Moviegoers cringed at the many scenes of debauchery and dishonesty in “The Wolf of Wall Street,” a film based on the real-life shenanigans of the boiler room kingpin Jordan Belfort.
But that fictionalized account left out some of the intriguing details of Mr. Belfort’s crimes, according to a group of men who had front-row seats to the real thing.
“Was the movie accurate? It played down the sex and drugs,” Ira L. Sorkin, a partner at Lowenstein Sandler who once represented Mr. Belfort’s Long Island brokerage firm, Stratton Oakmont, said at a law school event on Wednesday.
Getting more serious, Mr. Sorkin, a well-known lawyer who more recently defended Bernard L. Madoff, said: “The movie did not discuss two things: One, how they went about doing it, and, of course, the suffering of the victims.”
Mr. Sorkin joined two other players from that true financial drama at the Benjamin N. Cardozo School of Law in Manhattan on Wednesday evening, for a panel discussion on the facts behind Martin Scorsese’s film. The discussion, before an audience of lawyers and scholars, was moderated by Robert S. Khuzami, a partner at Kirkland & Ellis who until last year ran the enforcement unit of the Securities and Exchange Commission.
While Mr. Sorkin offered insight into the inner workings of Stratton Oakmont, his interlocutors – Joel M. Cohen, a partner at Gibson, Dunn & Crutcher who once prosecuted Mr. Belfort, and Gregory A. Coleman, a special agent at the F.B.I. — told what it was like bringing the stock manipulators to justice in the 1990s.
Notably absent from Wednesday’s reunion? Mr. Belfort himself.
“At the end of the day, it was all about pretty much blatant fraud,” Mr. Cohen said. “It was about pushing stock to unsuspecting investors with all kinds of hard-sell tactics to get people to buy stuff that wasn’t suitable for them.”
“I viewed the people at Stratton Oakmont as being inside a suit of armor,” Mr. Coleman said. “I’m a parasite that wants to get inside that suit of armor and infect them.”
Mr. Belfort and his employees ran a classic pump-and-dump scheme, Mr. Sorkin said. This might involve, for example, selling stock in an offering at $5 a share, before buying it all back at $6, allowing the brokers to control the supply of shares.
Then, Mr. Sorkin said, the sales force would pitch customers on the stock, helping drive up the price and creating an economic gain for the company insiders. After the price rose to a certain level, the brokers would dump their holdings on the market, causing the stock to collapse.
“I think the movie is wrong, also. The young brokers knew what was going on,” Mr. Sorkin said. “They surely did know what was going on. There were scripts.”
“Jordan was exceptional at that point,” he added. “He was able to gather in the sales force and promise them riches beyond belief.”
Later on, however, Mr. Belfort began using drugs more frequently. Around late 1994, Mr. Sorkin said, “they were so drugged up, I’m not sure they understood anything.”
Mr. Coleman, the F.B.I. agent, said the big break in the case came when Mr. Belfort set up offshore corporations and bank accounts to smuggle cash out of the United States. That allowed the government to go after him for money laundering, gaining leverage in the longer-running investigation into the pump-and-dump scheme.
“What made it easier for us was the mere issuance of the stock to the offshore corporation was the fraud,” Mr. Coleman said. “Every single transaction that occurred from that point forward was a money-laundering violation.”
Getting the important players to cooperate, though, was a challenge. After Mr. Belfort and his associate, Daniel Porush, were arrested, prosecutors threatened to indict Mr. Belfort’s wife, Nadine, Mr. Cohen recalled.
In hindsight, that move seems a tad unorthodox, Mr. Cohen said.
“I think that’s outrageous behavior, and no prosecutor should ever do that now,” Mr. Cohen, who now defends clients of his own, said in jest. “But it did tend to lubricate his decision to cooperate rather quickly.”
Mr. Belfort’s cooperation helped him avoid a lengthy prison sentence. Another factor that reduced his jail time was that he was considered a drug addict, Mr. Sorkin said. A judge sentenced Mr. Belfort to four years in prison, though he ended up serving only 22 months.
After writing a memoir and signing a movie deal, Mr. Belfort now has the distinction of being portrayed on the big screen by Leonardo DiCaprio.
That is “an interesting way to end your career,” Preet Bharara, the United States attorney in Manhattan, said in a speech to close Wednesday’s event. “Do the bad guys always win?”