Cyber Crime Analysis: Money Laundering and Securities Fraud

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George Washington University
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Most people never get a second chance, but for Jordan Belfort, this was not the case. He is known today as a motivational speaker, author, and stockbroker. He was made famous by the movie The Wolf of Wall Street in which he was portrayed by Leonardo DiCaprio. The list of crimes committed by Belford included money laundering and securities fraud. The estimated damage Belfort cost investors was tallied at more than two hundred million, but he spent less than two years in prison. Some have been rightfully arguing that white collar criminals like Belford are not punished enough for their crimes. Even though he committed these crimes in 1998, some of these crimes were committed by some firms on Wall Street before the 2009 crises. In this paper, I will provide an analysis of the money laundering and securities fraud by analyzing and summarizing the fact of Belford's case while considering the criminal justice perspective.

One of the best movies of 2013 was The Wolf of Wall Street in which Leonardo DiCaprio portrays the life of Jordan Belford. Belford started as a low level, entry level analyst at a Wall Street Brokerage firm in 1987 (Wulandari et al., 2013). As many young analysts on wall street, Belford was very ambitious and within three years while still in his 20s, he created his firm Stratton Oakmont in which he eventually employed more than one thousand people. The company bought very cheap stocks also known as penny stocks which secrets accounts, and sales those stocks to their clients. When the price of the stock rose, they would dump them into the market to make a lot of money for themselves and lose money for their investors. The company allegedly made their investors lose more than two hundred million dollars. Belford faced up to twenty-five years in prison, but because of his collaboration with the FBI, he spent less than two years in jail. Even though Belford was required to turn over 50 percent of whatever the company earns to their investors, unfortunately very little of the money was collected because victims did not figure in his book. Thousands of people have never been compensated.

The case of Belfort for a long time has raised controversy and questions without answers among the scholars and the legislatures. Being a fugitive of accountability, even after pleading guilty, the extent of sentence reduction fails to add up. Besides the agreement between the FBI and Belfort, it has never been understood why such a final decision was met, and in comparison to other minor cases, the duration of detention was as well drastically reduced. The concern and the basis of disputes inquire that; what are the factors that were considered to reduce the criminal offense by the FBI and the Judiciary? (Dervan, 2015). It is known and beyond question that all the government authorities involving criminal investigation departments, the police, and the FBI, should operate within the laws provided in the constitution without any level of favoritism. This conception is supported by the Constitution. Furthermore, in the process of making the final decision as per to the length in which he was to be detained, the court itself which is an independent organ resorted to a 22 months duration even after pleading guilty. It is, therefore, a concern that has failed to be justified in totality.

Belfort strategically organized through the belief of dump and pump, a principle that all the employees were aware of and applied effectively to maximize the profits. Furthermore, based on the Company motto which stated that the employees were not to surrender or hung up on the clients unless they were dead, asserts that the principal business motive was to make profits and not focus on the interests and the quality of services rendered to the clients (Salek, 2017). It is this conception of the company that is against the federal trade commission about the rights of the customers. The highlighted is only a section of the major offenses that Belfort committed against the public. Even after proper investigations and provision of clear evidence, it has never been understood why detention and level of punishment were significantly reduced.

Notably, the crimes considered against Belfort involved; exploitation of the public through the sales of cheap products at expensive prices, engagement in the illegal drug business and investment of illicit funds into the Swiss bank to prevent the government from identifying his wrongful acts (Frunza, 2015). All the crimes though from different aspects related to money were categorized as one, but it would have been prudent to distinguish them to determine the actual charge that Belfort was to pay.

Approach considered during the taxation process also raises concern regarding the various business activities taxed under Belfort. Logically during the tax process, it is expected that the amount imposed is proportional to the income that an institution receives and which is based on the available financial statements of the company. According to the articles reporting the crimes committed by Belfort, it is not mentioned anywhere that he ever defaulted in making tax payments. It is therefore suspicious and open ended on whether to suggest that some individuals from governmental organs related to taxation or auditing were aware of the process. The argument is that Belfort must have been paying taxes since no case was filed about this and also for payment to be made, business assets, revenue, and other essential factors must be put into consideration.

Furthermore, it would have been prudent for the Swiss company to assess the source and use of the money before agreeing to keep the funds (Straney, 2010). The primary business run by Belfort was never in a position to raise the amount equivalent to the savings, payment of the employees and settling of the other business expenses. It implies that an investigation should have been done from an early stage hence possible prevention of certain money losses especially by the majority of the company investors. The issue of taxation, therefore, is critical and should have been used as the basis for investigation and prevention of the money laundering escalations.

It is on record that, the initial amount that Belfort had gained from the company revenue enabled him to open two brokerage companies that of Parker and Monroe Securities. Even though the initial funds were able to finance the operations of the two created institutions, suspicions emanated since the amount of the overall revenue collected exceeded the expected and the real value. Also, if the figures were compared to the amount that the investors received, lots of questions seemed to emerge.

Constitutionally, and based on the laws governing the employees, it is never prudent to act unlawfully and perform illegal acts as mandated by the director or manager. The employees as well need to take a stand and separate themselves from the selfish deeds of the company owner. In the case of Belfort, it is noted that most of the people that he appointed to the top positions were friends and family members who could cover him in case he acted unlawfully. In the long run, after the emergence of suspicions and the onset of investigations from the FBI, some employees collaborated with the investigators and were at the forefront in giving information related to the illegal sources of money spent by Belfort in controlling some illegal activities. In many cases, therefore, it should never be the case that the top most positions in the company are only secured for relatives and close friends. Even though it is lawful and does not breach any employment acts, it raises questions since in a family, not all members are competent enough to occupy the key strategic positions in business.

Conceivably, the entire narration and deeds of Belfort question his morals. It is not ethical for the head of a company to take advantage of the input of the investors to maximize personal gains and on the other hand making them suffer losses (Straney, 2010).

Case Analysis

According to the investigations, reports by the FBI and the findings from the various judicial authorities, it is clear that Belfort committed a crime that deserved severe punishment compared to the four years sentence that was floated by the court. Money laundering is a criminal offense and which requires proper consideration with the aim of gathering information to determine the strength and impact that it has to the people especially the employees of the institution in the case of a company or any business corporation. In the case of Belfort, he pleaded guilty for illegal acquisition of money from the investments and finances by the investors (Wulandari et al., 2013). Furthermore, the profits obtained were later invested in other illegal business involving illegal drug selling, prostitution and other illegal money making activities which are totally against the rights of the people and the federal trade union. The diversity of the crimes is a clear indication of the fact that, the level of punishment which was to be served was unlawful, biased and full of favoritism. This aspect raised concerns and was therefore considered as an issue resulting to controversies among the various legislatures and judicial officials.

In consideration of the moral obligation, the FBI, concerned police officers and other investigation teams proved to be incompetent and unable to handle cases involving various prominent individuals. It was immoral and insensible for a court of law to reduce a sentence from a duration of 25yrs to 4yrs. It is questionable as to the factors that were considered in making such a decision since majority considered it an act of cowardice and against the will of the public. Ethics would have demanded that proper channels be followed in striking the ultimate decision instead of being lenient with a motive of satisfying individual gain even after committing a crime against the public, an institution, and the investors.

For purposes of making the right decision which is acceptable to all the judicial members, a set of procedures should be followed to ensure fairness in comparison to other cases which have been handled before. There are court rules and regulations which control the final decisions which are to be made. It is therefore proper, ethical and by law to ensure that the guidelines are strictly followed to make the final decision which is welcomed by the majority especially the victims. In the case of Belfort, the issues were to be singled out and subjected to analysis from different angles. All cases in the court of law have a different approach to which they are viewed regarding law. To be specific, there is an aspect where Belfort decided to save illegal funds into the Swiss bank to avoid the government from accessing the money. Also, engagement in the prostitution business, drug trafficking and illegal acquisition of the funds belonging to the investors could have been considered differently. All the highlighted offenses should have been viewed independent of one another and finally, the sentences computed together. After the single cases analysis and determination of the actual duration which the victim was to be subjected into, a proper consideration is, therefore, to be made as per to the reduction for purposes of achieving fairness.

Besides that, in law, the guidelines placed speaks volumes more than the ordinary consideration. It does not matter how long one is jailed so long as the investigations were accurately done and he or she pleads guilty of the crime. Furthermore, during the execution, the jury usually reads the basic reasoning in support of the decision made hence lesser need of the sentence reduction. It is therefore apparent that the court...

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