Almost a decade ago, the movie The Wolf of Wall Street took the world by storm. It had a star-filled cast, loads of action, and it painted a picture of investors that looked like a deranged dreamland—tons of money, yachts, beautiful women, and incredible parties. Though, there was also violence and fraud.
It was one of those movies that made people all over the world wonder if people working on Wall Street truly live this way. Also, if one such person was caught in the act of fraud, how many weren’t and are still living this insanely rich lifestyle gained through dishonest means?
What made this movie so intriguing for many is the fact that it claimed to tell the real-life story of Jordan Belfort, who goes by the nickname “The Wolf of Wall Street,” or “The Wolf,” and who had previously published a book with the same title in 2007. In this article, we will do our best to tell you the actual story of Belfort’s life and dive deeper into some of the real-life events that unfolded.
Who Is Jordan Belfort?
The protagonist (or antagonist, depending on the way you look at it) of the story is Jordan Belfort. He was born in 1962 in The Bronx and showed an interest in the business from a very early age; however, when it came to his education, he chose to study biology and even enrolled in dental school. On his first day at the University of Maryland School of Dentistry, a professor warned Belfort and other students that dentistry was not likely to make them incredibly financially successful, which caused Belfort to reconsider his enrollment.
After dropping out, he started working as a salesperson on Long Island. At a certain point within this position, Belfort had several people working for him, but by the time he got to 25 years of age, the business had gone bankrupt. After this unsuccessful venture, Belfort became more interested in the stock market and entered a stockbroking position he heard about through a friend.
In his late 20s, Belfort had founded a financial firm called Stratton Oakmont, an over-the-counter brokerage house. This venture of his was doing incredibly well and was linked to IPOs of over 30 companies.
How Did Jordan Belfort Make His Money?
As you might already know, Jordan Belfort made most of his money during his time at Stratton Oakmont, the firm he started in 1989. Here, Belfort started to develop his skills as a stock trader and began promoting penny stocks to other people interested in investing. However, things started to develop in a different direction once Stratton Oakmont began operating as a boiler room.
According to investor.gov, boiler rooms are “large-scale operations designed to lure in as many investors to an investment scam as possible, often using high-pressure sales tactics,” such as cold calling, etc., which Belfort instructed his traders to do.
During those days, Jordan Belfort’s job would be to promote penny stocks with the help of intensive marketing and thus drive up the price of the stocks. Then, Belfort would instruct his team to dump the stock. This is a maneuver that resulted in him making millions of dollars. At one point, Belford had 1,000+ traders working at Stratton Oakmont issuing stocks.
Scams and Fraud
During his time as a founder of Stratton Oakmont, Belford committed several illegal activities, which in the end caught up to him and landed him in prison. His firm, Stratton Oakmont, participated in a vast number of fraudulent activities, including the so-called “pump-and-dump schemes” which we just told you all about—a method that is known for inflating the prices of penny stocks.
The firm used intense sales tactics, and Belfort’s team pressured investors to put their money into speculative securities with no specific outcomes. Throughout almost the entire existence of Stratton Oakmont, the firm was monitored by the National Association of Securities Dealers (NASD), and it pursued constant legal actions against its activities. In 1996, the firm finally got shut down by authorities, and in 1999, both Belfort and his associate Danny Porush were sent to court for securities fraud and money laundering.
Belfort admitted he was guilty of committing a pump-and-dump scheme that potentially cost investors up to $200 million. This resulted in him being sentenced to prison for four years; however, he actually served only 22 months in total.
What the Wolf Is Doing After Prison
After Belfort was released from prison, as a part of his restitution agreement, he had to pay 50% of his entire income to people he defrauded through 2009. In 2013, a complaint was filed by federal prosecutors stating that he had not paid the appropriate amount of money in the past years. This led to Belfort having to reach another deal with the federal authorities and finally complete his restitution payments.
After he got out of prison, Jordan Belfort started to work on rebranding his image and wrote two consecutive books: The Wolf of Wall Street and Catching the Wolf of Wall Street. The first one you already know about—it inspired Martin Scorcese to make his famous film, and it has all the stories in the movie, but in even more detail.
In this book, Jordan basically shares what his life was like before everything caught up to him and he had to go to jail. His second book, Catching the Wolf of Wall Street, gives readers more of the same and a little extra. It tells more stories of Jordan’s life from the time he had no money and was just starting his operation, right until the FBI raid and everything that unfolded after.
When reading both of these books, it might be hard to believe that they’re not in any way fictional and that everything that happens is the biography of an actual person. It’s precisely this blend of seemingly unreal events and the actual person who lived them that made both of Belfort’s books a bestseller. Ultimately, only Belfort and those that were closest to him during these times will know if he embellished his stories.
Moving Toward Motivation
Besides writing bestselling novels, Jordan Belfort has also tried to reinvent his image by giving motivational speeches and sharing his journey with audiences across the world. He puts special emphasis on all the mistakes he made during his time at Stratton Oakmont, stating that he was under the influence of drugs during that period of his life and speaking about the regret he feels about losing his clients’ money and the scam deals that he made.
As a motivational speaker, his biggest strength is in talking about how to reinvent your life after hitting rock bottom, as he has done many times over. He is also known for sharing incredible sales tactics and is often invited by companies to speak in front of their employees.
In 2014, his name got mixed up in a scandal yet again when media outlets revealed that an Australian employee training company and Belfort might have been involved in a scam scheme surrounding government funding. However, as of now, these allegations have not been proven at all, and Belfort continues to lead a normal life.
In Conclusion
There’s no question that Jordan Belfort has lived an eventful, movie-like life, despite the fact that it hasn’t been very morally sound. While they haven’t always been positive, Belfort’s experiences are intriguing to so many for that very reason: we can never imagine ourselves in that position.
It’s true that Belfort was caught in the end, which is very fortunate for the people he was scamming. Still, it’s interesting to note that he managed to run significant fraud schemes for years and make millions of dollars during that time, all by convincing traders and investors—people who also had stock market knowledge and experience.
Many negative things can be said about Jordan Belfort and his reputation; however, one thing is clear—he was a successful salesman, despite being a dirty one. His story is also a good lesson about reinventing yourself from impossible situations. After he was sent to prison, Belfort’s reputation was at an all-time low; however, by sharing his stories, admitting his mistakes publically, and trying to amend the situation, he was able to reestablish himself as a public figure and is now again, incredibly successful.
Please feel free to reach out to me on this or any of your investment needs or questions. I may not always have the answers at my fingertips, but I promise I will get them for you. Michael Torrence
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Michael Torrence – Investment Advisor Representative: Michael was born and raised in Ohio and attended The Ohio State University. After College, he was commissioned as a 2ndLt in the United States Marine Corps. He attended his initial training in Quantico, Virginia, then graduated at the top of his Primary Aviator Class and was selected for the Strike (Jet) Platform.
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