Jordan Belfort: The real Wolf of Wall Street and the men who brought him down

Jordan Belfort scammed investors out of $200m. As Martin Scorsese and Leonardo DiCaprio bring his outrageous life to the big screen, Nick Harding gets the real inside story

Jordan Belfort stands outside his former home (Joe Fornabaio)

The pitch could have been barked by any of the "motivational-training" snake-oil salesmen who ply their wares in the corporate sector. But the man behind this particular "sales and persuasion" one-day course in Australia last year thought himself special enough to demand a US$5,000 entrance fee.

The inflated price tag may have been something to do with the quality of the after-dinner anecdotes, as the man hosting the event was Jordan Belfort - a 51-year-old American ex-con who is among the most infamous crooked businessmen in recent history. In the 1990s, Belfort was reputed to have been worth £60m, earning £600,000 a week. He owned a sprawling estate in the Hamptons, a fleet of supercars and a 167ft yacht which once belonged to Coco Chanel and which he sank in the Mediterranean. He had a supermodel wife and a drug and alcohol habit. He employed an army of young salespeople who aggressively sold stocks in questionable companies to unwitting investors. His workers were rewarded with massive bonuses and parties where prostitutes and dwarf-throwing competitions were provided as entertainment.

Today, the disgraced swindler (a term Belfort hates) has reinvented himself as a reputable businessman, with clients such as Delta and Virgin Airlines. Much to his delight, he's also being played by Leonardo DiCaprio in Martin Scorsese's new film, The Wolf of Wall Street, which portrays the lavish, drug-fuelled and illegal antics at Belfort's now-defunct East Coast stocks and shares brokerage Stratton Oakmont.

But, says Belfort, he's not letting all that glitz go to his head - he is a new man since his 2004 conviction for defrauding clients of more than $200m. "We are not the mistakes of our past," he recently said. "We're the resources and capabilities that we glean from our past. It chokes me up a little when I think about it. I was a bad guy. And it wasn't like I started that way. You can get desensitised to your own actions, it's easy on Wall Street... I shouldn't really care what people think of me. I know I'm good. But of course I do care."

Former Assistant US Attorney Joel Cohen, who helped put Belfort behind bars, couldn't agree less. "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."

The yacht, the cars, the supermodel wife and the fortune have all gone. The father of three now lives in a modest three-bedroom house in a relatively inexpensive LA suburb. At his seminars, attendees are taught a technique he calls "Straight Line" selling; a set of pre-determined steps from first contact to closing a deal. It is, he has said, roughly the same system he taught his employees to use when pressuring people to buy shares in the useless firms he once promoted. He's paid around $30,000 an hour for his wisdom.

He makes a very good living, then - but his income is a fraction of the vast wealth he enjoyed, and a court order requires him to pay 50 per cent of his earnings into a compensation fund for his thousands of victims. Nevertheless, the sale of the film rights to Belfort's two memoirs, The Wolf of Wall Street and Catching the Wolf of Wall Street, are estimated to have earnt him $2m. The film is up for a Golden Globe (Best Comedy) tonight and there is talk of several Oscar nominations when they are announced on Thursday.

Over the festive period, American film-goers flocked to see DiCaprio as Belfort marching hookers on to the office floor, receiving the attentions of a young lady at the wheel of his Ferrari and tearing up a sofa to find a stash of cocaine. Predictably, there has been outrage that the film glorifies these exploits. All of which, one imagines, gave Belfort his best Christmas in years - as he wrote on his blog at the end of last month: "Visit the theater and watch DiCaprio portray me as I was and remember the man I have become."

And what has Belfort, whose representatives did not answer our request for comments, become in the seven years since his release?

By all accounts a natural raconteur, Belfort delights in recounting stories of drug-fuelled excess, and distances himself from other disgraced businessmen. He describes Bernie Madoff, the US financier convicted in 2009 of defrauding investors of $65bn, as a "complete crook who took people’s money", and defends his own actions by claiming 95 per cent of his business dealings "were totally legit".

Belfort also gives the impression that he was seduced by the financial environment of the time. The market of the early 1990s made a lot of people a lot of money and, by Belfort's reckoning, his endeavours cost no one more than they could afford. "I don’t like to come off like what I did was not wrong. But I wasn't dealing with poor people. I was dealing with very rich people. No one lost their life savings," he argues.

This revisionism, however, is not the account Belfort gave to court when he pleaded guilty to charges of international securities fraud and money-laundering in 1999. Facing 20 to 30 years in jail, he agreed to gather evidence against his friends and colleagues in a year-long undercover operation in exchange for a lighter sentence.

It is also not an account that the two key investigators behind his downfall recognise.

FBI Special Agent Greg Coleman began investigating Belfort in 1992. "I have run into individuals who were bad people doing bad things and I've run into ones who were basically good people who made a mistake and will never do it again," says Coleman. "Belfort was really bad. And while there is some attempt on his part to clean up and change, I think he is still a work in progress. There were a lot of victims who could ill afford to lose that kind of money."

Joel Cohen concurs. "My sense is that he is only half-repentant, for whatever reason - whether he thinks it sells books and movies better. He says he is sorry to his victims but on the same token he tells the world that only 5 per cent of his behaviour was criminal."

Both have mixed feelings about the movie. Says Cohen, "It's not going to be about his prosecution. It will be about his rise and dwarves being thrown out of cannons. I fear it is being marketed as a general comment of all that ails society, when in fact it is a sordid story about bad people who do not represent society at all."

While the debauchery depicted in the film is true, plenty of the Belfort story is myth. His supposed links to the mafia have never been proven and Stratton Oakmont - a name chosen as it k sounded British and reputable - was never a Wall Street firm: the Wolf of Wall Street operated from a shopping mall in suburban Long Island.

Stratton Oakmont was a so-called "boiler room"; ostensibly a call centre where young workers rang investors and random names from the telephone directory, pushing them to buy shares in companies it financed and floated on the stock exchange (in a process called Initial Public Offerings or IPOs). Stratton Oakmont practised a technique called "pump and dump": investors were first hooked with the promise of shares in stable companies and then persuaded to invest in Stratton’s IPOs. The greater the number of people who invested, the higher the share prices rose. Illegally, Belfort and a group of insiders he tipped off also bought shares in these businesses. When the prices peaked, Belfort tipped off his cohorts to sell. They all made fortunes while the share prices plummeted, leaving everyone else with worthless stocks.

Belfort says he "exited the womb an entrepreneur". At 16, he sold ice lollies, bagels and trinkets on the beach at Long Island and with the money he made he put himself through college. He enrolled in dental school, but walked out on the first day when the Dean told the new intake that they were in the wrong profession if they wanted to make money. Instead, he began selling meat off the back of lorries. He started his own firm, but it went bankrupt, owing $24,000, when he was 24. Desperate for a job, Belfort started at the bottom in a Wall Street trading firm working as a connector, making calls to potential investors whom he would patch through to the brokers. "I was pond scum."

When he finally passed his traders' exams, he began his stockbroking career on 19 October 1987: Black Wednesday, when the market plummeted 508 points in a day. The company he worked for closed, but the setback only fuelled his desire. In 1989, he set up Stratton Oakmont.

When Cohen and Coleman started investigating the firm in 1992, the brokerage was already the subject of a civil fraud lawsuit brought by the US Securities and Exchange Commission (SEC). As a result, the company was ordered to pay a $2.5m fine and Belfort and his partners, Daniel Porush (played by Jonah Hill in the film) and Kenneth Greene agreed to $100,000 fines apiece. None of the three admitted or denied the SEC's allegations and the penalty was peanuts compared to what the firm and its employees and bosses were earning.

Coleman and Cohen spent the following years gradually digging away to collect evidence - but the loyalty Belfort engendered in his well-paid staff made it an almost impossible task.

The breakthrough came when Belfort became desperate and began smuggling money out of the country. The funds ended up in Swiss bank accounts, where it was laundered - and money-laundering was Coleman's area of expertise.

"The crowbar we used to open them up was the tax evasion," he explains. "We were able to get some witnesses who were helping them smuggle the money to provide information about that. We used that to go to the Swiss authorities to get them to provide information about the bankers Belfort was using in Geneva. It took time because bank secrecy in Switzerland was still very robust and we had to convince the authorities that this sort of behaviour was something they should provide information to us about. Eventually we got Belfort’s Swiss banker to co-operate."

With concrete evidence, both Belfort and Porush were arrested in September 1998 and persuaded to work with the investigation. Belfort was required to post $10m security as a condition of his bail. (The security took the form of jewels which he had delivered to the courthouse in an armoured car accompanied by armed guards.) The skills that made Belfort such a good conman also made him an effective government mole: the evidence he collected was used in scores of other prosecutions.

Belfort eventually pleaded guilty. The case took years to come to trial and in 2004 he was convicted, sentenced to four years, and jailed, serving 22 months in all. He reported to a federal prison camp in California, where he shared a cell with the comedian Tommy Chong, of Cheech and Chong fame, who was serving a nine-month sentence for selling drug paraphernalia.

Chong was working on a book; after hearing Belfort's outlandish tales, he persuaded his cell-mate to put pen to paper as well. On his release in 2006, Belfort realised there was an appetite for his life story and started pitching his manuscript. Publisher Random House gave him a $1m advance. Within a year of his release, The Wolf of Wall Street was on sale.

Coleman still keeps in contact with his former prey "as a subtle reminder that I am still watching", and the FBI man admits he is curious about the film. Asked to consult on the plot, he's played by actor Kyle Chandler (who recently appeared in Argo and Zero Dark Thirty). "I want to see how I am portrayed," he says. "I hope it's done realistically, rather than the stereotypical FBI guy in a suit." As for Cohen, "I don’t think Jordan loves me. In his book, his caricature of me is unfair. He describes me as 'the bastard' about 100 times."

Belfort has realised that infamy can be lucrative. However, for the man who once boasted he made $13m in one day, crime will not necessarily pay in the end. According to a recent letter from prosecutors sent to the judge overseeing his compensation agreement, so far Belfort has paid $11.6m of the required $110.4m into the fund. The letter suggests he has been withholding payments and that he is in default of his agreement. Belfort disputes this and is currently in talks with the federal courts to resolve the situation. Whatever the outcome, the Wolf still has a long way to go before he pays his debt to society. 1

'The Wolf of Wall Street' (18) is out on Friday