Fiction and Fact: The Culture of the Con

by

Howard Adelman

Foster, Peter (2014) “Goodbrokers: Wolf of Wall Street an inferior Scorcese remake,” National Post, 8 January, FP11.

Fulford, Robert (2014) “The American Scheme: How the con man managed to turn himself into a folk hero,” National Post, 7 January, B1.

Rakoff, Jed S. (2014) “”The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?” NYRB, LXI:1, 9 January.

Surowiecki, James (2014) “Do the Hustle,” The New Yorker, 13 January, 21.

Following my reviews of the two films, The Wolf of Wall Street and American Hustle, I will be using the above four essays or articles as well as the widespread very recent reports on the huge fines levelled against JP Morgan Chase Bank. This comment was instigated by a response to my blog with an attachment, an “Open Letter to the Makers of The Wolf of Wall Street, and the Wolf Himself” by Christina McDowell (http://blogs.laweekly.com/informer/2013/12/wolf_of_wall_street_prousalis.php) Christina is the daughter of Tom Prousalis, a partner of Jordan Belfort whom Leonardo DiCaprio played in the film. Belfort pleaded guilty to money laundering and securities fraud and was a prosecution witness against his former colleague, Tom Prousalis.

Christina wrote that the testimony was blocked lest it reveal a spate of other corrupt stock offerings: “that would have been a disaster. It would have just been too many liars, and too many schemes for the jurors, attorneys or the judge to follow.” Further, Christina wrote that Belfort and her father conspired together not just in one scheme, as the film portrayed, but in a series of fraudulent stock offerings such as MVSI Inc. of Vienna, e-Net Inc. of Germantown, Md., Octagon Corp. of Arlington, Va., and Czech Industries Inc. of Washington, D.C., and so on. Christina confronted the makers of the film for glorifying Belfort and receiving kudos and awards while both the victims of these fraudsters suffered enormously. Her mother, her two sisters and she herself also suffered and continue to suffer. The suffering began immediately after the fact by learning that they themselves were burdened with enormous credit card and other debts rooted in identity theft. Prousalis’ wife and his three daughters’ lives were just wrecked. Remember how Bernie Madoff’s son committed suicide!

Why? Because these con artists trick the members of their own families. But in the films they are turned into folk heroes. Christina wrote: “You people are dangerous. Your film is a reckless attempt at continuing to pretend that these sorts of schemes are entertaining, even as the country is reeling from yet another round of Wall Street scandals. We want to get lost in what? These phony financiers’ fun sexcapades and coke binges? Come on, we know the truth. This kind of behavior brought America to its knees.” At the end of the film, the story suggests that Jordan Belfort went along to a second career as a motivational speaker to become once again wealthy while many of his victims largely remain destitute and received little if any restitution.

Christina concludes that after she was sucked into the con, and the drug behaviour and pleasure seeking that went along with it, “then I unravelled the truth. The truth about my father and his behavior: that behind all of it was really just insidious soul-sucking shame masked by addiction, which we love to call ambition, which is really just greed. Greed and the desire for fame (exactly what you’ve successfully given self-appointed motivational speaker/financial guru Jordan Belfort, whose business opportunities will surely multiply thanks to this film).”

Peter Foster complemented that criticism by claiming the film exploited the same values as the con artist – lies and exaggerated behaviour. As Foster wrote, Belfort graduated from a meat salesman to a stock salesman and was named by himself as the Wolf, not by Forbes Magazine. Further, the critics are complicit in cheering the film claiming it was as good or even superior to Goodfellas when it is, as both I and Foster claimed, tedious and totally self-indulgent however great the acting and production values. The biggest lie is that the makers and promoters of the film, including Leonardo DiCaprio, call it a cautionary tale, when in artistic intent and consequences, it is precisely the opposite. As my son, Gabriel, who loves the film, says, Scorcese’s great skill is to portray villain’s from a very neutral perspective and not take a stand. Screenwriter Terence Winter claimed the lesson from the film is that, “We don’t learn anything. Nothing changes.” Further, Gabriel himself is anguished between his love for the brilliance in film making and the consequences among young people of his age who take the very opposite message from the film and glory in the excessive wealth and self-indulgence of the crooked stockbrokers.

Robert Fulford, while acknowledging that The Wolf of Wall Street is florid and hysterical and that the acting is sensationally good, claims that the message of the film is not only that, “We don’t learn anything. Nothing changes,” but that eternal recurrence of the con theme is a reverberating theme of American culture. The lesson is not that crooks get it and their lives are ruined, but that they are reborn again in new versions of the same thing as Christina declares about her father. “He recreates himself every time he imagines a new scheme for enriching himself at the hands of the innocent.” George Parker (1870-1930) who sold the Brooklyn Bridge many times over was “an outrageous model for all fictional con men.” Con men tell lies and make claims that are too good to be true.  Fulford opines that, “Characters like him are a gift to storytellers and moviemakers …moral cripples…riding on a smile and a shoeshine.” The best con movie of all time, The Sting, memorializes the type, but in a movie where the marks are the real crooks. The movie works by conning the audience, but traditionally making the con clear by a twist at the ending. The Wolf of Wall Street is a fraud that cons but never owns up to it.

The question arises: why do these con artists get away with it? James Surowiecki asks why Americans have a soft spot for these greedy hucksters who sell dreams that never come true and why do audiences get conned by movies like The Wolf of Wall Street and American Hustle? Surowiecki’s answer is the same as that of the screenwriter of The Wolf of Wall Street, “It has ever been thus.” As the University of Pennsylvania historian Walter McDougall wrote, “far from despising flimflam artists as parasites or worse, American popular culture habitually celebrates rascals as comedic figures.” Surowiecki continues: “It seems that con artists, for all their vices, represent many of the virtues that Americans aspire to. Con artists are independent and typically self-made…They succeed or fail based on their wits. They exemplify, in short, the complicated nature of American capitalism, which, as McDougall argues, has depended on people being hustlers in both the positive and the negative sense. The American economy wasn’t built just on good ideas and hard work. It was also built on hope and hype.”

As Surowiecki wrote, the line between crooks and businessmen is fuzzy. (As we will see, thus may still be true in the twenty-first century.) In the nineteenth century, Jay Gould who promoted railway stock was one of the biggest con artists the country had ever seen. Wall Street Entrepreneurs and con men have similar skills. “Successful entrepreneurship involves hucksterism, the ability to convince investors and employees that they should risk their money, their time, and their effort on you.” They peddle optimism. The philosophy of the sting is to sell hope. Steve Jobs was the greatest con man, entrepreneur and director of the twenty-first century, scripting and rehearsing his presentations to the greatest detail. He believed that you both had to have but also sell absolute conviction. As Weinberg said, “Before you sell a deal you have to live the deal. You have to believe in it, because, if you don’t believe in it, you can’t sell it.”  The one and only difference between the con artist and the entrepreneur is not the set of qualities, but that the entrepreneur can deliver and make the fantasies come true. Con men cannot.

Jed Rakoff in his article asks why there have been no prosecutions of high level executives from the latest financial scandal of the huge mortgage scams. Everything may not be the same. There were high level prosecutions in the past – Michael Milken in the 1970s junk bond bubble, Charles Keating and others in the 1980s savings-and-loan crisis, Jeffrey Skilling and Bernie Ebbers in the 1990s Enron scam. But there have been no prosecutions of executives from the 2008 sub-prime mortgage collapse. The 2 billion dollar fine of JP Morgan, the biggest US bank with $2.3 trillion in assets and revenues of over a $100 billion, was levied for failing to inform US authorities of the Madoff Ponzi fraud. The announcement was made five years after Madoff was arrested. The bank ignored its own information that Madoff was up to something very questionable. To avoid indictment, the bank had to admit criminal wrongdoings and pay the fine. This recent $2 billion was in addition to a previous series of fines $13 billion, $4.5 billion, $920 million, $470 million, $410 million and an anticipated another $2.3 or so billion more European fines, fines which in total only amounted to 12% of its net income over four years.

Why have the executives not been prosecuted for the collusion of these huge businesses with fraudsters like Madoff or Weinberg or Belfort, for the latter could not succeed in their theft, whether selling worthless stocks in the seventies and eighties or selling toxic mortgage-backed securities in the twenty-first century without the collusion of large banks? There are several possibilities. First, perhaps the banks were themselves conned. But they did not lose money; they made money – huge amounts. Further, the real question is why they shut their eyes to both what they knew and what they did not want to know. But why did SEC not catch on? Why did the rating agencies mislead everyone? There are reasons offered – the difficulty of proving intent, even though intent need not be proven, only wilful blindness, not nearly as difficult to prove. Further, since these firms also participated in the purchase of these weekly-backed mortgage securities and were sophisticated investors, how could they be declared as either victims or as complicit? Given the speed of electronic trading and the reliance on algorithms, how could responsibility ever be traced to individuals?

Another reason is offered. Unlike previous financial crises, in this crisis the whole western economy was at risk. There were more important priorities. Another reason Rakoff offers is the built-in incentives of prosecuting attorneys to make names for themselves, but to do so in a timely fashion as distinct from the large number of years it would take to prosecute banks for complicity. In the films, manic FBI agents take their place because they are mirrors of the con artists in the two films I discussed. Further, Rakoff suggested that the government itself was complicit since it proposed the shotgun marriages of the Bank of America with Merrill Lynch and JP Morgan with Bear Stearns with mistakes made and liabilities unrevealed. Prosecuting attorneys can make a name much easier than prosecuting individual executives by making deferred or non-prosecution agreements as was done with JP Morgan and settle for huge fines. They can then envision themselves as the modern Robin Hoods.

I want to suggest another reason not included in Rakoff’s long list of potential explanations. We have gone from making con artists folk heroes to making them superheroes just when films increasingly portray the dark side of traditional superheroes – Batman, Superman, Spiderman. Billy the Kid, Bonnie and Clyde from the dark side, and Daniel Boone and David Crocket from the light side, Joe Hill and Che Guevera from the left side, and Rob Roy and Joseph Trumeldor from the right side, have all been folk heroes. Canada has its own Two Gun Moshe Cohen. The biography of any one of them will show that they were themselves shape-shifters who helped in the effort to imprint their names, personalities and ostensible deeds into popular memory usually exaggerated to mythic proportions. The folk hero is an individual who performs acts that allows a sympathetic group to project onto them heroic status for that heroic status confers status and position on the group who identifies with the supposed hero. This is true of the Ford Nation in relationship to a serial liar and serial apologist like Rob Ford selling the fraud that he is the taxpayer’s best friend. Typically, trickster heroes in all cultures (Brer Rabbit, the coyote in aboriginal stories) have both good and bad sides, usually breaking taboos but upholding everyman values.

The con men tricksters of The Wolf of Wall Street and of American Hustle are the new contemporary folk heroes being mythologized by Hollywood now as superheroes. Though fictions about con artist folk heroes – whether Huckleberry Finn  or Tom Sawyer – used to serve as a counter-balance to restore social order, in the contemporary mould they are used to uphold the virtues of greed for its own sake. The difference now is that the films through mindblindness, not deliberate intention, but wilful mindblindness nevertheless, serves the same roles as the banks in their complicity with the original crimes in the sub-prime mortgage scandal in raising the status of the crooks in an afterlife of iconic status by developing stories as myths favouring con artists using megalomaniacal hype themselves with no relationship to social needs or social purposes and only incidental relatiobs to the facts. The films are as guilty of promoting vicarious hedonistic thrills as the con artist fraudster entrepreneurs were. The new blended superhero/folk heroes are not Robin Hood figures but icons of the age of greed and the new dreams of hedonistic glory and the pursuit of sensual pleasure in our society. When aesthetics trumps both truth and ethics in the glorification of appetite with the enormous investment that a first class con requires, Hollywood becomes the vehicle for creating the new myths without any fear they will be prosecuted for their “artistic license” as the film-makers both profit from the hype and the dreams they spin and as they propagate new imitators.