How to Earn $49 Million in One Year

            The year I turned 26, I earned 49 million dollars (P2.25 billion) which really pissed me off because it was three shy of a million a week.  Thus said Leonardo di Caprio playing real-life Wall Street stockbroker and convicted financial scammer Jordan Belfort in the film, “The Wolf of Wall Street.”  

Making money by the truckloads
(photo from the internet)

            Throughout the nearly three hours of debauchery depicted in the movie, the audience was treated to the underhanded tactics that Belfort and his crew employed to make millions of dollars. They “pumped and dumped” stocks, meaning they bought chunks of cheap penny stocks, hyped them and pressured unwitting customers to buy, thereby driving up the price, at which point they dumped the stocks, resulting in a price collapse and ultimately leaving their customers with virtually worthless stocks.  Another way Belfort enriched himself was by manipulating  the initial public offerings of firms like Steve Madden Corp. And while doing all of this, Belfort and his cohorts sought “executive stress relief” by way of sex orgies and drugs and other extreme behavior.  They inaugurated a viewing elevator  by having a female sales associate do a blowjob on a client in full view of everybody else.

Is all of this legal? Absolutely not. Leo as Belfort also said.

            The film is glossy, boasting a stellar cast. It oozed with manic energy that engaged the viewers. But at least two things disturbed me about the movie. It was not the non-stop gratuitous sex nor the “F” word being said an average of 2.8 times per minute, though some editing could have been done to tighten the movie. It was that the victims were virtually ignored,  with  the emphasis on all the carousing,  and on Belfort  getting off too easily. In a three-hour movie, not even one single frame was devoted to the victims of the scams, some of who were said to be blue collar workers such as garbage men,  and postal employees.

            A number of critics have likened di Caprio’s Belfort to the despicable slave owner Calvin Candie that the actor played in "Django Unchained". But the suffering victims of   Django Untamed were shown and Candie did suffer as well at the hands of an avenging slave.

In the case of the Wolf, he was shown making a deal with the Feds to rat out his cohorts for a reduced sentence of four years instead of the thirty years he would have gotten if he went on trial. And towards the end of the movie, he was introduced as “the world’s greatest sales trainer” by the real Belfort himself, playing a cameo role. Not bad for someone who allegedly scammed some $150 million from an assortment of people.

            In this regard, the film fails to be the cautionary tale it was touted to be, and instead may be seen as glorifying the excesses and the behavior that made them possible.  The heretofore virtually unknown Belfort was in practically all of the scenes. His having been portrayed  by the charming Mr. Di Caprio,  may even make his abhorrent behavior seem less distasteful.

Money coming out of their ears and other places?
(photo from the internet)

            Dr. Albert Bandura, one of the most influential psychologists of all time said, “…most human behavior is learned observationally through modeling: from observing others one forms an idea of how new behaviors are performed, and on later occasions this coded information serves as a guide for action.” (Social Learning Theory, 1977)

            Thus, people can learn that they can get away with something merely by watching others get away with it.  So if scammers get away with scams, are punished lightly, or can make deals by implicating their cronies, then others will also try to get away with such behavior. Interestingly, the real Belfort said in interviews that he idolized the fictional character Gordon Gekko in the film “Wall Street”. The film was released in 1987, a year before Belfort made the aforementioned $49 million that pissed him off. Compared to Belfort however, Gekko who thrived on insider trading and in acquisitions, would seem like a character from a Hallmark movie.

            Five years after Belfort’s 2003 conviction, the United States went into a financial crisis that exploded into a global crisis.  This was traced to the subprime debacle and the shenanigans in Wall Street. According to news reports, hardly anyone had been jailed for that even if it bankrupted not only individuals, and corporations, but even a whole country (Iceland).

            This sad state of affairs is also observed in the Philippines. There have been a number of bank closures where fraud was suspected and charges brought against erring bank owners and officers. Only a handful had been convicted so far.

Similarly, in the recent past, there were a number of high profile financial scams and an undetermined number of minor ones.  There was the Franc Swiss internet-based scam which reportedly duped investors of $150 million (P6.75 billion). Lately, there surfaced Aman Futures Trading Group which reportedly scammed P12 billion from 12,000 people including a town mayor by promising 50% to 80% return on investment in twenty days. The perpetrators of both scams are yet to be incarcerated.

            Among the highly publicized cases, one perpetrator was jailed.  Rose Baladjao of Multitel, who was convicted for defrauding investors some P20 billion was sentenced to life, but her sentence was reduced to twenty years in 2012. One of her cohorts , Cyrus Yao Hao even did a copycat with his Royal Mancehster Five which reportedly bilked investors of P2 billion.

            These scams recur despite warnings from government agencies like the SEC, the BSP, and the PDIC.  This is because of unmitigated greed all around. Greed of the perpetrators and investors, who want instant returns and believe in get-rich-quick schemes.

            Unless the punishment is made to fit the crime, and the people are educated on risky behavior, this recurrence will continue.

            Meanwhile, I hope those who watch “The Wolf of Wall Street” will find more affinity with the diligent FBI agent played by Kyle Chandler who resists bribes and does the right thing, rather than with Belfort who was brought to life with the oily charm of Leo di Caprio.

(photo from the internet)

Having said that, I still hope Leo wins the Oscar. 

This article was published in the Business Mirror, January 28, 2014