In April 2006, Jordan Belfort was released from prison after only 22 months. He was in prison for money laundering and fraud which cost investors over $200 million. Belfort, now an author and speaker, was a stockbroker famous for founding a brokerage house called Stratton Oakmont in 1989. However, this brokerage house sold small, inexpensive stocks through the “pump and dump” fraud, which involved Belfort and other workers to use misleading statements in order to market high amounts of these stocks, causing the price of them to increase, and allowing the company to sell mass amounts of the originally inexpensive stocks. While the company profited, investors lost lots of money. At the company’s peak, it was overseeing investments worth over $1 billion and Belfort’s net worth was in the hundreds of million dollars. He engaged in a lavish lifestyle and symbolized the excesses of the time. He hosted many opulent parties and is infamous for his extreme use of drugs.
As his firm continued to grow, Belfort tried to hide his money from the government by smuggling money from the US into Switzerland and putting the money in a Swiss bank account. However, the US Securities and Exchange Commission (SEC) grew suspicious of the firm and after launching an investigation, Stratton Oakmont had to pay $2.5 million for civil securities fraud. Meanwhile, the FBI was also investigating the company as some employees of the company were feeding them information. Furthermore, Belfort’s personal life was struggling with his addiction to drugs, and he even reportedly kicked his wife down the stairs of his house and drove his car through a garage with his child inside the car. The police arrested him and he spent weeks in rehab, and later that year, the FBI arrested him in 1999 for money laundering and fraud. In 2003 he was sentenced to four years in prison. However, he was let off two years early but was ordered to pay 50% of his income to over 1500 clients that he defrauded up until 2009. Later, the government ordered him to pay at least $10,000 per month for the rest of his life in payback. Today, he spends his time giving motivational speeches and offers sales training to people. In 2007, he published a memoir called The Wolf of Wall Street, and in 2013, the critically acclaimed movie about his life was released.
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This is a really interesting post! There have been more recent cases of "pump and dump" fraud including that of Enron Corporation. The company was formed in 1985, but within about ten years was named Fortune Magazine's "America's Most Innovative Company" every year from 1996 to 2001 and was one of the most powerful companies on Wall Street. However, the company began to crumble when its executives began devised a pump and dump scheme by falsely reporting projected profits as actual profits to investors, hiding debt, and using questionable accounting practices, all of which led to Enron's declaration of bankruptcy and final payout that took place in 2011. Many of Enron's executives were charged with conspiracy, securities fraud, and insider trading and the founder and former CEO, Kenneth Lay, was convicted on four counts of bank fraud as well as six counts of fraud and conspiracy. Finally, the CEO at the time of the company's downfall, Jeffrey Skilling, was sentenced to ten years in prison and was required to pay the victims of the fraud $42 million.
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It's interesting to note that, despite Belfort's infamous and widely disgraced past, people are still very interested to hear what he says. Reportedly, he makes around $30,000 for the speeches he gives. Many question whether he will ever be able to pay back the approximate $100 million he owes as restitution, given that he would have to give over a few thousand speeches to make that kind of money.
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https://finance.yahoo.com/news/wolf-wall-street-says-ll-184200507.html