How Jordan Belfort, the real Wolf of Wall Street, defrauded investors out of $200 million
The Wolf of Wall Street, a Martin Scorsese film starring Leonard DiCaprio as a high-flying financial criminal, is based on former financial hotshot Jordan Belfort’s memoir. He lived a crazy life full of booze, cocaine, Quaaludes and dwarf tossing before getting busted by the Feds.
Belfort, who was reportedly paid $1 million for the movie rights, was inspired to write his outrageous tale while sharing a prison cubicle with Tommy Chong, who loved hearing Belfort’s wild stories. (Chong, from Cheech and Chong, was there serving nine months for selling drug paraphernalia, mostly bongs.) “Just write from the heart and write about what you know,” Chong says he told Belfort, “and next thing you know he’s got a best seller, movie.” Belfort read Tom Wolfe’s Bonfire of the Vanities for inspiration, and got to work.
In the 90s Belfort ran Stratton Oakmont, a brokerage firm that was shut down in 1998 by the SEC. Belfort was arrested and later convicted of money laundering and securities fraud. He faced a multiple decade sentence, but received only 4 years, of which he only served 22 months, because he became an informant.
The scheme basically ran like this:
Stratton Oakmont would buy penny stocks with secret accounts, and then have their salesmen push the stocks on their clients. When the price of stock rose, they would dump the stocks they had bought, which made them A LOT of money and lost a lot of money for their clients. It was alleged that the defrauded investors lost $200 million.
Although he’s now profiting from telling his story, Beloft says he hates being known for his crimes. “Convicted stock swindler’—it’s like it hurts my heart,” he told Business Week. “I know it was true, but it’s not who I am. I say to my son, I say it to everybody who I try to mentor: We are not the mistakes of our past. We’re the resources and capabilities that we glean from our past. And it’s so true.”
Now Belfort provides for himself and his fiancée with motivational speaking. He reportedly rakes in $30,000 per speech, but even with that and the money’s he received from the book and the film, he is is still behind in paying restitution. He owed $110.4 million to the government to be put in a restitution fund for the victims. After hearing of his book deal, the government contacted his publisher, and worked out to take 50% of the money he made from it. Belfort has said that he wanted to give the government 100% of the money, but according to him, they wouldn’t make that deal. As of a letter filed with Belfort’s judge in October, he has paid about 10% of that so far.
Belfort began his speaking tours in Australia, where he had a fan base, and increasingly began being hired by companies. At first he didn’t want to share his sales techniques with them because of what can happen when they are misused. “Imagine if Apple had enough parts to make a million iPhones, but they said, ‘Well, let’s make 5 million—we’ll just put the s--- parts in after we run out of the good parts,’ ” Belfort says. “That was really the mistake that I made. My ability to sell outstripped my ability to manufacture good deals.” Leonardo DiCaprio chastised him for selling his dangerous selling wisdom. “Dude, what’s f---ing wrong with you?” Belfort says the actor said to him. But Belfort believes that there is nothing inherently wrong with selling. “It wasn’t the selling that was evil. It’s what you did with it.”
What’s his secret? Something called the Straight Line Persuasion System. “There are certain elements of influence that you have to line up before someone says yes,” he says. “At the highest level, sales is the transference of emotion. And the primary emotion you’re transferring is certainty.” He claims that he can teach almost anyone to sell anything to a reluctant customer by lowering their “action threshold” and their “pain threshold,” whatever their reasons are preventing them from buying, or making them uncomfortable about buying.
Here are a few teasers for Belfort’s speaking engagements from Keppler Speakers:
– The tale of his controversial fall from grace on Wall Street to his road of redemption will leave you inspired.
– Your audience will learn specific strategies necessary to effectively grow their organization to the highest level.
-“Success in the absence of ethics and integrity is not success….it’s failure.” -Jordan Belfort
The Wolf of Wall Street hits theaters December 25.