I don’t plan on seeing “The Wolf of Wall Street,” Martin Scorsese’s long-awaited movie rendition of the exploits of financial fraudster Jordan Belfort. I not only saw the real thing at the time, I know what the major wolves are like.
If even half the reviews are accurate, Belfort conned the great Scorsese into believing that a bunch of low-life penny thieves represents the typical Wall Street bad guy. They don’t.
In fact, for all the drugs, prostitutes and midget-tossing these dirtbags engaged in while ripping off old little old ladies in Queens, their crimes were pretty marginal in dollar terms and overall impact on the financial system.
No, the serious Wall Street crimes are much less extravagant and obscene — but much more sinister and costly.
They involve legally evading rules and laws by using the intellectual skills of MBAs and PhDs from the nation’s top schools to come up with esoteric formulas that are supposed to make investing super safe — but can also lead to the type of financial excess that gave us the 2008 financial crisis.
Drugs and personal excess will always be found on Wall Street (and in any profession that pays big bucks), but it’s been my experience that fraudsters are more often family men like Bernie Madoff — guys who methodically steal tens of billions without screwing a single hooker or snorting a single line of coke.
I say all this as someone who happens to know a thing or two about Belfort (played in the movie by Leonardo DiCaprio) and his partner in crime, Danny Porush. As a writer with The Wall Street Journal, I did some reporting on their bucket-shop brokerage, Stratton Oakmont, and a few others that engaged in the notorious pump-and-dump schemes back in the 1990s.
Their trick was to hire lots of undereducated “brokers” (a/k/a cold callers) to use high-pressure sales techniques to entice people to buy mostly worthless stocks. That’s the “pump” part. Belfort and his cronies had already obtained the same shares at a lower price; the “dump” came after the cold callers had done their dirty work finding people dumb enough to buy the stock (thus driving up their price), when Belfort and his buddies would sell their shares at a hefty profit.
One of those cronies was shoe magnate Steve Madden — a story I broke back in 2000; he spent time in jail for being part of the scheme, but there were many others.
Pretty nasty stuff, and I’m pretty sure Scorsese wants people to believe this was the crime of the century, given Belfort’s outsized personality and the antics he describes in the memoir the movie’s based on.
But in dollar terms, it wasn’t, not even close. In fact, it was pretty puny.
Yes, Belfort lived an extravagant life, and he was a convincing scamster who carried out his fraud with little remorse. But if his total ripoff ran to a couple hundred million dollars, I’d be surprised.
Whatever he stole, it was far less than the $50 billion Madoff made off with simply by offering people safe and stable returns in his investment fund — until the Ponzi scheme finally came up short. And less than the countless billions of ill-gotten-gains big Wall Street firms squeezed out of people by pushing investments in the “new economy” — i.e., worthless Internet stocks.
But Belfort got a book and a movie deal out of it and just a couple years in jail for ratting out guys like Madden, which shows Belfort can still sell nothing for something.
I remember a mid-’90s meeting where Journal editors and reporters debated what resources to spend covering these clowns. It was a sexy story: Firms with names that sounded like JP Morgan and Goldman Sachs, even if they specialized in peddling penny stocks and screwing average people. Long before Belfort wrote his “tell all” book, we knew these types of firms had ties to the Mob, and also about the drugs, prostitutes and the occasional midget-tossing.
In the end, we decided not to ignore the various “pump-and-dump” scams, but also not to make two-bit thieves look like master criminals — and certainly not to focus on these guys at the expense of warning investors about far bigger ripoffs done by people who were smart enough not to draw attention to themselves with midget-tossing.
Charles Gasparino is a Fox Business Network senior correspondent.