Scamfluencers - Steve Madden: The Cobbler Con

Episode Date: June 10, 2024

Steve Madden transforms from Long Island screw-up to fashion icon thanks to an eye for fashionable footwear and an addiction to work. But to get his shoe brand off the ground, Steve got entangled with one of the Wolf of Wall Street himself, Jordan Belfort. And Steve’s dealings with Jordan — including wild parties and stock manipulation — won’t stay secret forever. When Jordan’s scam spirals out of control, Steve’s left on his back foot.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Wondery Plus subscribers can listen to scamfluencers early and ad free right now. Join Wondery Plus in the Wondery app or Apple podcasts. Wondery Plus Sarah, do you remember being a preteen and like getting your mom to buy you an iconic piece of clothing? Like you just, you couldn't wait to wear it the next day to school. Yes, and I will explain this for Americans as briefly as possible. Okay. There was a store called Northern Reflections.

I had a kid's section called Northern Getaway. This store sold these t-shirts that said Spice Mice and it was the Spice Girls as Mice. And I wanted a Spice Mice shirt so badly, even though it was dumb. And I remember when I finally got one, I was so happy. I hate that I know exactly what you're talking about, but for me, even though it was dumb. And I remember when I finally got one, I was so happy. I hate that I know exactly what you're talking about, but for me, I think it was this pair of like brown suede boots with a kitten heel from Steve Madden, like truly hideous stuff.

I begged my mom to get them for me unsuccessfully. Oh my God, Steve Madden was for cool girls. The ads with the big heads, ugh. Well, Sarah, I'm bringing this up because today I want you to re-inhabit the fashion tastes you had, let's say 20 years ago. Back when life was simple and a pair of patent leather Mary Janes could change your life. It's December 1993 and 35 year old Steve Madden is at an

investment firm in Long Island, New York. The office is huge, the size of a football field, with low ceilings and rows of desks for hundreds of brokers. All eyes are on Steve as he prepares to give a speech. He's got on a baseball cap to cover his thinning, strawberry blonde hair, which is pulled into a low ponytail. And he's wearing a wrinkly Navy blazer over a t-shirt

with jeans and scuffed brown penny loafers. Steve's a local shoe designer who recently opened his first store in Manhattan. And this firm is helping him take his company public. A company he named after himself. Today, Steve Maddenstock is going live under the tag SHOO. You know, like shoe. Steve may be a CEO, but he's also just a middle-class dude from the burbs.

When he gazes out at the crowd, he probably feels a little out of place. It's a sea of aggressive, jacked-up finance bros. The kind that wear suits, Oxford shoes, and Rolexes. They're all part of the cult of Jordan Belfort, one of the firm's owners. This scene is actually in The Wolf of Wall Street, the Martin Scorsese movie.

Steve is a minor character, but in real life, he's focused on getting Wall Street's attention with his new shoe, the Mary Lou. Here's a picture, Sarah. Do they look familiar to you? So this shoe is iconic. It's like a black Mary Jane with a chunky platform. And it was really like paired with

tights and like a short skirt. It was like very TGIF Sabrina the Teenage Witch core. It was cool girl shoe for sure. And Steve's here at the firm for a Wall Street tradition to hype investors up about selling shares of his company. He passes out pairs of Mary Lou's so the brokers can take a closer look. And he starts talking about the design. Here's how it plays out in the movie, where Steve is played by actor Jake Hoffman. Believe it or not though, the Marylew is actually the same as the Mary Jane, but it's black leather. In the scene, the brokers throw his own shoes back at him, laughing and heckling.

And he's relieved when Jordan grabs the mic and takes over. Steve later says that this moment actually happened. Jordan compares Steve to fashion giants like Coco Chanel, Versace, and Armani. And he tells the brokers to sell the stock like their lives depend on it. If they push the price up the moment it goes public, they could all make a boatload of money. The brokers rush to their phones and start telling everyone who will listen about Steve Madden. With their help, Steve can finally achieve his dream

of building a shoe empire. And, spoiler alert, he does it, becoming a household name and revolutionizing footwear in the 90s and beyond. But he succeeds by making a deal with the devil, and it's a deal that'll come back to haunt him. The first all-reality subscription service of its kind, Hey You gives you access to every episode

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Watch all seasons and spin-offs of Below Deck on HeyU. That's H-A-Y-U.com. I'm Sachi Cole. And I'm Sarah Hagge. And we're the host of Scamfluencers, a weekly podcast from Wondry that takes you along the twists and turns of some of the most infamous scams of all time, the impact on victims and what's left once a facade falls away. Follow Scamfluencers on the Wondry app or wherever you get your podcasts. From Wondry, I'm Slotchy Cole. And I'm Sarah Hagie.

And this is Scamfluencers. If you ever cracked open Seventeen Magazine around 2000, you know the name Steve Madden. Or at least you definitely know his ads. Girls with oversized heads and rail thin bodies, wearing chunky heeled shoes and walking bug-eyed animals on a leash. The iconic shoe brand was worn by the Spice Girls and Britney Spears, and judging from my TikTok feed, it's still inspiring influencers today. But the man behind the brand fought every step

of the way to overcome his demons. Addiction, the influence of scammers like Jordan Belfort, and even a prison sentence. This is Steve Madden, the Cobbler Con. It's 1975 and Steve Madden is walking into Toulouse, a shoe store on Long Island's South Shore. Steve is 16 years old, skinny and pale with long red hair. He's here hoping to talk his way into a job.

Steve feels a bit like an outsider, because in certain ways, he is. His mom is Jewish and his dad is Irish Catholic, and interfaith marriages are rare in this part of Long Island. His parents are also older than a lot of the other kids' parents. They grew up during the Depression, and their idea of working hard to earn a dollar has been drilled into him. When Steve walks into Toulouse, something clicks. Rock and roll music is blaring.

The shoes are not boring. They're funky and colorful. These are the shoes for a new generation. Steve's enthusiasm must show, because he gets the job. He starts in the stock room and eventually works his way onto the sales floor. Later, he writes about this job in his memoir, The Cobbler, How I Disrupted an Industry, Fell from Grace, and Came Back Stronger Than Ever.

Here's a clip from the audiobook. At Toulouse, I started to learn the rhythm of retail, how a woman tries on a shoe, what she's telling you she wants when she twists this way and that in the mirror. It was sort of like dancing or kissing, an intuitive give and take. I could tell he is taking making shoes very seriously.

A man does not speak this way about anything a woman does unless, you know, they have a true passion for it. So I guess that's nice, even though it's like a little over the top. Yeah, I think we can let this part be nice, at least. Well, Steve is a star salesman, but he's struggling at school. He later attributes this to what he suspects is undiagnosed ADHD. But it doesn't help that he also spends a lot of time getting high with his friends. They bond over a love of girls and partying, and they skip class together to play golf and smoke weed. Steve

is brash, but he's also a natural leader. His ability to get along with people from all walks of life is what makes him so popular and such a good salesman. After high school, Steve spends about a year in Miami, supposedly going to college. But really, he mostly parties. He eventually moves back in with his parents and goes back to selling shoes. Luckily for him, he's got a gift. But it will take years to fully realize his potential, because first, he needs to face some personal demons that threaten to destroy him. One night, sometime in the 80s,

Steve wakes up in the hallway outside of his apartment in Greenwich Village, completely naked. From what he remembers, he'd taken drugs and fallen asleep in his bed. But now he's locked out. He takes the elevator down to the lobby, trying to cover his dick with his hand. He has to ask the night doorman

to let him back into his apartment. By this time, Steve's in his early 20s and working for a wholesale shoe company called LJ Simone, and his partying has evolved into a full-blown addiction. Quaaludes are his drug of choice. And if you've seen Wolf of Wall Street, you know exactly what they do.

You get drowsy and you do stupid shit. Steve sometimes wakes up covered in cuts and bruises with no memory of how he got them. In one of his lowest moments, he buys a helmet out of fear that he'd fall while high and smash his head open. I mean, he has to be in a pretty dark place if his solution to all this is,

I'll buy a helmet just in case something happens to my head. Like, this is not a guy who's doing well. Yeah, it's not promising. But during the day, Steve is still going store to store selling shoes. He probably should be walking since he lost his license after getting multiple DUIs. But he's able to borrow a car from Danny Porish, a guy he's been friends with since the second grade. And then one day, when Steve's unloading shoe boxes in Midtown Manhattan, he leaves

the car door open, and a passing truck blows it right off. When Steve breaks the news to Danny, Danny is so pissed off that they stop talking. Steve cannot catch a break. He's having a very, very bad time. Yeah. This period is very chaotic for Steve, and his addiction only seems to get worse. Like, one time, he shows up for a meeting

with a buyer at Macy's, wasted. He weaves his way through the store, and at some point, he just passes out. He wakes up under a rack of dresses, and the buyer sends him home in a cab. When his boss later finds out, he's furious. He tells Steve he has to clean up his act or he'll be fired.

But instead of seeing this as a wake-up call, Steve sees it as an attack. He leaves the company after eight years of working there. At this point, Steve is in his early 30s and he's flirting with the idea of starting his own shoe business. He launches a brand called Sully-A, but it collapses as quickly as it starts.

One night in January 1989, Steve's riding out a high in his apartment. He's belligerent, flailing around, and knocks all the books off his makeshift shelves. They're made out of cinder blocks. And finally, something hits him. He feels terrible, and he's alone in his shitty apartment. His life is a mess. He decides he needs to make a change. He admits in his book that, quote,

"'It's not nearly as dramatic a rock bottom as other addicts, but this was the final straw.'" Steve promises himself he's gonna get sober and strike out on his own in the shoe business, for real this time. The day after Steve's bookshelves collapse, he attends his first Alcoholics Anonymous meeting, and the inspiration he finds there helps steady his life.

He later says that his addiction shifts from drugs and alcohol to making money. So to make his business dreams come true, he starts conducting R&D in his everyday life. He lingers in department stores for hours to see what women are drawn to. He walks around New York City staring at what people are wearing and approaches women on the street to ask about their shoes. He even pays some of them to give him the pair off their feet to use for inspiration.

He's just manic about shoes. I understand he is obsessed with shoes to make them, but if a guy comes up to you asking for the shoes off your feet, your mind starts racing about what he intends to do with those shoes. Generally true, but in New York that happens like six or seven times a day. So what are you supposed to do?

Steve wants to make shoes that are stylish, but comfortable, and inexpensive. He first targets women his age, in their 30s, but he quickly pivots to what he sees as an underserved demo, teen girls. It's the late 80s and Gen X is entering young adulthood. They don't want to dress like their parents, and they can't afford or don't want

to buy fancy designer footwear. Steve puts together a few sketches, like a clog with a more streamlined, feminine look and a pointed toe. When worn with pants, it looks like a boot, but it's a slip-on that's easy to kick off. Other designs feature exaggerated heels or toe bumps and lots of big platform soles, all at a lower price point than most other shoe brands making stuffier, business casual wear.

And he finds a shoe factory in Brooklyn to help make them. Then he sets up meetings with buyers. He has tons of contacts thanks to his years in the biz. There's just one problem. Steve still doesn't have his driver's license. So he hires his doorman, David Cristobal, to take him around. For years, David helped Steve during his lowest moments,

like that time he woke up naked, wandering the halls. David drives Steve to meetings all over New York. Steve wears penny loafers, khakis, and lacoste button-down shirts. He figures looking like a member of the young Republicans might make people more receptive to his funky shoes. And it actually works. He starts selling his shoes right away.

They get stocked in stores all over town. I understand this strategy. Like, if you look very normal and unremarkable, you can kind of get away with a certain amount of craziness. The problem you and I have is we look too interesting, I always say. Well, Steve Later says that he brings in half a million dollars that first year.

And slowly but surely, he starts building out a team, including another designer who he sketches out ideas with. But all the money he makes goes right back into the business. Steve doesn't get paid until the orders are delivered. So he has to cover the costs upfront. Materials, labor, and production. To grow the business, Steve needs some serious cash. And if he wants to make it big,

he's gonna need to swim with the sharks. Around the same time that Steve is getting his business off the ground, his childhood friend, Danny, is trying to get his life in order too. He's now clean cut and preppy, and his cheeks crinkle up around his eyes when he smiles. He recently started a private ambulance business, and he also got married to his cousin, Nancy.

This is Jonah Hill's character in The Wolf of Wall Street, and the cousin marrying is brought up quite a lot. Yes, as it would arise. Well, Danny has spent years jumping from one job to the next, and he and Nancy are struggling. They live in an apartment complex that Nancy later tells the New York Post felt like an extended dorm. It's small and cramped, but the residents are young and social.

One day, Danny's watching his son play at the apartment's playground, and he winds up talking to someone new. The guy is short, with dark, slick back hair, piercing blue eyes, and the tan skin of someone who travels well. His name is Jordan Belfort. Yeah, sometimes you meet someone and your whole life changes.

You just know. Well, Jordan and Danny have a lot in common. They're both college dropouts who spent years trying to find their place in the business world. Jordan gave dental school a shot and worked as a door-to-door meat salesman. But now he's making 50 grand a month selling penny stocks at a brokerage firm. Danny later says that Jordan called it, quote, half a scam. His firm takes small, mostly unknown companies and aggressively sells their stock to customers over the phone. Then, once they've ballooned the share price, they sell and they rake in the dough.

It's basically a classic pump and dump scheme. Danny's tired of bouncing from job to job, busting his ass to make ends meet. He wants in. So two days later, he starts working with Jordan. Just a couple months after that, Jordan and Danny open their own firm. They call it Stratton Oakmont, and it's a classic boiler room. Three years later, in 1991, it's on track to becoming one of the most infamous names in the industry. Here's a picture of the two business partners together.

Wow. I mean, this photo is just like, you know, two guys in bow ties and tuxedos, and they're smiling broadly. And Danny is quite pale, and Jordan is so tan. He's brown. He looks like Alex Rodriguez. It's crazy. Danny is quite pale and Jordan is so tan. He's brown. He looks like Alex Rodriguez. It's crazy.

Yes, he looks not the way he's supposed to. Correct. Well, Danny is making big moves and loads of money, but he still finds time for his old friends. One night, he shows up to a basketball game to support a high school pal who now works for him at Stratton. The game is part of a sober rec league. Danny probably stands out in the crowd He shows up to a basketball game to support a high school pal who now works for him at Stratton.

The game is part of a sober rec league. Danny probably stands out in the crowd wearing his custom suit and Rolex watch. And he's surprised to see someone else he knows on the court. His old friend Steve. The two haven't spoken in years, ever since Steve wrecked Danny's car. But that's way in the past now, and the two old friends start hanging out again. When Steve talks about his budding shoe empire, Danny's ears perk up. His brokerage firm has been looking for small businesses whose stocks they can take public.

To him, Steve's company is a perfect candidate. So Danny invites Steve to dinner. They meet at a steakhouse in Manhattan, and over steak tartare, Danny tells Steve that Stratton Oakmont wants to help raise money for his company. He thinks they could raise as much as $600,000 through private investment, enough to really help Steve Madden grow. Then he says the firm can handle the initial public offering, which would make Steve millions. And Danny can probably tell that Steve's tempted, especially when Danny mentions who his partner is, Jordan Belfort. Jordan's got a reputation as a rising star who has a, ah, shall we say, creative approach

to securities regulations? And he's making bank. Danny assures Steve that everything he's heard is true. Jordan's a genius, and he knows what he's doing. Danny and Steve are a couple of dudes from Long Island who are probably feeling the same type of way, that they want to shed their fuck-up pasts and make something of themselves.

And now they have the chance to do just that. Pretty soon after their dinner meeting, Danny brings Steve to the Stratton offices in Long Island to see Jordan's Riz in real life. And sure enough, Jordan is magnetic. He calls Steve an artist, an innovator, and a genius, and he gives him a nickname, the Cobbler. Jordan says he and Danny believe in Steve Madden,

the person and the company, and they want to raise enough money to launch an IPO. But while they wait for the right time to take his company public, they offer Steve a way that he can help them out and make some quick cash by becoming what they call a flipper. All Steve has to do is buy cheap shares

of some of the companies that Stratton Oakmont is working with before they go public. This shrinks the supply and spikes the stock's value. Then the day the company goes public, the firm's agro brokers will use their high pressure tactics to get people to buy. This will create temporary demand and push up the stock price. Steve will then sell his shares back to Stratton while the stock is going up. And then once the value has shot way up, Stratton will sell its shares. They'll make

a killing and the flippers will get a cut. Jordan and Danny are already working with a trusted crew of people on this scheme. It's fast, simple, and Steve later claims that he thought it was legal, if a little shady. In reality, it's stock manipulation, and it is very illegal. But Steve Madden is still very much in its make-or-break period. So to hedge his bets, Steve says yes. Oh my gosh, Steve no. It's a bad choice, but Steve really needs the cash because he's just released his first hit shoe, the Maryland. He's still covering the costs up front, including the rent on his new factory in

Queens. And once he starts flipping, he pockets a few thousand bucks with each sale. Steve also starts to get closer with Jordan. Jordan sometimes invites him for late night helicopter rides to Atlantic City, where they eat lobster and gamble. Or for last minute trips to play golf around the country. Drugs flow freely and the sex workers almost outnumber Jordan's friends on his chartered flights. It doesn't seem like Steve should be around these people as someone who is an

addict and it doesn't seem too stable. This seems like the wrong crowd to me. Yeah, maybe. But Steve loves it and he manages to stay sober through it all. Money is his new drug. Meanwhile, the SEC has charged Stratton with securities fraud and manipulation. But Steve isn't too worried. They haven't concluded anything yet, and the investment bank Bear Stearns signs off on all of Stratton's trades. So Steve figures it must be legit, and as long as his business is booming, he's willing

to look the other way. But the authorities are not so laissez-faire. And once they start sniffing around, they're gonna wanna know where the Cobbler's Money Fix is coming from. MUSIC FADES I'm Ellis James. And I'm Colin Murray, and we're the hosts of Everything to Play For, the podcast that tells the greatest sports stories

of all time. This season, we're covering Wayne Rooney England man. Remember the name, Wayne Rooney. Yes, we're focusing in for three episodes on Wayne Rooney's career with the three lions on his chest. From a teenager breaking into the England set up all the way through to his international retirements, takes in so much, Ellis.

What a way to burst onto the scene as well, Euro 2004, where he was one of the absolute standout stars of that tournament. However, if you look at his international career, those tournaments ravaged by injury, disappointments, crazy things happening on and off the field. There's an awful lot to get stuck into. Cannot wait. Follow everything to play for in the Wandery app or wherever you get your podcasts. You can binge seasons early and ad free right now on Wandery+.

From Wandery, I'm Ra's Al Jafri and this is The Spy Who. This series, we open the file on Eamon Dean, the spy who betrayed Bin Laden. In 1994, 16-year-old Eamon wants to die. He heads to war-torn Bosnia to join the Mujahideen and save his fellow Muslims. He hopes to become a martyr so that he can be reunited with his dead parents in paradise. Instead, he's about to be confronted by a cruel and bloody reality. A reality that'll lead him to turn his back on terrorism and become the West's top spy inside Al-Qaeda. Follow The Spy Who on the Wandery app,

or wherever you listen to podcasts. Or you can binge the full season of The Spy Who Betrayed Bin Laden early and ad-free with Wanderi+. In May 1993, about two years after Steve partners with Stratton Oakmont, he opens the doors to his first retail store. It's in Soho. He knows the in-store experience is key for attracting customers.

And as he looks around the store, he's proud of what he's accomplished. It is uniquely Steve. He blares rock music, which is an interesting clash with the Serenity Garden he's installed near the front entrance. Sarah, take a look at this photo of Steve in the shop. Yeah, it's kind of endearing, you know?

He's in a boiler suit, vacuuming, and the decor is definitely interesting. There's, like, blue and then a lot of brass-looking things. Well, it's a lot of that, like, 90s, like, Eastern... Yeah. ...vaguely Asian nonsense kind of decor. Yeah, it's really 90s, and I, vaguely Asian nonsense kind of decor? Yeah, it's really 90s and I could see how it's kind of fun.

Well, on this first day, Steve is nervous. Foot traffic is slow. But then a woman walks in. She takes a look around and decides to buy a pair of brown suede boots, much like the ones I wanted, Sarah. Steve later describes the feeling as the same mixture of excitement and relief he experienced when he lost his virginity. You know what? I was being really mature and professional and trying super hard to not bring up anything sexual with Steve

Madden in feet, but him saying this, it's hard not to think he has a foot thing. I think you're probably right. But things are going well for Steve, and not just with his company. Just a month after his store opens, Steve pockets nearly a quarter of a million dollars for helping Stratton flip a stock. About five months after that,

Stratton decides to take Steve mad in public. Remember, this is the day of Steve's poorly received speech to Stratton brokers, the one where they all throw shoes at him. The stock debuts at $4 a share, and thanks to Stratton's hundreds of lunatic traders, by closing it doubles to eight. In just one day, the IPO added millions to Steve Madden's value. Steve later said it felt like winning the lottery.

However, in the run up to the IPO, Steve had made a deal with Jordan. The NASDAQ said it would refuse to list Steve Madden stock as long as Jordan owned so much of it. So Jordan sold Steve more than 1 million shares, but they make a secret agreement that sometime in the future, Steve would give them back. But according to Steve, he has no intention of doing that.

He tells himself the whole deal was an illegal gray area, and hey, it was helping pay his hardworking employees. After a few months, Steve Maddenstock sinks back to $3, less than what it was worth when it originally opened. It seems like the company really is no different than the other ones that Stratton Oakmont has launched. Steve realizes he's locked himself into a sketchy deal, and his company is still struggling to find its footing. He might be making bad financial decisions, but

Steve still really knows his business, and he's about to stumble on a design that'll change it forever. By 1994, Steve is still working like a maniac to make his company a success. He's moved from working in the back of the SoHo store to a real office in Long Island City. After all these years, he still wears a t-shirt and blue jeans with a ball cap every day. Steve's figured out that having his own store gives him a significant advantage. He and his fellow designers can mock up a new shoe, make it in their factory, and have it on display within hours.

If the shoe doesn't sell, it's no big deal, because they hadn't placed a big order. And if the shoe does sell, they can ramp up production and get even more on the shelf. It gives Steve and his team a ton of flexibility, and it allows them to try out ideas that no one else is doing, like an idea someone presents to Steve in the office hallway. It's a slide with a stretchy fabric over the top of it.

The designer who brings it up tells Steve he saw something similar on a recent trip to Spain. Steve's intrigued, but to make it better, he suggests adding a platform sole. This shoe becomes the slinky. And Sarah, I know you saw every French immersion teacher in Canada wear this shoe. Okay, I will say this shoe was famous with everyone, but I do associate it the most with inappropriate French teachers. I don't know why. And it's crazy because like my mom had this shoe,

and yet in my mind it was just these teachers. But it's a great shoe. Like people now still wear this shoe. It's come back. Oh, it it's so back and it's giving me complex PTSD from French immersion class for sure. Well the slinky is one of the most iconic shoes of the 90s and it's the first Steve Madden designed to make a million dollars. In 1994 the same year he releases the slinky Steve Madden sales increased by 40 percent. A year later they hit hit $39 million,

triple what they sold the previous year. Steve starts to hit his stride. He comes out with hit shoe after hit shoe. His platform penny loafers are worn by actors on Friends and in the 90s cinema classic Clueless. Huge celebrities like Carmen Electra, Alyssa Milano, and Mary J. Blige are all wearing Steve's shoes. Jordan and Danny are thrilled by Steve's success. Steve Madden's growth gives Stratton-Oakmont a sense of legitimacy, which they sorely need. In March, Jordan settled the SEC price fixing

investigation, but per the agreement, he's banned from securities trading for life. And though the SEC let Stratton-Oakmont stay in business, Danny has to be in charge, and the firm has to comply with a strict list of regulations. While Jordan has formally resigned from Stratton, he doesn't actually stop working. He turns to Steve to see if he can set up an office at Steve Madden headquarters. And Steve doesn't feel like he can say no because of all the help Jordan has already given him. Once he's set up, Jordan spends most of his days at the office swinging golf clubs,

giving Steve unsolicited business advice and getting trashed before noon. But reportedly, Jordan is still pulling the strings at Stratton, all from within the Steve Madden building. Wow, this is so much deeper than I ever knew. I'm like truly shocked at this information and how embedded Steve Madden was in all of this because, you know, in the movie, it's just such a blip

and here it's just so crazy. Yeah, much more involved. And Jordan seems to be nearing the end of his rope. He's operating in the shadows now, so it's getting harder for him to maintain his standard of living. He starts asking Steve about the Madden stock he's been holding for him. Steve never intended to give those shares back to Jordan.

And now that his company's gotten so successful, they're worth millions of dollars. Steve knows it wasn't even legal to make the agreement in the first place. So he's pretty sure Jordan won't do anything about it. Steve tries to brush him off, but Jordan keeps bringing it back up. Then, Steve's dad dies of a heart attack, and it sends Steve into relapse. First, he starts taking his mom's sleeping pills. And then, before he knows it, he's chasing Vicodin prescriptions and taking up to seven pills at a time.

While things couldn't be better for the Steve Madden brand, Steve Madden the person is spiraling. And as the authorities dig deeper into Stratton Oakmont, it brings them even closer to Steve's front door. It's 1995 and FBI agent Gregory Coleman is looking over a list of Stratton Oakmont's clients. He's likely in some nondescript office at the FBI headquarters in a tall Manhattan monolith building. He has very central casting FBI vibes, but he is a bit on the short side with a thin smile and close cropped hair.

He used to be a stockbroker himself, but he got out of the business after a big Wall Street crash. For the last three years, he's been a part of a new FBI squad focused on Wall Street corruption. And his team is about to send out subpoenas to Stratton associates like Steve Madden. Agent Coleman suspects that Stratton's been laundering money to hide the millions they've made off their shady deals. So he's been looking for bank accounts, analyzing transactions, and following the money. But he still doesn't have what he needs. The subpoenas are meant to scare people

into talking, but it isn't working. Agent Coleman gets a lucky break a year later, in 1996, when a Swiss banker is arrested in Miami for money laundering. Under pressure from the feds, he quickly gives up a couple of his clients to get a lighter sentence, including Jordan and Danny. They had been hiding some of their cash in Switzerland, a paradise for shell companies. Agent Coleman is thrilled when he hears the news. He knows he's on the right track. Here's what he says about it later on CNBC's American Greed. It confirmed our suspicions. It confirmed that I was not going down a road

which was going to lead to a dead end. So it was, in some senses, a very big score. What is so crazy about this is these investigators were trying so hard to be able to really nab Jordan and Danny. And it really is kind of the downfall of everyone who worked with them as well, right? Exactly. And meanwhile, the SEC has also continued to monitor Stratton. They find that Danny hasn't followed the rules they set out for the firm.

So in December 1996, four years after they first charged Stratton's bosses with fraud and manipulation, the National Association of Securities Dealers forced Stratton to close its doors. Agent Coleman is firming up his case against Stratton. And soon, he'll go after Steve, using the rift between him and Jordan to crack this case wide open. It's 1997.

Steve Madden and his staff are at an industry show at the Plaza Hotel in New York. Their suite is going off. Just like in his stores, Steve wants to make it feel like a club. Music is bumping and people sip champagne while picking at platters of food. Steve is getting ready to premiere his next line, which includes a new version of the Mary Lou. Last year, his company made nearly $46 million.

They opened four retail stores and have plans to open eight more. They also created a site on the World Wide Web with some very 1996 features. A Steve Madden fan club and a chat room. It's pretty genius to do this so early on, like create a lifestyle around a brand, like around a shoe, and like get to younger people with having a website. Yeah, think of what he could have done without all the fraud. Yeah. Well, the company is also introducing a clothing line.

Their slogan is, for a customer who doesn't break the law, but does break the rules. Fitting, right? This is also the same year that Steve Madden launches their iconic Big Head ads. Sarah, what are your memories of these? Because I know they're indelible. Yeah, it's so crazy because I feel like I wasn't paying a ton of attention to fashion when these were big. But because I have older sisters, I would see them so much in like magazines and they had commercials and everything. It's these tiny women kind of look like paper dolls almost in these baddie outfits and they have these giant heads.

And it's kind of like, oh, sexy little girl. I think anytime someone's trying to understand why a millennial woman has a fucked up sense of self about her body, they should just show these ads in medical textbooks. Well yeah, they're so tiny that it's not really human, but also it's quite aspirational. Oh god, how I wanted to look like this, Sarah. Well, Steve has the vision that is defining cool for a generation of teen girls,

but he's really still just a dorky business guy. He quotes Austin Powers and uses slang that sounds awkward coming out of his mouth. He brings in feng shui experts to reorganize the company offices and Hasidic rabbis to bless them. But he's become an unlikely celebrity in his own right. He's spotted courtside at Knicks games,

and some of his most devoted teen fans will line up for hours to meet him at his stores. During the industry show at the Plaza, Steve gets a visit from his old pal, Jordan. They haven't seen each other in months since Jordan moved out of his Steve Madden office. Steve has no idea where Jordan's been or what he's been up to. And the threat of federal action is still hanging over him.

Here's Steve talking about that time years later on the Joe Budden show. The interesting thing is we built a great business and the business keeps getting bigger and bigger. People are celebrating me in New York and I know that one day I'm going to get that knock. Today is the day. Steve senses something is off in the hotel suite. Jordan seems nervous and his eyes are darting around. Steve immediately suspects that Jordan might be wearing a wire. Jordan is here to confront Steve about those stocks that Steve is holding onto. He tells Steve he wants them, and this time he really means it.

Jordan threatens Steve with a lawsuit, and this time he really means it. Jordan threatens Steve with a lawsuit, but Steve doesn't buy it. If Jordan really wants to take him to court, it would mean admitting to his scam under oath. That would be extremely dumb, especially since the feds are still sniffing around. Jordan eventually leaves in a huff. But it turns out, Steve bets wrong. In June 1997, not long after the shoe show, Jordan files a lawsuit against Steve to get his shares. Steve's lawyers try to fight it.

They still figure Jordan won't want the details of their sketchy deal out in the public. And Steve doesn't really want that either. Plus, he doesn't want to lose the shares, which are now worth around $12 million. But Jordan won't let up, and they end up going to court. Jordan even shows the judge the contract they both signed, making the secret deal about the shares. Steve says in court that he wishes he had never heard the name Jordan Belfort. He says that he was manipulated into signing the contract by someone he trusted.

They reach a settlement about nine months later and Steve is forced to pay Jordan more than $4 million. It's a big blow, but Steve knows it could have been a lot worse. And luckily, this is the last thing that connects him and his company to Jordan and Stratton Oakmont. Or so he thinks. Hello, I'm Hannah. And I'm Suriati.

And we are the hosts of Red Handed, a weekly true crime podcast. Every week on Red Handed, we get stuck into the most talked about cases. From Idaho student killings, the Delphi murders, and our recent rundown of the Murdoch saga. Last year, we also started a second weekly show, Shorthand, which is just an excuse for us to talk about anything we find interesting because it's our show and we can do what we like. We've covered the death of Princess Diana, an unholy Quran written in Saddam Hussein's blood, the gruesome history of European witch hunting, and the very uncomfortable phenomenon of genetic sexual attraction.

Whatever the case, we want to know what pushes people to the extremes of human behavior. Like can someone give consent to be cannibalized? What drives a child to kill? And what's the psychology of a terrorist? Listen to Red Handed wherever you get your podcasts and access our bonus short hand episodes exclusively on Amazon Music or by subscribing to Wondry Plus in Apple Podcasts or the Wondry app. And I feel like a legend On a September evening in 1998, Jordan and his five-year-old daughter Chani are getting into his Mercedes for a trip to Blockbuster. She wants to get the new Rugrats movie.

He puts the top down and they pull out of the driveway. It's a clear night with the first smell of fall in the air. But he notices a gray sedan parked on the street nearby. And then a woman steps out of the back seat, flashes her badge, and tells him she's from the FBI. Here's Jordan talking about it in his audio book. I looked and sure enough, those three ugly letters were staring me in the face.

F-B-I. I smiled and said ironically, I guess you guys aren't here to borrow a cup of sugar, right? This guy is smarmy through and through. It's just like, give it a rest, man. Well, the agents tell him to take his daughter back to the house. And once they're there, they slap handcuffs on him,

and he's told he's under arrest for securities fraud and money laundering. In a matter of minutes, Agent Coleman pulls up to the scene with at least 20 other agents. He and Jordan attempt an awkward handshake, even though Jordan's hands are cuffed. And according to Jordan, Coleman calls him a wily adversary.

The next day, Danny is arrested in Boca Raton, Florida. He and Jordan soon learn that they're both facing more than 20 years in jail for securities fraud and money laundering. It's too much for either of them to handle. And after only a week in jail, they each decide to cooperate. Agent Coleman offers them a deal. If they agree to help him build cases against other people involved in the scam, he'll try to get them shorter sentences.

Here he is talking about it on the podcast, Crime Waves with Declan Hill. We made telephone tapes, we made in-person body recordings, we did money laundering payoffs where people were literally bringing bags of cash and then we would arrest them sort of like a by-bus type thing. Coleman gets Jordan and Danny to flip on their lawyers, their accountants, their bankers, fellow brokers, and their clients, like Steve Madden. He is of particular interest to the FBI because he was really the only Stratton client to succeed.

When questioned, Jordan admits that Steve had been involved, and Danny tells the feds that Steve had been deep into the fraud with them. On September 23, 1999, both Jordan and Danny plead guilty to 10 counts of securities fraud and money laundering. And because they're a couple of snitches, they do get off with lighter sentences. Jordan gets just four years in prison, and Danny is sentenced to a little over three. Much less than the 20 they were each up against.

Around the same time, Coleman and the FBI go public with the information that Jordan and Danny were cooperating. News that makes its way to Steve. And now Steve has no choice but to wait for the other shoe to drop. On June 20, 2000, nine months after Danny and Jordan pled guilty, Steve wakes up to dozens of missed calls and text messages. Everyone is frantically telling him to get out of his building. One of the people trying to reach him is a family member who has been living

in Steve's old apartment, which is in the same building, and he was woken up by the cops at his door. Unfortunately for him, that's where the police still think Steve lives. When Steve reads these messages, he throws on a pair of jeans, an old T-shirt, and sneaks out using the freight elevator. He goes straight to meet with his lawyer, and together they go to federal court so Steve

can turn himself in. He soon meets with prosecutors who hope he's as cooperative as Jordan and Danny. They want to know if he has anything to offer and if he would be willing to wear a wire. But Steve declines. As terrified as he is about going to prison, he says he would rather face it than go through all the trouble of becoming a rat. Steve is indicted for stock manipulation, money laundering, and securities fraud.

He's charged with helping manipulate 22 IPOs. After pleading not guilty, Steve is released on a $750,000 bail, but the day just keeps getting worse for him because the SEC then files a complaint against him. And when the news goes public, Steve Maddenstock loses nearly 15% of its value. I mean, is that really so huge

if the founder of the company is involved in very shady dealings? Like 15% does not sound like a lot considering how publicized these crimes are. Yeah, it does sound like it could maybe be more. But about a year later, Steve resigns as CEO of the company and takes on a new title, Chief Creative Officer. And then a few weeks later, he pleads guilty to two counts of securities fraud and money laundering. He's sentenced to nearly four years in prison. And then a year after that, in June 2002, Steve hosts a big party at Shoe Week in New York to send

himself off with a bang. Ironically, Joan Jett performs the song, I Don't Give a Damn About My Reputation. But there is an inevitable cloud over the whole soiree. According to a New York Times reporter, Steve hides away in the VIP area. Yeah, I think I would too. It's pretty brave of him to go to that party at all. Steve checks into prison on August 15, 2002. But he continues to stay on his company's payroll. He makes $700,000 a year for consulting.

He enters a drug rehab program to stay sober. And also while in prison, Steve becomes very close to a former office manager who becomes a regular visitor. Her name is Wendy, and they get so close that he proposes while still in prison. He ends up serving a little less than three years. That's even more time than Jordan, the real mastermind who was released after 22 months. Steve's company welcomes him back with open arms. They've been referring to his prison stint as his time away. Soon after, Wendy and Steve get married

and eventually have three kids, something he never thought would happen. Unfortunately, it's not a forever love and they get divorced in 2015 after 10 years together. Ultimately, Steve Madden's true love is Steve Madden, the brand. Steve continues to work at the company he built. Today, his title is just founder or as he describes it, chief cheerleader. And the company is actually doing really well.

It brought in $2 billion in 2023. Yeah, Steve Madden is still quite big. Like they have reliably middle ofof-the-road shoes that are stylish. I'm still wearing those Mary Janes. Well, Danny was accused of fraud again in 2008. He was working as a director of a medical supply company named Christian Diabetics.

A whistleblower claimed in a lawsuit that telemarketers at the company used high-pressure tactics to convince people to buy medical supplies they probably didn't need. Ultimately, a judge threw the case out for a lack of evidence, but the company reached a settlement with the whistleblower over claims of sexual assault. Oh, and Nancy sued him for skipping out on child support payments. Jordan became a public speaker and helped produce the movie based on his book and life.

He published another book in 2023 called The Wolf of Investing about how to safely invest for the long term. Sarah, I can't believe these beautiful, ugly, chunky, weird shoes that I still love were so complicated. I had no idea that this story was this complicated. I truly just knew he was kind of involved in a weird thing. I personally thought he got duped, but I don't think he did.

I think at the beginning maybe he like got swept up with these guys who seemed to know what they were talking about. And I do think he believed them when he was like, this can't be illegal if we're doing it. And if like Bear Stearns is signing off on the deals. But I think if we've learned anything about the stock market, it's that like a lot of these investment banks are also kind of in on it. Yeah, it's hard to know, I will say, what is legal and, you know, kind of wink wink illegal when it comes to stock trading because the rules seem to be all over the place. Like we saw what happened with Martha Stewart, but I feel like people must be doing that quite often.

Like, you know what I mean? I just think it's... It is a gray area, which is also maybe why you need to be more vigilant than not. Do you think that Steve Madden, the brand, and Steve Madden, the guy, that they could have been successful without doing this fraudulently? Like, again, we liked those shoes. I think so. I mean, the thing about Steve Madden that I learned is that he was like very tenacious.

Like he would not stop. Like he, if he hadn't committed these crimes, I feel like he would have been an inspirational story for, you know, grind set hustle kind of people where it's like, and he never stopped. He was flat broke and he kept going on with the shoes and blah, blah, blah. But I do think he could have been successful.

Maybe it would have been a longer road. The other thing that makes me nuts about the story is that in classic scam flincers form, Jordan, who is the most responsible, I think, and also the most influential is the most fine. Like he got out so fast and now he just like writes books and makes podcasts and talks for a living, that should be illegal.

He's straight up is a celebrity and remained one. Like he's constantly reinventing himself. People still look to him for financial advice. He really is like the king of scammers. I do think if you do a fraud like this, the punishment should be that you have to shut the fuck up forever. 100%.

It's kind of like when people commit a crime and are banned from something. It's like, no, this guy should not be allowed to be giving out financial advice and to be writing these books and to just be kind of celebrating his image in that way. It's so twisted to me that he hasn't been shamed out of public existence. Has the saga of Steve Madden taught you anything? Did you learn anything other than the fact that, um, I would like to go shopping for boots? I think it taught me to just, like,

ignore the stock market entirely. I think I just never want to know more. I don't want to even do the little investments. It's not real. It is a game people play. You can get sucked in even with the promise of a lot of wealth. And yeah, you know what? I think we should go off grid for finances.

Buying bars of gold, burying them, you know. I guess I'm turning into a conspiracy theorist. Cool. You know, I think sometimes a lack of information is a gift. Yeah, you know what, that's not my business. I don't need to know these things. If you like scam flincers, you can listen to every episode early and ad-free right now

by joining Wondry Plus in the Wondry app or on Apple podcasts. Prime members can listen ad-free on Amazon Music. Before you go, tell us about yourself by filling out a short survey at Wondry.com slash survey. This is Steve Madden, the Cobbler Con. I'm Slotchi Cole. And I'm Sarah Haggye. If you have a tip for us on a story that you think we should cover, please email us at scamfluencers at wonderi.com.

We use many sources in our research. A few that were particularly helpful were Steve Madden, Crisis of the Soul, by Joanna Berkman in New York Magazine. Steve Madden is back by Laura M. Holson in the New York Times. Here's the real story behind those Steve Madden slides everyone had in the 90s by Kara McGrath and Bustle, the documentary Mad Men, The Steve Madden Story, and The Cobbler, How I Disrupted an Industry, Fell from Grace, and Came Back Stronger Than Ever

by Steve Madden. Jessica Ford wrote this episode. Additional writing by us, Sachi Cole and Sarah Hagge. Sarah Eni is our story editor and senior producer, and Eric Thurm is our story editor. Fact-checking by Meredith Clark. Sound design by James Morgan. Additional audio assistance provided by Adrienne Tapia.

Our music supervisor is Scott Velazquez for Freeze on Sync. Our managing producers are Desi Blaylock and Matt Gant. Janine Cornelow and Stephanie Jens are our development producers. Our associate producers are Charlotte Miller and Lexi Peary. Our producers are John Reed, Yasmin Ward, and Kate Young. Our senior producers are Ginny Bloom and Jen Swan. Our executive producers are Jenny Lauer Beckman, Marshall Louie, and Erin O'Flaherty for Wondry.

Wondry. In 2001, less than a month after the 9-11 attacks, the US and allied forces invaded Afghanistan. The goal was simple, hunt down al-Qaeda and its leader, Osama bin Laden, and unseat the Taliban government that sheltered him. But even though the Taliban was quickly removed, negotiating an end to the war turned out to be a much bigger challenge. Despite some of the world's best negotiators working tirelessly for peace, all sides were never able to come

to a negotiated agreement and in 2021, 20 years after being ousted from power, the Taliban took back control of Afghanistan. So why did some of the world's smartest and most experienced negotiators fail for 20 years to mediate a peace deal in Afghanistan? The Afghan Impasse, a special seven episode edition of The Negotiators, a podcast from Doha Debates and Foreign Policy, looks back on the players, politics, and strategies that contributed to one of the biggest failures in modern peace negotiations. You can listen to The Negotiators, the Afghan impasse, exclusively on Wondery Plus. Join Wondery Plus in the Wondery app, Apple Podcasts, or Spotify.