Few figures in the finance world can claim as much influence as Jordan Belfort over the reputation of Wall Street as a greedy, heartless place. In 1999, Belfort pleaded guilty to numerous crimes related to stock market manipulation and the running of a long-term scam involving penny stocks.
In the wake of his sentencing and time in prison, Belfort wrote two memoirs: the first, The Wolf of Wall Street, was popularized in a 2013 movie adaptation directed by Martin Scorsese and starring Leonardo DiCaprio. In 2017, Belfort released another memoir, a self-help book entitled Way of the Wolf. Belfort has drawn criticism for profiting off his story of stealing money from innocent people, while his victims received nothing.
After scandals and a stint in prison for securities fraud, Belfort has reinvented himself as a motivational speaker. And one of his primary topics is the distinction between greed, ambition, and passion on Wall Street.
Early Life and Career
Jordan Belfort (born 1962) grew up in Queens, N.Y., and showed an understanding of the business world from an early age. According to his memoir The Wolf of Wall Street, Belfort worked with a friend to sell Italian water ice desserts out of inexpensive styrofoam coolers at a beach near his childhood home. In the summer months between high school and college, Belfort and his partner earned a whopping $20,000.
Belfort studied biology at American University with plans to enroll in dental school, using the money he had saved from his earlier venture. However, when the dean of the University of Maryland School of Dentistry warned students on the first day that dentistry was not a path to financial success, Belfort dropped out.
One of Belfort's earliest ventures after his short stint in dental school was as a door-to-door salesman in Long Island. He said the venture was successful, and that he was able to grow the business to the point where he had a team of several workers capable of moving more than two tons of product (in this case, meat and seafood) each week. By age 25, the business failed, and Jordan filed for bankruptcy. It was only then that he became interested in stockbroking, a position he entered with the help of a family friend.
By the late 1980s, as Belfort approached age 30, he founded the financial firm Stratton Oakmont, an over-the-counter brokerage house. Stratton Oakmont did remarkably well over the next several years and was linked to the IPOs of nearly three dozen different companies.
Scams, Fraud, and Other Crimes
It was in his position as founder of Stratton Oakmont that Belfort committed the illegal activities which would ultimately send him to prison. Stratton Oakmont participated in a number of different frauds, including pump-and-dump schemes to artificially inflate the price of penny stocks.
The firm was a type of boiler room, with a team that pressured investors to place their money into highly speculative securities. At its peak, the firm is said to have employed about 1,000 stockbrokers overseeing investments of more than $1 billion.
Throughout the history of Stratton Oakmont, the National Association of Securities Dealers (NASD) pursued consistent legal actions against the firm. In 1996, the firm was shut down. In 1999, Belfort and his associate Danny Porush were indicted for money laundering and securities fraud.
Belfort pleaded guilty to fraud for the pump-and-dump schemes which may have cost his investors as much as $200 million. He was sentenced to four years in prison and ultimately served 22 months in prison.
Life After Prison
Following his release from prison, and as part of his restitution agreement, Belfort was required to pay 50% of his income to his defrauded former investors through 2009.
Federal prosecutors filed a complaint in 2013, alleging that Belfort had not paid the appropriate amount of his income in the previous years. Ultimately, he reached a separate deal with federal authorities to complete the restitution payments.
Aside from his memoirs and the successful film adaptation of The Wolf of Wall Street, Belfort has reinvented himself as a motivational speaker. His speaking ranges from questions of ethics and motivation in the financial world to practical demonstrations of sales skills.
Belfort emphasizes the mistakes he made during his time at Stratton Oakmont, indicating he was under the influence of a drug addiction at the time and that he deeply regrets having lost money for his clients through scams.
Critics of Belfort commonly point to his criminal past and ask whether he is operating his businesses legitimately at this point.
In 2014, media outlets uncovered ties between Belfort and an Australian employee training company which may have participated in a scam involving government funding. As of early 2019, nothing has come of this possible connection, and Belfort continues to operate a fairly successful motivational speaking business.