Re: 6/18/02 - [Stratton Oakmont/Elgindy] Newsday: A Convicted Broker's New Job; Stratton Oakmont figure now sells mortgages
A Convicted Broker's New Job
Stratton Oakmont figure now sells mortgages
[picture]
Jordan Belfort in 1984
By Susan Harrigan
STAFF WRITER
June 18, 2002
Jordan Belfort, who pleaded guilty to money-laundering and securities fraud connected with Stratton Oakmont, one of the most infamous small-stock "boiler rooms" in history, is selling mortgages to the public at a registered mortgage brokerage on Long Island.
Belfort is working as an independent contractor selling mortgages for Jericho Mortgage Associates Inc., a small Jericho-based mortgage brokerage. Robert LoRusso, the brokerage's owner, said "he cleared it with the state" before he hired Belfort.
But people who've been convicted of, or pleaded guilty to, such felonies aren't allowed to work at mortgage brokerages, and are fired if their employment there is discovered, according to Barbara Kent, director of consumer affairs and financial products for the New York State banking department, which regulates mortgage brokers.
Kent said that sometimes the department complies with law-enforcement officers' requests that felons stay on the job to collect evidence. But she says there's no record that federal prosecutors made any such request for Belfort.
Kent said there is no record of any request from LoRusso to allow Belfort's hiring. She said, however, she "couldn't guarantee" that someone who was inexperienced hadn't given LoRusso a "wrong answer" during informal contacts. LoRusso said it was his impression that as long as he agreed to supervise Belfort carefully, "I could hire a mass murderer for all they cared."
Belfort, one of the kingpins of now-closed Stratton Oakmont in Lake Success, which used high-pressure phone-sale tactics to peddle risky, overpriced stocks the brokers had a stake in, awaits sentencing while he serves as a cooperating witness in a number of securities- fraud cases brought by the U.S. attorney for the Eastern District.
Eric Corngold, head of the business and securities fraud unit for the U.S. attorney's office in Brooklyn, said Belfort had disclosed his employment to the U.S. attorney's office and testified about it at public trials. "He told us he disclosed to his employer who he was, and it remains our understanding that he's complied with every legal obligation," Corngold said.
But Joel M. Cohen, a former Brooklyn federal prosecutor who helped develop the cases against Belfort and his former partner Daniel Porush, said Belfort's employment in a position dealing with thousands of consumer dollars "raises an interesting issue" in light of the fact that Belfort has previously violated his cooperation agreement with the government. After he pleaded guilty several years ago, Belfort agreed to secretly tape his conversations with others to develop evidence against them, but held up a sign saying "don't incriminate yourself" when he was asked to tape an old friend. Belfort also violated the terms of his bail and house arrest in 1999 by flying to a casino in Atlantic City to gamble.
"He has a debt to pay to society, and his wife, and you can't expect him to just become a carpenter," Cohen said of Belfort, who is helping support small children and faces huge fines and restitution. "On the other hand, it raises the legitimate issue, is this the industry he should be in?" Cohen said "there are many who would question the government's willingness to allow Jordan Belfort to remain on the street after he had violated the terms of his release in the way he did."
Belfort has expressed remorse for the defrauding of thousands of investors, and he helped prosecutors make cases against accomplices including shoe designer Steve Madden, who pleaded guilty to helping Stratton with its schemes and will go to jail for securities fraud and money-laundering this August.
Belfort said yesterday that he is "doing a clean, honest job" at Jericho Mortgage Associates, and just trying to make a living. "It's nice, for a change, to be in a business that is helping people," he said.
Gregory O'Connell, Belfort's lawyer, said Belfort's conduct is "closely scrutinized by several government officials," as well as his employer, and no complaints about his performance had been made to date. LoRusso said Belfort receives so many referrals from contented customers that he no longer has to go door-to-door soliciting business.
LoRusso said he has been Belfort's friend for more than a dozen years. Jericho Mortgage, founded in 1987, doesn't have a record of infractions except for a $500 fine in 1998 for dealing with an unregistered mortgage broker, which it paid without admitting or denying wrongdoing.
In 1997, Amr Elgindy, then the owner of a Texas- based securities firm, Key West Securities Inc., in court papers accused Belfort, who was barred from the securities business by regulators, of using LoRusso as a front to buy a secret interest in his firm.
Belfort and LoRusso denied Elgindy's accusation, and LoRusso sued successfully to end his investment in Elgindy's company. LoRusso said yesterday that he had only wanted to participate in Elgindy's firm as an investor at a time when the mortgage brokerage business was slow.
Elgindy, who is known as Tony, was charged by federal prosecutors last month with running a stock manipulation ring that allegedly included two FBI agents who tipped him to criminal investigations of companies. He pleaded not guilty.
Copyright © 2002, Newsday, Inc.
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