The stock scam wasn’t emblematic of greed in the Financial District. These guys were just shrewd crooks working out of Long Island.
The swindler known as the “Wolf of Wall Street” taught me how to pull off his boiler-room fraud, down to the smallest details. Movie director Martin Scorsese’s lurid version of the tale now showing in multiplexes doesn’t capture how the scams really worked.
In early 2000, Jordan Belfort and Danny Porush (renamed Donnie Azoff in the movie) were under house arrest. Faced with overwhelming evidence, they had cut deals with the government to reduce their jail sentences by ratting on their friends. One such friend was Steve Madden, the shoe designer who had played a supporting role in many of their crimes. I was the Securities and Exchange Commission enforcement attorney assigned to put together the SEC’s case against Madden.
As “cooperating witnesses,” Belfort and Porush spent many hours explaining to me the finer points of how they used their brokerage firm, Stratton Oakmont, to steal millions of dollars from investors, and convincing me that Madden had been a knowing participant in their schemes. Madden eventually paid millions to the government and spent considerably more time (30 months) locked up in federal prison than Belfort (22 months).
The Scorsese movie glosses over the nuts and bolts of how Jordan and his merry men bilked seemingly hapless suckers out of their life savings en route to the more entertaining sex, drugs and partying that his crimes financed. Today, in the era of Occupy Wall Street protests and seemingly daily multimillion-dollar regulatory fines against financial firms, it is tempting to view Jordan Belfort as emblematic of Wall Street’s greed. In fact, he was nothing more than a thief who found a way to steal from anyone who trusted him and to blame it on the stock market.