Risk Management

Risk Managers Welcome Jordan Belfort, the Wolf of Wall Street

Belfort tells the Risk and Insurance Management Society his “ultimate knockout blow was self-inflicted, and it was from a lack of ethics and integr...
David KatzMay 5, 2014

The way Jordan Belfort, the model for Leonardo DiCaprio’s character in the “The Wolf of Wall Street,” tells it, his downfall started “with one single lapse in ethical judgment.”

Jordan Belfort

Jordan Belfort

As the owner of the now-infamous Stratton Oakmont brokerage, Belfort maintains, he had been handling his operations without blemish. Then, however, “I took a bag of money from somebody,” he said.

Appearing as the keynote speaker at the annual Risk and Insurance Management Society Conference in Denver last week, Belfort, who, starting in 2004, served 22 months in a federal prison for securities fraud (for a barrage of pump-and-dump schemes) and money laundering (involving tax evasion via depositing money in Swiss bank accounts), told a rapt audience of corporate risk managers that he took the money “because it was a trade I wanted to do, and if the trade were done on paper, it would have been a red flag.”

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Further, he contended, he did the deal with a much older man who had been in business for 30 years and assured him that it was a widely accepted, commonplace maneuver.

Then, for a while, he did business “in the right way,” he claims, acknowledging that greed had been the motivation. But then “my ethical line moved, and what happens when your ethical line moves a little bit, you take it a bit further still. Next time again, further still. Then another tiny step,” he recounted.

“Over a year or so, I found myself doing things I would never do. I was associating with people I never would have associated with, and it all seemed perfectly OK,” he added. (Belfort’s account of his gradual slide into criminality, however, has reportedly been disputed by government officials who brought him to heel. “If he is trying to create the impression that he is basically an honest guy who stepped over the line a bit, that is dead wrong. This is a guy who woke up every day, seven days a week for many years, and said, What crimes can I commit today? He was looking to rip people off on a daily basis,” former Assistant U.S. Attorney Joel Cohen told The Independent.)

Currently working as a highly paid motivational speaker, Belfort said that he was on a whirlwind tour on which he aimed to raise $50 million to pay back victims of his crimes through fees and income from the movie and from his books, The Wolf of Wall Street and Catching the Wolf of Wall Street, which he sold at the society’s booth at the conference. At Belfort’s 2003 sentencing, a federal judge reportedly said he owed investors $110 million and ordered him to place 50 percent of his monthly revenue into a victims’ fund.

During his speech, Belfort asserted that he was, in fact, placing 100 percent of the profits gained from his books and the movie, which was released in December, into the fund and that the $50 million gain from the tour “would pretty much wipe out the entire debt.” In January, however,  the U.S. District Attorney’s office reportedly claimed that the “government has seen nothing to suggest that even 100 percent of Belfort’s profits from his book and the movie ‘Wolf of Wall Street’ would yield … the approximately $100 million that is still owed to the victims.”

Belfort’s Message

During and after his speech, Belfort, a riveting performer, received a warm response from the risk managers. When he announced proudly that he had been sober since 1997, “seventeen years to the week,” the audience loudly applauded the 51-year-old ex-con. After the applause, he quipped that, considering the abundance and variety of drugs he had consumed, “I should look like Keith Richards of The Rolling Stones” — a remark that drew uproarious laughter.

After the speech was over, more than one risk manager remarked appreciatively that the tale Belfort had spun — a mixture of self-deprecating confession, anecdotes of debauchery and sales advice — had delivered “a good message.”

Acknowledging that he was an unlikely person to lecture an auditorium filled with risk managers about risk management, Belfort recounted his misadventures as a businessman who had no sense of caution.

At age 23, after shattering company records as a whiz-kid door-to-door meat and seafood salesman, he started a new company. In a month he had built the firm up to one that ran 23 trucks. In a year, he was bankrupt. He had “no mind for risk at all — of overexpansion, of being undercapitalized, of not screening out my employees,” Belfort recalled.

“I think half of my employees were on crack,” said the widely known drug abuser, who is depicted in the movie as bonding with his brokerage partner over a pipe of the cocaine derivative.

Greed Wasn’t Good

The former felon admitted that his “ultimate knockout blow was self-inflicted, and it was from a lack of ethics and integrity.” He traced the roots of what he called his “ethical slippage” to his adulation of Gordon Gekko, the protagonist of the 1987 movie “Wall Street,” which was popular during the first year of Belfort’s first year of working for a brokerage.

“I watched Gordon Gekko get up there. I was very young and impressionable. He looked very handsome in his expensive suit,” Belfort said. “And he said, ‘greed…is good, greed cuts through.’ But, bottom line, greed is not good — it’s passion, ambition that clarifies and cuts through.”

Belfort, however, approached his career on Wall Street with the idea that it would be “about making as much as you can as fast without caring who you hurt along the way,” he said. “And that was really the mantra that was burning in the hearts and minds of a lot of people on Wall Street back then, and especially in mine. And I wanted everything tomorrow; I wanted instant gratification — that was my undoing.”

Switching gears, the Wolf of Wall Street noted what he seemed, somewhere, to still regard as his real tragedy. “If I would have done things legitimate, I’d probably be worth $10 billion right now,” he told the audience at RIMS.

Photo by Evan Agostini/Invision/AP