Jordan Belfort: The Wolf of Wall Street
History of the case
Definition of Crime
Laws Violated
Penalties Imposed Upon Guilty
In 1998 Jordan Belfort was indicted with 27 counts of International Securities Fraud and Money laundering. After cooperating with the FBI, in 2003 Belfort was sentenced to four years in prison and fined and ordered to back approximately $110 million that he had defrauded from investors. He served 22 months in federal prison and was ordered to pay investors 50% of his income until $110.4 million was collected (Kolhatkar, 2013). According to federal prosecutors, Belfort has not kept up his part to fulfill the terms of his agreement. After his release in April 2006 Belfort’s income has consisted of $1,767,203 from his publication of his books, the sale of his movie rights, and the $30,000 he gets per motivational speech. And since 2007 he has only paid $243,000 of the $110 million he is required to pay as restitution. His actions have resulted in federal prosecutors filing a complaint against him in October of last year. The government has not held Belfort in default, only for keep negotiations open. But, it is still uncertain of when the full restitution amount will be paid off (Con Artists Hall of Infamy).
Policy
Securities Fraud:
Securities fraud, also known as investor fraud or investment fraud, is a deceiving way of manipulation in the stock markets, which persuades potential investors to purchase or sale due to false information, usually resulting in loss of investments. Securities fraud may also involve direct theft from those investing through embezzlement, the theft or misuse of funds placed in one’s trust (Google), or stock manipulation, which is a premeditated attempt to meddle with...
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... they lost, and much less their stress and hardship they might have endured due to their unfortunate loss.
Melvin Weinberg: Abscam
History of the case
Definition of Crime
Laws Violated
Penalties Imposed Upon Guilty
Policy
Approximate Financial Impact
Punishment Analysis
References
Con Artists Hall of Infamy. (n.d.). THE INDUCTEES: Jordan Belfort. Retrieved April 8, 2014, from Con Artists Hall of Infamy: http://www.thehallofinfamy.org/inductees.php?action=detail&artist=jordan_belfort
Cornell University Law School. (n.d.). 18 U.S. Code § 1348 - Securities and commodities fraud. Retrieved April 8, 2014, from Legal Information Institute: http://www.law.cornell.edu/uscode/text/18/1348
Money Laundering Control Act of 1986 . (n.d.). Retrieved April 8, 2014, from http://www.ffiec.gov/bsa_aml_infobase/documents/regulations/ML_Control_1986.pdf
In May 2002 the SIPC trustee filed a 255.3 million lawsuit against the Madoff family. Madoff company BLMIS ended on December 11 2008 when he was arrested for stealing his customer’s money. For more than 50 years Madoff s company money from people and on June 29th 2009 he pleaded guilty "to 11 counts Complaint and was sentenced as a hundred fifty years in prison"(Lewis, 2013
After being seized, CenTrust sold its deposits in June 1990, to Great Western Financial Corp., Beverly Hills, California. Mr. Paul, the former chairman and CEO of the failed CenTrust Savings Bank of Miami, was sentenced to 11 years in federal prison after being convicted in a jury trial of 68 fraud-related counts in US District Court in Miami involving the spectacular collapse of CenTrust at a cost of $1.7 billion to taxpayers, and for allegedly helping arrange the sham purchase of $25 million in CenTrust securities by Bank of Credit & Commerce International. The verdict followed a six-week trial. In all felony counts, most involving allegations that he siphoned $3.2 million from CenTrust and spent it on his 95-foot yacht, his homes in Miami, his luxuries, and elsewhere during the 1980s.
After 8 years the SEC finally found the scheme controlled by Madoff. In December 2008 Madoff was found guilty; however, stayed under house arrest by the until his trial in March of 2009. He was not arrested because of the 10-million-dollar payment which allowed him to stay under home surveillance until the trial. While at home, he and his wife, mailed valuables such as jewels and jewelry to family members. In March of 2009, Bernard Madoff was finally found guilty and was sentenced to 150 years in prison. On the day of his arrest, the FBI found 100 checks that totaled $173 million dollars that were made to friends, family, and
Jordan Belfort is famous for his crooked way of earning his millions as a stockbroker on Wall Street. Even Belfort started at the bottom, on his first day in Wall Street he was told he was “lower than pond scum”(Belfort 1). After writing a book about his happenings on Wall Street, we’ve seen the
Madura, Jeff. What Every Investor Needs to Know About Accounting Fraud. New York: McGraw-Hill, 2004. 1-156
Jordan Belfort starts off his first day on Wall Street eager to make it to the top, only to be told he is nothing more than lowly scum by Thomas Middleditch’s character. Mark Hanna takes Jordan out to lunch later that afternoon to show him the “real” way of making money. Mark explains that there is only two ways of being a stockbroker without losing your mind, and that is with cocaine and prostitutes. Mark incepts that making money is the only goal one should have. He tells Jordan that his only objective is to move money from the client’s pocket to your pocket. Jordan is first hesitant about cheating his client’s money away from them, but puts his skepticism aside and joins in on Hanna’s power chant. Jordan faces an internal conflict similar to what many have felt; should I choose to make money even if I know my actions to obtain that money is morally wrong? Like Jordan most people selfishly continue to make money, and push away their morals aside.
“Fifty percent profit in forty-five days!” was the claim of Charles Ponzi. Ponzi was a purported financial wizard. In the summer of 1920, he ran an “investment company” in Boston. He claimed to reap great profits by trading postal reply coupons. Nonetheless, the investment scheme was a fraud. Ponzi was using investors' money to pay off earlier investors, while keeping some for himself. In the end, he had collected $9,500,000 from 10,000 investors.
From a young age, Jordan always had a natural talent as a salesman. At an early age, he operated a door-to-door seafood and meat business in the 1980s. Upon the failure of those businesses, Belfort began selling stocks in 1987 at the age of 25. After two years of selling stocks, Jordan started his own investment operation, Stratton Oakmont, by 1989. With his partner, Danny Porush, Jordan gathered tremendous amounts of cash using a “pump and dump” scheme. Using this system, his brokers pushed stocks onto their unsuspecting clients, which helped inflate the stocks’ prices, and then the company would sell off its own holdings in these stocks at a great profit. The firm made millions illegally, defrauding its investors. The Securities Exchange Commission began efforts to stop the company's delinquent ways in 1992. In 1999, Belfort pleaded guilty to securities fraud and money laundering. He was sentenced in 2003 to four years in prison, but only served 22 months. (Source 6)
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in restitution to any swindled stock buyers of his brokerage firm (A&E Networks Television). Though his lavish spending and berserk party lifestyle was consumed by excessive greed, he displayed both positive and negative aspects of business communications.
Weld, L. G., Bergevin, P. M., & Magrath, L. (2004). Anatomy of a financial fraud. The CPA
Jordan Belfort throughout his entire life subverted the law for his own financial gain, always seeing money as worth the risk in the decisions he made. His decisions were made by a rational mind of his own volition, considering the long-term possibilities and how to stay ahead of his pursuers. He constructed an environment with Stratton Oakmont to enable this behaviour, as well as corrupt those around him to follow in his footsteps. This lead to his repeated violations of laws to generate wealth when his fear of punishment was lower than that of the rewards he could potentially gain. It was only when he was confronted with the reality of his punishment and experienced it directly that he was finally deterred from his criminal behaviour.
This case illustrated that there were real consequences to white collar crime. In addition to paying the fifty million dollar fine, he relinquished another fifty million dollars of his illegal trading profits. (He still had millions remaining, however, from his illegal gains.) His actual prison sentence was three years, yet he served only twenty-two months in the federal prison at Lompoc, California, which was known to have a “country-club” atmosphere.
150 Ponzi schemes collapsed in 2009 alone, resulting in more than $16 billion in losses to tens of thousands of investors. These victims confront the challenge of calculating their losses for recovery claims as well as tax purposes. Ponzi scheme investigations currently account for approximately 21% of the Securities and Exchange Commission’s (SEC’s) enforcement workload — up from 17% in 2008 and 9% in 2005
As a physical human activity, fraud can be hard to establish, but the legal elements of fraud are more readily defined. Stated generally, the elements of fraud include; misrepresentation of material fact, made with knowledge of it falsity, made with intent to induce the victim to rely on the misrepresentation, the victim relies on the misrepresentatio...
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex, he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in restitution to any swindled stock buyers of his brokerage firm. Though his lavish spending and berserk party lifestyle was consumed by excessive greed, he displayed both positive and negative aspects of business communications.