The Wolf of Wall Street Page 8

  In unison, they nodded.

  Sitting across from me, in an overstuffed oxblood leather club chair, was none other than Danny Porush. At this particular moment he seemed to be suffering no ill effects from his latest fishcapade and was now trying to sell me on his latest brainstorm, which was: to pay a midget five grand to come into the boardroom and be tossed around by brokers, in what would certainly be the first Midget Tossing Competition in Long Island history. And as odd as the whole thing sounded, I couldn’t help but be somewhat intrigued.

  Danny shrugged his shoulders. “It’s not as crazy as it sounds. I mean, it’s not like we’re gonna toss the little bastard in any odd direction. The way I see it, we’d line up wrestling mats at the front of the boardroom and give the top-five brokers on the Madden deal two tosses each. We’d paint a bull’s-eye at one end of the mat and then put down some Velcro so the little bastard sticks. Then we pick a few of the hot sales assistants to hold up signs—like they’re judges at a diving competition. They can score based on throwing style, distance, degree of difficulty, all that sort of shit.”

  I shook my head in disbelief. “Where are you gonna find a midget on such short notice?” I looked over at Andy Greene, the room’s third occupant. “What’s your opinion on this matter? You’re the firm’s lawyer; you must have something to say…no?”

  Andy nodded sagely, as if he were measuring the appropriate legal response. He was an old and trusted friend, who’d recently been promoted to head of Stratton’s Corporate Finance Department. It was Andy’s job to sift through the dozens of business plans Stratton received each day and decide which, if any, were worth passing along to me. In essence, the Corporate Finance Department served as a manufacturing plant—providing finished goods in the form of shares and warrants in initial public offerings, or new issues, as the phrase went on Wall Street.

  Andy was wearing the typical Stratton uniform—consisting of an immaculate Gilberto suit, white shirt, silk necktie, and, in his case, the worst toupee this side of the Iron Curtain. At this particular moment, it looked like someone had taken a withered donkey’s tail and slapped it onto his egg-shaped Jewish skull, poured shellac over it, stuck a cereal bowl over the shellac, and then placed a twenty-pound plate of depleted uranium over the cereal bowl and let it sit for a while. It was for this very reason that Andy’s official Stratton nickname was Wigwam.

  “Well,” said Wigwam, “in terms of the insurance issues here, if we get a signed waiver from the midget, along with some sort of hold-harmless agreement, then I don’t think we have any liability if the midget were to break his neck. But we would need to take every precaution that a reasonable man would take, which is clearly the legal requirement in a situation like…”

  Jesus! I wasn’t looking for a fucking legal analysis of this whole midget-tossing business—I just wanted to know if Wigwam thought it was good for broker morale! So I tuned out, keeping one eye on the green-diode numbers and letters that were skidding across the computer monitors on either side of my desk and the other eye on the floor-to-ceiling plate-glass window that looked out into the boardroom.

  Wigwam and I went all the way back to grade school. Back then he had this terrific head of the finest blond hair you’ve ever seen, as fine as corn silk, in fact. But, alas, by his seventeenth birthday his wonderful head of hair was a distant memory, barely thick enough for the dreaded male comb-over.

  Faced with the impending doom of being bald as an eagle while still in high school, Andy decided to lock himself in his basement, smoke five thousand joints of cheap Mexican reefer, play video games, eat frozen Ellio’s pizza for breakfast, lunch, and dinner, and wait for Mother Nature, the bitch that she was, to play out her cruel joke on him.

  He emerged from his basement three years later, a fifty-year-old ornery Jew with a few strands of hair, a prodigious potbelly, and a newfound personality that was a cross between the humdrum Eeyore, from Winnie the Pooh, and Henny Penny, who thought the sky was falling. Along the way, Andy managed to get caught cheating on his SATs, which forced him into exile to the little town of Fredonia in upstate New York, where students freeze to death in summer, at the local educational institution, Fredonia State University. But he did manage to negotiate his way through the rigorous academic demands of that fine institution and graduate five and a half years later—not one ounce smarter, yet a good deal frumpier. From there he finagled his way into some Mickey Mouse law school in Southern California—earning a diploma that held about as much legal weight as one you’d receive from a Cracker Jack box.

  But, of course, at the investment-banking firm of Stratton Oakmont, mere trivialities such as these didn’t mean a lot. It was all about personal relationships; that and loyalty. So when Andrew Todd Greene, alias Wigwam, caught wind of the dramatic success that had rained down on his childhood friend, he followed in the footsteps of the rest of my childhood friends and sought me out, swore undying loyalty to me, and hopped on the gravy train. That was a little over a year ago. Since then, in typical Stratton fashion, he’d undermined and backstabbed and manipulated and cajoled and squeezed out anyone who stood in his way, until he Peter-Principled himself all the way to the very top of the Stratton food chain.

  Having had no experience in the subtle art of Stratton-style corporate finance—identifying fledgling growth companies so desperate for money that they were willing to sell a significant chunk of their inside ownership to me before I financed them—I was still in the process of training him. And given the fact that Wigwam possessed a legal diploma that I wouldn’t use to wipe my daughter’s perfect little bottom, I started him off with a base salary of $500,000.

  “…so does that make sense to you?” asked Wigwam.

  Suddenly I realized he was asking me a question, but other than it having something to do with tossing the midget, I hadn’t the slightest idea what the fuck he was talking about. So I ignored him and turned to Danny and asked, “Where are you gonna find a midget?”

  He shrugged. “I’m not really sure, but if you give me the green light my first call is gonna be to Ringling Bros. Circus.”

  “Or maybe to the World Wrestling Federation,” added my trusted attorney.

  Jesus H. Christ! I thought. I was up to my ears in more nuts than a fruitcake! I took a deep breath and said, “Listen, guys, fucking around with midgets ain’t no joke. Pound for pound they’re stronger than grizzly bears, and, if you want to know the truth, they happen to scare the living shit out of me. So before I approve this midget-tossing business, you need to find me a game warden who can rein in the little critter if he should go off the deep end. Then we’re gonna need some tranq darts, a pair a handcuffs, a can of Mace—”

  Wigwam chimed in: “A straitjacket—”

  Danny added: “An electric cattle prod—”

  “Exactly,” I said, with a chuckle. “And let’s get a couple of vials of saltpeter, just on general principles. After all, the bastard might pop a hard-on and go after some of the sales assistants. They’re horny, the wee folk, and they can fuck like jackrabbits.”

  We all broke up over that. I said, “In all seriousness, though, if this gets out to the press there’s gonna be hell to pay.”

  Danny shrugged. “I don’t know, I think we can put a positive spin on the whole thing. I mean, think about it for a second: How many job opportunities are there for midgets? It’ll be like we’re giving back to the less fortunate.” He shrugged again. “Either way, no one’ll give a shit.”

  Well, he was right about that. The truth was that no one could care less about the articles anymore. Every one of them always had the same negative slant—that the Strattonites were wild renegades, headed by me, a precocious young banker, who’d created my own self-contained universe out on Long Island, where normal behavior no longer applied. In the eyes of the press, Stratton and I had become inexorably linked, like Siamese twins. Even when I’d donated money to a foundation for abused children, they managed to find something wrong with it—writing a single
paragraph about my generosity and three or four pages about everything else.

  The press onslaught had started in 1991, when an insolent reporter from Forbes magazine, Roula Khalaf, coined me as a twisted version of Robin Hood, who robs from the rich and gives to himself and his merry band of brokers. She deserved an A for cleverness, of course. And, of course, I was a bit taken aback by it, at least at first, until I came to the conclusion that the article was actually a compliment. After all, how many twenty-eight-year-olds got their own personal exposé in Forbes magazine? And there was no denying that all this Robin Hood business emphasized my generous nature! After the article hit, I had a fresh wave of recruits lining up at my door.

  Yes, it was truly ironic that despite working for a guy who’d been accused of everything but the Lindbergh kidnapping, the Strattonites couldn’t have been prouder. They were running around the boardroom chanting, “We’re your merry band! We’re your merry band!” Some of them came into the office dressed in tights; others wore fancy berets at jaunty angles. Someone came up with the inspired notion of deflowering a virgin—for the simple medievalness of it—but after a painstaking search one couldn’t be found, at least not in the boardroom.

  So, yes, Danny was right. No one cared about the articles. But midget-tossing? I had no time for it right now. I still had serious issues to resolve with the Steve Madden underwriting, and I still had to contend with my father, who was lurking close—holding a half-million-dollar Am Ex bill in one hand and a cup of chilled Stoli, no doubt, in the other.

  I said to Wigwam, “Why don’t you go track down Madden, maybe offer him a few words of encouragement or something. Tell him to keep it short and sweet and not to go off on any tangents about how much he adores women’s shoes. They might lynch him over that.”

  “Consider it done,” said Wigwam, rising from his chair. “No shoe talk from the Cobbler.”

  Before he was even out the door, Danny was trashing his toupee. “What’s with that cheap fucking rug of his?” Danny muttered. “It looks like a dead fucking squirrel.”

  I shrugged. “I think it’s a Hair Club for Men special. He’s had the thing forever. Maybe it just needs to be dry-cleaned. Anyway, let’s get serious for a second: We still have the same issue with the Madden deal, and we’re out of time.”

  “I thought NASDAQ said they’d list it?” asked Danny.

  I shook my head. “They will, but they’ll only let us keep five percent of our stock; that’s it. The rest we have to divest to Steve before it starts trading. That means we have to sign the papers now, this morning! And it also means we have to trust Steve to do the right thing after the company goes public.” I compressed my lips and started shaking my head slowly. “I don’t know, Dan—I get this feeling he’s playing his own game of chess with us. I’m not sure if he’ll do the right thing if push comes to shove.”

  “You can trust him, JB. He’s a hundred percent loyal. I know the guy forever, and believe me—he knows the code of omerta as good as anyone.” Danny put his thumb and forefinger to his mouth and twisted it, as if to say, “He’ll keep his mouth shut nice and tight!” which is exactly what the Mafioso word omerta meant: silence. Then he said, “Anyway, after everything you’ve done for him, he’s not gonna screw you. He’s no fool, Steve, and he’s making so much money as my rathole that he won’t risk losing that.”

  Rathole was a Stratton code word for a nominee, a person who owned shares of stock on paper but was nothing more than a front man. There was nothing inherently illegal about being a nominee, as long as the appropriate taxes were being paid and the nominee arrangement didn’t violate any securities laws. In fact, the use of nominees was prevalent on Wall Street, with big players using them to build stock positions in a company without alerting other investors. And as long as you didn’t acquire more than five percent of any one company—at which point you’d be required to file a 13D disclosing your ownership and intentions—it was all perfectly legal.

  But the way we were using nominees—to secretly buy large blocks of Stratton new issues—violated so many securities laws that the SEC was trying to invent new ones to stop us. The problem was that the laws currently on the books had more holes than Swiss cheese. Of course, we weren’t the only ones on Wall Street taking advantage of this; in fact, everyone was. It was just that we were doing it with a bit more panache—and brazenness.

  I said to Danny, “I understand he’s your rathole, but controlling people with money isn’t as easy as it seems. Trust me on that. I’ve been doing it longer than you. It’s more about managing your rathole’s future expectations and less about what you’ve made him in the past. Yesterday’s profits are yesterday’s news, and, if anything, they work against you. People don’t like feeling indebted to someone, especially a close friend. So after a while your ratholes start resenting you. I’ve already lost a few friends that way. You will too; just give it some time. Anyway, the point I’m trying to make is that friendships bought with money don’t last very long, and the same goes with loyalty. That’s why old friends like Wigwam are priceless around here. You can’t buy loyalty like that; you know what I’m saying?”

  Danny nodded. “Yeah, and that’s what I have with Steve.”

  I nodded sadly. “Don’t get me wrong, I’m not trying to belittle your relationship with Steve. But we’re talking about eight million bucks here, on the low side. Depending on what happens with the company, it could be ten times that.” I shrugged. “Who really knows what’s gonna happen? I don’t have a crystal ball in my pocket—although I do have six Ludes there, and I’ll gladly split them with you after the market closes!” I raised my eyebrows three times in rapid succession.

  Danny smiled and gave me the thumbs-up sign. “I’m in like Flynn!”

  I nodded. “Anyway—in all seriousness—I will tell you that I got a really good feeling about this one. I think this company’s got a shot of hitting it out of the park. And if it does, we have two million shares. So do the math, pal: At a hundred bucks a share that’s two hundred million bucks. And that kind of money makes people do strange things. Not just Steve Madden.”

  Danny nodded and said, “I understand what you’re saying, and there’s no doubt that you’re the master at this stuff. But I’m telling you, Steve is loyal. The only problem is how to get that kind of money from him. He’s a slow payer as it is.”

  It was a valid point. One of the problems with ratholes was figuring out how to generate cash without raising any red flags. It was easier said than done, especially when the numbers went into the millions. “There are ways,” I said confidently. “We could work some of it out with some sort of consulting contract, but if the numbers go into the tens of millions we’ll have to consider doing something with our Swiss accounts, although I’d like to keep that under wraps as much as possible. Anyway, the way things are going we have bigger issues than just Steve Madden Shoes—like the fifteen other companies in the pipeline just like Madden. And if I’m having trouble trusting Steve, well, most of the people I hardly even know.”

  Danny said, “Just tell me what you want me to do with Steve and I’ll get it done. But I’m still telling you that you don’t need to worry about him. He sings your praises more than anyone.”

  I was well aware of how Steve sang my praises, perhaps too aware. The simple fact was that I had made an investment in his company and taken eighty-five percent in return, so what did he really owe me? In fact, unless he was the reincarnation of Mahatma Gandhi, he had to resent me—at least somewhat—for grabbing such a large percentage of his namesake.

  And there were other things about Steve that bothered me, things that I couldn’t share with Danny—namely, that Steve had made subtle intimations to me that he would prefer to deal directly with me than through Danny. And while I had no doubt that Steve was simply trying to earn brownie points with me, his strategy couldn’t have been more off the mark. What it proved was that Steve was cunning and manipulative—and, most importantly, in search of the Big
ger Better Deal. If somewhere down the line he found a Bigger Better Deal than me, all bets would be off.

  Right now Steve needed me. But it had little to do with Stratton raising him $7 million and even less to do with the approximately $3 million Danny had made him as his rathole. That was yesterday’s news. Going forward, my hold on Steve was based on my ability to control the price of his stock after it went public. As Steve Madden’s dominant market maker, virtually all the buying and selling would occur within the four walls of Stratton’s boardroom—which would afford me the opportunity to move the stock up and down as I saw fit. So if Steve didn’t play ball, I could literally crush the price of his stock until it was trading in pennies.

  It was this very ax, in fact, that hung over the heads of all Stratton Oakmont’s investment-banking clients. And I used it to ensure that they stayed loyal to the Stratton cause, which was: to issue me new shares, below the prevailing market price, which I could then sell at an enormous profit, using the power of the boardroom.

  Of course, I wasn’t the one who’d thought up this clever game of financial extortion. In fact, this very process was occurring at the most prestigious firms on Wall Street—firms like Merrill Lynch and Morgan Stanley and Dean Witter and Salomon Brothers and dozens of others—none of whom had the slightest compunction about beating a billion-dollar company over the head if they chose not to play ball with them.

  It was ironic, I thought, how America’s finest and supposedly most legitimate financial institutions had rigged the treasury market (Salomon Brothers); bankrupted Orange County, California (Merrill Lynch); and ripped off grandmas and grandpas to the tune of $300 million (Prudential-Bache). Yet they were all still in business—still thriving, in fact, under the protection of a WASPy umbrella.