The Ugly True Story Behind The Incredible Rise and Shocking Fall Of Financial Criminal Jordan Belfort

Jordan Belfort is the poster child for practically every cautionary tale about greed ever written. During the 1990s, his brokerage firm, Stratton Oakmont, took Wall Street by storm. The company attracted young brokers desperate to get rich, generated enormous commissions, and turned Belfort into one of the most notorious financiers in America.

During his heyday, Belfort lived like a rock star. He threw outrageous parties, abused massive quantities of drugs, bought mansions and exotic cars, and surrounded himself with people willing to do almost anything to keep the money flowing.

Unfortunately, when someone's life looks too good to be true, it often is. The illegal business practices that fueled Belfort's meteoric rise were eventually exposed, and his empire collapsed nearly as quickly as it had been built. More than 1,500 investors suffered severe financial losses. Belfort went to prison, agreed to inform on his former colleagues, and was ordered to pay $110.4 million in restitution.

You might assume that such a spectacular downfall would make someone disappear forever. Instead, Belfort managed to transform his infamy into a second career through two bestselling memoirs, motivational speaking engagements, and the 2013 movie "The Wolf of Wall Street," starring Leonardo DiCaprio and directed by Martin Scorsese.

But who is Jordan Belfort? And what exactly did he do to inspire so much notoriety? This is the ugly true story of his incredible rise and shocking fall.

Jordan Belfort Net Worth / ROBIN VAN LONKHUIJSEN/AFP/Getty Images

Early Life and First Business Ventures

Jordan Belfort was born in the Bronx, New York, on July 9, 1962, and was raised in Bayside, Queens. He showed an entrepreneurial streak while still young. During the summer between high school and college, Belfort and a childhood friend reportedly made approximately $20,000 selling Italian ice at the beach.

Belfort graduated from American University with a degree in biology and briefly enrolled in dental school. He abandoned that plan almost immediately and spent the next several years launching businesses, including a meat and seafood company that delivered products door-to-door.

The operation grew quickly, but it ultimately failed. Belfort filed for bankruptcy at the age of 25 and decided it might be better to work for someone else.

Breaking Into Wall Street

Belfort found work as a trainee stockbroker at L.F. Rothschild. It was his first significant exposure to the securities industry, and after seeing how much money successful brokers earned, he quickly decided to change the course of his life.

He was laid off following the 1987 Black Monday stock market crash but spent the next several years working at smaller brokerage firms. Belfort studied the industry, sharpened his sales pitches, and learned that selling inexpensive, lightly traded stocks could generate enormous commissions.

In 1989, he decided to branch out on his own.

The Rise of Stratton Oakmont

Belfort and business partner Danny Porush built Stratton Oakmont into a massive Long Island brokerage firm. Belfort placed childhood friends and relatives in positions of authority, including hiring his father as the company's chief financial officer. This created a close-knit group of senior managers who were loyal to Belfort and willing to protect the firm's secrets.

Stratton Oakmont eventually employed more than 1,000 brokers. Many were young, inexperienced, and obsessed with getting rich. Belfort trained them to use aggressive, tightly scripted telephone pitches designed to keep potential customers on the line until they agreed to invest.

The firm's unofficial motto was:

"Don't hang up until the client either buys or dies."

If you have seen "Boiler Room," starring Vin Diesel and Ben Affleck, you have a general idea of how this environment operated. The movie was partly inspired by Stratton Oakmont and the boiler-room brokerage culture Belfort helped make infamous.

How the Pump-and-Dump Scheme Worked

Stratton Oakmont specialized in what is known as a "pump-and-dump" scheme.

The firm would acquire large quantities of inexpensive shares in small, obscure companies. Its brokers would then aggressively promote those stocks to clients, often using exaggerated or misleading claims to create demand.

Customers were pressured to invest as much as possible. Mortgage your house. Cash in your retirement account. Empty your child's college fund. Buy before the opportunity disappears.

The sudden surge in buying activity would drive up the stock price. Once the price had been artificially inflated, Belfort and his associates would secretly sell their own holdings for enormous profits.

After Stratton stopped promoting the stock, its price would often collapse. The brokers had already collected their commissions, and Belfort had already cashed out. The customers were left holding nearly worthless shares.

From the outside, however, Stratton Oakmont appeared to be an extraordinarily successful brokerage firm. The company participated in dozens of public stock offerings, generated huge amounts of revenue, and attracted a steady stream of young employees eager to become millionaires.

Drugs, Parties and Offshore Cash

The money fueled a corporate culture built around excess. Stratton Oakmont employees spent lavishly on cars, homes, watches, drugs, and prostitutes. Drug use was rampant, and Belfort developed a serious addiction to Quaaludes.

Belfort crashed a helicopter, wrecked cars, and sank a luxury yacht originally built for fashion designer Coco Chanel. The yacht went down off the coast of Sardinia after Belfort insisted on sailing into dangerous weather despite the captain's warnings.

At the same time, Belfort was moving money into offshore accounts. Friends and relatives were recruited to transport cash to Switzerland, sometimes carrying the money strapped to their bodies.

Belfort later summarized his philosophy during this period with a remarkably blunt observation:

"It's easier to get rich quick when you don't follow the rules."

The Investigation and Collapse

That willingness to ignore the rules eventually caused Belfort's downfall.

The U.S. Securities and Exchange Commission began investigating Stratton Oakmont in the early 1990s. In 1994, Belfort agreed to leave the securities industry as part of a civil settlement. In December 1996, the National Association of Securities Dealers expelled Stratton Oakmont, effectively forcing the firm out of business.

The FBI also began investigating Belfort for securities fraud and money laundering. Members of his inner circle started cooperating with authorities, including associates familiar with his Swiss accounts.

Meanwhile, Belfort's drug use continued to spiral. His marriage to model Nadine Caridi became increasingly volatile. During one drug-fueled incident, Belfort allegedly kicked Caridi down a staircase. During another, he attempted to drive away with their young daughter and crashed his car through the garage door.

Belfort eventually entered rehabilitation. In 1998, federal authorities arrested him.

Conviction, Cooperation and Prison

Belfort pleaded guilty to securities fraud and money laundering in 1999. Prosecutors alleged that Stratton Oakmont's schemes caused approximately $200 million in losses to more than 1,500 investors.

Facing a potentially lengthy prison sentence, Belfort agreed to cooperate with federal authorities. He wore a recording device, gathered evidence, and informed on former colleagues and business associates.

In 2003, Belfort was sentenced to four years in federal prison and ordered to pay $110.4 million in restitution to 1,513 victims. His cooperation helped reduce the time he actually served to 22 months.

While incarcerated, Belfort shared quarters with Tommy Chong of "Cheech & Chong." Chong reportedly encouraged him to write down his outrageous stories.

Belfort was released from prison in 2006.

Inventing the "Wolf of Wall Street"

A crucial fact to understand about Jordan Belfort's "Wolf of Wall Street" nickname is that he apparently gave it to himself.

Belfort was not widely known by that name during his financial heyday. He created the persona while writing his memoir after his conviction.

The 2013 film portrays the nickname as though it originated with a Forbes article about Belfort published in 1991. That did not happen.

Forbes did publish a story about Belfort, but the article was titled:

"Steaks, Stocks – What's the Difference?"

The title referred to Belfort's previous career selling steaks and seafood door-to-door. The article described him as a "twisted Robin Hood who takes from the rich and gives to himself and his merry band of brokers." It also characterized Stratton Oakmont's business model as "pushing dicey stocks on gullible investors."

At no point did the article call Jordan Belfort the "Wolf of Wall Street." He appears to have invented the nickname out of thin air to lionize himself and market his memoir.

Books and Hollywood Reinvention

Belfort published "The Wolf of Wall Street" in 2007. His second memoir, "Catching the Wolf of Wall Street," followed in 2009 and focused on his arrest, cooperation with authorities, and life after the collapse of Stratton Oakmont.

Hollywood soon transformed those stories into a major motion picture. In addition to Leonardo DiCaprio, "The Wolf of Wall Street" starred Jonah Hill, Margot Robbie, Matthew McConaughey, Rob Reiner, and Jon Favreau.

The film turned Belfort into a celebrity and introduced millions of people to an entertaining, heavily dramatized version of his crimes and lifestyle.

Restitution Controversy

Belfort's post-prison success did not impress the government or the investors who lost money through Stratton Oakmont.

By early 2014, approximately $11.6 million had reportedly been credited toward his $110.4 million restitution order. Much of that amount came from property and assets relinquished in connection with his criminal case rather than money earned through his post-prison career.

Belfort generated income from book royalties, motivational speaking engagements, and the sale of his story to Hollywood. His repayment obligations nevertheless remained the subject of continuing disputes with federal prosecutors.

The controversy created an uncomfortable contrast: Belfort was building a profitable new career by telling stories about the same crimes that had financially devastated more than 1,500 people.

The Second Act

After prison, Belfort moved to California to be closer to his children and launched a sales-training business built around his "Straight Line" system. He began traveling internationally as a motivational speaker, teaching sales techniques, entrepreneurship, and what he described as ethical persuasion.

Belfort insisted that he was reformed and that his methods could be used legally. A portion of the business community embraced the kinder, gentler "Wolf of Wall Street." Others found it difficult to accept financial and ethical guidance from a convicted fraudster who still owed an enormous amount of restitution.

So what is the lesson of Jordan Belfort's story?

The simplest answer may be that there are no reliable shortcuts to lasting success. Belfort became phenomenally wealthy by manipulating investors and ignoring the law, but his empire eventually collapsed. He lost his firm, his fortune, his family, and his freedom.

Remarkably, he then found another way to profit from the story.

Jordan Belfort's rise and fall is not merely a tale about drugs, yachts, parties, and Wall Street excess. It is a warning about what can happen when charisma, greed, and salesmanship operate without any meaningful regard for ethics—or for the people left paying the price.