The FBI agent who arrested the infamous “Wolf of Wall Street” regaled the audience of an anti-money laundering conference in Cayman last week with his tales of tracking and bringing down Jordan Belfort.
“This guy Belfort is making millions of dollars a year and he has a tremendous amount of power because of his money and so he is very arrogant,” said special agent Gregory Coleman, recalling Belfont’s heady days of living the high life on Wall Street.
Mr. Coleman was speaking during last week’s Global Compliance Solutions AML/Compliance and Financial Crime Conference at the Westin resort.
Moviegoers may remember the 2013 film, starring Leonardo DiCaprio as Belfort, a New York boiler room kingpin who made millions by aggressively selling penny stocks in questionable companies to unwitting investors in the 1990s. Award-winning shoe designer Steve Madden went to prison for securities fraud and money laundering after investigators found out his company’s initial public offering had been launched through the Belfort’s firm, Stratton Oakmont.
One of the scenes in the film that highlights special agent Mr. Coleman, who is played by Kyle Chandler, is set on Belfort’s 175-foot mega-yacht, which once belonged to French fashion designer Coco Chanel.
“So what Belfort decides to do is bribe me, he wants to corrupt me to make the investigation go away because he knows I’m tracking him. Now what I like about Belfort is, he calls me special agent OCD – obsessive compulsive disorder,” Mr. Coleman told conference guests on Thursday.
While approaching the “mini-ship” with another FBI agent, Mr. Coleman found the scene to be as lavish as portrayed in the Hollywood production.
“I go to the boat and I go with another agent and when I get there, Belfort has a big wad of cash, thousands of dollars in cash, he’s got a spread of lobster and shrimp, top-shelf alcohol, all the best things money can buy, and he’s got two really good looking prostitutes.”
Belfort soon realizes the agents are not interested in the bribe.
“So I sit down with him and it becomes pretty clear to him about midway through that I’m not going to take the bait. He tells me to get off his boat, and I’m walking off the boat, he picks up two lobsters and throws them at me ….”
While the helicopter-crashing and yacht-sinking film, which was based on Belfort’s memoirs, may have seemed over the top to moviegoers, some scenes were accurate, according to Mr. Coleman, who spent six years investigating Belfort.
“What I learned about Hollywood in my process was this: Some parts of the movie are absolutely true and correct. I mean, that is the way it happened. Some things are completely made up, never existed, and some things are sort of in the middle,” said Mr. Coleman.
In 1989, Belfort founded brokerage firm Stratton Oakmont, which functioned as a boiler room with more than 1,000 stockbrokers who made millions by marketing penny stocks and defrauding investors with stock sales.
Mr. Coleman said although the company was just a tiny boiler room, Belfort spent thousands of dollars on image to create “the air of legitimacy,” which fooled many investors.
“At his firm, he manipulated a particular type of securities transaction called initial public offerings. Basically, they took small undiscovered companies, raised millions of dollars for them, and sold their shares to the public.”
Mr. Coleman said when working a securities fraud or manipulation case, the main concept an investigator needs to understand is supply and demand.
Belfort got rich by getting his brokers to push stocks on unsuspecting clients, which inflated the stocks’ prices, and then the company sold its own holdings in the stocks to turn a great profit.
When investigating money laundering cases, Mr. Coleman told the audience at the anti-money laundering conference to “follow the bank accounts.” Mr. Coleman, whose specialty is money laundering, said Belfort was “cooked” once he opened an offshore bank account in Geneva, Switzerland, because he left a money trail.
Most U.S. criminals laundering money used offshore bank accounts to hold their money, according to Mr. Coleman.
“I did two treaty requests to the Caymans in other cases, and I’ve gotten records from corporate service providers in the Cayman Islands on two occasions in the late 1990s,” he said.
He believes criminals may still be using the Cayman Islands to launder their money, but no more so than in other overseas jurisdictions.
“I don’t paint people in the Cayman Islands with a broad brush. They’re no different from the people in Switzerland, British Virgin Islands, Guernsey and the Isle of Man, [there are] good firms and bad firms. I follow the money, wherever the money takes me.
“There’s a difference between tax evasion and tax avoidance,” he said, “We incorporate thousands of companies per year out of Delaware in the U.S.,” he said, referring to a state where many businesses incorporate to avoid higher taxes in other states.
Today, Belfort, now 52, is now a motivational speaker, who delivered a keynote address at the Cayman Captive conference last year. After serving 22 months in prison for fraud and money laundering, he lives with his fiancée in a luxurious oceanfront home in California.
Mr. Coleman spent 25 years in the FBI’s securities fraud squad in New York City, and is planning to retire on in January next year. Later, he plans to open an anti-money laundering training consultant firm.