The Wolf of Wall Street: From the Prosecutor’s Seat

LIVE FROM THE ACFE GLOBAL FRAUD CONFERENCE

When did Jordan Belfort, “The Wolf of Wall Street,” make the majority of his money committing fraud? According to former U.S. Attorney Joel M. Cohen, Belfort’s fraudulent activities picked up dramatically in 1994, after he was charged with securities fraud and barred from brokering by the Securities and Exchange Commission (SEC).

Former U.S. Attorney Joel M. Cohen, who led the prosecution against Belfort, shared his viewpoint of the case against Belfort and his company, Stratton Oakmont, Tuesday during the final part of a two-part session. FBI Special Agent Gregory Coleman, who led the investigation, shared his account of events during Part One yesterday.

Cohen said he first became aware of the case when he took over as a federal prosecutor in the Eastern district of New York in Brooklyn in 1997. Coleman, who had been investigating the case for more than six years and had previously worked with five other federal prosecutors, went to meet with Cohen to walk him through the status of the case. “Much of the investigation into Belfort up to that point was in Greg’s head,” Cohen recalled. “He knew everything about him and what he was up to. My predecessor left me one box of some files, but Greg came in my office and rolled out a 14-foot-long roll of paper that showed a long flow chart of funds.”

Some of the information detailed in Coleman’s roll of paper was a trend called “cockroaching.” Cockroaching is what happens when a firm gets pushed down and crushed (or closed) and the employees (the cockroaches) scurry off to other firms. Belfort used these cockroaches that he already had relationships with to use his services to continue to commit pump and dump schemes without any regulation. “Belfort became a more powerful force after the SEC put him out of business,” Cohen said. “He had an even greater ability to manipulate stocks.”

When Coleman and Cohen decided to officially prepare an indictment they opted to attack the top of the scam rather than the players at the bottom. As I mentioned in Monday’s post, they went after the money Belfort was hiding in Geneva. What I didn’t cover yesterday was what Cohen said was a major hurdle in the investigation: getting the Swiss government to cooperate under something called “dual criminality.” In order for the Swiss to help with the investigation, the case had to fall under dual criminality, meaning both nations had to consider the offense a crime. Unfortunately, Switzerland didn’t technically consider securities fraud a crime… yet. Cohen and Coleman worked hard to convince them that their laws in fact did prohibit this activity, just in a different way.

With the necessary documents from the Swiss, as well as surveillance, Coleman and Cohen convinced Belfort in just 36 hours to admit to his almost decade-long frauds. “This guy woke up every day and committed fraud,” Cohen said.

Cohen closed by expressing his disappointment with how the 3-hour movie ended its provocative tale of Belfort. In the closing scene, Belfort, played by Leonardo DiCaprio, is shown years after his crimes speaking in front of a group of people. The person who introduces him to the podium is played by none other than Jordan Belfort. He also conveniently stands in front of a sign displaying the name of Belfort’s current speaking company, “Straight Line.” As if that isn’t enough, Cohen played a clip of DiCaprio in real life giving a gushing endorsement of Belfort’s motivational speaking skills. As Cohen said, I guess one more person has been fooled by the self-proclaimed “Wolf of Wall Street.”

For even more conference coverage, visit FraudConference.com.