Born to Steal: When the Mafia Hit Wall Street Page 10

  “He was a nasty old man. But he liked me. He liked me on the phone. When I used to call him, he’d say, ‘Ehhhhhhh, what are you doing up there in that New York shithole?’ He was a crazy old man. And I just started calling him ‘Stormin’ Norman.’ I’d say, ‘Stormin!’ And he would send money like it was going out of style. I got checks from him that I didn’t even ask him for. And then I would do trades in his account, and he would get a bill, and not remember that he didn’t even tell me to do the trade. He’d get a bill for like forty-six thousand, he’d call me up and say, ‘Hey, I got a bill here for forty-six from you guys up there.’ And I’d say, ‘Stormin’, last week you told me to do the trade,’ and he’d go, ‘I’ll send the check, then.’ And he’d just send a check.

  “It was ridiculous. Where did these people come from? I used to say, ‘Ben, this is crazy, man.’ Stormin’ was in Pacific Rim Entertainment, and Net Optix, two Robert Todd stocks. And then we put him in California Quartz warrants. They were a dollar, we were getting paid something like thirty cents.

  “So one day I called him up. Somebody answers the phone and says, ‘Norman passed on.’ And I say, ‘Ohhh.’ I was really upset about it, you know? Me and Benny almost cried. We wrote sixty tickets on his account not even ten minutes after we got off the phone. I says, ‘Benny, UT [unauthorized trade] him. The whole account.’

  “We UT’d his account, we went and we celebrated. I remember we were cheering, ‘Stormin’ Norman! He’s dead!’ We just wrote tickets and churned his account. Sold, bought, sold, bought, and just made commissions. The account got down to about thirty grand and we made all the rest in commissions. People called, and I said, ‘I’ll send you out the account statement.’ And that was that. Dead issue.

  “Norman was dead, and that was that.”

  CHAPTER TWELVE

  The chop house brokers and cold-callers lived in their own exblue-color, upwardly mobile nouveau-everything world, separated from the rest of the Street—the Real Wall Street—by differences in class and education, and by the fact that the chop house brokers just didn’t give a shit about anything outside the chop house world.

  They didn’t care about blue chips or high tech. They didn’t know bonds from urinal mints. The Dow Jones Industrial Average meant nothing to them, and Louis always believed that the brokers on the Real Wall Street never knew what they were talking about, half the time, when they went mouthing off on the subject of the “market.”

  “We weren’t brokers like they were,” said Louis. “We couldn’t even have a conversation with half these fucking brokers. We’d come into contact with them at Moran’s and shit, but we just didn’t have a conversation with them. Sometimes Benny used to get drunk and I used to see him remotely try to have a conversation with some broker. They would talk about market shit and we didn’t know what the fuck they were talking about. Options and shit. What’s an option? A future? I never heard of a future in my life.

  “They were really investing clients’ money to make the clients gain wealth. We weren’t doing that. We were investing the clients’ money so we could gain wealth. They were making money, but they were making two percent a year off an account. If a guy had ten million in an account, they’re taking two hundred thousand every year. If we had ten million in an account, we were making like two million a month. Different story. ”

  Not knowing about the market or stocks or money market funds put Louis in a bind. He had a problem that would have surprised his clients, because it contradicted everything he was telling them: Louis didn’t know what to do with his money.

  In the beginning, at Hanover, he used to spindle the bills very tight and put them in a mayonnaise jar in his room. The first couple of checks from Todd went to the Jeep and then the apartment and then the BMW, but there was still a lot of money left over. When you’re nineteen and don’t know how to invest and are from a family that has never had a lot of money—well, that is not a small issue.

  After being at Todd a few months, Louis put away his mayonnaise jar for good. He didn’t find a great stock or a top-notch mutual fund. He was a teenager, and Louis did what teenagers do with money. He spent it. At Todd, under Benny’s tutelage, he began to find cool stuff to buy, great things to do.

  Entertainment, for instance. The chop house kids loved to avail themselves of New York’s cultural scene, particularly its strip joints.

  Strip joints and chop houses served very similar functions. Chop houses took money from people to satisfy their fantasies of greed—fantasies that were almost never realized. Strip joints took money from the public, and from a lot of chop house brokers, to satisfy their fantasies of sex—fantasies that were also not realized very often. But they were realized often enough that Louis and his friends didn’t mind spending hundreds or even thousands of dollars a night. Louis didn’t grow up with the time-worn attitude that strip joints were for dirty old men who couldn’t get laid, who retreated to some quiet corner to pleasure themselves after watching the only naked women who came into their lives.

  By the early 1990s, strip joints were becoming cool. Celebrities were going to strip joints. Howard Stern, who hosted the morning talk-radio show Louis and the other chop house kids adored, was always talking about his trips to Scores, the strip joint in the shadow of the 59th Street Bridge.

  Still, in the beginning, strip joints were disappointing. Strip joints were a con. Louis didn’t like being conned. But he started going to them anyway once the Todd money started flowing. He and Benny began with grubby strip joints near their Midtown offices, but after a while they started going to the mother of all strip joints, Scores.

  “At first Benny says ‘Scores is too much. We’re going to start spending like five thousand.’ But then we started making money. We went one night for a party because we had a good month. We had a three-hundred-thousand-buck month at Robert Todd, so we went to Scores. We ran a sixty-four-hundred-dollar tab. Cristal—five bottles, six bottles, maybe. I must have spent fifteen hundred on this one girl. Samantha. But she wouldn’t give me the time of day. Kept on giving her money, and I used to try to make her come home but she wouldn’t come.”

  Money went a lot farther back home on Staten Island. Over there he was the Man.

  At Sea—St. Joseph-by-the-Sea in Tottenville—he was the skinny kid with the stormy home life who never had any money. The kid who was so incorrigible, cared so little for their rules, that the priests had him in permanent detention year after year and even during summer recess. He was the least likely to succeed. Louie the Louse, they used to call him. Lou-natic. It wasn’t meant in a mean way. Louis would laugh about it.

  He wasn’t laughing anymore. Nobody was laughing on Staten Island. Not with his money. Not when everybody knew that he was big on Wall Street and that one of the kids he used to hang out with at Sea, Mike Layden, now worked for him as a cold-caller at Robert Todd. Mike would let Louis stay at his place when his mother used to kick him out. He was staying at Mike’s place when he first met Stefanie. It was embarrassing. Louis didn’t have to be embarrassed anymore, not when Mike was running errands for him.

  Most of his friends were still in an extended adolescence, going to school, getting money from Daddy. Louis was still a kid but Middle America was handsomely subsidizing his adolescence. Very few teenagers had that kind of allowance. Nick and Fran never gave him much money anyway (except for dumb things parents care about like the two loans they had to take out for his college education). Now Louis made his own money. He drove to work. And Mike Layden or another cold-caller, the eager young kid he called Sally Leads, would park the car.

  “Everybody knew me. People I didn’t even know, didn’t talk to in school, used to see me in a restaurant or something and they’d come over to me and say, ‘Hey, Lou, what’s going on? I hear you’re doing really well.’ Blah blah blah. Then a lot of the girls that I couldn’t get in high school, they were coming around town. I’d be in clubs and they’d be all over me.

  “To the friends that I k
new from Staten Island—I was the Man. They’re going to school, and I was the boss—all-around boss, no-matter-what boss. At work and at home. I’d say, ‘Mike, come pick me up.’ He’d come pick me up. I was the boss. Ran the shop. Forget about it.

  “My friend Joe Favo, I went to school with him, and I started working on Wall Street and I’d still go out with him all the time. He seen me get the Jeep, get the BMW, and he was still going to school. He’d say, ‘What the fuck’s going on? What are you doing?’ He didn’t even believe me. I was trying to tell him I was making twenty, thirty thousand a month. Joe goes, ‘Yeah, right. Twenty, thirty thousand a month, ridiculous.’ It was unheard of. Even when I was making two thousand a week as a cold-caller, Joe would doubt me. He’d say, ‘It’s got to be a month to month you get paid.’ I’d say, ‘No, I’m telling you, every week.’ He’d say, ‘Bullshit!’

  “When I first got the BMW, me and Stefanie went to this deli on Arthur Kill Road. My friends from Sea, Timmy and Joe, worked there as stock boys and were going to school. We made them come outside and see the car, and they freaked out. I beeped the horn, they came out, and they were like, ‘Bullshit, it’s not yours.’ I showed them the lease. They wouldn’t believe me. I tried talking Timmy and Joe into coming to work with me, but they weren’t into that. But then when I got the BMW, they all wanted to come up to work.

  “So then they started coming out with me. My friends from Staten Island would come out with me and I’d take like eight of them, and I’d pay for everybody. I didn’t give a fuck. It cost me a thousand to go out with them, and it was nothing compared to going out with Benny. That cost three thousand. After a while Joe was like, ‘Holy shit!’

  “It was all around town. I was a legend. Everybody knew me.”

  CHAPTER THIRTEEN

  The Bitch Boy was a perk Louis thought up himself. Most of the chop house brokers, even the very biggest, had no Bitch Boys, so Sally Leads was special.

  Sally Leads was William Goldenberg, a seventeen-year-old Russian kid from Rego Park in Queens. He was about six feet one inch tall, blue-eyed and baby-faced, with light brown hair combed straight back. “He looked like a little boy. That was Leads. He had no story. No schooling, nothing,” said Louis. When William first joined Louis’s crew at Todd, Louis didn’t give a fuck how Mr. and Mrs. Goldenberg had named their son. But after a while, the name had to go. Louis simply could not have a “William” in a crew of Petes and Bennys and Joeys. This was a chop house, after all.

  “I said, ‘I can’t be calling you William. Horrible.’ I said, ‘Your nickname’s Sal. I like it,’” says Louis.

  Louis called him Leads because all Sal could do was “qualify” sales leads—asking them how much they made, whether they were in the stock market, etc. Elementary stuff. No selling involved. In other words, doing all the stuff that cold-callers were legally permitted to do. Sally could do that. But he simply didn’t have what it took to go beyond that, to sell stock using Benny’s name, to pitch clients, to break the law with flair and panache as Louis and Benny were doing.

  So in recognition of his lack of larcenous talent, the name Sally Leads was born. It sounded nice. Sal didn’t mind and it wasn’t so terrible. At least Louis wasn’t having Sal imitate a monkey, or read from Green Eggs and Ham. “It got so his own mother started calling him Sal,” said Louis. “I’d call his house and say, ‘Is Sal there?’ And she’d call out to him, ‘Sal!’”

  Sal was a friend more than an employee, and gradually became a kind of surrogate younger brother. They hung out together, and Sally started sleeping on the sofa in Louis’s new apartment. It was nice. Sally Leads was a good guy to have around.

  He was Sally Leads, usually, or sometimes Sal or sometimes just Leads. But he knew his name. He would come when called. And if Sal or Sally Leads or Leads wasn’t around, Mike Layden was always available to do stuff like park the car in a garage off Third Avenue.

  But Louis didn’t want to get too comfortable. Todd sucked.

  It was a management issue. The chief executive officers of chop house firms—with a few exceptions like Jordan Belfort at Stratton Oakmont—were rarely actually in charge of the brokers who worked there. They hardly ever attempted to exert any authority. So they couldn’t do much harm. But sometimes they got in the way. Sometimes they didn’t do their job. Sometimes they had idiotic ethical concerns. They could be a pain in the ass.

  As far as Louis was concerned, the president of Robert Todd was a problem. He was a guy named Robert Fallah. Fallah was no Roy Ageloff. He didn’t have that magnetism. He wasn’t a leader who could inspire the kids. Louis had to do his own inspiring. He ran the crew. And he didn’t like it when anybody told him what to do. Particularly when they weren’t doing what they were supposed to do, which was to give him “product”—stocks to sell. Sure, he had autonomy at Todd. He was able to make more money at Todd than he could at Hanover. But there was no comparison between the two organizations. Robert Todd simply could not hold a candle to Hanover Sterling.

  “Fallah didn’t have involvement with the brokers. He had a big office but you couldn’t even see him. He wasn’t involved like Roy. Every once in a while he would hold a meeting, when there was an IPO. The brokers would go in his office and it wouldn’t be an exciting meeting. It was serious,” said Louis.

  “This guy, Peter Cohen, he used to give the sales meetings and stuff like that. I wouldn’t even listen. It was a joke. He reminded me of the guy from that movie Glengarry Glen Ross. He would talk about his Rolex. He was a good-dressed guy. You could see he was making some money. He would call the meetings in the afternoon, after four o’clock. I’m working, but four o’clock to five we’d take a break anyway. He was tall, six-one, slick-back hair. In his late twenties. He wore a Rolex but it was a two-tone Rolex, silver and gold. An Oyster, a Perpetual, not a Presidential. It was five grand. A Presidential cost twenty. He was sales manager or something, which was a bullshit title anyway, like he went around and promoted sales throughout the United States or something.

  “He was just horrible. He would actually tell us how to sell. One meeting, after we started doing big money every month, he asked me to pitch. He used to do that. Somebody would pitch, or say their opening lines. He said, ‘Louie, you want to help us out and give us your opening lines?’ And I told him, ‘No.’ I wasn’t going to tell everybody my opening lines.

  “We had those meetings in the boardroom, but I would always sit way in the back. He would tell stories of how he made so much money, how he was such a success. ‘I worked hard for this Rolex. I drive a nice car. I live in a nice house.’ But this guy had no clue. Nice watch. I felt like telling him what a bullshit watch he had on. Probably living in not even a garage house in Long Island. He actually did drive a Mercedes but it wasn’t the great Mercedes. It was like the E Class. Chris and Rocco, they had really serious money. This guy Cohen, he didn’t have money, maybe two hundred a year. Which is good money. But not for that world. He didn’t have commissions. Fallah paid him. So I’m just assuming he made that much. It probably wasn’t even that much. He didn’t have clients, the guy. He probably got a percentage of the brokers that he recruited, but anybody he recruited wasn’t of any consequence.” *

  Todd just didn’t have an adequate inventory of “house stocks” (chop stocks that were sold mainly at Todd). Todd was just like the Getty station after the credit-card guy stopped coming in. You can’t make money when nobody is coming in with stolen credit cards, or stocks to sell.

  “When we had an IPO there was no product. At Hanover you’d be able to get for clients maybe two or three million shares. But at Todd they’d say, ‘We only got fifty thousand.’ Fifty fucking thousand? Me and Benny used to buy it all in a second and nobody would get any of it.”

  That created resentment. Benny and Louis found themselves on the outs, not part of the “inner circle” of brokers usually found at all brokerages, chop houses and legit ones alike. Louis’s fuck-you attitude didn’t help. He was kind of an alternat
e-universe Massood Gilani—a guy who was unpopular because he was trying too hard to do his job, which in Louis’s case was to separate investors from their money.

  And even when there was a product, it was lackluster. Take Pacific Rim Entertainment. It was Louis’s first IPO, and it was a typical chop house IPO because it was a legitimate company. Generally speaking, companies that issued chop stocks were not dramatically different from a lot of other small companies. What made the chop stocks different were the premium prices they commanded and the special way they were sold—the zest, the enthusiasm (or the fraud, as regulators would say much later).

  Pacific Rim went public on November 12, 1993, at a share price of $5. And members of the public who examined the prospectus, with the Robert Todd Financial Corporation logo at the bottom, would not have found any more than the usual red flags typical for any growing company. That’s because Pacific Rim was not a fraud. It had never been tainted by scandal before or since the company went public, and in the years to come would not even get the usual shareholder suits that sometimes are slapped on even the most legit companies. Pacific Rim produced cartoons and operated an animated production facility in the city of Shenzhen in China. It even had a cute stock symbol, “TOON.”

  There was nothing fishy in the financial statements. True, the company was losing money, but it had a talented staff, six hundred workers in China, and a chairman who was a veteran of the entertainment business. This would have been great stuff for Louis’s IPO pitch if he had cared. But he didn’t. Only a moron would have pitched an IPO by talking about what the company did. Wasn’t necessary. In fact, only the worst salesman in the world would need to sell an IPO, period. IPOs sold themselves in the early 1990s. Louis didn’t have to read the prospectus, or even know if the company made cartoons or cigars or underarm deodorant, or nothing at all.