1 00:00:01,960 --> 00:00:07,860 In this episode of American Greed, convicted stockbroker Jordan Belcourt, 2 00:00:08,119 --> 00:00:11,580 a .k .a. the Wolf of Wall Street. 3 00:00:12,180 --> 00:00:16,580 He is funny, colorful, he can be charming as long as you stay ten feet 4 00:00:16,580 --> 00:00:21,000 your wallet in your back pocket. I had a gift to get up before the crowd and 5 00:00:21,000 --> 00:00:22,100 sell, manipulate. 6 00:00:22,560 --> 00:00:25,340 And I could have used it for good or I could have used it for evil. I used it 7 00:00:25,340 --> 00:00:29,860 for evil. When Hollywood turns his life of sex, drugs, and crime into a 8 00:00:29,860 --> 00:00:30,860 blockbuster, 9 00:00:31,320 --> 00:00:33,380 His victims feel cheated again. 10 00:00:34,260 --> 00:00:38,800 Too many people walk out of a movie and think they have seen the story. And it 11 00:00:38,800 --> 00:00:43,140 leaves out significant parts of the story, not the least of which is 1 ,500 12 00:00:43,140 --> 00:00:44,680 people that lost real money. 13 00:00:44,920 --> 00:00:49,740 He was about as close as you could come to being the financial serial killer. 14 00:01:09,230 --> 00:01:14,530 This wild party looks like an early 90s beer commercial written by a teenage boy 15 00:01:14,530 --> 00:01:17,650 and funded by an oil baron. 16 00:01:18,510 --> 00:01:21,550 Yes, that's a helicopter landing on a yacht. 17 00:01:22,030 --> 00:01:23,430 What a great life, huh? 18 00:01:23,670 --> 00:01:24,950 But this is no fantasy. 19 00:01:25,370 --> 00:01:30,010 It's just another day in the life of Jordan Belfort, head of the brokerage 20 00:01:30,010 --> 00:01:31,550 Stratton Oakmont. 21 00:01:31,970 --> 00:01:36,210 If we all stick together, next year at this time, we'll be a legend on Wall 22 00:01:36,210 --> 00:01:37,390 Street, guys, and that's our goal. 23 00:01:37,590 --> 00:01:38,590 All right? 24 00:01:40,440 --> 00:01:44,480 It's an unbelievable turnaround for the young master of the universe. 25 00:01:44,940 --> 00:01:48,560 Just four years ago, Belfort was at rock bottom. 26 00:01:52,900 --> 00:01:55,100 It's late October 1987. 27 00:01:57,260 --> 00:02:02,820 25 -year -old Jordan Belfort prepares for his first day as a stockbroker at 28 00:02:02,820 --> 00:02:05,860 prestigious Wall Street firm L .F. Rothschild. 29 00:02:07,180 --> 00:02:12,740 The enthusiastic young man recently passed his Series 7 exam and is eager to 30 00:02:12,740 --> 00:02:18,420 begin a career in the world of high finance, as he tells CNBC's Jane Wells 31 00:02:18,420 --> 00:02:19,680 2007 interview. 32 00:02:20,120 --> 00:02:25,180 My first day I walk in, and I watch people in their mid to late 20s making 33 00:02:25,180 --> 00:02:28,260 a million, a million dollars a year in this raging bull market of the mid -80s. 34 00:02:28,660 --> 00:02:30,820 Belfort is a born salesman. 35 00:02:31,160 --> 00:02:33,820 The son of two accountants from Bayside, Queens. 36 00:02:34,560 --> 00:02:38,620 He ran his own meat and seafood delivery business before making the leap to Wall 37 00:02:38,620 --> 00:02:39,620 Street. 38 00:02:39,820 --> 00:02:43,320 This guy was driven from the get -go. He's very eager to please. 39 00:02:44,020 --> 00:02:47,880 He was in many ways self -taught. You knew you could sell. Knew I could sell. 40 00:02:48,040 --> 00:02:50,820 You know, this is going to be my future. I'm going to be a broker. Look at all 41 00:02:50,820 --> 00:02:52,180 these people getting rich. It'll be me too. 42 00:02:52,400 --> 00:02:57,880 But in a cruel turn of events, Belfort tells Wells that his first day on the 43 00:02:57,880 --> 00:03:01,440 is Black Monday, October 19, 1987. 44 00:03:02,320 --> 00:03:05,420 That Monday morning, I come in bright -eyed and bushy -tailed, and the market 45 00:03:05,420 --> 00:03:08,740 crashes 508 points on my first day as a stockbroker. 46 00:03:09,000 --> 00:03:11,840 Okay, and all of a sudden, everyone's like, it's over. 47 00:03:12,480 --> 00:03:17,160 The new broker is soon out of work, but refuses to give up. 48 00:03:18,080 --> 00:03:23,740 While flipping through the classifieds, Belfort's wife spots a job 30 miles away 49 00:03:23,740 --> 00:03:25,460 in Hoppog, Long Island. 50 00:03:26,580 --> 00:03:29,640 I answered the ad. I went down to this place, and I walked in. I was shocked. 51 00:03:30,440 --> 00:03:33,540 I was utterly shocked, and it was the first time I really walked into a penny 52 00:03:33,540 --> 00:03:34,540 stock firm. 53 00:03:34,600 --> 00:03:40,780 The firm is the Investor Center, a penny stock shop that pushes risky, small 54 00:03:40,780 --> 00:03:45,120 -time businesses for anywhere from 10 to 99 cents a share. 55 00:03:45,360 --> 00:03:49,620 Much to Belfort's surprise, he learns that the brokers make a healthy 56 00:03:49,620 --> 00:03:53,860 commission. As the manager explained to me, he's like, listen, your commission 57 00:03:53,860 --> 00:03:56,420 is, you get 50 % of the bid in the end. 58 00:03:56,640 --> 00:03:57,629 And I'm like... 59 00:03:57,630 --> 00:04:01,150 So if someone sends in a quarter million dollars in a trade, I get to keep 125 60 00:04:01,150 --> 00:04:05,410 ,000? He's like, well, yeah, and no, it doesn't really work that way in the real 61 00:04:05,410 --> 00:04:07,410 world. No one will send that much money in for a penny stock. 62 00:04:07,650 --> 00:04:12,550 The manager tells Belfort only small -time investors buy penny stocks. 63 00:04:13,170 --> 00:04:16,329 But that doesn't stop the young broker from dreaming big. 64 00:04:18,310 --> 00:04:21,990 I was literally lying in bed one day and the light bulb went off. And I remember 65 00:04:21,990 --> 00:04:25,590 lying in bed looking up at the ceiling saying, I wonder what would happen if we 66 00:04:25,590 --> 00:04:26,790 just started calling all rich people. 67 00:04:27,500 --> 00:04:32,940 In 1989, at the age of 27, Belfort puts his theory to the test. 68 00:04:33,540 --> 00:04:38,940 He starts up his own brokerage firm, Stratton Oakmont, with his friend Danny 69 00:04:38,940 --> 00:04:41,720 Porish and a dozen salesmen from Long Island. 70 00:04:42,980 --> 00:04:48,080 The company eventually opens an office in the appropriately named village of 71 00:04:48,080 --> 00:04:49,160 Lake Success. 72 00:04:49,920 --> 00:04:53,160 We went out and bought these, they were called Dun and Bradstreet Leaves, and they 73 00:04:53,160 --> 00:04:54,980 were the names of business owners that had... 74 00:04:55,230 --> 00:04:57,370 businesses in excess of a million dollars a year in sales. 75 00:04:57,730 --> 00:04:59,650 And that became our target market. 76 00:04:59,870 --> 00:05:03,890 To his dismay, Belfort discovers that his former boss was correct. 77 00:05:04,690 --> 00:05:07,730 Wealthy investors don't buy penny stocks. 78 00:05:08,330 --> 00:05:12,730 And that night, I went home and it hit me. And I said, you know what? I know 79 00:05:12,730 --> 00:05:13,549 what's wrong. 80 00:05:13,550 --> 00:05:14,670 They never heard of the stock. 81 00:05:14,910 --> 00:05:17,690 They never heard of the broker term. You're fighting too much of an uphill 82 00:05:17,690 --> 00:05:21,390 battle. What we need to do is we need to start off with a big stock. 83 00:05:22,239 --> 00:05:27,460 Belfort writes a new pitch for his brokers, one that emphasizes building 84 00:05:27,460 --> 00:05:30,340 with clients through established blue -chip stocks. 85 00:05:31,120 --> 00:05:35,040 The technique becomes known as the Stratton two -step. 86 00:05:35,260 --> 00:05:40,260 The blue -chips were used to basically lure the people in. That was what they 87 00:05:40,260 --> 00:05:41,320 called the first trade. 88 00:05:41,640 --> 00:05:45,420 They would do it with an IBM or an Eastman Kodak, for example. Those are 89 00:05:45,420 --> 00:05:46,920 companies that everybody knows about. 90 00:05:47,840 --> 00:05:52,980 Gregory Coleman is an FBI special agent who spent years investigating Stratton's 91 00:05:52,980 --> 00:05:53,980 sales methods. 92 00:05:54,900 --> 00:05:59,340 Once clients make a little money on the blue -chip stocks, Coleman says 93 00:05:59,340 --> 00:06:04,720 Stratton's brokers then focus on the real business at hand, pitching the more 94 00:06:04,720 --> 00:06:06,500 profitable penny stocks. 95 00:06:07,060 --> 00:06:11,500 Once the customer sent the money in, shortly thereafter they would get a call 96 00:06:11,500 --> 00:06:12,500 about a second trade. 97 00:06:13,450 --> 00:06:18,130 But rather than pitching existing penny stocks, Belford and Porish start 98 00:06:18,130 --> 00:06:21,170 underwriting their own initial public offerings. 99 00:06:22,530 --> 00:06:26,550 Stratton's house stocks often feature businesses like karate schools, 100 00:06:27,050 --> 00:06:30,810 independent movie studios, backyard technology startups. 101 00:06:31,410 --> 00:06:35,970 He'd sneak in these IPOs, these obscure little IPOs, and he would say, oh, you 102 00:06:35,970 --> 00:06:38,890 know, I'm telling you, you can get in, it doesn't cost very much, you're going 103 00:06:38,890 --> 00:06:40,370 to make a lot of money, trust me. 104 00:06:40,700 --> 00:06:44,400 Belford would put their spin on it. His brokers would put their spin on it. And 105 00:06:44,400 --> 00:06:49,020 so these sort of undiscovered, unknown companies were touted as the next 106 00:06:49,020 --> 00:06:51,560 Microsoft, the next Dell computers. 107 00:06:51,960 --> 00:06:57,860 In an unusual move, Stratton sets the IPO prices well above a typical penny 108 00:06:57,860 --> 00:06:58,860 stock offering. 109 00:06:59,080 --> 00:07:03,280 He would try and get them listed on the NASDAQ over the National Market 110 00:07:03,280 --> 00:07:06,680 Exchange. So although they were the same type of companies, they weren't selling 111 00:07:06,680 --> 00:07:11,240 at 5, 10, 15 cents per share. They would start at $4, $5, and $6. 112 00:07:12,560 --> 00:07:16,360 Belfort's talent for spinning a tail makes for a winning strategy. 113 00:07:18,080 --> 00:07:22,600 Under his direction, it's not unusual for the value of Stratton's house stocks 114 00:07:22,600 --> 00:07:28,100 to skyrocket, reaching $10, $15, even $20 a share. 115 00:07:30,700 --> 00:07:35,980 In just a matter of months, the company is making a killing on these diamonds in 116 00:07:35,980 --> 00:07:36,579 the rough. 117 00:07:36,580 --> 00:07:39,660 I always say brokers don't sell stocks. 118 00:07:40,320 --> 00:07:41,760 Brokers sell a story. 119 00:07:42,040 --> 00:07:46,560 And once they convince the public of the story, the public buys the stocks. 120 00:07:46,780 --> 00:07:48,280 And that's what Belfort did. 121 00:07:48,620 --> 00:07:55,080 Next on American Greed, the lure of quick and easy cash sends Belfort down a 122 00:07:55,080 --> 00:07:56,080 reckless path. 123 00:07:57,320 --> 00:08:00,680 At one point, I would wake up pretty much every day and try to think of new 124 00:08:00,680 --> 00:08:03,080 schemes that I could pull and new ways to rip people off. 125 00:08:15,700 --> 00:08:16,860 It's not Wall Street. 126 00:08:17,560 --> 00:08:22,560 But in the early 1990s, Lake Success, Long Island is a hotspot for aspiring 127 00:08:22,560 --> 00:08:23,880 young stockbrokers. 128 00:08:25,390 --> 00:08:30,030 Under the leadership of Jordan Belfort, Stratton Oakmont becomes known as the 129 00:08:30,030 --> 00:08:34,169 place where you can make big cash by selling the hottest new stocks. 130 00:08:35,429 --> 00:08:40,789 In 1991, the company makes commission revenues of nearly $30 million. 131 00:08:41,730 --> 00:08:45,170 I was the best training ground for stockbrokers. You know, go to Stratton, 132 00:08:45,170 --> 00:08:46,550 become a trained killer. 133 00:08:46,890 --> 00:08:49,790 But Stratton isn't your typical brokery. 134 00:08:50,829 --> 00:08:55,730 Rather than employ Wall Street veterans, they instead have a unique hiring 135 00:08:55,730 --> 00:08:56,730 process. 136 00:08:58,230 --> 00:08:59,570 Stratton did something different. 137 00:08:59,790 --> 00:09:06,750 They wanted basically uneducated, unexperienced people to join their firm. 138 00:09:06,950 --> 00:09:07,950 You didn't even need a college degree? 139 00:09:08,130 --> 00:09:09,310 You didn't need a high school diploma. 140 00:09:10,090 --> 00:09:11,270 You didn't need anything. 141 00:09:11,490 --> 00:09:15,670 All you needed was to come into the room, swear loyalty to the Stratton way 142 00:09:15,670 --> 00:09:17,810 life, and we would show you how to get rich. 143 00:09:18,150 --> 00:09:19,290 They basically wanted... 144 00:09:19,630 --> 00:09:22,750 wanted us stupid so they could train us in their model. 145 00:09:23,070 --> 00:09:28,430 Carl is a former Stratton employee who says he's gone on to be a respected 146 00:09:28,430 --> 00:09:33,630 businessman and requests anonymity. He remembers the frenzy surrounding his 147 00:09:33,630 --> 00:09:34,870 first day on the job. 148 00:09:35,350 --> 00:09:40,690 They would bring in everybody for job interviews, and they would put you in a 149 00:09:40,690 --> 00:09:45,030 room. They would ask, is anybody licensed in any other brokerage firm 150 00:09:45,170 --> 00:09:47,350 And if anybody raised their hand... 151 00:09:47,790 --> 00:09:49,490 We'd throw them out right then and there. 152 00:09:49,710 --> 00:09:55,310 New employees are assigned to work the phones as cold callers, feeding clients 153 00:09:55,310 --> 00:09:57,570 to Belfort and the other salesmen. 154 00:09:58,070 --> 00:10:03,850 At its height, Stratton Oakmont employs more than 1 ,000 people, mostly young 155 00:10:03,850 --> 00:10:04,850 men. 156 00:10:05,170 --> 00:10:10,910 We walk into this huge room, and all it is is guys sitting at tables. We were 157 00:10:10,910 --> 00:10:13,570 given leads to call, and we called our leads. 158 00:10:14,790 --> 00:10:17,110 I had to get people on the phone all day long. 159 00:10:17,370 --> 00:10:23,590 The work is tedious, but the rewards are high, especially if you get promoted to 160 00:10:23,590 --> 00:10:24,590 broker. 161 00:10:25,030 --> 00:10:31,870 One kid that I knew who was there was barely 22 years old, driving a brand 162 00:10:31,870 --> 00:10:32,870 -new Ferrari. 163 00:10:32,970 --> 00:10:36,090 Another kid who was 24 driving a Porsche. 164 00:10:36,470 --> 00:10:40,010 There were so many kids, and everyone was making so much money. It was almost 165 00:10:40,010 --> 00:10:42,750 like a self -contained society. In a way, it was like a cult. 166 00:10:44,400 --> 00:10:47,260 And Jordan Belfort is the cult leader. 167 00:10:48,100 --> 00:10:53,900 Every morning, Belfort delivers a fiery motivational speech, rallying the troops 168 00:10:53,900 --> 00:10:56,360 around the hot stock of the day. 169 00:10:57,600 --> 00:11:02,180 He would convince them that they were going to sell, sell, sell that stock. 170 00:11:02,180 --> 00:11:05,120 were supposed to rip the client's hearts out through the phone. I said to my 171 00:11:05,120 --> 00:11:06,120 broker, okay. 172 00:11:06,280 --> 00:11:09,580 I want you to do this, I want you to do that, I want you to rip their heads off. 173 00:11:09,640 --> 00:11:13,400 Which, by the way, I stole from the movie Wall Street. That was the best 174 00:11:13,400 --> 00:11:16,600 ever, I thought. So I had to kind of use those words to be like Michael Douglas. 175 00:11:16,880 --> 00:11:20,220 Because they're sheep, and sheep get slaughtered. 176 00:11:20,460 --> 00:11:24,620 Reading from Belfort Scripts, Stratton's army connects with clients across the 177 00:11:24,620 --> 00:11:25,620 country. 178 00:11:26,100 --> 00:11:29,780 Callers are expected to follow Belfort Scripts down to the word. 179 00:11:30,440 --> 00:11:34,480 We always figured ourselves as movie actors. We were given a script every 180 00:11:34,560 --> 00:11:37,280 and we would pitch whatever stock they told us to pitch. 181 00:11:37,840 --> 00:11:41,920 Belford calls his sales technique the straight -line philosophy. 182 00:11:42,800 --> 00:11:45,940 Callers are taught to do whatever it takes to close the deal. 183 00:11:46,880 --> 00:11:51,620 Stratton prints out ready -made comebacks to client excuses like, I 184 00:11:51,620 --> 00:11:56,140 this company, I have another broker, and let me talk to my wife. 185 00:11:56,640 --> 00:12:01,460 You know, we would always say, I understand, Mr. Jones. Let me ask you, 186 00:12:01,460 --> 00:12:03,200 would your wife be the most happiest with? 187 00:12:03,580 --> 00:12:07,880 Would your wife be happy with you making a good investment and making money on 188 00:12:07,880 --> 00:12:09,980 your investments and on your future? Yes. 189 00:12:10,400 --> 00:12:13,060 Well, that's exactly what I'm looking to do here for you today. 190 00:12:14,880 --> 00:12:19,280 Bob Sharon is the owner of a woman's garment company in Los Angeles. 191 00:12:19,860 --> 00:12:24,720 In March of 1992, he gets an unexpected phone call from a Stratton broker. 192 00:12:25,480 --> 00:12:30,440 Your name was given to me by a classmate from Harvard Business School. 193 00:12:30,800 --> 00:12:35,840 And he said, I made him a lot of money in stock, and he gave me your name. Are 194 00:12:35,840 --> 00:12:36,840 you interested? 195 00:12:36,960 --> 00:12:39,780 Bob's business has recently had a good run. 196 00:12:39,980 --> 00:12:44,860 He's sitting on some extra cash and jumped at the opportunity to expand his 197 00:12:44,860 --> 00:12:45,860 portfolio. 198 00:12:46,320 --> 00:12:51,740 Without ever checking in with his old college pal, Bob agrees to buy 300 199 00:12:51,740 --> 00:12:54,040 of a blue -chip pharmaceutical company. 200 00:12:54,640 --> 00:13:01,360 I know I bought 300 shares and it was, I want to say, $9 ,000 201 00:13:01,360 --> 00:13:04,340 and I made $11 ,000. 202 00:13:04,620 --> 00:13:06,480 So, okay, feeling pretty good. 203 00:13:07,320 --> 00:13:13,440 Soon after, Bob invests over $7 ,000 on a Stratton house stock, another 204 00:13:13,440 --> 00:13:17,440 pharmaceutical company, and makes a $3 ,000 profit. 205 00:13:18,560 --> 00:13:23,260 Riding a winning streak, Bob's broker convinces him it's time to go big. 206 00:13:23,520 --> 00:13:27,220 They were very good at figuring your trigger points. 207 00:13:27,480 --> 00:13:34,040 Mine was, I'm an intelligent risk taker and will reap the rewards from taking 208 00:13:34,040 --> 00:13:35,040 those risks. 209 00:13:35,660 --> 00:13:40,980 Bob invests $65 ,000 on another can't -miss Stratton house stock, 210 00:13:41,520 --> 00:13:43,940 DVI Health Services. 211 00:13:44,420 --> 00:13:46,880 My impressions are this could be big. 212 00:13:47,360 --> 00:13:50,920 This could be a 25%, 30 % returns. 213 00:13:51,860 --> 00:13:54,420 This warrants some big money. 214 00:13:55,160 --> 00:14:00,260 In the Chicago suburbs, Tom Boccorne has a similar encounter with a Stratton 215 00:14:00,260 --> 00:14:01,260 broker. 216 00:14:01,780 --> 00:14:06,360 A married father of two, Tom recently purchased his father's construction 217 00:14:06,360 --> 00:14:11,800 business. The company is successful, doing upwards of $25 million a year in 218 00:14:11,800 --> 00:14:16,140 business. But Tom needs cash to pay back his father. 219 00:14:16,750 --> 00:14:21,130 I had bought the company for, I think, a million five, and I had to pay it off. 220 00:14:21,770 --> 00:14:23,690 So I was looking for other ways to do it. 221 00:14:24,190 --> 00:14:29,270 The broker encourages Tom to invest $20 ,000 in a blue chip stock. 222 00:14:30,530 --> 00:14:32,910 Within days, he makes a 10 % return. 223 00:14:33,810 --> 00:14:37,130 The broker then pitches Tom on a hot Stratton IPO, 224 00:14:38,010 --> 00:14:41,570 Aqua Natural, a water purification company. 225 00:14:41,910 --> 00:14:45,290 You go to a grocery store, and you bring in your own containers, and you fill 226 00:14:45,290 --> 00:14:47,710 up. With pure water. 227 00:14:48,330 --> 00:14:51,950 I thought that was a good idea because the local grocery store did have it 228 00:14:51,950 --> 00:14:52,649 around here. 229 00:14:52,650 --> 00:14:54,370 The stock is another winner. 230 00:14:55,070 --> 00:14:57,930 Tom doubles his investment in just four days. 231 00:14:59,050 --> 00:15:03,450 His broker suggests he rolled his earnings into other Stratton House 232 00:15:04,190 --> 00:15:08,850 I think after the first month I was up to a few hundred thousand. It was easy 233 00:15:08,850 --> 00:15:09,850 money. 234 00:15:10,310 --> 00:15:12,250 Coming up on American Greed. 235 00:15:12,860 --> 00:15:17,580 While Stratton's clients are enjoying their newfound wealth, back on Long 236 00:15:17,580 --> 00:15:22,820 Island, the brokers find creative ways to celebrate their success. Money, 237 00:15:22,980 --> 00:15:25,040 partying, quaaludes, cocaine. 238 00:15:25,360 --> 00:15:27,420 I mean, it's like a young man's fantasy. 239 00:15:37,680 --> 00:15:44,060 Before he turns 30 years old, Jordan Belfort is making $20 million a year as 240 00:15:44,060 --> 00:15:45,620 head of Stratton Oakmont. 241 00:15:48,140 --> 00:15:52,880 Befitting a man of great wealth, he buys a waterfront mansion in the Hamptons. 242 00:15:53,620 --> 00:15:59,640 His main residence is a $1 .7 million mansion in the wealthy village of Old 243 00:15:59,640 --> 00:16:03,460 Brookville. And I bought the house from Richie Grasso, back then was the 244 00:16:03,460 --> 00:16:05,180 president of the New York Stock Exchange. 245 00:16:05,820 --> 00:16:07,640 He even upgrades his marriage. 246 00:16:08,540 --> 00:16:13,900 Belfort divorces his first love and marries a beer commercial model, who he 247 00:16:13,900 --> 00:16:16,000 affectionately calls the Duchess. 248 00:16:17,200 --> 00:16:18,200 That's mine. 249 00:16:18,420 --> 00:16:24,300 Among his toys is a Ferrari Testarossa, just like Don Johnson drives in Miami 250 00:16:24,300 --> 00:16:25,300 Vice. 251 00:16:25,660 --> 00:16:30,120 And a 167 -foot yacht that once belonged to Coco Chanel. 252 00:16:30,640 --> 00:16:33,780 And my wife begged me not to buy it, which is why I had to buy it. Because 253 00:16:33,780 --> 00:16:36,460 she said, you can't. I said, I got to buy it. So I wrote the check right away 254 00:16:36,460 --> 00:16:37,540 for the yacht. For how much? 255 00:16:38,600 --> 00:16:39,600 Five and a half million. 256 00:16:40,660 --> 00:16:44,600 With so much cash on hand, Belfort develops another expensive habit. 257 00:16:45,360 --> 00:16:46,360 Drug addiction. 258 00:16:47,300 --> 00:16:50,120 Belfort dabbles in cocaine and prescription medications. 259 00:16:50,580 --> 00:16:52,920 But his favorite vice is Quaalude. 260 00:16:54,030 --> 00:16:59,810 He used the 1970s -era sedative and party drug nearly every day, often 261 00:16:59,810 --> 00:17:01,570 himself a drooling mess. 262 00:17:02,010 --> 00:17:06,430 I had this rip -roaring drug habit. I used to go scuba diving on five 263 00:17:06,650 --> 00:17:10,050 I was on the bottom. I couldn't come up because I was so stoned. He was flying a 264 00:17:10,050 --> 00:17:12,990 helicopter on quaaludes without a pilot's license and lived. 265 00:17:13,230 --> 00:17:17,010 He told me he was taking 22 different drugs at one point. I don't know how 266 00:17:17,010 --> 00:17:18,010 that's physically possible. 267 00:17:18,589 --> 00:17:21,849 The party continues back at the Stratton offices. 268 00:17:22,960 --> 00:17:27,099 The atmosphere often resembles a fraternity house rather than a 269 00:17:27,099 --> 00:17:33,940 brokerage. It was really just a culture of debauchery and what the 270 00:17:33,940 --> 00:17:35,000 drug dealers have in there. 271 00:17:35,560 --> 00:17:37,700 Sex in the office is common. 272 00:17:38,060 --> 00:17:42,080 Young female assistants are passed around almost as much as the drugs. 273 00:17:44,140 --> 00:17:49,400 Belfort once offers a female broker $10 ,000 to shave her head. 274 00:17:50,400 --> 00:17:54,420 Other employees are paid to perform outrageous stunts. 275 00:17:55,660 --> 00:18:00,640 I remember somebody bringing in a thing like in the carnivals where you could 276 00:18:00,640 --> 00:18:04,480 get electrocuted and they would pay someone $10 ,000 if they could hold it 277 00:18:04,480 --> 00:18:09,540 way. Somehow you just had a group of 13 -year -old boys who never grew up. 278 00:18:10,240 --> 00:18:15,780 Making this outrageous decadence possible is the lucrative IPOs that 279 00:18:15,780 --> 00:18:16,780 underwrites. 280 00:18:17,230 --> 00:18:22,990 Stratton ultimately takes 34 companies public, and nearly every one is a 281 00:18:23,610 --> 00:18:27,370 But Stratton's success isn't what it appears to be. 282 00:18:27,910 --> 00:18:32,590 For years, they've manipulated every facet of their house stocks. 283 00:18:32,930 --> 00:18:38,130 Stratton was a classic pump -and -dump securities firm. 284 00:18:38,370 --> 00:18:42,670 Joel Cohen is a former assistant United States attorney who eventually 285 00:18:42,670 --> 00:18:44,310 prosecutes Belfort. 286 00:18:44,860 --> 00:18:49,520 They would pump up the price of the stock by getting innocent investors to 287 00:18:49,520 --> 00:18:52,980 it based upon blatantly false representations about what it was worth. 288 00:18:53,520 --> 00:18:58,540 The Fed says Stratton has been running the scam since the firm's earliest days. 289 00:18:59,280 --> 00:19:04,940 In order for Belfort to manipulate his security offerings, it relates to supply 290 00:19:04,940 --> 00:19:05,819 and demand. 291 00:19:05,820 --> 00:19:10,420 What Belfort does is he has to constrict the supply. He has to reduce the supply 292 00:19:10,420 --> 00:19:13,700 while simultaneously increasing the demand. 293 00:19:14,300 --> 00:19:15,760 The demand side is easy. 294 00:19:16,260 --> 00:19:21,280 Stratton pays its young employees big commissions to push the risky stocks and 295 00:19:21,280 --> 00:19:22,420 drive up their price. 296 00:19:23,260 --> 00:19:26,720 So the question becomes, how does Belfort constrict the supply? 297 00:19:27,520 --> 00:19:33,500 According to the feds, Stratton secretly hoards massive amounts of new issue 298 00:19:33,500 --> 00:19:35,580 stock before it goes public. 299 00:19:36,160 --> 00:19:39,760 Belfort sashes the shares with accomplices he calls... 300 00:19:40,060 --> 00:19:41,060 Rat holes. 301 00:19:41,120 --> 00:19:44,320 Many of them were friends. Some of them were people that sold them cars. One 302 00:19:44,320 --> 00:19:48,900 famously was the house Quaaludes dealer for the Stratton Oakmont firm. 303 00:19:49,340 --> 00:19:54,320 Rat holes are instructed to hold on to the shares until Stratton is able to 304 00:19:54,320 --> 00:19:55,660 up the price of the stock. 305 00:19:56,000 --> 00:19:58,380 A rat hole may get 100 ,000 shares. 306 00:19:58,620 --> 00:20:00,180 They would get the stock at 5. 307 00:20:00,380 --> 00:20:04,420 It would go to 10. It would go to 15. It would go to 20. It would go to 25. 308 00:20:04,980 --> 00:20:09,460 And when it got to 25, they would then flip it back to Stratton. 309 00:20:10,060 --> 00:20:14,840 At the peak price, Stratton then sells the rat hole shares to unsuspecting 310 00:20:14,840 --> 00:20:15,840 investors. 311 00:20:16,020 --> 00:20:21,160 The increase in volume eventually causes the price to plummet, leaving investors 312 00:20:21,160 --> 00:20:24,460 holding massive quantities of worthless stock. 313 00:20:24,920 --> 00:20:30,140 So all of the rat holes would make huge profits off of a stock that in fact was 314 00:20:30,140 --> 00:20:33,800 worth nothing or next to nothing, and then the entire price would collapse 315 00:20:33,800 --> 00:20:37,660 thereafter because there was no legitimate market for these stocks other 316 00:20:37,660 --> 00:20:38,660 the victims. 317 00:20:38,780 --> 00:20:43,800 As part of the arrangement, rat holes agree to give the profits back to 318 00:20:43,800 --> 00:20:47,120 while receiving a kickback in return for their assistance. 319 00:20:47,740 --> 00:20:51,820 For many of them, they would get a check for $25 ,000 or $50 ,000 or cash for 320 00:20:51,820 --> 00:20:54,020 $100 ,000, some piece of the profits. 321 00:20:54,580 --> 00:20:59,580 Investors like Bob Sharon have no idea they're pawns in Stratton's game. 322 00:21:00,000 --> 00:21:04,420 After making a profit on his initial investments, Bob gradually starts losing 323 00:21:04,420 --> 00:21:07,360 money on all his Stratton house stocks. 324 00:21:08,300 --> 00:21:12,300 He calls his broker to sell his shares, but they won't comply. 325 00:21:13,440 --> 00:21:17,020 At first, he's insisting that, no, no, no, you can't get out, you've got to do 326 00:21:17,020 --> 00:21:21,820 this, that we've got bigger ones here. But now, by then, I probably had $250 327 00:21:21,820 --> 00:21:24,020 ,000 tied up in. 328 00:21:24,360 --> 00:21:30,020 The next day, he discovers that his broker sold the shares, but then flipped 329 00:21:30,020 --> 00:21:32,240 into another stock without his consent. 330 00:21:32,740 --> 00:21:36,140 The new stock is plummeting even faster than before. 331 00:21:36,730 --> 00:21:40,650 Now we were just, I mean, screaming at the top of our lungs at each other, and 332 00:21:40,650 --> 00:21:47,030 him screaming back, or too good to ever make any money in anything, you know, 333 00:21:47,070 --> 00:21:49,610 you're a worthless piece of crap. 334 00:21:51,510 --> 00:21:56,470 Bob eventually gets his broker to return what money he has left, around $80 335 00:21:56,470 --> 00:21:57,470 ,000. 336 00:21:57,750 --> 00:22:00,950 But his losses are well over $100 ,000. 337 00:22:02,120 --> 00:22:06,480 Outside of Chicago, Tom Bocconi's losses are even greater. 338 00:22:06,800 --> 00:22:11,840 Well, I had an account there with about a million in it, and one day they just 339 00:22:11,840 --> 00:22:15,220 took it all and put it in stocks, two different stocks, two or three different 340 00:22:15,220 --> 00:22:17,960 stocks. And then within days, it was almost gone. 341 00:22:18,360 --> 00:22:23,860 In late 1991, the Securities and Exchange Commission is officially 342 00:22:23,860 --> 00:22:26,060 the firm after receiving numerous complaints. 343 00:22:27,070 --> 00:22:32,250 Several months later, the FBI is brought in when it's determined that Stratton's 344 00:22:32,250 --> 00:22:35,190 misdeeds are greater than previously thought. 345 00:22:35,430 --> 00:22:39,290 We weren't involved in securities cases before that. It was mid -1992. They 346 00:22:39,290 --> 00:22:44,890 formed a brand new squad whose sole function was to investigate Wall Street 347 00:22:44,890 --> 00:22:45,890 -related crimes. 348 00:22:46,670 --> 00:22:51,770 Next on American Greed, feeling the heat, Jordan Belfort devises an 349 00:22:51,770 --> 00:22:55,070 international plan to stash his ill -gotten cash. 350 00:22:55,630 --> 00:22:59,570 In the criminal insanity of breaking the law, it was like, oh, well, you know, 351 00:22:59,650 --> 00:23:00,650 next step, Switzerland. 352 00:23:11,410 --> 00:23:14,590 After three years of illegally raking in the cash, 353 00:23:15,290 --> 00:23:17,410 The heat is now on Stratton Oakmont. 354 00:23:18,330 --> 00:23:22,810 Several investors have filed complaints against the firm, and many have sought 355 00:23:22,810 --> 00:23:23,810 settlements. 356 00:23:24,390 --> 00:23:30,170 The SEC sends agents to the brokerage to scour their records, but Belfort makes 357 00:23:30,170 --> 00:23:32,150 their stay an uncomfortable one. 358 00:23:33,150 --> 00:23:37,990 He cranks the air conditioning to freezing levels and bugs the room. 359 00:23:38,800 --> 00:23:42,040 I said, these guys are dumb enough to set up shop in my own conference room. 360 00:23:42,040 --> 00:23:43,040 They're going to run their investigation. 361 00:23:43,400 --> 00:23:44,840 They kind of deserved it, I thought. 362 00:23:45,740 --> 00:23:50,600 While the SEC investigates, Belfort makes plans to protect his fortune. 363 00:23:51,320 --> 00:23:57,140 In August 1993, he flies to Europe to meet with officials at a private bank in 364 00:23:57,140 --> 00:23:58,140 Geneva, Switzerland. 365 00:23:59,340 --> 00:24:03,020 Belfort was schooled on different ways of setting up bank accounts and 366 00:24:03,020 --> 00:24:07,420 corporations through these people in Switzerland to hide and disguise his 367 00:24:07,790 --> 00:24:12,930 Belfort's wife has an aunt who lives in London, a 65 -year -old retired 368 00:24:12,930 --> 00:24:13,930 schoolteacher. 369 00:24:14,670 --> 00:24:17,730 Belfort opens a Swiss bank account in the woman's name. 370 00:24:18,010 --> 00:24:22,810 According to Belfort, he just sort of represented that he was trying to evade 371 00:24:22,810 --> 00:24:27,130 some taxes, and she agreed to do it. What did your wife's aunt think of the 372 00:24:27,130 --> 00:24:28,130 whole thing? 373 00:24:28,210 --> 00:24:29,410 Oh, she thought it was fabulous. 374 00:24:29,910 --> 00:24:34,130 Over the next year, Belfort begins smuggling cash to the bank through his 375 00:24:34,130 --> 00:24:35,130 Quaalude dealer. 376 00:24:35,450 --> 00:24:37,250 whose wife is a Swiss citizen. 377 00:24:37,850 --> 00:24:42,150 She was born, raised, and grew up in Switzerland. She spoke French. She knew 378 00:24:42,150 --> 00:24:43,250 way around the banking system. 379 00:24:43,470 --> 00:24:46,150 So it was sort of the perfect couple to bring in. 380 00:24:46,870 --> 00:24:51,710 The FBI says the couple transport over $1 .3 million overseas. 381 00:24:53,030 --> 00:24:54,990 Almost all of it was done in suitcases. 382 00:24:55,190 --> 00:24:58,310 It was done, they would hide it in their socks and different bags. They would 383 00:24:58,310 --> 00:25:00,330 break it up among different pieces of luggage. 384 00:25:01,580 --> 00:25:08,360 In December 1993, Belfort finds himself flush with even more cash when Stratton 385 00:25:08,360 --> 00:25:14,520 embarks on one of its biggest IPOs yet, Steve Madden Shoes. Steve Madden was a 386 00:25:14,520 --> 00:25:18,040 good story. They used to call him the cobbler, the guy who's selling shoes out 387 00:25:18,040 --> 00:25:21,180 of the trunk of his car. Unlike most of the Stratton deals, it actually had 388 00:25:21,180 --> 00:25:24,700 value and a real idea with products that people really want to buy. 389 00:25:25,240 --> 00:25:29,620 Madden is a childhood friend of Belfort's right -hand man, Danny Porish. 390 00:25:30,560 --> 00:25:33,640 He's worked as a rat hole for Stratton over the past two years. 391 00:25:33,960 --> 00:25:38,160 But on this day, it's his company that's the star of the show. 392 00:25:39,080 --> 00:25:42,520 Stratton's army of callers can't sell the shares fast enough. 393 00:25:44,280 --> 00:25:49,300 Bellport claims Stratton makes $23 million in just two hours. 394 00:25:50,040 --> 00:25:55,500 Stock was manipulated in the same ways that the other IPOs that Stratton 395 00:25:55,500 --> 00:25:56,880 controlled were manipulated. 396 00:25:57,380 --> 00:25:59,440 But the good times don't last long. 397 00:26:00,140 --> 00:26:06,000 In February 1994, the SEC has enough evidence to take Stratton to court for 398 00:26:06,000 --> 00:26:07,160 securities fraud. 399 00:26:07,800 --> 00:26:11,540 Stratton's shelf life was short. The lawsuits were building up against them. 400 00:26:11,620 --> 00:26:12,620 They could hear the footsteps. 401 00:26:13,480 --> 00:26:17,240 Under pressure, Stratton agrees to a settlement with the agency. 402 00:26:17,640 --> 00:26:23,060 The company doesn't admit to any wrongdoing, but it agrees to pay a $2 .5 403 00:26:23,060 --> 00:26:24,200 million penalty. 404 00:26:25,610 --> 00:26:32,410 As part of the agreement, Belfort must personally pay a $100 ,000 fine and 405 00:26:32,410 --> 00:26:33,690 the company he founded. 406 00:26:34,870 --> 00:26:38,350 In 1994, Belfort's barred from the business for life. 407 00:26:38,670 --> 00:26:44,170 They really put a great spin on it, you know, that he could have won, he could 408 00:26:44,170 --> 00:26:47,510 have beat it, but he didn't want to drag Stratton down, so he's going to step 409 00:26:47,510 --> 00:26:48,910 down for the good of the firm. 410 00:26:49,610 --> 00:26:54,170 In the aftermath of the judgment, Stratton arranges a deal to pay Belfort 411 00:26:54,170 --> 00:26:58,670 whopping $180 million for his stake in the company. 412 00:26:59,370 --> 00:27:04,350 He'll be paid $12 million a year over the next 15 years. 413 00:27:05,730 --> 00:27:11,010 This is $180 million for a company that had no intrinsic value. If you take away 414 00:27:11,010 --> 00:27:15,530 manipulation, the only thing that company was worth was the rent on a 415 00:27:16,170 --> 00:27:18,490 in a parking lot in suburban Long Island. 416 00:27:18,730 --> 00:27:23,170 Danny Porridge is officially named the head of Stratton. But despite the 417 00:27:23,390 --> 00:27:25,930 Belfort is far from being out of the picture. 418 00:27:26,250 --> 00:27:31,170 What he was doing was operating Stratton from behind the scenes, just no longer 419 00:27:31,170 --> 00:27:35,210 coming to the office, but fully participating in all the remaining IPOs 420 00:27:35,210 --> 00:27:39,290 did. It didn't miss a beat, really, because we always figured that Belfort 421 00:27:39,290 --> 00:27:40,570 really in charge anyway. 422 00:27:41,310 --> 00:27:46,110 With the civil case settled, the FBI continues to pursue criminal charges 423 00:27:46,110 --> 00:27:47,890 against Belford and Stratton. 424 00:27:48,270 --> 00:27:51,130 But its case is proving to be difficult. 425 00:27:51,730 --> 00:27:56,670 Because the brokers and the other employees were making so much money, he 426 00:27:56,670 --> 00:27:59,270 lured them in and he created a very loyal following. 427 00:27:59,570 --> 00:28:02,770 So there was no incentive to cooperate with us at all. 428 00:28:03,360 --> 00:28:08,800 Next on American Greed, while Belfort sits back and counts his cash, the FBI 429 00:28:08,800 --> 00:28:11,100 gets an unexpected break in their case. 430 00:28:11,320 --> 00:28:16,760 I remember making that call, and they were extremely excited that we had the 431 00:28:16,760 --> 00:28:18,180 evidence of which we had. 432 00:28:18,600 --> 00:28:22,160 How else did Jordan Belfort spend his dirty money? 433 00:28:22,840 --> 00:28:26,800 Find out at cnbcprime .com slash American Greed. 434 00:28:27,200 --> 00:28:28,200 Feeling greedy? 435 00:28:28,640 --> 00:28:31,340 Want more than your shirt of behind -the -scenes dirt? 436 00:28:32,320 --> 00:28:34,780 Follow us at American Greed TV on Twitter. 437 00:28:35,160 --> 00:28:36,400 We'll be right there. 438 00:28:43,200 --> 00:28:48,320 By 1994, Jordan Belfort finds himself in a peculiar place. 439 00:28:48,800 --> 00:28:53,700 Despite being barred from the securities industry, he's still making millions 440 00:28:53,700 --> 00:28:55,840 off his connections to Stratton Oakmont. 441 00:28:56,380 --> 00:28:59,920 On paper, my net worth was just off the charts. I had, like, stakes in 20 442 00:28:59,920 --> 00:29:02,300 different companies. Half of them were public, half of them were about to go 443 00:29:02,300 --> 00:29:05,560 public. I had cash in the bank. So on paper, you were worth? I had to hide, 444 00:29:05,620 --> 00:29:07,500 like, $200 -something million. 445 00:29:07,740 --> 00:29:11,780 But Belfort also knows that it could come tumbling down at any minute. 446 00:29:12,420 --> 00:29:17,780 While he manages to get away from the SEC, FBI agent Gregory Coleman is on his 447 00:29:17,780 --> 00:29:20,760 tail, and Belfort isn't enjoying the chase. 448 00:29:21,480 --> 00:29:24,620 I would hear about Coleman knocked on this door or that door. And I was like, 449 00:29:24,620 --> 00:29:27,340 my luck, I get the guy. I get Tommy Lee Jones chasing me. That's how I felt, 450 00:29:27,480 --> 00:29:28,480 okay? 451 00:29:28,500 --> 00:29:33,300 While Belfort continually looks over his shoulder, an unlikely and completely 452 00:29:33,300 --> 00:29:36,120 unrelated event all but seals his fate. 453 00:29:37,100 --> 00:29:42,200 A thousand miles away in Miami, U .S. Customs agents are working an undercover 454 00:29:42,200 --> 00:29:46,000 money laundering case involving a South American drug cartel. 455 00:29:46,800 --> 00:29:48,600 We were purporting to be. 456 00:29:49,040 --> 00:29:55,000 Narcotics smugglers. So we were soliciting in a sting type of provision 457 00:29:55,000 --> 00:29:56,000 Swiss bankers. 458 00:29:57,140 --> 00:30:02,560 David Marwell is a special agent in charge for Homeland Security and a 459 00:30:02,560 --> 00:30:07,720 special agent with the U .S. Customs Service. So in November of 1994. 460 00:30:09,480 --> 00:30:15,980 At the culmination of the investigation, we arrested a multitude of people, as 461 00:30:15,980 --> 00:30:19,600 well as a couple of Swiss bankers at the time in Florida. 462 00:30:20,120 --> 00:30:24,480 Belfort's banker just happens to be one of the men arrested. With his back 463 00:30:24,480 --> 00:30:29,640 against the wall, the Swiss banker opens the vault on his secrets, telling the 464 00:30:29,640 --> 00:30:32,240 feds that Jordan Belfort is one of his clients. 465 00:30:33,220 --> 00:30:36,200 Marwell calls the SEC to deliver the news. 466 00:30:37,120 --> 00:30:38,960 The SEC was kind of shocked. 467 00:30:39,400 --> 00:30:45,040 And they immediately said, you've got to reach out to this FBI agent by the name 468 00:30:45,040 --> 00:30:50,300 of Greg Coleman. Agent Coleman has long suspected Belfort is illegally moving 469 00:30:50,300 --> 00:30:51,300 cash overseas. 470 00:30:51,740 --> 00:30:53,120 He now has proof. 471 00:30:53,840 --> 00:30:59,300 It confirmed our suspicions. It confirmed that I was not going down a 472 00:30:59,300 --> 00:31:03,460 was going to lead to a dead end. So it was, in some senses, a very big score. 473 00:31:03,960 --> 00:31:10,750 While the FBI solidifies its case... In 1996, the end finally arrives for 474 00:31:10,750 --> 00:31:11,750 Stratton Oakmont. 475 00:31:12,650 --> 00:31:17,630 In June, the National Association of Securities Dealers begins proceedings 476 00:31:17,630 --> 00:31:20,210 against the firm for their fraudulent activities. 477 00:31:21,230 --> 00:31:26,870 By December, Stratton is expelled from the industry, closing its doors for 478 00:31:27,230 --> 00:31:31,130 And everyone knew it was coming. We thought we were being persecuted 479 00:31:31,130 --> 00:31:32,069 of course. 480 00:31:32,070 --> 00:31:33,670 Obviously, we weren't. 481 00:31:35,540 --> 00:31:40,780 In the fall of 1998, the FBI and Department of Justice finally have all 482 00:31:40,780 --> 00:31:43,640 information they need to take Belfort down. 483 00:31:44,480 --> 00:31:49,420 At September, the FBI arrest Jordan Belfort and Danny Porridge for money 484 00:31:49,420 --> 00:31:51,220 laundering and securities fraud. 485 00:31:51,840 --> 00:31:54,300 Their bail is set at $10 million each. 486 00:31:54,580 --> 00:31:56,580 Belfort came up with the money within three days. 487 00:31:56,800 --> 00:32:02,400 He just put up $10 million in cash and jewels and a brink truck had arrived 488 00:32:02,400 --> 00:32:03,560 his wife's jewelry. 489 00:32:04,250 --> 00:32:06,830 The feds tell Belfort they know everything. 490 00:32:07,130 --> 00:32:10,910 The money laundering, the Swiss banker, the rat holes. 491 00:32:11,910 --> 00:32:16,650 Faced with the threat of 25 years in prison, Belfort makes a decision. 492 00:32:17,050 --> 00:32:18,350 Do you fight it? Do you plea? 493 00:32:18,630 --> 00:32:19,630 Or do you cooperate? 494 00:32:20,150 --> 00:32:23,530 And in my mind, you know, fighting it wasn't really an option. It was the 495 00:32:23,530 --> 00:32:27,190 toughest decision that I ever had to make. I didn't really have much of a 496 00:32:27,190 --> 00:32:28,190 choice. 497 00:32:28,420 --> 00:32:33,500 Belfort agrees to cooperate with the feds, telling them intimate details of 498 00:32:33,500 --> 00:32:34,660 the scam operated. 499 00:32:35,200 --> 00:32:39,620 The hard thing was doing it in an orderly way because there was so much to 500 00:32:39,620 --> 00:32:44,560 cover. There were so many entrails to the fraud they were engaged in. Over the 501 00:32:44,560 --> 00:32:47,360 next 12 months, the wolf becomes a rat. 502 00:32:48,080 --> 00:32:51,400 Belfort agrees to wear a wire and meet with his friends and associates. 503 00:32:52,660 --> 00:32:56,180 Several former Strattonites are now running their own crooked firms. 504 00:32:56,880 --> 00:32:59,940 where they continue the scams they learn from their mentors. 505 00:33:00,560 --> 00:33:04,420 They were actually operating four or five other firms, which were 506 00:33:04,420 --> 00:33:08,520 the same kinds of fraud. And we wanted to stop that crime from happening 507 00:33:08,520 --> 00:33:09,520 it was spreading. 508 00:33:10,420 --> 00:33:15,660 Belfort secretly tapes dozens of conversations, such as this meeting in 509 00:33:15,660 --> 00:33:19,240 associate offers to hide Belfort's money in Asia. 510 00:33:27,430 --> 00:33:34,010 He became actually a very, very good cooperator. He made tapes, many, many 511 00:33:34,010 --> 00:33:37,970 telephone tapes, many body recordings for us against a number of people. 512 00:33:38,270 --> 00:33:39,650 In September 1999, 513 00:33:40,550 --> 00:33:45,410 Belfort and Porish officially plead guilty to securities fraud and money 514 00:33:45,410 --> 00:33:51,690 laundering. The men admit they manipulated the stocks of 34 companies, 515 00:33:51,690 --> 00:33:53,690 investors over $200 million. 516 00:33:55,100 --> 00:34:00,940 The exact number of victims is unknown, but it's believed to be more than 1 ,500 517 00:34:00,940 --> 00:34:01,940 people. 518 00:34:02,500 --> 00:34:07,060 Well, there were dozens, probably hundreds and hundreds of investors who 519 00:34:07,060 --> 00:34:09,520 the bulk of their life savings because of what these guys did. 520 00:34:10,300 --> 00:34:16,760 Next on American Greed, Jordan Belfort goes to prison and experiences some high 521 00:34:16,760 --> 00:34:18,679 times while in the joint. 522 00:34:19,000 --> 00:34:21,560 Now, this is how crazy the Jordan Belfort story is. 523 00:34:21,880 --> 00:34:26,699 The Quaaludes, the parties, and then when he goes to prison, who is his 524 00:34:26,699 --> 00:34:28,580 cellmate? Tommy Chom. 525 00:34:38,159 --> 00:34:43,960 In 2003, almost four years after pleading guilty to running a stock, 526 00:34:43,960 --> 00:34:48,840 dump scheme, Jordan Belfort and Danny Porish are both sentenced to four years 527 00:34:48,840 --> 00:34:49,840 federal prison. 528 00:34:50,250 --> 00:34:55,710 Despite stealing over $200 million, the men avoid a lengthy sentence. 529 00:34:56,449 --> 00:35:01,870 Back in the time frame that Belfort and Porridge were sentenced, it really just 530 00:35:01,870 --> 00:35:05,770 was not viewed as a serious crime as it is now. 531 00:35:06,350 --> 00:35:10,430 Their cooperation with the government significantly reduces the sentences. 532 00:35:10,970 --> 00:35:14,770 Thanks to their assistance, the Department of Justice is able to get 533 00:35:14,770 --> 00:35:17,230 on dozens of Belfort's associates. 534 00:35:18,480 --> 00:35:23,800 There were probably 75 people that were prosecuted, people in the securities 535 00:35:23,800 --> 00:35:25,920 industry, accountants, lawyers. 536 00:35:26,860 --> 00:35:33,680 As part of their punishment, Belfort and Porish must jointly pay $110 million in 537 00:35:33,680 --> 00:35:38,840 restitution. The men are required to pay 50 % of all future earnings toward the 538 00:35:38,840 --> 00:35:43,740 fund. The first down payment is made when the government seizes more than $10 539 00:35:43,740 --> 00:35:46,100 million worth of assets from Belfort. 540 00:35:46,750 --> 00:35:51,070 Cars, houses, jewelry, bank accounts, all of those assets are ultimately 541 00:35:51,070 --> 00:35:52,230 forfeited to the government. 542 00:35:52,510 --> 00:35:56,590 Belfort's home in Old Brookville was seized by us. His beach home in 543 00:35:56,590 --> 00:36:01,810 Southampton, Long Island. In 2004, Belfort is sent to the Taft Federal 544 00:36:01,810 --> 00:36:05,050 Correctional Institution outside of Bakersfield, California. 545 00:36:05,830 --> 00:36:10,810 After living a drug -fueled existence for most of the past decade, it's only 546 00:36:10,810 --> 00:36:13,550 fitting that his cellmate is none other than Tommy Chong. 547 00:36:14,510 --> 00:36:17,830 One half of the stoner comedy duo Cheech and Chong. 548 00:36:18,650 --> 00:36:22,590 Of all the inmates in the entire federal prison system, he gets Tommy Chong as 549 00:36:22,590 --> 00:36:27,570 his cellmate, who was in prison for, I think, selling bongs across state lines 550 00:36:27,570 --> 00:36:28,570 back then. 551 00:36:28,830 --> 00:36:33,810 While in prison, Belfort entertains his cellmate with wild tales of life at 552 00:36:33,810 --> 00:36:36,730 Stratton. The two become close friends. 553 00:36:37,360 --> 00:36:41,160 You know, what do you do when you're in jail? You have a lot of time, so you 554 00:36:41,160 --> 00:36:43,960 tell stories. I would tell him stories, and he would tell me stories. I mean, he 555 00:36:43,960 --> 00:36:45,440 would say to me, God, you should write a book. 556 00:36:46,000 --> 00:36:49,820 Belfort follows Chong's advice and starts putting pen to paper. 557 00:36:50,240 --> 00:36:52,700 He also enters a prison rehab program. 558 00:36:53,760 --> 00:36:59,440 After 22 months behind bars, Jordan Belfort is released early for good 559 00:37:00,700 --> 00:37:03,440 I think he should have been in jail longer. I mean, two years. 560 00:37:04,300 --> 00:37:06,940 Two years for wrecking thousands of people's lives. 561 00:37:07,580 --> 00:37:12,600 Upon release, Belfort moves to Manhattan Beach, California, just south of Los 562 00:37:12,600 --> 00:37:15,840 Angeles, where he finishes writing his autobiography. 563 00:37:16,420 --> 00:37:22,380 In 2007, Random House publishes his first book, The Wolf of Wall Street. 564 00:37:22,880 --> 00:37:28,080 It's a vulgar and hedonistic romp filled with sex, drugs, and deviant behavior. 565 00:37:28,880 --> 00:37:32,640 I was just writing the truth as it came out of my head. 566 00:37:33,190 --> 00:37:35,910 And this is what I wrote. And then suddenly I looked back and I'm like, oh, 567 00:37:35,910 --> 00:37:36,749 it was true. 568 00:37:36,750 --> 00:37:40,210 Those who know Belfort find the book's title amusing. 569 00:37:40,710 --> 00:37:44,270 Never heard anybody call him the Wolf of Wall Street. The first time I learned 570 00:37:44,270 --> 00:37:47,790 of it was when I picked up a copy of his book and came to learn that he was 571 00:37:47,790 --> 00:37:48,970 claiming that that was his nickname. 572 00:37:49,330 --> 00:37:53,470 The book is a modest success, but it generates plenty of buzz. 573 00:37:54,570 --> 00:37:58,970 In 2007, Jane Wells interviews Belfort on his book tour. 574 00:37:59,290 --> 00:38:01,490 He says he's a changed man. 575 00:38:01,930 --> 00:38:03,910 I believe everyone is entitled to be forgiven. 576 00:38:04,370 --> 00:38:05,590 I didn't murder anybody. 577 00:38:06,470 --> 00:38:10,790 It's not as bad as that. It's not. It was a financial crime. I have a chance 578 00:38:10,790 --> 00:38:13,890 maybe not reverse what I did, but to try to make good on it. 579 00:38:14,750 --> 00:38:20,450 In December 2013, Belfort's life story hits the silver screen at Martin 580 00:38:20,450 --> 00:38:25,170 Scorsese's The Wolf of Wall Street. I have offered our lovely sales assistant, 581 00:38:25,390 --> 00:38:30,850 Danielle Harrison, here $10 ,000 to shave off your fucking eyes! 582 00:38:34,000 --> 00:38:38,100 The film is a hit, grossing nearly $400 million worldwide. 583 00:38:39,580 --> 00:38:43,620 Belfort is paid just over $1 million for the movie rights and other fees. 584 00:38:45,320 --> 00:38:50,820 For the end of the film, Belfort himself makes a cameo. The world's greatest 585 00:38:50,820 --> 00:38:52,820 sales trainer, Mr. 586 00:38:53,140 --> 00:38:54,900 Jordan Belfort! 587 00:38:55,670 --> 00:38:59,050 And to me, the most astounding part of that was that they're basically doing 588 00:38:59,050 --> 00:39:03,330 what amounts to an advertisement pitch for Belfort's motivational speaking 589 00:39:03,330 --> 00:39:07,790 company. Since his release from prison, the convicted felon has built a 590 00:39:07,790 --> 00:39:10,370 lucrative second career as a motivational speaker. 591 00:39:11,870 --> 00:39:17,890 Belfort claims he's paid $30 ,000 per engagement, mostly speaking about 592 00:39:17,890 --> 00:39:21,830 ethics and how to use his straight -line sales technique. 593 00:39:22,350 --> 00:39:25,850 So I want you to feel confident that once you master this skill, it's going 594 00:39:25,850 --> 00:39:27,270 change your life on every level. 595 00:39:27,890 --> 00:39:32,290 Admirers pay anywhere from $50 ,000 to $2 ,000 for the experience. 596 00:39:33,290 --> 00:39:37,030 Belfort maintains that he's determined to pay off his debts. 597 00:39:37,470 --> 00:39:42,410 Yeah, listen, I think this movie for that is an amazing thing because I'm 598 00:39:42,410 --> 00:39:48,490 100 % of all the profits from the movie and both books. And the books is 599 00:39:48,490 --> 00:39:50,790 really... You are compelled to give, and if I'm wrong... 600 00:39:51,240 --> 00:39:55,480 50 % of all your growth earnings straight to paying back. Is that not 601 00:39:55,480 --> 00:39:57,900 anymore? That's not right. Was it ever the case? Yeah, before I was on 602 00:39:57,900 --> 00:40:00,880 probation. But now you're on probation, you're no longer compelled to legally. 603 00:40:01,260 --> 00:40:02,260 Not legally. 604 00:40:03,120 --> 00:40:06,560 But the government says Belfort is spinning another tale. 605 00:40:08,280 --> 00:40:14,160 In October 2013, the Department of Justice files court papers saying 606 00:40:14,160 --> 00:40:17,560 still legally obligated to pay 50 % of his income. 607 00:40:18,280 --> 00:40:23,940 They say he has contributed just $11 .6 million to the restitution fund, more 608 00:40:23,940 --> 00:40:28,380 than $10 million of that coming from the seizure of his assets a decade ago. 609 00:40:28,840 --> 00:40:34,140 And I just have no doubt that if it's up to him, he won't be giving the money 610 00:40:34,140 --> 00:40:39,320 back to the victims. The government says Belfort pays just $21 ,000 from his 611 00:40:39,320 --> 00:40:41,760 million -dollar movie deal in 2011. 612 00:40:42,300 --> 00:40:46,340 In 2010, they say he pays nothing at all. 613 00:40:46,780 --> 00:40:52,600 What I see and hear from him is a man who mouths the word remorse, uses the 614 00:40:52,600 --> 00:40:56,060 remorse, but doesn't act on it. He hasn't been repaying his victims. 615 00:40:56,700 --> 00:40:59,040 The matter is still being negotiated. 616 00:40:59,660 --> 00:41:03,360 Jordan Belfort declined American Greed's request for an interview. 617 00:41:04,440 --> 00:41:10,160 Former Stratton investors say seeing Belfort in the spotlight has opened up 618 00:41:10,160 --> 00:41:11,160 wounds again. 619 00:41:11,940 --> 00:41:15,280 Tom Picorni lost $800 ,000 to Stratton. 620 00:41:16,200 --> 00:41:19,620 He believes his financial difficulties cost him his marriage. 621 00:41:20,320 --> 00:41:25,940 After about the first three or four years, I basically tried to block it 622 00:41:26,020 --> 00:41:30,900 His movie came up, and that's when I started getting phone calls from 623 00:41:30,900 --> 00:41:35,600 on it. And then my oldest son saw him on TV where he said he paid everybody 624 00:41:35,600 --> 00:41:40,440 back. And that kind of made me mad because he hasn't paid anybody back. 625 00:41:41,060 --> 00:41:44,840 Bob Sharon actually lives just a few miles from Belford. 626 00:41:45,370 --> 00:41:47,530 Their kids even attended the same school. 627 00:41:48,270 --> 00:41:53,610 But Sharon says he has no desire to confront the man who stole more than 628 00:41:53,610 --> 00:41:55,050 ,000 from him. 629 00:41:55,370 --> 00:41:59,990 What am I going to go up to him and say, you know, Jordan, you owe me $130 ,000. 630 00:42:00,190 --> 00:42:01,510 Would you please write me a check? 631 00:42:01,750 --> 00:42:04,870 I don't sit around with resentment because then I would lose twice. 632 00:42:05,430 --> 00:42:10,550 You know, I lost the money. I don't need to lose peace of mind by harboring a 633 00:42:10,550 --> 00:42:11,650 lot of resentment about it. 634 00:42:12,000 --> 00:42:17,180 As for Agent Coleman, he says he hopes Belfort's new business ventures are 635 00:42:17,180 --> 00:42:21,600 legit. If he makes more money at what he's doing, he can pay back more victim 636 00:42:21,600 --> 00:42:25,640 investors. I hope what he does for the rest of his life is clean and he stays 637 00:42:25,640 --> 00:42:29,800 out of trouble, because if he ever steps over the line, I want him to know I'll 638 00:42:29,800 --> 00:42:30,800 be there to arrest him again. 639 00:42:35,600 --> 00:42:38,600 An unvarnished look at the commerce of crime. 640 00:42:39,150 --> 00:42:43,030 It's $300 to $500 billion a year business, and I just want a little piece 641 00:42:43,450 --> 00:42:45,790 American Bikes, coming up next. 642 00:42:46,670 --> 00:42:50,690 CNBC, the fastest growing cable network in primetime. 643 00:42:51,390 --> 00:42:52,390 CNBC.