The Wolf of Wall Street was showing in packed cinemas around the country and drawing comparisons with Greg Blank, South Africa’s most famous stock market fraudster, when I spoke to him in 2014.
Sentenced to eight years in prison in 1992, Blank, who died earlier this month at 67, had not seen the movie but knew all about its central character, Jordan Belfort, and said he was never the “wolf of Diagonal Street”.
Blank met Belfort when asset management company Peregrine brought him to South Africa to give a motivational talk to its clients and was “not overly impressed”, he said. “I found him to be supercilious with a massive ego and no remorse. Like it was all a joke for him.”
He told Belfort they had something in common: they’d both landed up in jail. Belfort told him it was “more like a holiday camp” and that he hadn’t really done anything wrong.
Apart from the jail time, said Blank, there were no parallels between them at all. “Absolutely nothing. People never lost their money with me. There was no public involved; it was only institutions. Belfort cost people hundreds of millions. He destroyed lives. He was an absolute con. He was selling stocks that had no fundamentals; there was nothing there.”
Blank ran a scam with senior traders from Old Mutual, the biggest investor on the JSE at the time. He collected shares his accomplices told him Old Mutual wanted. He warehoused them in local and foreign accounts while driving up the price by promoting them to family, friends and clients. When the price was high enough to offer a suitably attractive margin, he sold to Old Mutual and shared the profits with his syndicate.
He was convicted on 48 counts of defrauding Old Mutual out of R10m. One of his accomplices committed suicide; the other fled to Italy.
Blank said he “only” made R1.2m out of the scam. Apart from the fact that R1.2m was a substantial amount at the time, he omitted to say that the investigation covered only one year. There was no computer audit trail, and the view was that he could have been running the scam for much longer than the period which then Cape attorney-general Frank Kahn decided to focus on.
As the film makes clear, Belfort was motivated by greed and power. Were these Blank’s motivations too?
“Call it power if you like,” said Blank, but in his case greed had little to do with it. “I mean, you’re talking R1.2m. That wasn’t greed; it was just pure stupidity.”
He was young, he said, “only 31”. But he’d been a broker for seven or eight years by then. He was a director at his firm, Frankel Kruger, by the age of 25. If anyone knew the rules, he did.
Belfort was a downright crook, but Blank said he never saw himself that way. “Not at all. Everyone was doing their own little story. This was the culture of the stock exchange. At the end of the day, no-one was losing. When you’re involved in an environment like this, you don’t actually see the right from the wrong.”
He still seemed confused. “What I did was wrong,” he said unconvincingly. His contrition seemed to centre on the fact that he was jailed despite striking a deal that if he pleaded guilty he would not go to jail. The state didn’t even ask the judge, Thomas Dante Cloete, to send him to jail, he said.
“My case was the first in history where the judge went against the state. Why? Because he had his own agenda, who knows? Maybe he wanted to make an example of me. He was a freemason, and we heard stories that the freemasons said: ‘You’ve got to make an example of him.’ I had a deal: plead guilty and you’ll walk away scot-free.”
Did he deserve to go to jail? No, he said, because others in the scam paid admission of guilt fines and because he did a deal with the state. “I got shafted. I was the victim of a judge who was out to make a point.” In fact, the appeal court found there was no such deal.
Another difference between him and Belfort, he said, was that he pleaded guilty. Only to avoid jail? “Not at all. I did a deal.” In America he would “never have seen one day of jail”, because he did a deal. “But in this country there are laws but there’s no justice.”
Didn’t the judge send him to jail because he, like Belfort, showed absolutely no remorse? “I couldn’t have done more to show remorse. I’d paid everything back and more.”
On reflection, he thought “the mistake” he made was telling the psychologist who examined him that he didn’t think he had done anything wrong. “I said, everyone else is doing it; how can it be a crime? It was the culture at the time.”
This country is an absolute free-for-all. If you want to commit a crime, commit it in South Africa
— Greg Blank
Blank was paroled after 22 months at Krugersdorp prison. While inside, he started a gym, a boxing club and a hairdressing salon funded by business contacts. The speculation was that they owed him. He was widely believed to have been the fall guy who kept his mouth shut and took the rap to keep bigger fish out of jail.
Did Sidney Frankel, a founding partner of Frankel Kruger, know what was going on? “I’m sure he did, but this is a meaningless conversation. I’m not interested in who, where, why or what. It’s something I don’t really care for anymore. I’ve gone forward.” He said his “only sin” was nondisclosure. But nondisclosure was what most frauds were. His nondisclosure was a crime and he knew it.
It was a “victimless crime”, he said. But, apart from the third-party victims he didn’t see, by running an illegal operation without disclosing it to his partners, he almost destroyed them and the entire company.
Blank said Belfort was an “unbelievable salesman. That’s why he could do what he did.” Blank never lost the ability, even after being jailed for fraud, to charm anyone into buying anything. That’s not what gave him the edge, he said. “I had to do my homework, do the fundamentals, know about the company, know where it was going. That’s what gave me the edge.”
Brokers who knew him at the time responded to this with a hollow laugh. What gave him the edge — and his reputation for brilliance — was insider information. If he could charm people into buying anything, he could also charm the right people into telling him anything.
“If I had that kind of information, I’d be a brilliant trader too,” said a veteran broker. “He was a charming man, and that was his weapon. Incredibly charming and convincing.”
Belfort used his exceptional people skills as a motivational speaker to make lots of money when he got out of jail, something Blank never did, he said. “America’s a very forgiving society. That’s why America is an unbelievable country. Because in America you can go forward.
“In this country, the moment you have a bit of success you have people going back 23 years to my case. In America they’ve got a thing where if you admit your shortcomings, you’re entitled to a second chance. In this country there are no second chances.” And it hadn’t made South Africa a more ethical society, he said.
“This country is an absolute free-for-all. If you want to commit a crime, commit it in South Africa.”
It didn’t work for him, did it? “I didn’t think I was committing a crime. It’s not like I held up a bank. I was in the exchange, and every single person when I was in the exchange at that time was guilty of what I was doing.”
His crime was victimless, he repeated. Look at the “macro picture”, he urged. “Focus on what’s going on now. Not what happened 23 years ago when poor Greg Blank landed up in jail and became Jesus Christ because somebody had to be made an example of.”
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