles Made of Sand," a two-part series about Belfort that appeared in Newsday, won a New York Society of the Silurians award.

(CNN) -- "The Wolf of Wall Street?" Give me a break.

If you've been to the movies lately, you may have seen a trailer for a Martin Scorsese film with that name. It's the title of the first book in a two-volume memoir by former stock swindler Jordan Belfort, upon whom the film is based.

The trailer appears to portray Belfort as a player in a small part of lower Manhattan that's become the world-famous icon of capitalism. It opens with dizzying shots of famous symbols such as the Wall Street sign and the bronze Charging Bull statue, a favorite photo backdrop for tourists.

There's a hilarious scene with Belfort, played by Leonardo DiCaprio, hamming it up with one of his early mentors, played by Matthew McConaughey, at a window table in a restaurant with fabulous city views. You think Wall Street big shots might go there. And if you haven't caught on yet, the camera moves to Belfort on his yacht, which happens to be bobbing in a harbor with the World Financial Center in the background.

"The Wolf of Wall Street" might turn out to be great entertainment, which is what Hollywood is for. And maybe Belfort really did dock his 167-foot yacht near the Financial Center at least once before it sank in a Mediterranean storm.

But don't fall for the scenery. As Nadine Belfort, his second wife, said during an argument portrayed in his memoir, "My husband, the Wolf of Wall Street! It's almost too ridiculous for words."

For starters, almost all of Belfort's lucrative criminal career took place in a less glamorous locale than those opening scenes. After seven months in his first job in the securities industry, pitching stocks over the telephone for a genuine Wall Street-based firm, Belfort left there after stocks crashed in 1987 and headed east. His intention, he says in the memoir, was to bring "my own version of Wall Street out to Long Island instead."

The Expressway to his schemes

To convey what Belfort's professional life in this "version of Wall Street" was really like, the film trailer should start with shots of Long Island Expressway traffic and segue to a scene in a Greek diner near Lake Success, Long Island, population about 3,000, near the border with Queens. Belfort's firm, Stratton Oakmont, was headquartered there. In his memoir, he says he had breakfast at the diner with another mentor three times a week.

Employing hundreds of brokers, Belfort's Long Island version of Wall Street was a huge, infamous example of a type of thievery known as a "pump and dump" scheme.

Employing hundreds of brokers, Belfort's Long Island version of Wall Street was a huge, infamous example of a type of thievery known as a "pump and dump" scheme.
Susan Harrigan

In the scheme's first stage, Belfort and his partner, Daniel Porush, secretly got control of stock in small companies that Stratton took public. Then Stratton brokers, working banks of telephones, called individuals throughout the United States, using scripts that included wildly optimistic predictions about how high the stocks' prices would go.

When enough people had finally been fooled into buying the shares, the price really did rise as a result. Ignoring instructions from ordinary investors who wanted to sell, Belfort and other insiders cashed in at the peak, dumped all their stock into the market for a huge profit, and left the people they'd duped holding nearly worthless stock.

Trying to impress potential victims, brokers at Stratton and many other so-called "boiler rooms" said they were calling from "Wall Street." In fact, their only real connection with Wall Street was that some of the stocks they sold were traded at exchanges there, and the boiler rooms' "clearing firms" (companies handling the mechanical details of stock trades) might be there.

The tactic evidently worked.

Altogether, individual investors, many of them retirees, were cheated out of about $250 million by Stratton Oakmont by the time regulators managed to close it in 1996.

There was a book in 1929 called "The Wolf of Wall Street," based on a B-movie by that name about a fellow who cornered the market in copper. That helps me believe someone really did call Belfort that at least once.

But during more than a dozen years following Belfort's story for Newsday, I never once heard him referred to as "The Wolf." Not by his friends, enemies or ex-employees, and certainly not by the legions of regulators trying to close him down.

Joseph Borg, director of the Alabama Securities Commission, headed a long investigation of Stratton in the 1990s. He told me he hadn't heard it either. He thinks Belfort invented the "Wolf "nickname himself. "I have to give him credit," Borg says. "He's not stupid."

Not 'Wolf,' but something else ...

A word I did often hear to refer to boiler-room operators was something farther down the food chain -- "cockroach."

The brokers themselves used it. Belfort made it into a verb when he testified in the trial of Stratton's accountant years after Stratton closed. After it became obvious that regulators were about to shut Stratton down, he, Porush and some advisers decided to "close Stratton's doors ... and cockroach," he said.

In his memoir, Belfort explains what he calls the "Cockroach Theory," saying it meant setting up satellite firms when regulators got close to a big boiler room, moving brokers there in batches and continuing to operate as before at the new location.

For regulators, he wrote, closing a crooked brokerage suddenly became "like stepping on a cockroach and squashing it, only to find 10 new ones scurrying in all directions."

It's a real pity that the "Wolf" movie trailer doesn't give you some idea about who these victims were.

Decidely middle class, unsophisticated investors, they included Dorothy and Louis Dequine, 88-year-old Florida residents. They lost $252,000 in 1994 after a Stratton broker replaced their holdings with worthless stocks without authorization.

Claude Stemp, a Vietnam veteran, lost $62,000 in a 1996 Stratton swindle, and had to take out a second mortgage on his house to afford care for his ailing mother. When he saw the fictional movie "Boiler Room" a few years later, Stemp said, "I just about cried."

Many of the swindled await their money

The web page for Jordan Belfort\'s sales training business.
The web page for Jordan Belfort's sales training business.

Despite Belfort's lucrative movie and book deals, and earnings from a new career as a motivational speaker, many of these victims are still waiting for restitution.

When Belfort was sentenced in 2003 to four years in prison, Judge John Gleeson ordered him to pay about $110.4 million to a victims fund, in installments equal to 50% of his monthly gross income, after his release from jail. If any major changes in his financial circumstances took place, the percentage Belfort had to pay could be adjusted up or down.

After I asked for an update on the fund in early October, lawyers in the office of Loretta E. Lynch, U.S. Attorney for the Eastern District of New York, replied that Belfort had only contributed about $11.6 million to the victims' fund so far -- about one-tenth of the required total.

In a court filing with many details about Belfort's current income whited out, Lynch's office asked Gleeson to find Belfort in default, saying that according to his tax returns and other available information, the payments he has been making are "insufficient." They said that in 2011, for instance, Belfort paid $21,000 in restitution, although he made more than $1 million for the motion picture rights to his memoir, as well as more income from a motivational speaking corporation he half-owns.

Jordan stands as a shining example of the transformative qualities of ambition and hard work, and in that regard, he is a true motivator.
Leonardo DiCaprio

Belfort's attorneys responded that he doesn't deny he still owes money to victims, but that his position is his obligation to pay 50% of his income to them ended when his term of "supervised release" from prison expired in April 2009. They said that for the past two years, he's been trying to arrange a "forbearance" agreement with the government to "pay 100% of the profits of the movie and the two books," but that his offer has been turned down.

"Before you accuse me of anything, you should learn the facts," Belfort said in an e-mail last week. "I have been trying to settle this case forever and have been completely stonewalled. I can even show you the settlement offer from the government, on their letterhead, asking for only 50% of my books, after I offered 100%."

On Friday afternoon, the government asked to withdraw its pending motion to hold Belfort in default on his payments to victims. Oral argument in the case had been scheduled to begin Nov. 22. In a court document, Beth Schwartz, Assistant U.S. Attorney for the Eastern District of New York, said the delay would give both sides "an opportunity to explore a resolution" of certain issues, and that "Mr. Belfort joins in this request."

The movie, originally scheduled for mid-November, is now set for release on Christmas Day. Meanwhile, the website for "Jordan Belfort's Wolf of Wall Street Sales Training," his motivational speaking company, features a video of DiCaprio doing a bit of speaking himself.

"There is nothing quite like Jordan's public speaking and his ability to train and empower young entrepreneurs," DiCaprio says. "Jordan stands as a shining example of the transformative qualities of ambition and hard work, and in that regard, he is a true motivator."

Enjoy the show.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Susan Harrigan.

ADVERTISEMENT
Part of complete coverage on
updated 4:06 PM EDT, Tue October 21, 2014
Timothy Stanley says Lewinsky is shamelessly playing the victim in her affair with Bill Clinton, humiliating Hillary Clinton again and aiding her critics
updated 9:02 PM EDT, Mon October 20, 2014
Imagine being rescued from modern slavery, only to be charged with a crime, writes John Sutter
updated 12:00 PM EDT, Tue October 21, 2014
Tidal flooding used to be a relatively rare occurrence along the East Coast. Not anymore, write Melanie Fitzpatrick and Erika Spanger-Siegfried.
updated 7:35 AM EDT, Tue October 21, 2014
Carol Costello says activists, writers, politicians have begun discussing their abortions. But will that new approach make a difference on an old battleground?
updated 9:12 AM EDT, Tue October 21, 2014
Sigrid Fry-Revere says the National Organ Transplant Act has caused more Americans to die waiting for an organ than died in both World Wars, Korea, Vietnam, Afghanistan and Iraq
updated 2:51 PM EDT, Tue October 21, 2014
Crystal Wright says racist remarks like those made by black Republican actress Stacey Dash do nothing to get blacks to join the GOP
updated 2:27 PM EDT, Tue October 21, 2014
Mel Robbins says by telling her story, Monica Lewinsky offers a lesson in confronting humiliating mistakes while keeping her head held high
updated 9:29 AM EDT, Mon October 20, 2014
Cornell Belcher says the story of the "tea party wave" in 2010 was bogus; it was an election determined by ebbing Democratic turnout
updated 4:12 PM EDT, Mon October 20, 2014
Les Abend says pilots want protocols, preparation and checklists for all contingencies; at the moment, controlling a deadly disease is out of their comfort zone
updated 11:36 PM EDT, Sun October 19, 2014
David Weinberger says an online controversy that snowballed from a misogynist attack by gamers into a culture war is a preview of the way news is handled in a world of hashtag-fueled scandal
updated 8:23 AM EDT, Mon October 20, 2014
Julian Zelizer says Paul Krugman makes some good points in his defense of President Obama but is premature in calling him one of the most successful presidents.
updated 10:21 PM EDT, Sun October 19, 2014
Conservatives can't bash and slash government and then suddenly act surprised if government isn't there when we need it, writes Sally Kohn
updated 8:28 AM EDT, Mon October 20, 2014
ISIS is looking to take over a good chunk of the Middle East -- if not the entire Muslim world, write Peter Bergen and Emily Schneider.
updated 9:00 AM EDT, Mon October 20, 2014
The world's response to Ebola is its own sort of tragedy, writes John Sutter
updated 4:33 PM EDT, Fri October 17, 2014
Hidden away in Russian orphanages are thousands of children with disabilities who aren't orphans, whose harmful treatment has long been hidden from public view, writes Andrea Mazzarino
updated 1:22 PM EDT, Sat October 18, 2014
When you hear "trick or treat" this year, think "nudge," writes John Bare
updated 12:42 AM EDT, Sat October 18, 2014
The more than 200 kidnapped Nigerian schoolgirls have become pawns in a larger drama, writes Richard Joseph.
updated 9:45 AM EDT, Fri October 17, 2014
Peggy Drexler said Amal Alamuddin was accused of buying into the patriarchy when she changed her name to Clooney. But that was her choice.
updated 4:43 PM EDT, Thu October 16, 2014
Ford Vox says the CDC's Thomas Frieden is a good man with a stellar resume who has shown he lacks the unique talents and vision needed to confront the Ebola crisis
updated 4:58 AM EDT, Sat October 18, 2014
How can such a numerically small force as ISIS take control of vast swathes of Syria and Iraq?
updated 9:42 AM EDT, Fri October 17, 2014
How big a threat do foreign fighters in Syria and Iraq pose to the West? It's a question that has been much on the mind of policymakers and commentators.
updated 8:21 AM EDT, Fri October 17, 2014
More than a quarter-million American women served honorably in the Iraq and Afghanistan wars. Now they are home, we have an obligation to help them transition back to civilian life.
updated 4:27 PM EDT, Thu October 16, 2014
Paul Begala says Rick Scott's deeply weird refusal to begin a debate because rival Charlie Crist had a fan under his podium spells disaster for the Florida governor--delighting Crist
updated 12:07 AM EDT, Thu October 16, 2014
The longer we wait to engage on Ebola, the more limited our options will become, says Marco Rubio.
updated 7:53 AM EDT, Wed October 15, 2014
Democratic candidates who run from President Obama in red states where he is unpopular are making a big mistake, says Donna Brazile
updated 12:29 AM EDT, Thu October 16, 2014
At some 7 billion people, the world can sometimes seem like a crowded place. But if the latest estimates are to be believed, then in less than a century it is going to feel even more so -- about 50% more crowded, says Evan Fraser
updated 12:53 PM EDT, Mon October 20, 2014
Paul Callan says the Ebola situation is pointing up the need for better leadership
updated 6:45 PM EDT, Wed October 15, 2014
Nurses are the unsung heroes of the Ebola outbreak. Yet, there are troubling signs we're failing them, says John Sutter
updated 1:00 PM EDT, Wed October 15, 2014
Dean Obeidallah says it's a mistake to give up a business name you've invested energy in, just because of a new terrorist group
updated 7:01 PM EDT, Wed October 15, 2014
Fear of Ebola is contagious, writes Mel Robbins; but it's time to put the disease in perspective
updated 1:44 PM EDT, Tue October 14, 2014
Oliver Kershaw says that if Big Tobacco is given monopoly of e-cigarette products, public health will suffer.
updated 9:35 AM EDT, Sat October 18, 2014
Stop thinking your job will make you happy.
updated 10:08 PM EDT, Tue October 14, 2014
Ruben Navarrette says it's time to deal with another scandal involving the Secret Service — one that leads directly into the White House.
updated 7:25 AM EDT, Tue October 14, 2014
Americans who choose to fight for militant groups or support them are young and likely to be active in jihadist social media, says Peter Bergen
updated 9:03 AM EDT, Mon October 13, 2014
Stephanie Coontz says 11 years ago only one state allowed same sex marriage. Soon, some 60% of Americans will live where gays can marry. How did attitudes change so quickly?
updated 4:04 PM EDT, Tue October 14, 2014
Legalizing assisted suicide seems acceptable when focusing on individuals. But such laws would put many at risk of immense harm, writes Marilyn Golden.
updated 9:07 AM EDT, Mon October 13, 2014
Julian Zelizer says the issues are huge, but both parties are wrestling with problems that alienate voters
updated 6:50 PM EDT, Mon October 13, 2014
Mel Robbins says the town's school chief was right to cancel the season, but that's just the beginning of what needs to be done
updated 11:43 AM EDT, Sat October 11, 2014
He didn't discover that the world was round, David Perry writes. So what did he do?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT