Why `Wolf’ List Shouldn’t Be Released

[Photo: Flickr]

My former colleague Susan Antilla had a nice piece in the New York Times recently on a judge’s decision to keep confidential the list of victims preyed upon by Jordan Belfort, the self-proclaimed “Wolf of Wall Street.” A TV news magazine had requested the judge release the name of Belfort’s 1,300 victims.

As Antilla reported:

The potential harm that could come from releasing the list to the public is “substantial,” wrote Judge John Gleeson of Federal District Court in Brooklyn, citing the danger of “sucker lists” coveted by fraudsters on the prowl for easy marks.

It’s good to see a federal judge recognizing the public harm that could be caused by releasing this information. As Antilla points out, these “sucker lists” are highly valued by other scammers. While it may defy common sense, the fact is that someone who’s been cheated once is more likely to fall victim again. The crooks know it, and they covet these lists.

Belfort, of course, has turned the whole world into his sucker list, having written a best-selling book about his schemes and then conning Hollywood into glorifying it in film.  Belfort has done little to repay the victims on the list. As Gleeson pointed out, releasing their names would only compound their insult and injury.

Unfortunately, the issue of selling or releasing sucker lists isn’t unique to Belfort’s case. The issue is far more common in bankruptcy cases, and many bankruptcy judge’s don’t share Gleeson’s views. In a bankruptcy, the judge is obligated to maximize the recovery for the estate, and often the “mullet list” is the only asset of value remaining when a scam company goes bankrupt. I wrote about a lot of oil and gas boiler rooms in the late ’80s and early ’90s, and I was amazed at how often a company would file for bankruptcy and sell its sucker list to another company, often founded by many of the same scammers who would then target the same victims.

Too often, we want to dismiss the victims of investment scams as gullible or ignorant, but con men know how to play our emotions against us. I once wrote about a Dallas con man who conned the prosecuting attorney who had sent him to prison for securities fraud years earlier. When I asked the attorney how he could have invested with someone he knew was so dishonest, he said he thought the con man had reformed.

The point is that everyone is vulnerable. In fact, the more sure you are you won’t get conned, the more vulnerable you are. The con men will pick up on that certainty and use it against you. Financial frauds, after all, are designed to separate you from your money. All the more reason that lists like Belfort’s need to remain locked away.