Kenny SessaMay 6th, 2015Freshman SeminarProfessor Daniel SabolFinal Paper

The Wolf of Wall Street

In the world of business people are always trying to bend the rules a little bit just to make a quick buck. Most of the time these people are caught because the money gets in the way. Back in 1929, Albert H. Wiggin, the head of Chase National Bank, had shorted 40,000 shares of his own company using family corporations to hide the trades (Gekas). Essentially, he built the company so that if it failed, which it did, he would make a lot of money. He walked away with four million dollars. In 1986, Dennis Levine turned himself in because he was going to be indicted with insider trading. Levine earned nearly 2.7 million dollars, and after turning himself in became a witness against his broker, Ivan Boesky who had made nearly $50 million. Levine got two years in prison while Boesky got a three-year sentence. In 2003, Martha Stewart was also indicted on nine counts of insider trading. She sold $230,000 worth of ImClones stock and was caught by the SEC after her brokers assistant tipped off investigators. Finally, in the 1990s another very well known scandal happened on Wall Street, which involved a Queens native, Jordan Belfort. When Jordan Belfort made his rise to fame, he was nicknamed the Wolf of Wall Street because he scammed millions through his investment company, Stratton Oakmont, using a pump and dump method. Born on July 9th, 1962 in Queens, New York into a family of accountants, Belfort had business in his blood. He launched his first business when he was in his late teens when he began selling Italian ice with a childhood friend during the summer, and managed to earn an impressive $20,000 profit (Wilson). He initially intended to use this money to pay for a dentistry degree but changed his major and eventually graduating with a degree in biology from American University. Post graduation Jordan slowly made his presence known. A natural salesman, he eventually launched a business selling meat and seafood, but the company soon went belly up (Jordan Belfort Bio). In his memoirs he talks about his company and how they sold nearly 5,000 pounds of meat and fish a week. However, by the age of 25 the company had failed and he filed for bankruptcy. His company going under was the changing point in Belforts life and would eventually be the beginning of the downward spiral for Jordan. A family friend helped him become a trainee at L.F. Rothschild. In 1987, Belfort put his sales skills to use in a different arena. He started working for a brokerage firm, learning in the ins and outs of being a stockbroker (Jordan Belfort Bio). After the Black Monday stock market crash of 1987 he was laid off and back on the streets jobless. He jumped around from brokerage to brokerage for the next two years, perfecting his sales pitches on the side. In the end, he founded his own trading company, which he named Stratton Oakmont. With his partner, Danny Porush, Jordan Belfort raked in cash using a "pump and dump" scheme. His brokers pushed stocks onto their unsuspecting clients, which helped inflate the stocks' prices, then the company would sell off its own holdings in these stocks at a great profit (Jordan Belfort Bio). The way that this method would work is that Belfort and his brokers would have invested in a particular stock themselves, and then the would get on the phones with the people they were pitching it to, and they would push and push these people to invest in the stocks, eventually prying every last penny out of the people they were selling to. Then when the stock was at its peak, Stratton Oakmont would sell all of its holdings of that one particular stock and rope in a very hefty profit. Soon after, the stock would come quickly down to be worth nothing and the people who invested would lose all of their money. Their quick success spread rapidly through the city and on Wall Street. Stratton had hundreds of young aspiring brokers waiting in the doors to be hired. Half the time the people that were hired were straight out of college and very inexperienced. But Jordan quickly taught them his ways of a successful stock pitch and to make the sale no matter what quantity. Their motto was "Don't hang up until the client either buys or dies" (Wilson). With all this money and success it lead Strattons clients down a dark and dangerous path. The employees of Stratton Oakmont treated money like they were giving it to charity, buying whatever they wanted when they wanted and doing what they wanted to do without thinking about it. Sex, substance abuse, and wild behavior were normal at Stratton and always strongly encouraged. This wild behavior was provoked by Belfort every single day of his life and it ultimately became his life, he developed an extremely bad drug addiction: especially to Quaaludes. This high life living was a serious problem for him; he bought a mansion in one of the most expensive real estate in the world and owned every other toy you can think of. This combination is a recipe for disaster. The drug addiction and the toys he owned accounted for several accidents during his life. Including the crashing of his helicopter in his back yard. It also included the sinking of the yacht that he gave to his second wife, which once belonged to Coco Chanel. All of this commotion that they were making on W all Street couldnt have gone unnoticed. They were slowly taking over the stock market, and was it all legal? Not even close. Belfort never played by the rules during this period of his life and would eventually be the reason that he hit rock bottom. His life slowly spiraled out of control when the FBI began to crack down on him, one thing he was being investigated for money laundering 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 (Jordan Belfort Bio). People he though was close to him were working with the FBI to bring him down. His drug use during this period skyrocketed, and when things started to come down on him, it affected his family as well as his career. Belfort and his second wife got into an argument, which ultimately ended up with him kicking her down the stairs of their home. He then followed that incident by him attempting to kidnap his daughter. The end of that ended up with him crashing his car on his own property. He was placed in rehab following those events that occurred. After finally getting his act together and things finally started to look bright for him, the FBI had found out that he had broken the deal with the SEC and he was he was arrested by the for money laundering and securities fraud.In the end Belfort, Porush, and Stratton took money from nearly 1500 individual investors, which came out to 200 million dollars. Both Jordan and Danny both pled guilty to 10 counts of securities fraud and money laundering. The wolf was sentenced to four years in prison but served just less than two years because he agreed to testify against some of his colleagues that were apart of his scam. He was also sentenced to pay $110 million dollars in restitution, but has only paid nearly 11 million dollars of it thus far. Danny Porush also was sentenced to four years and served 39 months in prison. Stratton then closed its doors after this all went up in smoke and that was the end of the Wolf of Wall Street himself.

Works Cited

Wilson, Paula. "The Incredible Rise and Shocking Fall Of Jordan Belfort The Wolf Of Wall Street." RSS. N.p., 31 Mar. 2014. Web. 06 May 2015. .

"Jordan Belfort." Bio.com. A&E Networks Television, n.d. Web. 06 May 2015. .

Gekas, Alexandra. "8 Infamous Wall Street Scandals." Woman's Day. N.p., n.d. Web. 06 May 2015. .