What lies on other side of Wolf’s Wall Street

For many of Belfort’s victims,the movie brings back old pain of being cheated.

Written by New York Times | Published: December 29, 2013 4:43:49 am

Susan Antilla

The Wolf of Wall Street is about to have his day. The Martin Scorsese film about the Wolf — Jordan Belfort in real life,played by Leonardo DiCaprio — tells how Belfort swindled thousands of investors out of more than $100 million as head of a penny-stock boiler room in the 1990s.

The film is an “almost nonstop parade of sex,drugs,nudity”,according to the online magazine Deadline Hollywood.

Left untold is the story of the victims,disparaged as “garbage” by DiCaprio’s character in the movie. For many of them — small businessmen and people like Steve Orton,a State Farm insurance agent from Alpharetta,Georgia — the publicity for the film has brought back the old pain. Still,Orton said,while “it kind of sickens me,I really feel like I owe it to myself to complete the circle to see it”.

Ken Minor,a real estate appraiser in Gilroy,California,said the experience “hurt me pretty bad”. He drew on a home equity line of credit to buy stocks with Belfort’s brokerage firm,Stratton Oakmont,and still has not repaid it. “I’m not a rich guy,” he said,“and I’ve been paying for it ever since.” Will he go to the movie? “If I see it,” Minor replied,“it will be for free.”

Stratton was shut down by industry regulators in 1996,and Belfort was sentenced to four years in prison for securities fraud and money laundering. He was released from federal prison after serving 22 months,in April 2006. A little more than a year later,he published his tell-all about the go-go years,The Wolf of Wall Street. He followed up in 2009 with Catching the Wolf of Wall Street. According to court records,Belfort received $940,500 for the movie rights to his two books.

At Belfort’s sentencing in 2003,Judge John Gleeson of US District Court in New York said that Belfort owed investors $110 million for his crimes and that he must divert 50 per cent of his gross monthly revenue to a victims’ fund beginning one month after his release from prison. The government has already distributed $10.4 million to investors garnered from property Belfort gave up in his plea agreement. And after serving restraining notices on Belfort’s publishers in 2007,the government reached an agreement with Belfort that it would receive half of the book proceeds.

In addition,Stephen P Harbeck,president of the Securities Investor Protection Corp,said his agency and a bankruptcy trustee had given investors $3.9 million from Stratton assets that remained after it collapsed,and an additional $5.3 million from SIPC funds. Of 3,378 Stratton customers who filed claims with SIPC,only 362 collected money,as per SIPC’s 2008 report.

Belfort said that his brokers had singled out people who could afford to lose money. “Listen,the idea of Stratton was it was wealthy people we were calling — not your average moms and pops,” he said. That might come as a surprise to some of Stratton’s victims.

Peter Springsteel,an architect in Mystic,Connecticut,said he was just starting his business when he was cold-called by a Stratton broker in the 1990s. He lost about half his life savings.

“My father lost practically a quarter-million dollars,” said Dr Louis E Dequine III,a veterinarian,whose father,Louis E Dequine Jr,an engineer,was cold-called at his home in Pensacola,Florida,by a Stratton broker. The older Dequine suffered a stroke under the stress. Dequine,whose parents have since died,said that he was distressed to get a call one day from his father,who was “confused about what had happened” in his account. “He had been persuaded to take his money out of the brokerage firm where he’d had a very long-term relationship and put it with Stratton Oakmont,” Dequine recalls.

Minor said he had taken his case to a predecessor of Wall Street’s self-regulatory organisation,the Financial Industry Regulatory Authority,and arbitrators granted him the full $57,000 he lost. But Minor said all the money went to his lawyers.He had not realised he was a victim of fraud until the arbitration.

Like Minor,many Stratton customers were victorious at their hearings before arbitrators and mediators. But when the firm filed for bankruptcy protection in January 1997,that shut off any chance for investors to collect. Orton,for instance,lost $68,500 with Stratton and won the full amount in mediation. But the bankruptcy made it impossible to collect the money,which,he said,he had expected to use for his child’s education.

Joel M Cohen,a former assistant US attorney in New York who worked on the Belfort case,said that Belfort might have been better advised to keep a low profile that did not display the “sordid,embarrassing details” of his life. He might also have reconsidered the title of his book and movie,Cohen added. “I never heard anyone call him ‘the Wolf of Wall Street’. NYT


In 1987,Jordan Belfort took a job at L F Rothschild. It was his first job in the business,and he was given the assignment of cold-calling “prospects” that he would then turn over to a broker. It was Long Island where Belfort picked up the pieces. He found a job pitching penny stocks — that is,stocks that are too small to be listed on any exchange,many of fly-by-night companies — and realised he had found his calling. He was such a good salesman that he soon went out on his own,founding a brokerage house with his friend Danny Porush. They called it Stratton Oakmont. It was a classic “pump and dump” operation: Belfort and his executives would buy up stock in a particular company,then have his legions of brokers sell that stock to unwitting investors,which would cause the stock to rise,allowing Belfort and company to sell their shares at a nice profit. Inevitably,the stock would fall back to earth,leaving the investors holding the bag.

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