Sunday, December 22, 2013

Guess who made Barron's? Full Cover Story

Flashback Note: I can remember the glory days back in the late 80's, when Stratton Oakmont was considered by many in my home town (Massapequa Park N.Y.) to be the premiere place to work and prosper at. Hanging around FOXES night club watching 23 yr old college dropouts pull in in brand new Porches, Lotus Esprit's, Rovers etc - 55 ft sea-ray's at Conscious Point, South Hampton with models and bottles falling off the bow...I recall it well as was one of the few in my crowd who didn't register.  I suspect I may have been considered one of the coat-tailers, but I tagged along invited and partied with the rest of them in disbelief.

Looking back now 25 years later very few of them are still in the industry, and not by choice. I estimate 90% had arbitration that led to being barred from trading US Securities. 

The few I know still registered are some of the most talented brokers I know (couldn't trade their way out of a paper bag) but they could sell an Eskimo an Igloo all day long. 

In a recent interview, Jordan Belfort the CEO played by Leo DiCaprio, Boasts he brainwashed the brokers that "lying was their fiduciary duty"...The one credit I can give him is that he brought Steve Madden Shoes public, which still currently trades and is the only company they brought public that didn't go belly up. (Madden spent a chunk of time in jail as well for his shenanigans) Currently Belfort has only made 10 million of 100 million in restitution owed...Tim_K

Good Film, Extremely Bad Wolf -- Barron's
Dec 21 at 00:09

By Farran Smith Nehme

      (FROM BARRON'S 12/23/13)
      Director Martin Scorsese has spent a sizable chunk of his career exploring
the world of gangsters, from Mean Streets to Goodfellas to Casino to Gangs of
New York to The Departed. And he has found the perfect man to extend his
gangster chronicle in Jordan Belfort, the charismatic penny-stock swindler
behind Stratton Oakmont and the central figure in Scorsese's new film, "The Wolf
of Wall Street." After a sizzling seven-year run, Stratton Oakmont imploded in
the 1990s, costing investors more than $300 million.

      Relentlessly profane and raucously funny, the characters in The Wolf of
Wall Street, starring Leonardo DiCaprio as Belfort, consume drugs in quantities
that would stun a charging rhino. And each scene seems to come with its own set
of naked women and often public sex acts. It's exhausting, but dazzling.
      Based on Belfort's memoir of the same title, the film shows a classic
"pump- and-dump" operation, wherein brokers drive up the price of shares, then
sell at the top and leave clients holding the bag. DiCaprio's Belfort is briefly
portrayed as a straight arrow, until his financial career turns him into an
overspending, drug-taking, hooker-hiring, client-bilking sociopath. "Whip their
necks off, don't let 'em off the phone" was Belfort's motto, or so one former
Stratton broker told a Forbes reporter back in the firm's heyday. That reporter
is portrayed in the movie; the editor of her 1991 story is now an editor at
      As for what drew Scorsese to this material, one factor might be that the
most outrageous incidents come straight from Belfort's mouth. Landing a
helicopter on his lawn with one eye shut because he was high at the time? True.
Persuading a female employee to shave her head by offering to pay for her breast
implants? Belfort says he did that. Getting so loaded on maximum-strength
Quaaludes that he wrecked his Ferrari without realizing it? That happened, too.
      The movie begins with an ad for Stratton Oakmont that blatantly parodies
Merrill Lynch's meandering-bull commercials: A male lion roams a trading floor,
ready to eat everyone's lunch. After DiCaprio starts his voice-over with a tally
of his possessions and drug intake -- and that takes a while -- there's a
flashback to his sober young self being humiliated in his first Street job.
      He's ambitious, but the system hasn't shown him yet how to be ruthless. In
real life, Belfort was likely not so innocent. Before he sold rancid stocks, he
sold meat and seafood, door-to-door, and ended up filing for bankruptcy at age
25 because, he once told a reporter, the margins in that business were too
small. After signing on with a series of sleazy penny-stock operators, he
started his own firm in a used-car dealership in Queens, N.Y.
      In the film version, Matthew McConaughey, who plays a senior broker at a
white-shoe firm, takes Belfort to a fancy restaurant. The broker pounds his
chest, advises the youngster to make some good old-fashioned cocaine a part of
his daily routine, and tells him their profession is "fugazi" -- fake: "Nobody
knows if the stock is gonna go up, down, sideways, or in circles," he says.
      Then Belfort runs headlong into an irresistible force: Black Monday, Oct.
19, 1987, when the market dropped 23% in a single day. Silence envelops the
trading floor at the closing bell; there isn't another still moment in the film
until Belfort himself bottoms out.
      Having tried things the more-or-less straight way, a jobless Belfort
discovers the world of penny stocks, where the broker's cut is 50%, not 1%. He
founds what becomes Stratton Oakmont with a bunch of losers. Donnie Azoff, a
composite character played by Jonah Hill, sidles up to Belfort at a restaurant
and soon becomes his fawning partner. Belfort's actual partner, Daniel Porush,
threatened to sue Paramount, the film's producer, if he was depicted in the
      The firm becomes an amoral, bacchanalian cult. Prostitutes are an everyday
presence; Belfort divides them into categories according to price and safe-sex
requirements, dubbing the top-of-the-line hookers "blue chips" and the lowest-
end ones "pink sheets." The male brokers' toxic attitude toward women is often
hard to watch, and the scenes concerning "midget-tossing" contests are
      Belfort stages a gleefully crooked initial public offering for the shoe
maker Steve Madden. He dumps his doe-eyed innocent wife (Cristin Milioti) for
model Naomi, played by Australian Margot Robbie with a Brooklyn accent and a
welcome amount of self-preserving common sense.
      And he attracts the attention of an FBI agent, played by Kyle Chandler.
Belfort stashes his dough in Switzerland, and that's where his unraveling
      The movie buys into Belfort's self-aggrandizing view of his Wall Street
status, with DiCaprio even telling his acolytes they're going after "the
wealthiest 1%." Moviegoers who buy that plotline, however, are purchasing
another Belfort bill of goods.
      In reality, the victims were more like John Kilroy, a Pizza Hut franchisee
in Maineville, Ohio. Kilroy, who lost an "upsetting" amount of money in Stratton
Oakmont's crooked stocks, says he received only token restitution from the
roughly $11 million seized from Belfort and Porush.
      After pleading guilty to fraud and money laundering in 1999, Belfort was
ordered to make restitution of $110.4 million -- plus interest. (Porush was
ordered to pay more than $200 million.) Indeed, the judgment required Belfort
to pay half of his earnings into a restitution fund, which, prosecutors say, he
hasn't done.
      In addition to $10.4 million in assets that were seized from him
personally, Belfort has coughed up only $1.2 million so far -- and most of
that involuntarily. For example, he forked over $702,000 in royalties from his
two memoirs only after a restraining notice was served on his agent, according
to prosecutors. "The Wolf of Wall Street" was followed by "Catching the Wolf of
Wall Street," in which he revels in ratting out his former friends in return for
a reduction in prison time.
      Having served 28 months of a 42-month sentence, Belfort now claims he is
reformed. He says he has made repeated offers over the past two years to turn
over the money he received for the movie rights to the government. But
prosecutors say he paid only $21,000 in restitution in 2011, the same year he
signed the $1.045 million movie deal and reported the receipt of $940,500.
      Belfort didn't respond to Barron's requests for comment. His attorney,
Nick De Feis, at the New York firm De Feis O'Connell & Rose, says: "The parties
continue to be in discussion about the restitution obligation."
      Fourteen years after his guilty plea, Belfort is basking in his renewed
infamy. He lives in a mini-mansion overlooking the ocean in Manhattan Beach,
Calif., drives a Mercedes SL, and earns five-figure sums for his motivational
speeches, according to a recent magazine article. Given that, you'd think he
could have done a little bit better by his victims -- and that the U.S. Attorney
for New York's Eastern District, Loretta Lynch, could have pursued him more
vigorously. The U.S. Attorney's office had no comment.
      Scorsese, however, is not a prosecutor, and he's using Belfort to riff on
a theme that runs through many of his movies. He is the great American bard of
addiction -- to violence as well as drugs. In The Wolf of Wall Street, which is
scheduled to open on Christmas Day, sex takes the place of violence, and the
drug consumption may be the greatest in the history of American movies. You can
follow the plot, or you can measure the coke. You'll never be able to do both.
But sex and drugs are just the trappings.
      The movie's addiction narrative is about money, and how it turns a middle-
class kid into, well, Jordan Belfort. Money is a drug that corrupts and rushes
in to fill a moral void. And while DiCaprio owns this movie -- there's scarcely
a shot that doesn't include either his face or his voice -- most of the other
characters are equally contemptible. It's showcase Scorsese, the most sardonic
entry yet in his cinematic rogues' gallery.
      In the film's closing scene, the real Belfort, looking smugger and
sleazier than even DiCaprio's masterful skills can capture, introduces the
taller, handsomer film version of himself to a credulous audience that has paid
to attend his get-rich-quick seminar.
      In a recent letter to the court, Belfort's fiancee, Anne Koppe, argues
that her husband-to-be is being persecuted by the government, that "he is an
exemplary contributor to the economy," and that "[o]ur business and our family
rely on his reputation of being an honest and honorable man."
      Even DiCaprio might have been taken in. In a promotional video for
Belfort's motivational-speaking business, the actor says, "Jordan stands as a
shining example of the transformative qualities of ambition and hard work."
      Victims like John Kilroy, who are still waiting for a second round of
restitution money, are less convinced of Belfort's redemption. "Hopefully, he'll
make a few more movies, and I'll get a check every year," he says, "but I'm not
going to hold my breath."

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