Ultimate Resource On The 1MDB Scandal Involving Goldman Sachs, Celebrities, Politicians, Etc. (#GotBitcoin)
Armed with a seemingly bottomless supply of cash, an unassuming Malaysian named Jho Low staged the ultimate extravaganza. Ultimate Resource On The 1MDB Scandal Involving Goldman Sachs, Celebrities, Politicians, Etc. (#GotBitcoin)
Las Vegas, Nov. 3-4, 2012
Around 6 p.m. on a warm, cloudless November night, Pras Michél, a former member of the ‘90s hip-hop trio the Fugees, approached one of the Chairman Suites on the fifth floor of the Palazzo hotel. He knocked and the door opened, revealing a rotund man, dressed in a black tuxedo, who flashed a warm smile. The man, glowing slightly with perspiration, was known to his friends as Jho Low, and he spoke in the soft-voiced lilt common to Malaysians. “Here’s my boy,” Mr. Low said, embracing the rapper.
The Chairman Suites, at $25,000 per night, were the most opulent the Palazzo had to offer, with a pool terrace overlooking the Strip. But the host didn’t plan to spend much time in the room that night; Mr. Low had a much grander celebration in store for his 31st birthday.
The Chairman Suites, at $25,000 per night, were the most opulent the Palazzo had to offer, with a pool terrace overlooking the Strip. But the host didn’t plan to spend much time in the room that night; Mr. Low had a much grander celebration in store for his 31st birthday.
This was just the pre-party for his inner circle, who had jetted in from across the globe. Guzzling champagne, the guests, an eclectic mix of celebrities and hangers-on, buzzed around Mr. Low as more people arrived. Swizz Beatz, the hip-hop producer and husband of Alicia Keys, conversed animatedly with Mr. Low. At one point, Leonardo DiCaprio arrived alongside Benicio Del Toro to talk to Mr. Low about some film ideas.
What did the guests make of their host? To many at the gathering, Mr. Low cut a mysterious figure. Hailing from Malaysia, a small Southeast Asian country, Mr. Low had a round face that was still boyish, with glasses, red cheeks, and barely a hint of facial hair. His unremarkable appearance was matched by an awkwardness and lack of ease in conversation, which the beautiful women around Mr. Low took to be shyness. Polite and courteous, he never seemed fully in the moment, often cutting short a conversation to take a call on one of his half a dozen cellphones.
But despite Mr. Low’s unassuming appearance, word was that he was loaded—maybe a billionaire. Guests murmured to each other that he was the money behind Mr. DiCaprio’s latest movie, “The Wolf of Wall Street,” which was still filming. Mr. Low’s bashful manners belied a hard core of ambition the like of which the world rarely sees.
Look more closely, and Mr. Low wasn’t so much timid as quietly calculating, as if computing every human interaction, sizing up what he could provide for someone and what they, in turn, could do for him.
Despite his age, Mr. Low had a weird gravitas, allowing him to hold his own in a room of grizzled Wall Street bankers or pampered Hollywood types. For years, he had methodically cultivated the wealthiest and most powerful people on the planet. The bold strategy had placed him in their orbit and landed him a seat here in the Palazzo. Now, he was the one doling out favors.
The night at the Palazzo marked the apex of Mr. Low’s ascendancy. The guest list for his birthday included Hollywood stars, top bankers from Goldman Sachs , and powerful figures from the Middle East. In the aftermath of the U.S. financial crisis, they all wanted a piece of Mr. Low.
Pras Michél had lost his place in the limelight since the Fugees disbanded, but was hoping to reinvent himself as a private-equity investor, and Mr. Low held out the promise of funding. Some celebrities had received hundreds of thousands of dollars in appearance fees from Mr. Low just to turn up at his events, and they were keen to keep him happy.
But even those stars couldn’t really claim to know Mr. Low’s story. If you entered “Jho Low” into Google, very little came up. Some people said he was an Asian arms dealer. Others claimed he was close to the prime minister of Malaysia. Or maybe he inherited billions from his Chinese grandfather. Casino operators and nightclubs refer to their highest rollers as “whales,” and one thing was certain about Mr. Low: He was the most extravagant whale that Vegas, New York, and St. Tropez had seen in a long time—maybe ever.
A few hours later, just after 9 p.m., Mr. Low’s guests began the journey to the evening’s main event. As the limousines drove up the Strip, it was clear they weren’t heading to the desert, as some guests thought, instead pulling up at what looked like a giant aircraft hangar, specially constructed on a vacant parcel of land.
Among those present was Robin Leach, who for decades, as host of the TV show “Lifestyles of the Rich and Famous,” had chronicled the spending of rappers, Hollywood stars, and old-money dynasties. But that was the 1980s and 1990s, and nothing had prepared him for the intemperance of the night.
A gossip columnist for the Las Vegas Sun, Mr. Leach was among the few guests who had gleaned some details of what was coming. “Wicked whispers EXCLUSIVE: Britney Spears flying into Vegas tomorrow for secret concert, biggest big bucks private party ever thrown,” he tweeted.
It must have cost millions, Mr. Leach estimated. Here were new lovers Kanye West and Kim Kardashian canoodling under a canopy; Paris Hilton and heartthrob River Viiperi whispering by a bar; actors Bradley Cooper and Zach Galifianakis, on a break from filming “The Hangover Part III,” laughed as they took in the scene. “We’re used to extravagant parties in Las Vegas, but this was the ultimate party,” Mr. Leach said. “I’ve never been to one like it.”
Mr. Low was careful not to overlook his less well-known friends and key business contacts. Among the guests were Tim Leissner, a German-born banker who was a star deal maker for Goldman Sachs in Asia. There were whispers among Wall Street bankers about the huge profits Goldman had been making in Malaysia, hundreds of millions of dollars arranging bonds for a state investment fund, but they hadn’t reached insular Hollywood.
The crowd was already lively when Jamie Foxx started off the show with a video projected on huge screens. It featured friends of Mr. Low from around the world, each dancing a bit of the hit song “Gangnam Style.” As the video ended, Psy, the South Korean singer who had shot to stardom that year for “Gangnam Style,” played the song live as the crowd erupted.
Over the following hour and a half, there were performances from Redfoo and the Party Rock Crew, Busta Rhymes, Q-Tip, Pharrell, and Swizz Beatz, with Ludacris and Chris Brown, who debuted the song “Everyday Birthday.”
During Q-Tip’s session, a drunk Mr. DiCaprio got on stage and rapped alongside him. Then, a giant faux wedding cake was wheeled on stage.
After a few moments, Britney Spears, wearing a skimpy, gold-colored outfit, burst out and, joined by dancers, serenaded Mr. Low with “Happy Birthday.” Each of the performers earned a fat check, with Ms. Spears reportedly taking a six-figure sum for her brief cameo.
Then the gifts. The nightlife impresarios who helped set up the party, Noah Tepperberg and Jason Strauss, stopped the music and took a microphone. Mr. Low had spent tens of millions of dollars in their clubs Marquee, TAO, and LAVO over the past few years, just as the financial crisis hit and Wall Street high rollers were feeling the pinch.
He was their No. 1 client, and they did everything to ensure other nightclub owners didn’t steal him away. As Messrs. Tepperberg and Strauss motioned to staff, a bright red Lamborghini was driven out into the middle of the marquee.
Someone gave not one but three high-end Ducati motorcycles. Finally, a ribbon-wrapped $2.5 million Bugatti Veyron was presented by Szen Low to his brother.
Just after 12:20 a.m., the sky lit up with fireworks. Partying went into the early hours, with performances by Usher, DJ Chuckie, and Kanye West. Surrounded by celebrities and friends, Mr. Low piled into a limousine and brought the party back to the Palazzo, where he gambled well into the bright light of Sunday afternoon.
This Was The World Built By Jho Low
“While you were sleeping, one Chinese billionaire was having the party of the year,” began an article on the website of local radio station KROQ two days later, mistaking Mr. Low’s nationality. It referred to him as “Jay Low.” It wasn’t the first time Mr. Low’s name seeped into the tabloids or was associated with extravagance—and it wasn’t the last—but the Vegas birthday party was a peak moment in his strange and eventful life.
Many of those who came across Mr. Low wrote him off as a big-talking scion of a rich Asian family. Few people asked questions about him, and those who bothered to do so discovered only fragments of the real person. But Mr. Low wasn’t the child of wealth, at least not the kind that would finance a celebrity-studded party.
His money came from a series of events that are so unlikely, they appear made up. Even today, the scale of what he achieved—the global heists he is suspected of having pulled off, allowing him to pay for that night’s party and much, much more—is hard to fathom.
Mr. Low might have hailed from Malaysia, but his was a 21st-century global scheme. His alleged co-conspirators came from the world’s wealthiest 0.1%, the richest of the rich, or people who aspired to enter its ranks: young Americans, Europeans and Asians who studied for M.B.A.s together, took jobs in finance, and partied in New York, Las Vegas, London, Cannes and Hong Kong.
The backdrop was the global financial crisis, which had sent the U.S. economy plummeting into recession, adding to the allure of a spendthrift Asian billionaire like Mr. Low.
Armed with more liquid cash than possibly any individual in history, Mr. Low infiltrated the very heart of U.S. power. He was enabled by his obscure origins and the fact that people had only a vague notion of Malaysia. If he claimed to be a Malaysian prince, then it was true. The heir to a billion-dollar fortune? Sure, it might be right, but nobody seemed to care.
Not Leonardo DiCaprio and Martin Scorsese, who were promised tens of millions of dollars to make films. Not Paris Hilton, Jamie Foxx and other stars who were paid handsomely to appear at events. Not Jason Strauss and Noah Tepperberg, whose nightclub empire was thriving.
Not the supermodels on whom Mr. Low lavished multimillion-dollar jewelry. Not the Wall Street bankers who made tens of millions of dollars in bonuses. And certainly not Mr. Low’s protector, Malaysian Prime Minister Najib Razak.
Mr. Low’s purported scheme involved the purchase of storied companies, friendships with the world’s most celebrated people, trysts with extraordinarily beautiful women, and even a visit to the White House—most of all, it involved an extraordinary and complex manipulation of global finance.
The FBI is still attempting to unravel exactly what occurred. Billions of dollars in Malaysian government money, raised with the help of Goldman Sachs, is believed to have disappeared into a Byzantine labyrinth of bank accounts, offshore companies, and other complex financial structures.
Tim Leissner, who left Goldman in 2016, is now in plea-deal talks with U.S. authorities. Goldman has said it had no way of knowing there might be fraud surrounding the Malaysian government funds.
As the scheme began to crash down around them, Malaysia’s prime minister turned his back on democracy in a failed attempt to cling to power. After a stunning election loss in May, he is now under arrest and facing charges including money laundering. He has denied wrongdoing.
Wanted for questioning by the FBI, Mr. Low is a fugitive moving between Hong Kong, Macau and mainland China as Malaysia seeks his arrest. Through a spokesman, he maintains his innocence.
“Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood and the World” is the result of three years of research, drawing on interviews with more than 100 people in more than a dozen countries. Every anecdote is based on the recollections of multiple sources and in some cases backed up by photographs, videos and other documentation.
The authors reviewed tens of thousands of documents, including public court records and confidential investigative and financial records, as well as hundreds of thousands of emails provided to authorities during the course of probing the case. They also relied on official allegations contained in the U.S. Justice Department’s civil asset-forfeiture cases, as well as court proceedings in Singapore and official reports by Swiss authorities.
Rosmah Mansor, Wife of Former Malaysian Leader, Charged With Money Laundering Related to 1MDB Scandal
Malaysia’s former first lady, who faces charges of violating money-laundering laws and evading taxes, is free on bail.
Malaysian prosecutors charged the wife of former Prime Minister Najib Razak with 17 counts of violating money-laundering laws, including tax evasion, on Thursday in relation to one of the world’s biggest financial scandals.
The latest development follows a wave of criminal charges leveled against Mr. Najib by the government of Prime Minister Mahathir Mohamad, which has opened investigations into 1Malaysia Development Bhd., or 1MDB, a state investment fund established by Mr. Najib in 2009.
The former first lady, who is known for her lavish spending, is seen by investigators as a central force in the scandal.
Investigators and people close to her told journalists that she possessed extensive influence over decisions made by Mr. Najib when he was premier.
Rosmah Mansor, 66 years old, pleaded not guilty to all the charges, which included evading taxes of more than 7 million ringgit ($1.7 million). If convicted of money laundering, Ms. Rosmah could be imprisoned for up to 15 years and face fines of not less than five times the sum or value of the proceeds from the criminal activity.
Ms. Rosmah was detained in custody overnight by antigraft authorities before being presented at the court in Kuala Lumpur to face the charges. The judge has granted her bail on the condition that she surrenders her passport and not harass witnesses in the trial.
The former first lady left the court complex with Mr. Najib after paying a quarter of the 2 million ringgit ($483,200) bail on Thursday and has pledged to pay the remainder by Oct. 11. The judge set the next hearing date on Nov. 8.
Separately, Mr. Najib also appeared in court for procedural matters connected to some of the 32 charges that have been brought against him, including money laundering, abuse of power and criminal breach of trust. On Wednesday evening, he posted on his Facebook page urging prayers and hope.
“Malaysians will be very happy to see that Ms. Rosmah has been finally charged… and many want to see charges against the son,” said James Chin, a Malaysian analyst who heads the Asia Institute at the University of Tasmania.
In civil lawsuits, the U.S. Department of Justice says at least $4.5 billion was misappropriated from 1MDB, which, if true, would make it one of the largest-ever financial heists.
In addition to the U.S., Malaysia, Singapore and Switzerland have launched criminal investigations into 1MDB. The Swiss Attorney-General has said that around $7 billion originating from 1MDB and a former unit flowed through the global financial system between 2009 and 2015.
Mr. Najib tried to quash an investigation into the 1MDB scandal when it exploded in 2015 after reporting by journalist. But he was swept from office in May after Mr. Mahathir, his former mentor-turned-foe, campaigned on an anticorruption platform. Previously, Malaysia’s then-attorney general had cleared Mr. Najib in an earlier investigation into malfeasance at 1MDB.
“The big winner in all this will be Mr. Mahathir. To ordinary Malaysians, it looks like he has kept to his election promise that he will jail anyone who stole from 1MDB,” Mr. Chin, the analyst, said.
Since July, Mr. Najib, 65 years old, has pleaded not guilty to 32 charges related to the scandal, including criminal breach of trust, money laundering and abuse of power.
Some stem from a sum of more than $600 million that allegedly entered his personal bank accounts ahead of an election campaign in 2013 that his coalition narrowly won.
Mr. Najib has said the money didn’t come from 1MDB or public entities and described it as a “contingency fund” to aid his coalition in those elections. He and the state fund have repeatedly denied wrongdoing.
Mr. Najib is free on nearly $850,000 in bail and trials are due to begin in February. If convicted, the abuse of power counts are punishable by up to 20 years in prison, while the maximum penalty for money laundering is 15 years.
The Malaysian Anti-Corruption Commission has conducted several marathon rounds of questioning Ms. Rosmah in investigations related to 1MDB, including into SRC International Sdn Bhd., a former unit of 1MDB established in 2011 as a vehicle for overseas energy investments. SRC was placed under the Finance Ministry’s control in 2012.
Ms. Rosmah’s spending for years made her a lightning rod for anger over suspected corruption and Malaysians have singled her out for much of the blame for the scandal. Ms. Rosmah previously described criticism of her spending as politically motivated.
Ms. Rosmah has accumulated one of the world’s largest collections of pink diamonds, according to a Malaysian businessman who said he helped select some of the gems.
One diamond she acquired was valued at $27 million, according to the U.S. Justice Department. A man U.S. investigators believe played a critical role in the 1MDB affair—and who has also described helping procure diamonds for Ms. Rosmah—has estimated her collection’s value at $350 million.
Raids on Najib residences have unearthed $28 million in cash stuffed into suitcases and more than $266 million worth of handbags, luxury watches, jewelry and other goods, police said.
The Malaysian investigation has also focused on Mr. Najib’s stepson, Riza Aziz, who faced four days of questioning by antigraft officials in July.
A Justice Department lawsuit details how Mr. Riza, a onetime banker, allegedly received tens of millions of dollars from 1MDB, which U.S. officials say he used to buy property in London, Los Angeles and New York and to finance a Hollywood film company. Mr. Riza has denied any wrongdoing.
Yacht Seized by Malaysia Goes Up for Auction
A $250 million superyacht seized by Malaysia in its probe of corruption linked to state fund 1MDB is now up for auction. The wife and sons of former Prime Minster Najib Razak were questioned again as the investigation continues. Mr. Najib, who denies wrongoing, walked out of a TV interview when asked about the scandal.
Justice Department To Charge Former Goldman Bankers In Malaysia 1MDB Scandal
Charges will name former Goldman bankers Tim Leissner and Roger Ng, as well as Malaysian financier Jho Low.
The U.S. Justice Department is planning to announce Thursday morning multiple criminal charges related to a multibillion-dollar Malaysian sovereign-wealth fund scandal, including against two former Goldman Sachs bankers and Malaysian financier Jho Low, according to people familiar with the matter.
Tim Leissner, former partner for Goldman Sachs in Asia, is expected to plead guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act, the people familiar said. He will forfeit $43.7 million, they said.
Roger Ng, the other former Goldman banker, and Jho Low, the Malaysian financier who allegedly masterminded the fraud, will be indicted, the people familiar said. Mr. Ng was arrested in Malaysia, while Mr. Low is at large and was last seen in China.
U.S. prosecutors have previously filed civil asset forfeiture suits to seize assets allegedly purchased with funds stolen from the fund, called 1Malaysia Development Bhd, or 1MDB. These are the first criminal charges against individuals from the Justice Department in the case.
Calls to Mr. Leissner’s attorneys weren’t immediately returned. Mr. Ng couldn’t immediately be reached for comment.
U.S. Attorney General Jeff Sessions called the 1MDB scandal “kleptocracy at its worst” in a speech last December.
Goldman Sachs’s Ex-CEO Lloyd Blankfein Met Malaysian at Center of 1MDB Scandal
Second of two meetings came after bank’s compliance department had raised concerns about dealings with financier Jho Low.
Former Goldman Sachs Chief Executive Lloyd Blankfein attended two meetings with a Malaysian financier at the center of one of the world’s largest financial scandals, including one after the Wall Street bank’s compliance department had raised multiple concerns about the financier’s background and said the bank shouldn’t do business with him.
The financier, Jho Low, was indicted this month by the U.S. Justice Department and charged with helping steal billions of dollars from 1Malaysia Development Bhd., an investment fund that he helped run from behind the scenes.
The Justice Department further alleges that two Goldman Sachs bankers participated in the schemes while hiding their collaboration with Mr. Low from Goldman’s management in New York.
The meetings, held in 2009 and 2013 for Mr. Blankfein to meet Najib Razak, Malaysia’s then prime minister, included discussions of 1MDB, according to people familiar with the meetings.
A Goldman spokesman said Mr. Blankfein met many people in his 12-year tenure atop the bank, and couldn’t have known Malaysia’s leader would bring Mr. Low to either meeting. Mr. Blankfein has no recollection of meeting Mr. Low, he said. There is no indication Mr. Blankfein was aware of the bank’s compliance concerns about Mr. Low at the time.
Asked last week at a public forum about the developing scandal, Mr. Blankfein laid the blame on rogue employees. “These are guys who evaded our safeguards and lie,” he said.
The Justice Department is continuing to investigate Goldman’s role in the 1MDB scandal, including which bankers were aware of Goldman’s interactions with Mr. Low and how the bank handled the matter once it learned of the alleged fraud.
The bank is also investigating, searching hundreds of thousands of pages of emails, calendars and travel records of employees involved in the deals.
Goldman helped 1MDB raise more than $6.5 billion through three bond issuances in 2012 and 2013, and in the process made around $600 million in profits. Over half of the sum raised was allegedly stolen by Mr. Low and others in a scheme Mr. Low masterminded, according to the Justice Department indictment. The bank has said it couldn’t have known what would happen to the money it helped raise.
Mr. Low, who Malaysia’s government believes is in China, has denied wrongdoing.
Tim Leissner, Goldman’s former chairman of Southeast Asia, pleaded guilty in August to conspiring to launder money and violate foreign anti-bribery laws for helping siphon billions of dollars from the bond deals, according to filings made public last week.
Former Goldman managing director Roger Ng was indicted on three counts of conspiring to violate foreign antibribery laws and launder money, the filings show.
When he pleaded guilty in U.S. District Court in Brooklyn, Mr. Leissner said he “conspired with other employees and agents of Goldman Sachs very much in line of its culture of Goldman Sachs to conceal facts from certain compliance and legal employees of Goldman Sachs,” according to a heavily redacted transcript of the hearing, released Friday.
“I and several other employees of Goldman Sachs at the time also concealed that we knew that Jho Low was promising and paying bribes and kickbacks to foreign officials to obtain and retain 1MDB business for Goldman Sachs,” Mr. Leissner said, adding that he and his co-workers knew some of the cash for the bribes came from the bonds Goldman sold for 1MDB.
An attorney for Mr. Leissner declined to comment on the indictment. Mr. Ng, who is under arrest in Malaysia, couldn’t be reached.
The indictment also named an “Italian national” at Goldman as a co-conspirator who allegedly helped keep Mr. Low’s involvement in 1MDB hidden from the bank’s management in New York. People familiar with the matter say the person is Andrea Vella, a Hong Kong-based partner who helped structure the 1MDB bonds and rose to be co-head of investment banking in Asia.
Goldman put Mr. Vella on leave after the indictment was unsealed last week. He had been stripped of his management responsibilities two weeks earlier in a management shakeup. Mr. Vella, who hasn’t been charged with any wrongdoing, didn’t respond to a request for comment.
In 2015, after news about 1MDB broke in international media, Goldman moved to reduce the size of its Singapore office, through which much of the 1MDB bond transaction business had been run.
One of the executives on a list of people to be laid off at the time, a Swiss national named Cyrus Shey who had worked closely with Mr. Vella on the 1MDB bonds, was unhappy about being fired, according to a person familiar with the matter.
Mr. Vella told colleagues at Goldman he was concerned Mr. Shey could go public with details about 1MDB at a time of scrutiny of the business, and he interceded to ensure Mr. Shey wasn’t immediately let go, according to the person.
Mr. Shey later got a $1.5 million private loan from Mr. Leissner, who was then Goldman’s chairman of Southeast Asia, the person said. Mr. Leissner left the bank in early 2016.
Mr. Shey didn’t respond to questions. His lawyer said Mr. Shey never planned to discuss 1MDB publicly; the lawyer didn’t respond to questions about the private loan from Mr. Leissner.
Mr. Leissner and his lawyer didn’t respond to requests for comments for this article.
The Justice Department indictment alleges that Messrs. Leissner and Ng sought to cover up their activities by repeatedly assuring Goldman executives Mr. Low wasn’t involved in their work with 1MDB, even as Mr. Low kept turning up at meetings.
The first meeting attended by Mr. Blankfein in November 2009, in New York’s Four Season’s hotel, was set up by Messrs. Leissner and Ng for Goldman to pursue deals with 1MDB, according to an affidavit, made public last week, from an FBI agent involved in the investigations.
Two months earlier, Mr. Leissner had attempted to get Mr. Low an account with Goldman’s private bank in Switzerland, but was turned down because of compliance concerns about the source of Mr. Low’s wealth, the affidavit says. Mr. Blankfein’s attendance alongside Mr. Low and then-Prime Minister Najib at the 2009 meeting was first reported by Bloomberg.
In the following years, as Goldman helped 1MDB raise money, the role of Mr. Low at the fund was a constant source of concern for the bank’s New York-based compliance executives and lawyers, the affidavit says. Two former Goldman executives based in Asia said Mr. Low’s role in the fund was widely talked about in the office.
Lawyers and members of Goldman committees that vet deals constantly asked Mr. Leissner by email and in meetings whether Mr. Low was involved. On multiple occasions, Mr. Leissner denied that Mr. Low played any role, according to the affidavit.
In March 2013, Goldman sold the last of three bonds for 1MDB. On March 10, just over a week ahead of the $3 billion bond issuance, a meeting of a New York-based committee that decides what deals and clients Goldman should back quizzed Mr. Leissner about Mr. Low’s role as an intermediary at 1MDB, the affidavit says.
After the deal, in late April, a member of the committee emailed Mr. Leissner with further concerns about Mr. Low’s role, the affidavit adds. Mr. Leissner denied Mr. Low had any involvement, according to the affidavit.
Just a few months later, in September 2013, Mr. Blankfein met Mr. Low for a second time. Mr. Leissner arranged for Mr. Najib, Malaysia’s then prime minister, to sit down with around 20 high-level Goldman clients at New York’s Mandarin Oriental hotel. Mr. Low attended with Mr. Najib, people familiar with the matter say.
In late 2014, Mr. Blankfein praised Messrs. Leissner and Vella for their efforts in arranging business with Malaysia.
“Look at what Tim and Andrea did in Malaysia,” he told a meeting in New York on how to build business in growth markets. “We have to do more of that.”
Goldman Sachs Sued Over ‘Central Role’ in 1MDB Scandal
An Abu Dhabi sovereign-wealth fund says the bank enabled bribes.
An Abu Dhabi sovereign-wealth fund accused Goldman Sachs GS +1.68% Group Inc. in a lawsuit Wednesday of playing a “central role” in an international corruption scandal and enabling bribes to former top executives at the fund.
International Petroleum Investment Company, a one-time investment partner of scandal-struck 1Malaysia Development Bhd., or 1MDB, named Goldman in a lawsuit filed in a state court in New York. The suit, which also named several other individuals associated with 1MDB, didn’t specify the amount of damages IPIC was seeking.
“Goldman Sachs conspired with others to bribe IPIC’s and Aabar’s former executives,” the court filing said, referring to IPIC’s subsidiary Aabar Investments PJS.
“We are in the process of assessing the details of allegations and fully expect to contest the claim vigorously,” a Goldman spokesman said in a statement.
The filing comes on the heels of a Justice Department criminal case unsealed earlier in November against former Goldman executives, alleging they and others were involved in a conspiracy to defraud the Malaysian fund of billions of dollars.
The move is a sign that the 1MDB scandal, a reputational black eye for Goldman, could spill over into its banking business. IPIC and its successor, Mubadala Investment Co., are longtime investment-banking clients, having hired Goldman for years to advise on and raise money for deals.
Any moves by Abu Dhabi to shift business away from Goldman could influence other governments in the Middle East, especially Saudi Arabia, where it has a strong voice, according to people familiar with the bank’s regional business.
Sovereign-wealth funds are key for Goldman, which identified them as a source of new business. Last year, Goldman revamped its banker network to better cover these state-backed funds and in 2018 hired Dina Powell, an experienced foreign policy hand, from the White House to oversee its relationships with sovereigns.
Former Goldman Sachs partner Tim Leissner, who traveled to Abu Dhabi on multiple occasions to meet with IPIC executives during the 1MDB dealings, pleaded guilty to conspiracy to money laundering and violating antibribery laws in the Justice Department case unsealed earlier in November.
Former Goldman managing director Roger Ng was arrested in Malaysia on a warrant, where he is fighting extradition to the U.S. The Justice Department also indicted the Malaysian financier at the center of the scheme, Jho Low, who denies any wrongdoing and is believed to be living in China.
The criminal complaints allege that Mr. Leissner conspired with Mr. Low and IPIC executives to siphon away billions of dollars, sharing the proceeds.
Goldman, which earned $600 million in fees over two years for advising 1MDB on a series of bond sales, has maintained it acted appropriately and had no knowledge of wrongdoing by its former employees. IPIC guaranteed $3.5 billion of the bonds for 1MDB over roughly one year, a deal where Goldman earned nearly half its fees on its 1MDB-related work.
From 2012 to 2014, IPIC officials entered into a series of deals with 1MDB that purported to invest in Malaysian development projects, such as real estate and power stations. Prosecutors in the U.S. and Malaysia allege the deals were elaborate scams to siphon money away for the benefit of individuals involved.
IPIC said the New York filing was one of three actions it took Wednesday related to the 1MDB scandal to “protect its business interests against an international conspiracy.”
The company said it filed criminal complaints Wednesday in Abu Dhabi against former IPIC executive Khadem Al Qubaisi and the former CEO of Aabar Investments, Mohamed Badawy Al Husseiny. IPIC alleges the men laundered stolen funds and received bribes.
Justice Department cases alleged Mr. Al Qubaisi received nearly half a billion dollars of the stolen funds, using it to buy luxury homes in Los Angeles and New York. Mr. Husseiny allegedly received more than $60 million.
Mr. Al Qubaisi is Emirati, while Mr. Al Husseiny is an American citizen. Both men have been detained in Abu Dhabi for roughly two years.
Michael O’Kane, a lawyer for Mr. Al Qubaisi, said his client denies the allegations and had been “subject to arbitrary detention in the U.A.E. for 26 months in complete breach of his human rights and the rule of law.”
“His conditions are appalling, his health is failing and he has been cut off from all external communications,” Mr. O’Kane said in a statement. “It is extraordinary that he has now been charged when he has never been subject to a proper investigation in the U.A.E. into the 1MDB matter.”
In London, IPIC also initiated an arbitration proceeding to enforce a settlement agreement it reached with Malaysia in May 2017 over bonds that Goldman arranged and that are at the center of the embezzlement scandal.
The deal was negotiated under former Malaysian Prime Minister Najib Razak, who was voted out of office in May and is now accused of multiple crimes in Malaysia related to 1MDB and other dealings. He has denied the charges.
The new Malaysian government said in October it was filing an application in the U.K. to set aside the arbitration award.
“IPIC will take any and all legal action necessary, now and in the future, to protect its business interests against the financial exposure and damages it has suffered as a result of this international conspiracy,” said Michael Carlinsky, a lawyer at Quinn Emanuel Urquhart & Sullivan LLP, representing IPIC.
“We will also defend and protect the 2017 settlement concluded with and authorized by 1MDB and the government of Malaysia,” he added.
In the fallout from the 1MDB scandal, IPIC and Aabar merged their assets with another Abu Dhabi sovereign fund in 2017, creating the roughly $125 billion Mubadala Investment Co. IPIC and Aabar remain as legal entities in Abu Dhabi, registration records show.
1MDB Scandal Ensnares Former Justice Department Employee
Ex-staffer admits to helping funnel millions into the U.S. on behalf of Malaysian businessman Jho Low.
A former Justice Department employee pleaded guilty Friday to helping funnel tens of millions of dollars into the U.S. for the alleged mastermind of the multibillion-dollar fraud involving Malaysia’s sovereign-wealth fund.
Some of the $74 million allegedly brought into the U.S. on behalf of Jho Low, a Malaysian businessman, was used to pay a prominent Republican fundraiser, court documents show.
Mr. Low sought to use the funds to influence the Justice Department investigation into the fund, 1Malaysia Development Bhd, and other foreign lobbying activities, the documents said.
George Higginbotham, who worked at the Justice Department as a senior congressional affairs specialist until August, pleaded guilty Friday to conspiring to make false statements to banks about the source and purpose of the funds to move them into the U.S.
The Justice Department said Mr. Higginbotham played no role in the U.S. investigation, which led earlier this month to charges against two senior Goldman Sachs Group Inc. bankers along with Mr. Low.
In addition, the Justice Department has filed civil-forfeiture lawsuits seeking to recover more than $1.5 billion in illicit assets accused of being tied to the alleged fraud. Mr. Higginbotham “failed to influence any aspect of the Department’s investigation of 1MDB,” the agency said.
Mr. Higginbotham understood that Mr. Low would have difficulty moving money into the U.S. because of his public association with the 1MDB affair, so he agreed to help conceal from U.S. banks the origin and purpose of the funds, according to court documents.
A lawyer for Mr. Higginbotham couldn’t immediately be reached for comment. Mr. Low has denied wrongdoing.
1MDB was a state economic-development fund set up by former Malaysian Prime Minister Najib Razak in 2009. The U.S. Justice Department has said at least $4.5 billion was misappropriated from the fund and used to pay bribes to government officials, pad a slush fund controlled by the prime minister and purchase jewelry for his wife, among other embezzlements.
Mr. Najib has pleaded not guilty to charges in Malaysia related to the scandal and has denied wrongdoing. His wife has also pleaded not guilty to charges.
In March 2017, a friend of Mr. Low’s asked Mr. Higginbotham, 46 years old, to help identify “someone with political influence” who could “resolve” Mr. Low’s issues surrounding the Justice Department’s 1MDB case, according to the court documents. Mr. Low ultimately selected a fundraiser with “political connections at high levels of the United States government” to lobby on 1MDB issues, the documents said.
The fundraiser isn’t named but is identifiable as longtime Republican donor Elliott Broidy, whom journalists previously reported had been in negotiations to earn as much as a $75 million fee if the Justice Department quickly dropped its 1MDB investigation. The fee was described in a draft agreement journalists reported involved the law firm of Mr. Broidy’s wife.
The new court documents describe a draft retainer agreement—in which Mr. Low would pay a $75 million success fee if the 1MDB forfeiture proceedings were resolved within 180 days—that was negotiated with the law firm of the wife of the retained consultant.
Chris Clark, a lawyer for Mr. Broidy, said, “I have no comment on your speculation.” In the earlier journal article, he said neither Mr. Broidy nor his wife’s law firm had ever represented Malaysia or any of its officials “in any capacity.”
Mr. Broidy was a vice chairman for the Trump 2016 campaign’s joint fund with the Republican Party, helping it raise more than $108 million.
In his plea, Mr. Higginbotham also admitted to helping Mr. Low’s effort to have returned to China a foreign national who is identifiable as Guo Wengui, a wealthy Chinese businessman who has criticized the Chinese government from his home in New York. The Chinese government has aggressively sought to bring him back to China.
Malaysia Files Criminal Charges Against Goldman Sachs
Charges stem from alleged misappropriation of $2.7 billion from Malaysian fund 1MDB.
Malaysian authorities on Monday filed criminal charges against Goldman Sachs Group Inc. and a former partner of the bank in connection with the 1MDB financial scandal, the country’s attorney general said in a statement.
Goldman Sachs International and two Asian subsidiaries of the Wall Street bank were charged under securities laws for the omission of material information and publishing of untrue statements in offering documents in 2012 and 2013 for the sale of international bonds by state investment fund 1Malaysia Development Bhd., or 1MDB.
“We believe these charges are misdirected, will vigorously defend them and look forward to the opportunity to present our case. The firm continues to cooperate with all authorities investigating these matters,” Goldman said in a statement.
Malaysia’s attorney general also filed charges against Tim Leissner, a former Goldman partner, under securities laws. Mr. Leissner pleaded guilty in criminal charges made public by the U.S. Justice Department in November to misappropriating 1MDB money and bribing officials in Malaysia and Abu Dhabi. His sentencing is expected early next year.
Mr. Leissner wasn’t immediately available for comment.
Goldman arranged $6.5 billion in bonds for 1MDB in 2012 and 2013, of which $2.7 billion was allegedly stolen. The bank made $600 million in profits. The 1MDB fund is now the center of global investigations led by the U.S. Justice Department and including authorities in Malaysia, Singapore, Switzerland and Luxembourg.
“Malaysia considers the allegations in the charges against the accused to be grave violations of our securities laws, and to reflect their severity, prosecutors will seek criminal fines against the accused well in excess of the $2.7 billion misappropriated from the bonds proceeds and $600 million in fees received by Goldman Sachs, and custodial sentences against each of the individual accused: the maximum term of imprisonment being 10 years,” the attorney general’s statement said.
The attorney general also filed charges against Jho Low, the alleged mastermind of the 1MDB scheme, and Jasmine Loo, a former 1MDB counsel. Both already have been charged in absentia by Malaysian authorities with money laundering and other offenses.
The Justice Department also indicted Mr. Low with money-laundering and other charges. The whereabouts of Mr. Low and Ms. Loo are unclear, but Malaysian authorities believe Mr. Low is living in China.
Another former Goldman executive, Roger Ng, a Malaysian citizen, is in detention in Kuala Lumpur and is expected to be charged later this week. Attempts to reach Mr. Ng, who is fighting extradition to the U.S., weren’t successful.
Goldman CEO Defends Firm on 1MDB Accusations
David Solomon says culture of compliance is strong.
Goldman Sachs Group Inc. Chief Executive David Solomon on Friday made his most forceful defense yet of the firm, which is under fire for its dealings with a Malaysian sovereign-wealth fund at the center of an international bribery scandal.
In an message posted to Goldman’s internal website and seen by journalists, Mr. Solomon defended its culture and compliance measures, both of which have been criticized by U.S. prosecutors who last month criminally charged two former Goldman bankers in the widening probe of the 1Malaysia Development Bhd. fund, known as 1MDB. He has been relatively quiet on the matter since the U.S. Justice Department unsealed indictments Nov. 1.
“While we understand the anger and skepticism, we do not believe that the criticism directed at us accurately reflects who we were then or who we are now,” Mr. Solomon wrote. “Our culture and our processes around our due diligence and compliance was strong at the time, and is even stronger today.”
Goldman, through three bond sales, raised $6.5 billion for 1MDB, much of which prosecutors allege was stolen. One former Goldman banker has pleaded guilty and another is under arrest in Malaysia.
They are accused of conspiring with a Malaysian financier named Jho Low to loot 1MDB and pay bribes to foreign officials. Mr. Low, believed to be in China, previously has denied any wrongdoing.
Malaysia this week filed criminal charges against Goldman, and the bank said it would fight the allegations. U.S. prosecutors continue to investigate the bank’s role and are weighing whether to bring charges of their own.
The scandal has muddied the early going for Mr. Solomon, who took over as CEO just two months ago. Morale among many employees has tumbled alongside the stock, which is down 25% since Nov. 1 amid a broader market tumble.
In the internal note, Mr. Solomon said Goldman asked tough questions of 1MDB and investigated to ensure that there were no middlemen like Mr. Low on the deal.
He also defended the roughly $600 million Goldman made from the 1MDB bond offerings, which is nearly 10% of the total funds raised, far more than is typical. He said Goldman was paid to shoulder the risk that the bonds might not sell, and added that the bank was saddled with bonds from the third offering, in 2013, for almost a year.
Malaysia’s Finance Minister Wants Goldman’s $7.5 Billion, Not an Apology
Lim Guan Eng seeks full reimbursement and reparations for the money the 1MDB fund raised with the investment bank’s help.
Malaysia’s finance minister waved off an apology from Goldman Sachs Chief Executive David Solomon for the role of one its then-bankers in the scandal surrounding state investment fund 1Malaysia Development Bhd., saying it wasn’t enough.
Lim Guan Eng said Friday that the only apology that would matter is one that comes with full reimbursement and reparations for the $6.5 billion the 1MDB fund raised with the investment bank’s help. Prosecutors say much of the money was later siphoned off, with several hundred million dollars going to the personal accounts of then-leader Najib Razak.
The former prime minister has pleaded not guilty to multiple charges of money laundering and other offenses.
“Only when you pay reparation and compensation, then that will be sufficient,” Mr. Lim told reporters, saying an appropriate figure would be $7.5 billion.
He added that Malaysia would consider dropping charges it filed against Goldman Sachs if it was compensated for the full amount raised.
“As we have stated previously, Goldman Sachs was lied to by certain members of the former Malaysian government and 1MDB,” a spokesman for the investment bank said. “We intend to vigorously contest the charges brought against us.”
Goldman Sachs has been dragged into the scandal at 1MDB because of its role as underwriter and arranger for three bond sales that raised $6.5 billion for the fund.
Much of the total has gone missing, sparking a multinational investigation from Switzerland to the U.S. It also contributed to the defeat of Mr. Najib’s government in elections in May.
U.S. prosecutors charged two former Goldman bankers in November in relation to the theft of billions of dollars from 1MDB.
Tim Leissner, Goldman’s former chairman for Southeast Asia, pleaded guilty to conspiring to launder money and violating antibribery laws for his role in the affair. The other former Goldman banker, Roger Ng, was arrested in Malaysia in November at the request of U.S. authorities.
He is in custody facing extradition to the U.S. to face criminal charges relating to the scandal and couldn’t be reached for comment. His lawyer couldn’t immediately be reached for comment.
Malaysia also filed criminal charges against Goldman Sachs last month for its role in arranging the bond issues.
Mr. Solomon, the chief executive, apologized to the Malaysian people for Mr. Leissner’s involvement in the scandal during a conference call Wednesday to discuss the bank’s fourth-quarter results.
“At least he accepted that they have to bear and shoulder some responsibility,” Mr. Lim said. “But that apology is insufficient.”
Alleged 1MDB Conspirator Says He Is a Scapegoat For Emiratis
Former royal aide jailed in Abu Dhabi says U.A.E. authorities are pressing him to surrender his assets.
A former top aide to a powerful member of Abu Dhabi’s royal family alleged from prison that he is unfairly being blamed for the United Arab Emirates’ role in one of the world’s biggest financial scandals, and that Emirati authorities are trying to force him to turn over his assets.
Khadem Al Qubaisi was once one of the Middle East’s highflying businessmen. He helped negotiate the bailout of Barclays Bank in 2008 and a multibillion-dollar investment into Daimler AG on behalf of his boss, Sheikh Mansour Bin Zayed al Nahyan, the United Arab Emirates’ deputy prime minister and a member of the royal family.
Abu Dhabi authorities arrested Mr. Al Qubaisi in 2016 amid U.S. Justice Department accusations that he and several co-conspirators collectively stole billions of dollars from 1Malaysia Development Bhd., an investment fund ostensibly set up to help develop the Malaysian economy.
Mr. Al Qubaisi received $471 million of stolen funds into his private account in Luxembourg and used some of it to buy U.S. real estate, according to civil complaints by the Justice Department targeting his assets. Mr. Al Qubaisi hasn’t been charged with any crime in the U.A.E. or U.S.
In his first media interview since he was imprisoned in Abu Dhabi, Mr. Al Qubaisi said from a prison phone that he is being blamed as a “scapegoat” by Sheikh Mansour and Abu Dhabi authorities. Sheikh Mansour is also chairman of the Abu Dhabi Judicial Department, which oversees all criminal cases in the emirate.
Mr. Al Qubaisi said authorities are pressing him to turn over his assets to a private company owned by the sheikh.
The Abu Dhabi government declined to comment. Representatives for Sheikh Mansour and Das Holding, an Abu Dhabi company he controls, didn’t respond to multiple requests for comment.
An Abu Dhabi-based lawyer involved in Mr. Al Qubaisi’s case said Mr. Al Qubaisi “abused and exceeded his authorities” at Abu Dhabi sovereign funds “to achieve personal and illegal gains.”
“Now he is more concerned about keeping his illegal wealth than doing the right thing by admitting his guilt and returning the proceeds he obtained from his criminal activities,” the lawyer said.
Mr. Al Qubaisi said he had acted with the knowledge of more-senior U.A.E. officials when he steered a sovereign-wealth fund he managed, International Petroleum Investment Co., to become a key business partner of 1MDB, including guaranteeing $3.5 billion in 1MDB bonds.
That deal soured when billions of dollars went missing from 1MDB, setting off a multiyear legal battle between sovereign funds in the U.A.E. and Malaysia.
U.S. authorities say Mr. Al Qubaisi helped funnel 1MDB money to conspirators through companies set up to look like subsidiaries of IPIC, the U.A.E. fund.
Mr. Al Qubaisi didn’t address the specifics of the allegations against him in the interview.
“I did this deal but I did it on behalf of the government of Abu Dhabi,” he said. Now “they are putting everything on my back.”
Sheikh Mansour was chairman of IPIC at the time Mr. Al Qubaisi was agreeing to support 1MDB. After Mr. Al Qubaisi’s arrest, IPIC was folded into another U.A.E. fund, where Sheikh Mansour is a board member.
During two five-minute phone calls from Al Wathba prison in Abu Dhabi, Mr. Al Qubaisi said he hadn’t been interrogated by any law enforcement body about 1MDB deals.
Instead, U.A.E. officers periodically come and pressure him to sign over his assets, including land and villas in the U.A.E., to Das Holding, he said.
He said that earlier this month he was handcuffed to a window in a corridor and left for 24 hours.
“If I did something wrong for this Malaysia deal, ok, they can go and take my assets, no problem,” he said. “Why is a private company trying to take control of my assets?”
Two nephews who had power of attorney over some of his assets had been detained until they signed over $40 million in luxury cars and land to Das Holding, Mr. Al Qubaisi said. The nephews didn’t respond to requests for comment.
The Abu Dhabi lawyer involved in the case said Mr. Al Qubaisi’s description of his prison conditions and treatment were inaccurate.
Mr. Al Qubaisi said his plan was to “die here in this place or to get out.”
Soon after Mr. Al Qubaisi’s phone calls to journalists, an intermediary in Abu Dhabi who set up the calls was detained and questioned by Abu Dhabi security services, according to a person familiar with the situation.
Mr. Al Qubaisi is wanted for questioning in several other countries for allegedly pilfering money from 1MDB and committing other financial crimes, according to this person. Abu Dhabi authorities haven’t agreed to let him testify elsewhere.
The Justice Department is seeking to reclaim luxury homes in the U.S. that Mr. Al Qubaisi allegedly bought with funds stolen from 1MDB. The department declined to comment on the matter.
Luxembourg and Swiss authorities have frozen tens of millions of dollars in accounts controlled by Mr. Al Qubaisi and French authorities have seized real estate.
Financial documents reviewed after the interviews show an even bigger asset was largely financed with 1MDB money but hasn’t been targeted by authorities: a half billion-dollar yacht called the Topaz. Mr. Al Qubaisi directed companies he controlled to use approximately €116 million ($132 million) originating from 1MDB for debt payments on the yacht between 2012 and 2015, the documents show.
The Topaz—a 482-foot yacht with eight floors, a swimming pool, cinema and two helicopter pads—was used and controlled by Sheikh Mansour until at least 2015, according to people familiar with the matter.
Jho Low, the Malaysian financier who U.S. officials allege masterminded the 1MDB scandal, leased it on multiple occasions, including to attend the 2014 FIFA World Cup with Leonardo DiCaprio and other celebrities, according to people familiar with the matter. Mr. Low has denied wrongdoing.
The yacht’s current ownership couldn’t be determined. The remaining €271 million of an original €464.3 million loan to buy the boat was fully paid off last April, according to registry filings. The documents don’t specify who paid it.
1MDB Scandal Could Hit Pay For Goldman Execs, Including Lloyd Blankfein
New Chief Executive David Solomon, others also could have compensation withheld.
Goldman Sachs Group Inc. could withhold millions of dollars in pay from former chief Lloyd Blankfein because of the scandal around a corrupt Malaysian investment fund, the bank said Friday.
Goldman’s board of directors won’t—for now—pay out deferred bonuses that Mr. Blankfein and two other former top executives earned in prior years, and will instead await the outcome of an investigation into Goldman’s work for the Malaysian fund, known as 1MDB. The bank said it might also claw back some of the $23 million it paid new Chief Executive David Solomon in 2018.
By hitting executive pay—Wall Street’s most obvious tool to reward and punish—the moves are the clearest sign yet that Goldman sees potentially serious consequences in the 1MDB investigation. The bank faces a large fine and a reputational black eye it can ill afford as it courts retail customers and invests heavily in new businesses.
In recent months, Goldman has been laying out its case to regulators in an effort to avoid criminal charges, according to people familiar with the discussions.
Goldman raised $6.5 billion for 1MDB, of which prosecutors allege $2.7 billion was stolen by a Malaysian financier and two former Goldman bankers. One of those bankers, Tim Leissner, has pleaded guilty to stealing some $200 million and arranging bribes for government officials in Malaysia and Abu Dhabi. He hasn’t commented.
The federal indictments darkened Mr. Blankfein’s farewell tour and complicated the early tenure of Mr. Solomon, who took over Oct. 1 as chief executive.
Overall Mr. Blankfein earned $20.5 million in 2018, down from $24 million a year earlier, according to Friday’s filing. That figure isn’t affected by the potential clawback, which stems from a deferred cash grant he received in 2011 that was to be paid out this past January.
Goldman is temporarily withholding that award, which was originally granted at $7 million. The size of the ultimate payout was tied to Goldman’s performance over the past eight years. The value has roughly doubled, according to a review of filings.
The bank also said it was withholding similar bonuses owed to two unnamed former executives. They are, according to a person familiar with the matter, Michael Evans, who was a senior Goldman executive at the time of the 1MDB bond sales, and Michael Sherwood, a senior executive in London who retired in 2016.
Former executive Gary Cohn also got those bonuses, but was compensated in a lump sum when he joined the Trump administration in 2017.
Mr. Solomon wasn’t senior enough in 2011 to receive that particular bonus. But the bank said Friday it might later claw back some of his 2018 pay and that of other senior executives, a group likely to include President John Waldron and Chief Financial Officer Stephen Scherr.
Mr. Solomon was paid $23 million in 2018 for three months as CEO and nine months as chief operating officer. The biggest chunk, $15.4 million, is in stock units that pay out based on Goldman’s performance over the next few years.
Pay for Wall Street executives, which fell sharply after the financial crisis, has crept up as banks’ results have steadily improved. The highest-paid bank CEO is JPMorgan Chase & Co.’s James Dimon, who made $31 million last year, followed by Morgan Stanley’s James Gorman, who earned $29 million. Bank of America Corp. and Citigroup Inc. haven’t yet disclosed their CEOs’ compensation for 2018.
The Justice Department charged two former Goldman bankers in November. The next month, Malaysia lodged criminal charges against Goldman, and its attorney general said he would seek a fine well above the $2.7 billion allegedly stolen.
Ex-Goldman Banker Sent To U.S. To Face 1MDB Charges
Malaysian citizen Roger Ng to face U.S. charges in connection with one of the world’s largest financial scandals.
A former Goldman Sachs Group Inc. managing director is returning to the U.S. from Malaysia to contest U.S. criminal charges in connection with one of the world’s largest financial scandals, one of his attorneys said.
Malaysian citizen Roger Ng, 46, is accused of aiding his boss, Tim Leissner, Goldman’s former chairman for Southeast Asia. Mr. Leissner pleaded guilty last year in the U.S. to conspiring to launder money and violate foreign antibribery laws for helping to siphon off billions of dollars from Malaysian state investment fund 1Malaysia Development Bhd., or 1MDB. Mr. Leissner is awaiting sentencing.
Mr. Ng’s Malaysian lawyer, Tan Hock Chuan, said Monday that Mr. Ng had left the Southeast Asian country for New York over the weekend. Mr. Tan couldn’t confirm whether he had arrived. Mr. Ng’s American lawyer, Marc Agnifilo, said he expected a court date to be scheduled in Brooklyn for Monday.
Neither Mr. Ng nor his lawyers have commented on the charges.
In an indictment unsealed in the Eastern District Court of New York last November, Mr. Ng was accused—along with another Malaysian, the alleged 1MDB fraud architect Jho Low—of three counts of conspiring to violate foreign antibribery laws and launder money.
Mr. Low has maintained his innocence through a spokesman.
Mr. Ng was later arrested in Malaysia at the request of U.S. authorities and had been fighting extradition. In February, he volunteered to be sent to the U.S. Malaysian authorities declined as Mr. Ng was also facing charges related to 1MDB at home.
Malaysia subsequently agreed to surrender Mr. Ng to the U.S. temporarily, Malaysia’s Attorney General Tommy Thomas said in a statement Monday.
In December, Malaysian prosecutors charged Mr. Ng with four criminal charges of abetting Goldman in the sale of the guaranteed notes and bonds worth $1.57 billion belonging to 1MDB subsidiaries by omitting material information and publishing untrue statements. He has pleaded not guilty.
The financial scandals at 1MDB have sparked multinational investigations, including Switzerland and the U.S., with billions of dollars allegedly siphoned from the fund, created by then-Prime Minister Najib Razak to boost the economy. Public anger over the scandal led to Mr. Najib’s election defeat last year, and he and associates face charges in Malaysia including money-laundering and abuse of power.
Mr. Najib has been charged with 42 1MDB-related criminal counts and is facing his first of a series of trials at the Kuala Lumpur High Court.
Malaysian prosecutors have charged Mr. Leissner and Mr. Ng with abetting Goldman, which has been criminally charged in Malaysia. The two are accused of providing misleading statements in the offering prospectus for the bonds the bank helped sell for 1MDB. No trial date has been set.
Goldman has consistently denied wrongdoing. The bank said certain individuals from the former Malaysian government and 1MDB had lied to it about the proceeds from the bond sales.
A Goldman spokesman said Monday that the bank was “outraged’’ that any employee would undertake such actions as laid out in the U.S. charges.
Alleged 1MDB Co-Conspirators Sentenced to Prison
As well as receiving jail sentences, the two men must jointly pay more than $300 million.
Two prominent figures in a global Malaysian sovereign-wealth fund scandal were convicted of financial crimes and sentenced to prison in Abu Dhabi, according to a statement from the emirate’s criminal court and people familiar with the matter.
Khadem al Qubaisi, a United Arab Emirates citizen who once headed Abu Dhabi’s International Petroleum Investment Company, was given a 15-year prison sentence and Mohammed Badawy al Husseiny, an American citizen who ran a subsidiary of IPIC, was sentenced to 10 years.
They jointly must pay about €300 million ($336 million), half to IPIC, referred to as the “victim company,” and half as a penalty, according to the criminal court.
The press release didn’t identify the men by name, but people familiar with the judicial actions confirmed the unnamed defendants were Messrs. Al Qubaisi and Mr. Al Husseiny.
Lawyers for both men and a representative of the Abu Dhabi Criminal Court declined to comment on the charges.
The Abu Dhabi court statement didn’t mention specific details of the charges, other than to say Mr. Al Qubaisi, referred to as the “first defendant,” was convicted of “exploiting his job and unlawfully appropriating 149 million euros after selling shares he owns for the company he heads, without disclosing his ownership of the shares, for 210 million euros.”
Further details of that transaction weren’t provided, but people familiar with the conviction said it wasn’t related to the Malaysian fund scandal.
The statement said the investigations were part of a broader investigation by the Abu Dhabi Public Funds Prosecution into allegations of corruption.
Mr. Al Husseiny, the “second defendant,” was convicted of “exploiting his position and facilitating the seizure of the company’s money by” Mr. Al Qubaisi, according to the statement and people familiar with the matter.
In an interview in January, Mr. Al Qubaisi told The Wall Street Journal from Al Wathba prison in Abu Dhabi that he was being unfairly blamed as the “scapegoat” for the U.A.E.’s role in the 1Malaysia Development Bhd. scandal, where the Justice Department says $4.5 billion was stolen and distributed among a group of alleged co-conspirators, including Messrs. Al Qubaisi and Al Husseiny.
“I did this deal but I did it on behalf of the government of Abu Dhabi,” he said, adding that he was being forced to turn over assets to Sheikh Mansour bin Zayed, former chairman of IPIC and senior member of the emirate’s royal family. Now “they are putting everything on my back,” he said at the time.
Sheikh Mansour didn’t respond to a request for comment at the time.
Mr. Al Qubaisi also claimed he had been handcuffed to a window in a corridor and left for 24 hours, saying his plan was to “die here in this place or get out.”
Accused Mastermind of 1MDB Reaches Civil Settlement With Justice Department
Jho Low agrees to forfeit more than $700 million in assets, but he remains a fugitive from U.S. criminal justice system.
Jho Low, the businessman-turned-fugitive accused of masterminding a multibillion-dollar fraud involving Malaysia’s sovereign-wealth fund, agreed to forfeit more than $700 million in assets U.S. authorities sought to seize, according to a settlement filed Wednesday.
Mr. Low will give up assets that include real estate, a luxury yacht and a private jet, according to the settlement, which doesn’t resolve the criminal cases against the Malaysian businessman or include any admission of wrongdoing by him.
Mr. Low remains a fugitive from the U.S. criminal justice system and is believed to be in China or under Chinese protection elsewhere in the world.
“This settlement agreement forces Low and his family to relinquish hundreds of millions of dollars in ill-gotten gains that were intended to be used for the benefit of the Malaysian people, and it sends a signal that the United States will not be a safe haven for the proceeds of corruption,” said Brian Benczkowski, head of the Justice Department’s criminal division.
In a statement, Mr. Low said “the agreement does not constitute an admission of guilt, liability or any form of wrongdoing by me or the asset owners. We believe all parties consider this resolution, which is subject to final court approval, to be a successful and satisfactory result.”
Mr. Low still faces criminal cases in New York and Washington that accuse him of conspiring to launder billions of dollars in proceeds from the fraud and bribing Malaysian government officials as well as committing U.S. campaign-finance violations.
The settlement resolves a set of civil-forfeiture suits the U.S. has filed to recover property valued at more than $1 billion, including van Gogh and Monet paintings and luxury real estate in New York and Los Angeles.
Prosecutors alleged that the assets were obtained using stolen funds that Mr. Low embezzled from 1Malaysia Development Bhd., or 1MDB, a Malaysian sovereign-wealth fund.
The Justice Department pursued the cases under a program that tries to recover the proceeds of international corruption. “The money would be returned for benefit of people harmed by the corruption,” said a department spokesman, who declined to comment on whether the funds would be provided to Malaysia.
The 1MDB scandal is believed to be one of the largest financial frauds in history, involving at least 10 countries around the world from Asia to the Middle East to North America.
It has resulted in the political downfall of former Malaysian Prime Minister Najib Razak, as well as criminal charges against top bankers at Goldman Sachs Group.
The Justice Department in November 2018 charged two former Goldman bankers, Timothy Leissner and Roger Ng. It is investigating Goldman itself, The Wall Street Journal has reported, with the likely outcome that the firm will pay a large fine.
Federal prosecutors will allow Mr. Low to keep $15 million of the funds to pay his legal team, according to the settlement. He has retained a number of prominent U.S. lawyers and law firms, including former New Jersey Gov. Chris Christie.
Those funds will be held in escrow for legal expenses, according to one person familiar with the matter.
“It is one of the largest civil forfeiture settlements in U.S. history and represents the voluntary return of each and every asset claimed by DOJ, thus resolving this litigation in its entirety without admission of wrongdoing or fault by any party,” Mr. Christie said in a statement.
Fugitive Businessman Jho Low To Forfeit Over $100 Million In Luxury Homes
That includes apartments in London and New York and a mansion in Los Angeles.
Fugitive businessman Jho Low, accused of orchestrating a multibillion-dollar fraud of a Malaysian sovereign wealth fund, has agreed to forfeit over $100 million worth of luxury real estate as part of a wide-ranging settlement with U.S. prosecutors.
That includes two posh London apartments, two New York City condos—one on the city’s famed Billionaire’s Row—and a contemporary mansion in Los Angeles, all of which U.S. prosecutors accused Mr. Low of buying with stolen money from a multibillion-dollar heist, known as the 1MDB scandal, the U.S. Department of Justice announced on Wednesday.
The collection of lavish properties are only a slice of some $700 million in assets, including a private jet, fine art and diamond jewelry, that Mr. Low has agreed to give up, according to court documents filed this week.
More: Former Superyacht of Fugitive Businessman Jho Low Hits the Market
Mr. Low, 37, has denied all charges against him. He said in a statement that the settlement did “not constitute an admission of guilt, liability or any form of wrongdoing by me.”
The three U.S. homes were already headed to the market as part of prior agreements between Mr. Low and federal prosecutors, Mansion Global has previously reported.
One of them, a lavish penthouse atop the Mandarin Oriental Residences by Central Park South, a stretch of Midtown Manhattan referred to as Billionaire’s Row for its superlatively expensive apartments, is already in contract, according to listing records on StreetEasy.
The four-bedroom penthouse went into contract earlier this month, asking $30 million—approximately $500,000 less than Mr. Low bought it for in 2011.
Agents for Mr. Low are expected to help the U.S. government manage and dispose of the assets, including his five homes, the Justice Department said.
But the intermediaries are likely to face an uphill task selling off the properties for figures close to what Mr. Low originally paid, as both New York City and London are in the midst of a downturn in their prime housing markets.
For example, Mr. Low’s other New York City property is located on the second floor of a historic pre-war building in Manhattan’s trendy SoHo neighborhood.
The apartment, which features 14-foot ceilings, decorative interior columns and built-in bookshelves, is asking $9.2 million—several million less than the $13.8 million Mr. Low purchased it for back in 2014, according to a listing for the property and court documents.
It’s not just a change in market conditions that presents a hurdle for those charged with unloading the properties, as some have fallen into disrepair.
For instance, the sprawling Los Angeles mansion, set on 1.2 acres off the city’s Sunset Strip, “will need full restoration,” according to a listing for the property with Ernie Carswell and Christopher Pickett, both of Douglas Elliman. The brokerage has declined to comment on the property.
The Los Angeles house, which prosecutors said Mr. Low purchased with embezzled funds, is on the market for $24 million—less than two-thirds of the $39 million the businessman paid in 2012, according to property records and court documents.
Meanwhile, the sale of Mr. Low’s London properties face a similarly daunting market, as higher transfer taxes in the U.K. paired with a rancorous political environment ahead of Brexit have combined to depress home values in the city’s center since 2014.
It’s not clear how much Mr. Low paid for the two London apartments, which include a 12,000-square-foot penthouse and a nearby flat, both in the city’s posh Mayfair neighborhood. Federal prosecutors claim he wired at least £35 million to a U.K. bank account for the purchase of the penthouse atop Stratton House in 2010, according to court documents.
But the developer of the building, Grafton Advisors, claims the lavish aerie set a record nine years ago at over £4,000 per square foot, according to Grafton’s website. That would mean a final sale price at the time of over £48 million. At the moment, there are no publicly listed apartments priced that high in London.
Mr. Low, who is reportedly in self-imposed exile in China, is accused of orchestrating the theft of $4.5 billion from the 1Malaysia Development Berhad, known as 1MDB. U.S. prosecutors maintain that he laundered the ill-gotten gains through banks around the world and used the funds to run a lavish lifestyle.
“Thanks to this settlement, one of the men allegedly at the center of this massive scheme will lose all access to hundreds of millions of dollars,” said U.S. Attorney Nicola T. Hanna of the Central District of California in a statement on Wednesday.
“This settlement agreement forces Low and his family to relinquish hundreds of millions of dollars in ill-gotten gains that were intended to be used for the benefit of the Malaysian people, and it sends a signal that the United States will not be a safe haven for the proceeds of corruption.”
Goldman Sachs in Talks to Admit Guilt, Pay $2 Billion Fine to Settle 1MDB Probe
Wall Street bank could install monitor as part of deal with Justice Department.
Goldman Sachs Group Inc. GS -0.22% is in talks with the U.S. government to pay a multibillion-dollar fine, admit guilt and agree to continuing oversight of its compliance procedures in order to resolve a criminal investigation into its role in a Malaysian corruption scandal.
Goldman and the Justice Department have largely agreed on a fine of just under $2 billion to settle allegations that the Wall Street firm ignored red flags while billions of dollars were looted from its client, a Malaysian government fund known as 1MDB, people familiar with the matter said.
The bank and U.S. officials have discussed a deal in which a Goldman subsidiary in Asia—not the parent company—would plead guilty to violating U.S. bribery laws, some of the people said. The discussions also involve Goldman installing an independent monitor to oversee and recommend changes to its compliance procedures, the people said.
Talks are continuing and the outlines of a deal, which could be reached early next year, may change.
The settlement wouldn’t resolve an investigation by authorities in Malaysia, which is seeking billions of dollars from Goldman. It couldn’t be determined whether other U.S. regulators would join the settlement or pursue their own.
“Resolution discussions are ongoing, and it is irresponsible to speculate on an outcome,” a Goldman spokeswoman said.
Last week, Goldman President John Waldron told CNBC: “We don’t control the outcome, obviously. We’re one party. We have a number of people to talk to … we’re working as hard as we can to try to get it resolved sensibly.”
Representatives of the Justice Department declined to comment.
Settling with the Justice Department would clear a matter that has weighed on Goldman’s stock price. But new, tighter oversight would keep the bank under the shadow of a scandal that its chief executive, David Solomon, is eager to move past.
Goldman raised $6.5 billion for 1MDB, the abbreviation for 1Malaysia Development Bhd., much of which U.S. authorities say was stolen by a Malaysian government adviser, Jho Low, and two Goldman bankers. Prosecutors say the bank ignored warning signs about Mr. Low and the fund in pursuit of fees that eventually reached about $600 million.
One of the bankers, Tim Leissner, pleaded guilty to stealing more than $200 million from 1MDB and this week agreed to a lifetime ban from the securities industry. Mr. Leissner is cooperating with investigators, The Wall Street Journal has previously reported, and is scheduled to be sentenced next year.
The other banker, a Malaysian national named Roger Ng, has pleaded not guilty in a New York court and also faces charges in Malaysia.
Mr. Low agreed in October to forfeit more than $700 million in assets to U.S. authorities but hasn’t admitted to wrongdoing and remains a fugitive from the U.S. criminal-justice system.
Goldman has said that Messrs. Leissner and Ng, who are no longer with the bank, were rogue actors who intentionally misled their bosses and siphoned money through personal accounts out of view of the bank.
A third executive, previously reported by the Journal to be a Hong Kong-based banker named Andrea Vella, is alleged by U.S. authorities to have known about the scheme. He hasn’t been charged and remains on administrative leave from Goldman. A lawyer for Mr. Vella couldn’t be reached for comment.
At $2 billion, a 1MDB-related fine would be one of the largest levied by the Justice Department against a bank since the mortgage settlements following the financial crisis. It is money Goldman can ill-afford as it struggles to boost revenue and is spending heavily on growth initiatives. The bank doesn’t disclose its legal reserves.
Bloomberg earlier reported the possibility of a settlement of around $2 billion.
The resolution of the 1MDB matter may also hit compensation for Goldman executives. The bank’s board reserved the right to claw back pay from Mr. Solomon and his predecessor, Lloyd Blankfein, as well as other top officials, pending the outcome of 1MDB investigations.
Independent monitors, often hired from law or consulting firms, are used to ensure that companies comply with settlement terms. They were widely required, for example, in the wake of the subprime-mortgage crisis to track banks’ progress in forgiving loans to struggling homeowners.
Monitors can be expensive— HSBC Holdings PLC hired thousands of staffers to clean up its money-laundering controls after a government settlement in 2012—and could make it harder for Goldman to make acquisitions or other moves that require approval from Washington.
Still unresolved is whether Goldman would receive credit offsetting any penalty paid to the Justice Department if the bank were to pay any fine to Malaysia, the people familiar with the matter said.
That country’s prime minister was swept into power on an anticorruption platform after the 1MDB scandal, for which his predecessor faces criminal charges. The former prime minister, Najib Razak, has pleaded not guilty.
Malaysia has filed criminal charges against Goldman itself, plus 17 current and former employees in its Asia offices. A Goldman spokeswoman at the time said the charges were “misdirected.”
Goldman Profit Falls As Bank Braces For 1MDB Fine
Bank sets aside more money toward expected settlement resolving its ties to Malaysian fund.
Eight years ago, Goldman Sachs Group Inc. GS +0.57% bankers sold bonds on behalf of a little-known Malaysian investment fund.
On Wednesday, the fallout from that deal wiped out about 13% of the bank’s 2019 profits and darkened otherwise strong results. Goldman socked away an extra $1.1 billion late last year to help pay for an expected settlement with regulators, who allege the bank overlooked signs of corruption at the Malaysian fund, known as 1MDB, in pursuit of fees.
The Wall Street Journal previously reported that Goldman is negotiating to pay the U.S. Justice Department a fine of about $2 billion and plead guilty to violating antibribery laws.
The legal reserves pushed Goldman’s return on equity—a closely watched measure of shareholder value—to 10% for the year, the worst among big banks that have reported financial results so far. Costs also rose as Goldman spends heavily on new initiatives, such as consumer banking and wealth management.
The result: Goldman’s annual profit fell 19% even as revenue held steady.
The bank hasn’t gotten the boost from consumer spending and borrowing seen by JPMorgan Chase & Co. and other big Main Street banks. It remains more dependent on traditional Wall Street operations of deal making and securities trading, which held up well in the quarter but where growth is harder to come by.
In the fourth quarter, Goldman’s investment bankers posted their second-best quarter ever and its struggling bond-trading arm showed signs of life. But both were overshadowed by the 1MDB legal charge and higher expenses.
Goldman fourth-quarter profit fell 24% to $1.92 billion, even as revenue rose to $9.96 billion.
The results provide a creaky dais for Goldman’s coming investor day on Jan. 29, when Chief Executive David Solomon will lay out his plans to get the firm growing again. He has promised new financial targets that investors will be able to judge his administration by.
A year into the job, Mr. Solomon and his lieutenants are moving quickly—and spending heavily—to reshape its existing businesses and add new ones they hope will allow Goldman to better compete with more balanced rivals and weather tough markets.
They bought a wealth manager, launched a credit card with Apple Inc., are raising new private investment funds and are building a corporate cash-management business.
Those moves are expensive. They also require a delicate balance of investing for growth without choking off existing businesses or irking rainmakers. Chief Financial Officer Stephen Scherr said Wednesday that the firm had cut bonuses in some divisions to fund new businesses such as consumer banking.
Goldman’s shares are up 20% since October but still trade at a discount to bigger rivals like JPMorgan and Bank of America Corp. JPMorgan reported record annual profits on Tuesday, while quarterly profits fell at Bank of America, which is keenly sensitive to interest-rate cuts.
Goldman’s securities-trading business rebounded from a weak end to 2018 to post 33% higher revenue in the fourth quarter. The gains were even sharper in bond trading, where Goldman once minted billions but has struggled since the financial crisis.
Shares rose about 0.5% in midday trading.
Goldman Executive Exits After He Is Barred From Banking Over 1MDB Scandal
Andrea Vella permanently barred for his role in Goldman’s financing of a multibillion-dollar fraud involving a sovereign-wealth fund.
A senior Goldman Sachs Group Inc. GS +1.46% executive left the firm after the Federal Reserve punished him for his role in a Malaysian corruption scandal that has tarnished Goldman’s reputation.
The Fed on Tuesday said it had permanently barred Andrea Vella from the banking industry for his role in Goldman’s financing of a multibillion-dollar fraud involving 1Malaysia Development Bhd., a sovereign-wealth fund.
Mr. Vella left the firm in recent days, a person familiar with the matter said. A lawyer for Mr. Vella couldn’t be immediately reached for comment.
Mr. Vella, a financial-structuring specialist who was once a rising star at the Wall Street bank, had been on paid leave since late 2018, when he was implicated—though not charged—by Justice Department prosecutors.
He is the third senior Goldman banker named by the U.S. government in the 1MDB scandal, in which more than $4 billion was allegedly looted from the Malaysian government fund. Mr. Vella consented to the ban, which does not require him to pay a financial penalty or to admit wrongdoing.
The investigation, now in its fourth year, has hung over the early tenure of Goldman’s chief executive, David Solomon.
The bank is negotiating to pay the Justice Department a fine of about $2 billion and plead guilty to violating antibribery laws, The Wall Street Journal has reported. Goldman socked away an extra $1.1 billion late last year to help pay for an expected settlement with regulators, who allege the bank overlooked signs of corruption at the Malaysian fund in pursuit of fees.
Tim Leissner, a Goldman partner, pleaded guilty in 2018 to stealing more than $200 million and paying bribes to government officials.
Another Goldman banker is awaiting trial in the U.S. and Malaysia. Both are accused of conspiring with a Malaysian government adviser, Jho Low, to siphon off the proceeds of several bond sales that Goldman handled for 1MDB.
Italian-born Mr. Vella previously headed Goldman’s investment-banking operations in Asia. The Federal Reserve said he engaged in “unsafe and unsound practices,” failing to escalate internal concerns about Mr. Low, who had already set off red flags inside the firm.
“Low was a person of known concern to Goldman, and his involvement indicated heightened potential underwriting risks,” the Fed said in a statement.
Goldman Sachs Settles 1MDB Dispute With Malaysia for $3.9 Billion
Wall Street bank will pay $2.5 billion in cash and guarantee recovery of $1.4 billion in proceeds from assets.
Goldman Sachs Group Inc. will pay $2.5 billion to the government of Malaysia for its role in the alleged theft of billions of dollars from a government investment fund, bringing the Wall Street bank close to ending one of the worst scandals in its history.
Goldman also guaranteed the recovery of $1.4 billion in assets allegedly stolen from the fund, according to the agreement announced separately by the bank and Malaysia’s Finance Ministry on Friday.
Goldman was the main banker for the Malaysian fund, 1Malaysia Development Bhd., or 1MDB. The bank raised billions of dollars for the fund, much of which was allegedly stolen by people who worked for the fund, government officials and two senior Goldman bankers.
The deal ends a yearslong tussle between one of the world’s most powerful investment banks and the Southeast Asian nation. The scandal led to the downfall of former Malaysian Prime Minister Najib Razak, who is on trial for money laundering and abuse-of-power charges relating to 1MDB. Mr. Najib denies wrongdoing.
Goldman raised $6.5 billion for 1MDB through three bond sales in 2012 and 2013, much of which U.S. authorities say was stolen by a Malaysian government adviser, Jho Low. U.S. prosecutors say the bank ignored warning signs about Mr. Low and the fund in pursuit of fees that eventually reached about $600 million.
Mr. Low agreed in October to forfeit more than $700 million in assets to U.S. authorities but hasn’t admitted wrongdoing. His whereabouts remain unknown.
The deal with Malaysia could lead to a quick settlement with the U.S. Department of Justice, effectively ending the scandal for Goldman. Late last year, the bank was close to a deal to pay a fine of about $2 billion and was negotiating whether to plead guilty to violating antibribery laws, The Wall Street Journal has reported.
Goldman executives had long said they hoped to resolve the two investigations together. Now, a Goldman deal with the U.S. will take into account its Malaysia settlement, people close to the talks said. Goldman socked away an extra $1.1 billion late last year to help pay for an expected settlement with regulators.
While Goldman has run into regulatory trouble before, including in the financial crisis, it hasn’t faced charges or fines like these. And the involvement of senior executives at the firm, including a partner, in the scandal make it difficult for the firm to claim they were rogue employees.
Malaysia created 1MDB in 2009 to help spur economic growth. The fund, advised by Mr. Low, sold $6.5 billion in three bond deals, investing it in power plants and oil-drilling ventures.
More than $4.5 billion went to fraudulent shell companies controlled by corrupt officials in Malaysia and Abu Dhabi, U.S. authorities have alleged. Some cash was also used in Mr. Najib’s re-election campaign, the Journal reported.
The fund was supposed to use profits from its deals to pay back the bonds, but that quickly became impossible. A series of stories in the Journal laid out how Mr. Low with help from associates in the Middle East and two Goldman bankers, allegedly siphoned off cash from the fund. Mr. Low spent the money on a luxury yacht, luxury apartments, high-end and a series of over-the-top parties.
The U.S. Justice Department accused Mr. Low of masterminding the scandal and has seized some of his assets, returning the cash to Malaysia. It couldn’t be determined whether the assets Goldman is supposed to help return to Malaysia are tied to Mr. Low.
The settlement doesn’t affect Malaysia’s claims against Mr. Low and other parties related to the 1MDB scandal, the Finance Ministry said.
Malaysia and Goldman had been at odds over the scandal since Mr. Najib was voted out of office in 2018. The government had sought a penalty of as much as $7 billion and charged overseas units of Goldman with violating securities laws over the bond deals. It raised pressure on the bank last year when it filed criminal charges against 17 current and former Goldman executives over their handling of the scandal at 1MDB.
Goldman has said it was misled by two bankers who worked on the deals, Southeast Asia chairman Timothy Leissner and managing director Roger Ng. Mr. Leissner has pleaded guilty in the U.S. to charges of conspiracy to launder money and violate antibribery laws. Mr. Ng has been indicted on bribery and money-laundering charges.
Goldman said the settlement Friday resolved all criminal and regulatory proceedings in Malaysia involving the bank related to 1MDB, including pending criminal proceedings against subsidiaries and certain of their current and former directors—excluding Messrs. Leissner and Ng.
“Today’s settlement is an important step towards putting the 1MDB matter behind us and will help enable the Malaysian government to move forward with additional recovery efforts and to execute on its economic priorities,” Goldman said.
Najib Razak, Former Malaysian Prime Minister, Found Guilty In 1MDB Case
Verdict is the first in a string of cases against Najib, who was sentenced by the court to 12 years imprisonment and fined nearly $50 million
Former Prime Minister Najib Razak was sentenced to 12 years imprisonment and fined nearly $50 million by a Malaysian court that found him guilty of abuse of power in connection with one of the world’s largest financial scandals that resulted in his defeat in the country’s 2018 elections.
The sentence is to run concurrently with shorter prison terms of 10 years for each of the three charges of money laundering and three charges of criminal breach of trust against him, the court said.
Tuesday’s verdict marks the first in a string of cases against Mr. Najib over allegations he unlawfully received hundreds of millions of dollars from a state investment fund called 1Malaysia Development Bhd., or 1MDB, which he launched in 2009 to spur his country’s economy.
Mr. Najib pleaded not guilty and denied wrongdoing in a short statement before the court Tuesday.
Proceedings lasted all day and were closely watched in the Southeast Asian country where Mr. Najib continues to wield political influence. His lawyer said Mr. Najib would appeal the decision before a higher court.
More than $4.5 billion was allegedly stolen between 2009 and 2014 by people who worked for the fund, government officials and others. U.S. authorities have said money siphoned from 1MDB was used to finance Hollywood films and buy luxury real estate.
In a deal announced last week, the main banker for the fund, Goldman Sachs Group Inc., agreed to pay $2.5 billion to the Malaysian government for its role in the alleged fraud and guaranteed the recovery of $1.4 billion in assets allegedly stolen from the fund.
Goldman raised $6.5 billion for 1MDB through three bond sales in 2012 and 2013, much of which U.S. authorities say was stolen. U.S. prosecutors say the bank ignored warning signs in pursuit of fees that reached about $600 million.
The court’s decision Tuesday revolved around allegations that 42 million Malaysian ringgit, or around $10 million, was transferred from a former 1MDB unit called SRC International Sdn Bhd. into Mr. Najib’s personal bank accounts.
The court granted Mr. Najib a stay of execution of both the prison sentences and the fine until a higher court hears his planned appeal and arrives at a verdict on it, which could take months. Mr. Najib must report to a police station twice a month, the court stipulated.
Mr. Najib had a close relationship with Jho Low, a Malaysian financier and the alleged architect of the fraud that spanned many countries. Mr. Low’s whereabouts is unknown, and he has denied wrongdoing.
The U.S. Justice Department has stripped Mr. Low of his custom-made yacht, a stake in New York’s Park Lane Hotel and $700 million in other assets, in civil-forfeiture settlements in which Mr. Low admitted no wrongdoing.
The judge rejected Mr. Najib’s defense that he was misled by Mr. Low and was under the impression that the money flowing into his account was a gift from a Saudi royal.
Mr. Najib suffered a historic election loss in 2018 amid widespread anger over the scandal, marking the first time his party was out of power since Malaysia’s independence from Britain in 1957. He belongs to a powerful political family, and his father also served as prime minister.
His opponents ran on an anticorruption campaign centered on the revelations surrounding 1MDB, and his successor ordered sweeping investigations into it.
But political instability in Malaysia this year returned Mr. Najib’s party to power in a coalition led by Prime Minister Muhyiddin Yassin. The trial was seen as a test of whether Malaysia’s new government would uphold the rule of law or try to protect the former leader who governed the country for nearly 10 years.
Goldman Sachs Restates Earnings After $3.9 Billion Malaysia Settlement
Deal With Malaysia reduces second-quarter earnings by $2 billion.
Goldman Sachs Group Inc. restated its second-quarter earnings lower Friday after reaching a $3.9 billion settlement with the government of Malaysia to resolve a long-running investigation into its work for a corrupt investment fund.
That settlement, reached last month just after the quarter’s end, reduced the bank’s earnings by $2 billion to $373 million, or 53 cents a share.
Previously it had reported profits of $2.4 billion, or $6.26 per share, holding steady during a stretch in which the coronavirus pandemic hammered other banks’ results.
Under the settlement, Goldman will pay $2.5 billion in cash to the Malaysian government to settle allegations that it enabled the theft of billions of dollars from the fund, known as 1MDB. It also guaranteed the recovery of $1.4 billion in assets allegedly stolen from the fund.
The bank set aside an additional $2 billion in legal provisions in the quarter, according to Friday’s filing, much of which is likely to go to the U.S. Justice Department to settle its allegations related to 1MDB.
Federal prosecutors have accused Goldman of violating antibribery and corruption laws by ignoring warning signs at 1MDB in pursuit of deal fees that ultimately exceeded $600 million.
The Wall Street Journal reported in December that U.S. prosecutors were seeking a fine of around $2 billion on top of a guilty plea by a Goldman subsidiary and ongoing oversight of the bank’s compliance procedures.
All in, the 1MDB affair is likely to cost Goldman more in penalties than the $5.1 billion it paid to settle government investigations into its mortgage-trading activities around the 2008 housing crisis. It didn’t admit to wrongdoing then.
Goldman Sachs To Pay $2.8 Billion, Admit Wrongdoing To Settle 1MDB Charges
A bank subsidiary in Asia tied to the misconduct is expected to plead guilty this week, while the parent company will accept deferred prosecution agreement.
Goldman Sachs Group Inc. will pay about $2.8 billion and admit wrongdoing to end a bribery probe that stretched from Southeast Asia to Hollywood and reinforced a reputation for scandal that the Wall Street firm has spent years trying to shed.
The settlement with the Justice Department, expected as soon as this week, would resolve an investigation into Goldman’s work for a corrupt Malaysian government fund known as 1MDB, people familiar with the matter said.
Prosecutors have accused an international cast of characters—including two Goldman bankers—of embezzling billions of dollars from the fund, and U.S. officials had been preparing a case that the bank ignored signs of fraud in pursuit of fees.
The settlement caps one of the biggest stains in Goldman’s 151-year history. All in, the 1MDB scandal will cost the firm more than $5 billion to resolve, about two-thirds of a year’s profits. But Goldman will avoid the harshest sanctions that prosecutors had sought and has already accounted for the penalties in its financial reports to shareholders. Its shares rose 1.2% Tuesday.
Under the deal ironed out in recent days with the Justice Department, Goldman will pay a roughly $2.2 billion penalty and give up about $600 million it earned in fees from its work for 1MDB, people familiar with the matter said. In July, the bank agreed to pay the Malaysian government at least $2.5 billion to resolve a parallel investigation there.
A Goldman subsidiary tied to the misconduct in Asia is expected to plead guilty but the parent company won’t face prosecution, the people said, avoiding a felony mark that could have crippled its ability to do business.
The arrangement, known as a deferred prosecution agreement, would allow officials to pursue charges later if Goldman errs again.
The bank will also escape without a government-appointed monitor to oversee its compliance department, which The Wall Street Journal reported had earlier been a priority for prosecutors. Bloomberg News earlier reported that a settlement was imminent.
The 1MDB scandal has dogged Goldman’s chief executive, David Solomon, who took over in 2018, as he tried to push the bank in profitable new directions. And to the firm’s critics on Wall Street and in Washington, it reinforced the bank’s reputation as a money-spinner willing to serve even unscrupulous clients if the fees were good enough.
It is an image Goldman has worked to shed since the 2008 financial crisis, when it was a central player in the mortgage meltdown and paid $550 million to settle criminal allegations that it duped investors about a particularly noxious bond. That episode tarnished the firm’s reputation and cast a long shadow over the tenure of its then-CEO, Lloyd Blankfein.
Since then Goldman has sought to reinvent itself as a softer place. It launched a Main Street bank and an institute to support small businesses. When market volatility this spring caught its trading clients wrong-sided and triggered thousands of margin calls, the firm ordered its traders to take a more forgiving tack.
The 1MDB scandal shows that its past can’t be so easily outrun. While the conduct is years old, it occurred in the division that Mr. Solomon ran at the time. Both Messrs. Solomon and Blankfein, along with other current and former top executives, still face a potential clawback of past bonuses pending a resolution of the investigation.
Goldman began courting Malaysian officials more than a decade ago, as the 2008 crisis was crimping earnings back in the U.S. The Asian country had just launched a government fund to spur economic development, called 1 Malaysia Development Bhd., or 1MDB, and Goldman in 2012 and 2013 helped sell $6.5 billion in bonds for the fund.
Most of that money went missing and was allegedly stolen by an adviser to the fund, Jho Low, and his associates, according to prosecutors. Nearly $700 million ended up in the bank account of the country’s prime minister, who was later convicted of abuse of power for his role in the scandal.
Mr. Low allegedly spent much of the rest on luxury condos in New York and London, fine art and a giant yacht, throwing huge parties in Las Vegas and bankrolling the film “The Wolf of Wall Street.”
Goldman for years blamed the 1MDB scandal on a pair of senior bankers who were criminally charged in the matter, Timothy Leissner and Roger Ng.
When the scandal began to unravel in 2015, Goldman defended itself, saying the deals were vetted by internal committees and that the bank paid appropriately for the risks it took.
Prosecutors have acknowledged that Messrs. Leissner and Ng tried to hide the worst of their alleged wrongdoing from superiors.
Critics have said that the fees Goldman earned from 1MDB, which were far higher than is typical for the kind of work it did, should have been a warning sign that something wasn’t right.
In any event, Goldman was hungry for the kind of deals Messrs. Leissner and Ng were drumming up: A 1MDB bond deal in 2012 won one of Goldman’s most prestigious internal awards, praised for its “spirit of creativity and entrepreneurial thinking.”
“This case is a modern twist on the oldest and most destructive form of criminality, individuals who have power using their position in society for purposes of evil and greed rather than for good,” said William McMurry, who retired from the FBI this year to join the firm 5 Stones Intelligence after helping to oversee the 1MDB investigation since 2015.
Mr. Leissner, the former head of Goldman’s Southeast Asia business, admitted in 2018 to violating money-laundering and bribery laws in working closely with Mr. Low to engineer the theft.
Mr. Leissner received more than $200 million from 1MDB and paid bribes to government officials, including gifts of jewelry for Malaysia’s then-first lady. He agreed to forfeit $43.7 million and has been cooperating with the U.S. government.
Mr. Ng has pleaded not guilty and is awaiting trial. He was extradited to the U.S. from Malaysia last year.
Goldman Pays Billions—And Takes Millions From Top Execs—To End 1MDB Scandal
The bank will pay nearly $3 billion and recoup $174 million from executives.
Goldman Sachs Group Inc. on Thursday admitted it broke U.S. corruption laws, agreed to pay billions of dollars to global regulators and financially punished its top executives, resolving one of the biggest scandals in Wall Street history.
Goldman took $174 million in compensation from executives and agreed to pay nearly $3 billion to officials in four countries to end a yearslong investigation into its dealings with a Malaysian investment fund at the heart of a global bribery ring. Its check to the U.S. government is the largest such fine ever paid.
All told, Goldman’s dealings with the fund, known as 1MDB, will cost it more than $5 billion in financial penalties and a reputational black eye.
The fund launched a decade ago with grand plans to jump-start the Malaysian economy, but instead, prosecutors say, it became a piggy bank for government officials, investment bankers and an international cast of high-rolling hangers-on.
In New York federal court Thursday, a Goldman subsidiary pleaded guilty to conspiring to violate antibribery laws. A deal cut with authorities allows the bank itself to avoid prosecution on the same charge, which could have crippled its business and further sullied a reputation the bank has worked hard to shine up in recent years.
As a salve to shareholders, Goldman said Thursday it would cut bonuses for Chief Executive David Solomon and three top lieutenants and claw back millions of dollars in past pay from his predecessor, Lloyd Blankfein, and other departed executives. “We must always remain open to improvement, learn from our mistakes and accept the consequences when we fail,” Mr. Solomon said in a statement.
The Justice Department on Thursday laid out a case it has spent years building, detailing a corruption ring that stretched from Southeast Asia to Hollywood and passed through one of Wall Street’s titans. Prosecutors allege that billions of dollars was stolen from 1MDB and more than $1.6 billion in bribes were paid—the most ever in a U.S. corruption case—to government officials in Malaysia and the Middle East.
Two Goldman bankers have been criminally charged in the scandal. Prosecutors alleged that senior executives at the bank, enamored by the fees that poured in from 1MDB, ignored warning signs of fraud.
“This case is also about the way our American financial institutions conduct business,” said Seth DuCharme, the acting U.S. Attorney in Brooklyn. “It’s about reminding people about where the boundaries to fair play are.”
Goldman will pay $2.9 billion to the U.S. Justice Department and other global regulators, on top of the $2.5 billion it agreed in July to pay Malaysia’s government. The Federal Reserve, Goldman’s main financial regulator, levied its own fine and said the bank had failed to supervise its employees.
In 2012 and 2013, Goldman helped raise $6.5 billion for 1MDB by selling bonds to investors. Prosecutors say much of that money was stolen by an adviser to the fund named Jho Low, aided by the two Goldman bankers and associates in the Malaysian and Emirati governments.
Nearly $700 million ended up in the bank account of the Malaysia’s prime minister, who was later convicted of abuse of power.
Goldman had long portrayed the bankers—Timothy Leissner, who has pleaded guilty and is awaiting sentencing, and Roger Ng, who has maintained his innocence and is set to stand trial next year—as rogue employees who hid their activities and Mr. Low’s involvement from their bosses. Mr. Low, who has denied the allegations against him, is on the run from U.S. law enforcement.
The Justice Department said in court papers that Goldman’s compliance staff accepted Mr. Leissner’s statements and ignored red flags.
After articles in The Wall Street Journal and other publications raised questions about the 1MDB deals, Goldman failed to investigate the bond deals or why Mr. Low, who had already been rejected by the bank as a private client, was involved, the Justice Department said.
Company officials talked about alleged bribes on recorded Goldman lines, including one conversation in which an employee told an unnamed senior executive that he was disturbed by information that a deal involving 1MDB was being delayed because a participant was seeking a bribe, court papers say. “What’s disturbing about that? It’s nothing new, is it?” the senior executive replied, according to the Justice Department.
As officials built their case against Goldman last year, the bank withheld deferred pay that was owed to top executives and reserved the right to reduce bonuses going forward. On Thursday it acted on that warning.
Four current executives—Mr. Solomon, President John Waldron, Chief Financial Officer Stephen Scherr and the head of Goldman’s international business, Richard Gnodde—will forfeit $31 million in pay this year, the bank said, about one-third of what they were paid in 2019.
The firm is also clawing back bonuses previously paid to Mr. Blankfein, former CFO David Viniar, and two senior executives at the time of the 1MDB deals who have since retired.
It is in also discussions to recoup money from Gary Cohn, a former executive whose future bonuses were paid out when he joined the Trump administration in 2017, a person familiar with the matter said. (Mr. Cohn left his role as White House economic adviser the next year.)
Mr. Blankfein, in a statement, said, “It goes with the responsibility of leadership to accept some consequences for things that go wrong on your watch.” The other former executives couldn’t be reached.
The financial moves are a concession to shareholders who will shoulder the financial cost of the scandal and employees whose own bonuses this year are likely to shrink because of it.
They also are an admission of sorts that the crux of the government’s case against Goldman—that it failed to properly oversee its senior bankers and fostered a win-at-all-cost culture—has some merit.
Bonuses are companies’ handiest tool to reward and punish executives. Wells Fargo & Co. withheld $135 million from two top executives in the wake of the firm’s fake-accounts scandal.
The moves could help placate Goldman’s partners, who have been griping about declining pay, particularly after Mr. Solomon received a substantial raise earlier this year.
Critics of the government’s efforts to rein in Wall Street excesses may question why the bank itself wasn’t forced to plead guilty, despite its admissions of wrongdoing.
Because firmwide indictments have the potential to cripple a company’s ability to operate, federal prosecutors carefully consider how and when to charge a corporation. Still, some big banks, including JPMorgan Chase & Co., have weathered guilty pleas in recent years.
Brian Rabbitt, the acting assistant attorney general, on Thursday called the outcome “a serious and significant resolution that imposes serious and significant consequences.”
Goldman Sachs Malaysia Subsidiary Pleads Guilty In 1MDB Case
Move comes as Hong Kong’s financial regulator fines Wall Street firm $350 million.
A unit of Goldman Sachs Group Inc. pleaded guilty on Thursday morning to conspiring to violate U.S. antibribery laws, the first step in an expected resolution of a long-running investigation into its role in a Malaysian corruption scandal.
Lawyers for Goldman, appearing remotely in Brooklyn federal court, said the bank’s subsidiary in Malaysia would plead guilty to violations of the Foreign Corrupt Practices Act, which bars U.S. companies from paying bribes to government officials abroad.
The Wall Street firm also agreed to pay nearly $3 billion to officials in four countries to end a yearslong probe into its dealings with the 1Malaysia Development Bhd. investment fund, known as 1MDB.
That is on top of the $2.5 billion it agreed in July to pay the government of Malaysia. Earlier Thursday, Hong Kong’s financial regulator fined Goldman $350 million for its role in the scandal.
All in, the penalties exceed $5 billion, or about eight months of profit for the Wall Street firm.
Prosecutors in the U.S. have accused an international cast of characters—including two former Goldman bankers—of embezzling billions of dollars from the fund, and U.S. officials had been preparing a case that the bank ignored signs of fraud in pursuit of fees.
A decade ago, Goldman looked to Malaysia as a place to do business when the 2008 financial crisis slammed U.S. and European markets. The Asian country had just launched the 1MDB fund to spur economic development.
In 2012 and 2013, Goldman helped raise $6.5 billion for 1MDB by selling bonds to investors. Prosecutors say much of that money was stolen by an adviser to the fund named Jho Low, aided by two Goldman bankers and associates in the Malaysian and Emirati governments.
Goldman had long portrayed the bankers—Timothy Leissner, who has pleaded guilty, and Roger Ng, who has maintained his innocence—as rogue employees who hid their activities and Mr. Low’s involvement in the deals from their bosses. Mr. Low has denied the allegations against him.
Critics have long said that the fees Goldman earned from 1MDB, which were far higher than is typical for the kind of work it did, should have been a warning sign that something wasn’t right.
In its reprimand Thursday, Hong Kong’s Securities and Futures Commission said the nearly $600 million in fees Goldman generated from the 1MDB bond deals was more than double the total revenue it earned on 213 other bond offerings across Asia between 2011 and 2015.
Goldman’s Gary Cohn Saga Thrusts Clawback Shortcomings Into Spotlight
It seemed like a decisive move by Goldman Sachs Group Inc.’s board of directors: Compel a dozen executives to give back millions of dollars to hold them publicly accountable for the 1MDB corruption scandal.
But any hopes of a swift and unified act of contrition were thwarted when one of them, Gary Cohn, didn’t pay up. Weeks later, he ended the stalemate on his own terms by pledging to give his share to charity.
The episode thrust into the spotlight the issue of how to hold executives to account for bad behavior. And while Cohn’s hardball tactics let him sidestep the board’s demands, it’s remarkable the board went after its executives’ money at all — because few do.
“Some people believe that the best way is to put a bad episode behind you as opposed to doing something about it,” said Charles Elson, a corporate governance expert at the University of Delaware.
The directors of General Electric Co., for example, haven’t tried to claw back pay from those responsible for the alleged accounting gimmicks that led to a $200 million fine last week. Neither have the boards of drug companies accused of fueling the opioid epidemic.
And a year ago, Boeing Co.’s directors ousted then-Chief Executive Officer Dennis Muilenburg after two plane crashes killed 346 passengers and torpedoed the stock — but let him walk way with his riches largely intact.
Directors, who often are or were executives themselves, by and large try to avoid drawn-out conflicts with former bosses that could rattle the stock price and, in turn, the shareholders that appoint them.
The committee on Goldman’s board that oversees executive pay includes the former CEOs of Mercer International Inc. and DuPont, and four of the five GE directors in charge of compensation have been public company executives.
The clawback came into vogue in the wake of Enron and got another boost after the financial crisis. It gives boards a legal claim on money they deem was paid to executives unjustly. In other words, it’s a formal request for a payback, backed by a threat to sue.
Taking Cohn to court over his share — a bit more than $10 million, an inconsequential sum to the bank and a fraction of the hundreds of millions he earned during over 20 years at the bank — may be both financially irrational and a tough case to win.
Cohn, who was the bank’s longtime chief operating officer and left to join President Donald Trump’s administration in early 2017, wasn’t directly implicated in the 1MDB affair and hasn’t been accused of any wrongdoing.
Dollars And Cents
But Elson, who himself has been involved in such deliberations as a corporate director, said it’s not about the dollars and cents.
“If someone acted inappropriately, you’ve got to go to the mat,” he said. “It’s about accountability and the signal you’re sending to the rest of the organization.”
Cohn “volunteered many weeks ago to make a significant charitable contribution” and “looks forward to doing so,” a representative for him told Bloomberg News last week.
A Goldman spokesman said at the time that the bank was happy about the donation and considers the matter closed. In all, the board sought to recoup or cancel $174 million of pay from the 12 current and former executives.
At GE, the Securities and Exchange Commission said executives for years misrepresented to investors the profitability and shape of its power unit and insurance portfolio.
The practices, which happened on the watch of then-CEO Jeff Immelt, eventually forced GE to take a massive charge and sped up a downward spiral that wiped out hundreds of billions in market value.
“What’s striking is the deliberateness of what GE’s executives did,” said Erik Gordon, a professor at the University of Michigan. “This wasn’t behavior they missed — it’s behavior they drove. If GE doesn’t go after clawbacks, who would?”
GE didn’t admit or deny wrongdoing as part of the settlement. In a statement last week, GE said the accord didn’t warrant any revisions to its financials and that the firm was happy to have resolved the matter. A spokeswoman declined to comment further.
Aside from a criminal conviction, most clawbacks include broad legal definitions of wrongdoing such as oversight lapses, policy violations or harm done to the firm. That leaves boards with lots of discretion to decide when to apply them.
“You agreed to pay executives millions to do their jobs,” said Catherine Jackson, a former senior adviser to the $300 billion Dutch pension fund PGGM. “If it comes out that they didn’t do their jobs, then why should you have to pay them?”
But proving a person’s culpability in a scandal that grew over time, involving the decisions and actions of many, is rarely easy.
The process could drag on, expose more uncomfortable facts, implicate other employees — or the directors themselves — and lead to more bad press, said Michael Callahan, the former general counsel of LinkedIn Corp. who now teaches law at Stanford University. Institutional investors typically have little stomach for such legal fights, however righteous they may claim to be.
“How strong is your case, and how long are you willing to be in the public eye?” Callahan said.
As a result, they’re rarely used, according to Brett Miller, head of data solutions at Institutional Shareholder Services’ division for responsible investing, even at companies that pay big sums to settle accusations of wrongdoing.
This year, drug distributors AmerisourceBergen Corp. and Cardinal Health Inc. booked their biggest-ever losses. These largely stemmed from setting aside roughly $6 billion each for anticipated settlements in the litigation over their alleged roles in the opioid crisis, which has killed tens of thousands of Americans. Amerisource and Cardinal have repeatedly denied any wrongdoing.
Unless the clawback policy offers a slam dunk case against the executive, many boards opt not to fight, said University of Delaware’s Elson.
That way, they can maintain they did what’s best for the company, all while letting the person off with whatever their contract entitled them — usually coupled with a non-disparagement clause.
Boeing ousted Muilenburg last year after he was rebuked by Congress and the top U.S. aviation regulator for botching the response to two fatal 737 Max accidents.
News outlets including Bloomberg had detailed how some employees raised concerns about the development process of the 737 Max, saying profits were put ahead of safety.
The board docked his unvested awards but let him leave with $80 million in pension and deferred pay — money he’d earned over his three-decade career at Boeing.
At the time, a Boeing spokesman said he left with “the benefits to which he was contractually entitled.” This year, the board reinforced its clawback policy so that it also covers misconduct that compromised the safety of its products.
The company didn’t comment while Muilenburg, who recently joined a Silicon Valley tractor startup, declined to discuss the turbulent close to his stint at Boeing in a recent interview with Bloomberg.
“That argument — ‘It’s in the contract and that’s that’ — it’s fair legally,” Elson said, “but I don’t think it’s the best way to run a company.”
1MDB Case Hits Setback As Judge Rules Against U.S. Justice Department
A U.S. judge rejected the Justice Department’s attempts to seize $325 million from an oil exploration joint-venture linked to the 1MDB scandal, in a setback for federal prosecutors in a multibillion dollar kleptocracy case.
The U.S. ruling emerged at a London court hearing this week where Petrosaudi Oil Services (Venezuela) Ltd. is battling to win release of hundreds of millions of dollars at the heart of the case.
U.S. District Judge Dale Fischer in Los Angeles earlier this month granted Petrosaudi’s request to dismiss the Justice Department’s forfeiture claim, ruling that the government had failed to make an adequate allegation between the money and any criminal offense.
The Justice Department created the Kleptocracy Asset Recovery Initiative in 2010, with the aim of seizing proceeds from foreign corruption.
“It appears that the government would like to take advantage of an inference that one or more PetroSaudi entities were knowingly involved in the theft of the $700 million and the subsequent laundering and cover-up without actually making any allegations to that effect,” Fischer said in her March 9 ruling.
The 1MDB scandal has spurred court cases around the world, as Malaysian authorities try to track down more than $4 billion that was siphoned off from the country’s economic development fund.
U.S. prosecutors, for their part, have been seeking to recoup at least $1 billion that was allegedly spent on yachts and paintings by Claude Monet and Vincent Van Gogh and other luxury goods.
The DOJ alleges that the alleged perpetrators of the 1MDB scam pledged $1 billion in Malaysian state funds to a proposed joint venture between Petrosaudi and PDVSA, Venezuela’s state-owned oil producer, only to redirect $700 million of that into their own account for their personal benefit, leaving the venture with just $300 million.
The Justice Department has until March 29 to file an amended complaint. A Justice Department spokesman and the prosecutors leading the forfeiture effort, who’ve also been heavily involved in the broader 1MDB asset recovery efforts, didn’t return messages seeking comment.
Two Petrosaudi executives are the subject of a criminal investigation in Switzerland, where they were based, and face charges of engaging in a criminal conspiracy in Malaysia linked to 1MDB.
The two men, who can’t be identified under Swiss reporting restrictions, in January lost a bid to have hundreds of thousands of Petrosaudi emails and other documents excluded from the ongoing probe.
The Swiss Federal Criminal Court ruled that the documents were admissible, rejecting the argument that the data was “stolen” by Xavier Justo, a former employee. The January decision was reported earlier Thursday by Swiss blog Gotham City.
Justo has been heralded as a whistleblower in the case and was awarded $2 million by a Malaysian tycoon for sharing the documents. He called the January ruling a victory for Swiss justice.
“Petrosaudi has tried to discredit me and has tried to have these files declared unacceptable in court,” Justo said in a message.
“They have failed in both cases.”
Swiss lawyers for the two men, did not immediately return messages seeking comment. A lawyer at Baker & Hostetler, which represents Petrosaudi in the U.S. case, declined to comment.
Meanwhile in London, Petrosaudi is fighting to release more than $300 million it was awarded by a Paris arbitration court in July in its dispute with PDVSA.
The money has been frozen since PDVSA unsuccessfully pushed for an asset freeze and authorities in the U.S. and Malaysia moved to seize it.
Judge Robert Miles in London said on Tuesday the funds should be routed from an escrow account held by London law firm Clyde & Co. to the U.K. court itself as he allowed a transfer of almost $440,000 to Petrosaudi to pay for legal expenses.
PDVSA had briefly secured a freeze of the assets, before it was overturned, because of what it said were allegations that the funds were linked to “money-laundering, bribery and corruption connected to the alleged fraud in Malaysia.”
Jho Low Mounted Secret Lobbying Campaign Over 1MDB Probe, U.S. Says
A Malaysian financier and a former member of hiphop trio the Fugees were accused in a new indictment of illegally lobbying the Trump administration to drop an investigation tied to the 1MDB global bribery scandal and remove a Chinese dissident from the U.S.
A federal grand jury on Thursday returned a superseding indictment against Low Taek Jho, also known as Jho Low, and Prakazrel “Pras” Michel, according to a Justice Department statement Friday.
Low and Michel’s aim was to influence then-President Donald Trump‘s Justice Department to abandon the probe of Low and others and extradite a wealthy Chinese exile who has criticized the government in Beijing.
That exile has not been identified by the Justice Department, but a person familiar with the matter has said it is Guo Wengui.
Both Low and Michel were charged with money-laundering conspiracy, while Michel was also accused of witness tampering and conspiring to make false statements to banks.
“Pras intends to defend this case very vigorously and believes that when all of the facts are developed, a jury will conclude that this was a selective prosecution that has unfairly targeted Mr. Michel and will exonerate him,” Michel’s lawyer, Benjamin Brafman, said in a statement.
With Lauryn Hill and Wyclef Jean, Michel was a member of the Fugees, which had some of the biggest hits of the 1990s.
Low and Michel were previously charged in 2019 with seeking to funnel millions of dollars of Low’s money into the U.S. presidential election as legitimate campaign contributions while hiding the actual source of the funds.
Prosecutors said the two men worked closely with Trump fundraiser Elliott Broidy, who pleaded guilty last year to illegally lobbying the Trump administration to help Low squelch the 1MDB investigation and to seek the extradition of Wengui from the U.S. Trump pardoned Broidy in January.
The back-channel efforts failed. Low was indicted in 2018 on charges of conspiring to launder billions of dollars embezzled from 1MDB. Low has denied wrongdoing and is considered a fugitive.
Low had been a little-known financier who built an $8 billion fund intended to develop the Malaysian economy.
Authorities in the U.S. and Malaysia allege he spent the pilfered money on parties, sports cars, luxury properties and priceless art.
Goldman Sachs Group Inc. admitted its role in the scheme and its Malaysia unit pleaded guilty last year, agreeing to pay more than $2.3 billion in financial penalties, the largest in American history for violating U.S. anti-bribery laws. The unit was sentenced Wednesday, triggering a $1.26 billion payment for Goldman Sachs for the remaining fines.
Ex-Goldman Banker Roger Ng’s 1MDB Trial Delayed Over Omicron
The U.S. judge presiding over the case of former Goldman Sachs Group Inc banker Roger Ng delayed the start of his fraud trial to Feb. 7 from Jan. 24, citing the recent spike of omicron variant Covid cases.
Ng, a former managing director for Goldman in Malaysia, is accused of conspiring with financier Jho Low and others to embezzle at least $2.7 billion from sovereign wealth fund 1Malaysia Development Berhad.
U.S. District Judge Margo Brodie in Brooklyn, New York, on Friday said she was reluctant to delay the trial and noted that her postponement was shorter than the one month requested by the government.
“If the virus peaks in January, we will be in the downward end of it, and it should be relatively safe and be able to conduct the trial safely,” she said.
Ng’s trial, at one time scheduled for March 2021, has already been subject to substantial delay.
The former banker will be the first person to go to trial in the U.S. in the scandal. Goldman itself agreed to pay billions of dollars in civil and criminal penalties for its role, and Ng’s former boss, Tim Leissner, pleaded guilty and is expected to testify against him.
Ng claims he warned Goldman against working with Low and that Leissner, not him, drove the bank’s work for 1MDB.
Ex-Goldman Banker’s Trial To Pause On U.S. Documents Blunder
* Prosecutors Failed To Share Over 15,500 Documents With Defense
* Evidence Relates To Tim Leissner, U.S. Star Witness Against Ng
Tim Leissner was supposed to be the U.S. government’s star witness in the bribery case against Roger Ng, the only Goldman Sachs Group Inc. banker to go to trial in the multibillion-dollar 1MDB scandal.
Instead, a misstep over crucial evidence about Leissner could end up tanking the case, after the U.S. disclosed that it failed to turn over to the defense more than 15,500 documents related to him.
On Wednesday the judge said she would pause the trial to give the defense time to review the newly disclosed evidence, which the government says it discovered Tuesday night.
In a hearing outside the jury’s presence, Ng’s lawyer Marc Agnifilo told the court he may ask for a mistrial.
‘Middle of the Night’
“In the middle of the night we got a letter from the government describing by its own admission an ‘inexcusable’ discovery disclosure,” an angry Agnifilo told U.S. District Judge Margo Brodie in federal court in Brooklyn, New York.
He added that he had complained for at least two and a half years about the government’s “slow-walking” evidence he needs to defend his client.
“The government absolutely did not live up to its obligation,” Agnifilo said. “This is a categorically serious failure. This is unforgivable.”
In a letter filed with the court, prosecutors said the government failed to disclose the evidence related to Leissner, who was Ng’s boss at Goldman.
Leissner is crucial to the government’s argument that Ng conspired with him, while Ng’s lawyers said Wednesday that the documents support their argument that Ng played no role in the scheme.
The error “is inexcusable,” prosecutor Alixandra Smith said in the letter.
$35 Million Payment
Agnifilo said some of the evidence he has reviewed rebuts the government’s claims that Leissner, who has pleaded guilty and is cooperating with prosecutors, paid Ng a $35 million kickback for his role in the 1MDB scandal.
Agnifilo said the evidence supports the defense theory that the money was a transfer from Leissner’s wife to Ng’s wife for a separate business transaction.
He told the judge he is considering making a request for a mistrial and may also ask for the charges to be dismissed if he concludes Ng’s right to a fair trial has been hampered by the failure to disclose the material.
Prosecutor Drew Rolle told the judge his direct examination of Leissner should conclude by Thursday. Brodie will suspend the trial after that testimony concludes to allow Ng’s defense team time to review the new documents before they cross-examine Leissner.
Wednesday’s disclosure comes after prosecutors in Manhattan federal court were dressed down two years ago for their failure to turn over evidence in a case.
U.S. District Judge Alison Nathan issued a blistering opinion in September 2020 stating there were “serious and pervasive issues” involving disclosure and misleading statements by the government attorneys.
She called for an investigation and required that every prosecutor in that office read her decision.
The case is U.S. v. Low Taek Jho, 18-cr-538, U.S. District Court, Eastern District of New York (Brooklyn).
This Is the Only Goldman Banker Standing Trial For 1MDB
* Roger Ng Is The Only Goldman Banker Standing Trial For 1MDB
* Ng Has Been Charged With Helping Launder Billions From Fund
Day after day, the scene has replayed: Roger Ng, a former Goldman Sachs Group Inc. banker, leaves his Manhattan apartment and, with an electronic monitor strapped to his ankle, heads downtown to build the case that might save him from prison.
It’s been nearly three years since Ng landed in the U.S. from Southeast Asia to face federal charges over his role in a scheme to loot billions from the Malaysian fund known as 1MDB.
In that time Malaysia’s former prime minister has been convicted of crimes while Goldman has paid $5 billion in fines and apologized for breaking the law, one of the biggest black marks in its 153-year history.
Now, at long last, Ng is about to get his day in court – as the only person in all of Goldman Sachs to stand trial in the U.S. for a scandal that stretched from Singapore to Hollywood to Wall Street and beyond. He has pleaded not guilty.
Free on a $20 million bond, Ng, 49, has been confined to his apartment except for runs on Manhattan’s West Side, trips to the grocery store and his lawyer’s office. He has spent his days at that office poring over millions of documents in the sprawling case.
He sits at a desk that was previously occupied by “Pharma Bro” Martin Shkreli, who was sentenced to prison for securities fraud in 2018, in another high-profile legal drama.
Ng’s trial, delayed for two years because of the pandemic, is finally set to begin with jury selection Monday and is expected to last at least five weeks. Ng faces as many as 30 years in prison.
“No one expected him to be here for three years,” his lawyer, Marc Agnifilo, said at a recent hearing. Ng and Agnifilo declined to comment for this story.
While his defense team has cast Ng as a deputy to star Goldman banker Tim Leissner and the first to warn compliance about Malaysian financier Jho Low, prosecutors say Ng played a critical role in a bribe-paying and money-laundering scheme.
By now the broad outlines of the 1MDB scandal, or at least its most salacious details, are well known on Wall Street. There is the gob-smacking dollar figure: $2.7 billion supposedly plundered, the scheme greased by bribes to various officials in Malaysia and Abu Dhabi.
Some of the money went to a $200 million superyacht. Some went to paintings by Monet, van Gogh and Basquiat. Still more went to finance a movie based on other real-life market mayhem: “The Wolf of Wall Street.”
The U.S. says the “brazen” scheme couldn’t have been pulled off without help of bankers at Goldman Sachs.
Ng, the former head of investment banking in Malaysia, is charged with helping Low and Leissner launder billions of dollars embezzled from 1Malaysia Development Berhad, or 1MDB. He’s also charged with violating U.S. anti-bribery laws.
Low, the alleged mastermind of the fraud, has denied wrongdoing and remains at large. Leissner secretly pleaded guilty in 2018 to conspiring to violate U.S. anti-bribery laws, as well as to engaging in a money laundering conspiracy. Leissner agreed to cooperate with the U.S. and is expected to be a star witness at Ng’s trial.
Ng has said he was the first to inform Goldman Sachs compliance about Low, sending “red flag warnings” not to do business with him.
Agnifilo, Ng’s lawyer, has also said Leissner cooperated with the U.S. and implicated Ng to save himself. Agnifilo contends that Ng played no role in the fraud.
“Roger is a relatively insignificant figure caught between the Department of Justice and the government of Malaysia in a case of overwhelming significance,” Agnifilo said in a 2019 interview. “He’s really the yo-yo between these two countries.”
The case against Ng focuses on Goldman’s fundraising work in 2012 and 2013 for 1MDB that raised about $6.5 billion in three transactions. The first was “Project Magnolia,” a $1.75 billion debt-financing deal to purchase a Malaysian energy company.
While assuring superiors Low wasn’t involved, Ng and Leissner allegedly agreed to pay bribes to officials to facilitate the bond deal, of which $577 million was diverted to pay officials like Malaysian prime minister Najib Razak, prosecutors said.
Low and others collected $295 million, while about $60 million was diverted to a company co-founded by Najib’s stepson and helped finance “The Wolf of Wall Street,” according to the U.S.
Ng ultimately received about $35 million diverted from 1MDB into an account “managed and controlled” by his wife, prosecutors say. Ng’s wife hasn’t been charged with wrongdoing.
Leissner, who agreed to forfeit $43.7 million and awaits sentencing later this year, could face as long as 25 years in prison. His lawyer Henry Mazurek didn’t return a call seeking comment.
Ng was arrested in Malaysia in late 2018 and agreed to come to the U.S. the next year. Even if he prevails in the U.S., his legal battle won’t end there: He still faces separate trial in Malaysia.
Goldman’s Most Notorious Banker Turns Star Witness In 1MDB Trial
* Tim Leissner Hasn’t Spoken Publicly Since Guilty Plea In 2018
* Leissner Will Testify Against Former Subordinate Roger Ng
Almost four years after pleading guilty for his role in the 1MDB scandal, Goldman Sachs Group Inc.’s former Southeast Asia chairman, Tim Leissner, is about to speak publicly for the first time.
Leissner is expected to be the star witness in the U.S. government’s case against his former subordinate Roger Ng, the only Goldman banker to go on trial for the multibillion-dollar bribery scheme.
Opening statements are scheduled to begin Monday in Brooklyn. Each man faces the possibility of decades in prison for their work together.
Leissner pleaded guilty in August 2018 to a count of conspiracy to violate U.S. anti-bribery laws and to conspiring to launder money. He was ordered to forfeit $44 million. Goldman paid $5 billion in fines and apologized for breaking the law.
Ng, however, has chosen to fight the case against him. His lawyers have cast him as Leissner’s deputy, a bookish banker who was the first to warn Goldman compliance about Malaysian financier Jho Low.
The trial will once again cast an uncomfortable spotlight on Wall Street’s most influential bank, which has failed to wash off the stain from its nefarious role in the scandal. The Ng-vs-Leissner show marks the first public examination in the U.S. of the part played by Goldman Sachs bankers in enabling a historic loot that shocked in its reach and chutzpah.
Goldman had hoped the $5 billion in penalties it’s been forced to pay was enough to quash further scrutiny. Instead, executives there are keeping a wary eye on proceedings in a Brooklyn courtroom.
Their only hope: the fallout from this latest airing of its Malaysia dealings doesn’t radiate beyond the ex-employees, who’d already been cast aside as profit-chasing bankers gone rogue.
Leissner, the more flamboyant face of the scandal, is likely to spend several days on the stand. Prosecutors will use his testimony to try to show that Ng played a critical role in the scheme.
The last time Leissner spoke publicly was when he pleaded guilty. A chastened Leissner, reading from a prepared statement, told the court he and unnamed colleagues concealed from his employer that Jho Low was involved in one of the bond deals and was paying bribes and kickbacks.
“I knew that this was contrary to Goldman Sachs’ stated policies and procedures,” he told the judge in Brooklyn.
Leissner hasn’t been sentenced yet and is free on $20 million bond. His guilty plea and cooperation in the case against Ng are meant to reduce his sentence, which is likely to be announced later this year.
Before his fall from grace, Leissner had lived a golden life as a Goldman executive — he rubbed elbows with heads of state, he made millions, he married famous former model Kimora Lee Simmons.
The 52-year-old German national was the kind of banker who seemed to know everybody. He embodied the Wall Street alchemy that transforms proximity to power into money.
His father was a Volkswagen AG executive in Yugoslavia during the Bosnian War before stints in Mexico and China. Leissner graduated from Germany’s University of Siegen and got an MBA from the University of Hartford in Connecticut in 1992.
He joined Goldman in 1998 and became chief of staff to Richard Gnodde, president of the bank’s Asia operations and now head of the bank’s international business. By 2006, Leissner was named a partner and in 2014 he became the firm’s Southeast Asia chairman.
Prior to Simmons, Leissner was married to Judy Chan, a former analyst at Goldman whose father ran a coal-mining business in China. Their wedding feast included suckling pigs with electric lights flashing in their eye sockets.
Chan would later become a successful vintner, running Grace Vineyard, China’s first family-owned winery.
Leissner met Simmons, a reality show star and head of a fashion company, in the business-class section of a flight from Hong Kong to Kuala Lumpur. The encounter began with an argument and ended with a marriage proposal, they told the Wall Street Journal.
They were wed in 2014 and his wife’s social-media accounts showed the couple’s jet-set life, from yachts in the Caribbean to meeting the king and queen of Malaysia.
Meanwhile, Leissner’s business was blossoming — he was an early adviser to 1 Malaysia Development Bhd., a fund created to pursue investment and development projects for the economic benefit of Malaysia and its people.
Over two years, Goldman made around $600 million working on three bond sales that raised $6.5 billion for 1MDB, dwarfing what banks typically earn from government deals. Those bond deals and others helped Leissner get “large year-end bonuses” from Goldman, according to the U.S. government.
But U.S. authorities said Leissner was using bribes and kickbacks to get and retain 1MDB’s business, and that he embezzled from the fund for himself and others. More than $2.7 billion of the $6.5 billion raised was misappropriated, according to court filings.
Between mid-2012 and late 2014, “more than $200 million of the proceeds of the three 1MDB bonds and other 1MDB business was transferred” to accounts controlled by Leissner and a co-conspirator, the U.S. government said.
Problems came to light when $681 million showed up in the personal bank accounts of Malaysia’s prime minister, triggering investigations. Goldman put Leissner on leave in January 2016, and he resigned soon after.
Leissner largely dropped out of view, occasionally popping up in photos posted by Simmons or one of her children. The couple have a son, Wolfe, who was born in 2015.
For a time, he lived with Simmons in an $11 million mansion in Los Angeles. That house was sold last year, but Leissner continues to live in Los Angeles. One magazine reported in 2020 that he was spotted “canoodling” with another woman.
Simmons and Leissner have separated, according to a person familiar with the matter who spoke on condition of anonymity because the matter is private.
He and his estranged wife are still united in fighting a court battle in Los Angeles against her ex-husband, Russell Simmons, co-founder of hip hop label Def Jam Records. Simmons sued them in May 2021, alleging they used his shares in a fitness drink company they jointly owned as security for Leissner’s bond. Simmons wants the stock in Celsius Holdings Inc. returned, as well as damages.
Leissner’s lawyers argue Simmons didn’t “loan” the Celsius shares to them but they had already been sold by the time the couple posted them as collateral. Both Leissner and Kimora Lee have filed motions arguing Simmons’s claims should be dismissed.
“The allegations brought by Russell against Kimora are patently false and we look forward to a successful conclusion in court” said David Willingham, a lawyer for Kimora Lee Simmons.
At Trial, Lawyers Present Clashing Portraits of Goldman Sachs Banker
Roger Ng Is The First Defendant In The 1MDB Case To Face A U.S. Jury
A federal prosecutor and a criminal defense attorney presented contrasting portraits of a former Goldman Sachs Group Inc. managing director who went on trial Monday on charges related to the multibillion-dollar looting of a Malaysian government fund.
In opening statements, Justice Department attorney Brent Wible told a jury in New York that the onetime banker, Roger Ng, conspired with Malaysian financier Jho Low and others to bribe government officials and launder money to secure lucrative business deals with 1Malaysia Development Bhd., a state-controlled economic development company known as 1MDB. Mr. Ng received $35 million in kickbacks for his role in the scheme, Mr. Wible said.
“He saw an opportunity to use his position at Goldman to get rich by cheating,” the prosecutor said.
Marc Agnifilo, a lawyer for Mr. Ng., said his client was innocent and pinned the blame on Mr. Ng’s boss, former Goldman partner Timothy Leissner, who is the government’s star witness and previously pleaded guilty to U.S. charges of conspiracy to launder money and violate antibribery laws for his role in the scandal.
“This is a massive crime and there are lots of guilty people. He’s just not one of them,” Mr. Agnifilo said of Mr. Ng.
Mr. Ng is the first criminal defendant in the U.S. case to face a jury. The trial is expected to bring renewed scrutiny to Goldman’s role in the international scandal.
Mr. Ng and Mr. Low were charged in 2018 with conspiring to launder money that was misappropriated from 1MDB and with two counts of conspiring to violate the federal Foreign Corrupt Practices Act.
Mr. Low hasn’t been arrested and his whereabouts are unknown. However, in 2019 he agreed to forfeit more than $700 million in assets U.S. authorities had sought to seize.
Lawyers for Messrs. Leissner and Low didn’t respond to requests for comment. A spokeswoman for Goldman declined to comment.
Between 2009 and 2014, the laundered money was used to pay bribes to high-level government officials to obtain business for Goldman, federal prosecutors say. During that time, the bank helped raise about $6.5 billion for 1MDB through three bond offerings and earned $600 million in fees and revenue.
The scandal chastened the bank. It paid more than $5 billion in penalties to the U.S. and Malaysia and took away compensation from some top executives.
It also admitted that a subsidiary broke U.S. corruption laws. Its board called the matter an “institutional failure.”
Former Malaysian Prime Minister Najib Razak, who was accused of embezzling more than $680 million from the 1MDB fund, was sentenced in 2020 to 12 years imprisonment after a court in his country found him guilty of abuse of power.
Mr. Low is accused of masterminding the plundering of the fund and acting as an intermediary between Goldman employees and government officials.
He and others used the stolen money to buy luxury real estate and artwork and bankroll major Hollywood films, according to federal prosecutors.
Mr. Ng, a Malaysian national, has been under home detention in New York while awaiting trial. His lawyers have said that he warned members of Goldman’s legal, compliance and investment divisions about Mr. Low, but the bank continued to deal with him.
Mr. Agnifilo said Monday that Mr. Leissner is testifying to get a reduced sentence. He described Mr. Leissner as an immoral man who exploited people, was previously married to two women at the same time and was desperate for money when he met Mr. Low.
“The protector of Low all along was Leissner. It was never Roger,” Mr. Agnifilo said.
Prosecutors, however, said Messrs. Ng and Low had a close relationship in the run-up to the bond offerings. Mr. Ng flew with Mr. Low on private jets, attended a lavish party with him in Las Vegas and met him on a yacht in the Mediterranean Sea during the 2011 Cannes Film Festival, prosecutors said.
Bill McMurry, the chief executive of investigative firm W1 Global and a former Federal Bureau of Investigation agent who supervised the 1MDB investigation, said 1MDB was one of the biggest international corruption cases that the FBI ever handled.
The case highlighted the tension between business and compliance officials, Mr. McMurry said. Prosecutors said Goldman compliance teams rejected Mr. Low’s attempts to open an account with the bank, citing concerns about his source of income.
However, high-level employees in Goldman’s investment bank either ignored or nominally addressed red flags raised during the vetting of the bond deals, prosecutors said.
“This deal clearly had risks, and Goldman Sachs senior leadership decided to move forward with it,” Mr. McMurry said. “They paid a hefty fine for that decision.”
Jho Low’s Wild Nights On Display: $250,000 For DiCaprio, Fox
* Prosecutors Riffle Through Party Expenses For 1MDB Fugitive
* Low Allegedly Conspired With Ex-Goldman Banker Ng Now On Trial
A quarter of a million dollars for Leonardo DiCaprio. A $385,773 bar tab. Five grand for “model wrangling.”
These were among the expenses that jurors in the federal conspiracy trial of former Goldman Sachs Group Inc. banker Roger Ng heard about Tuesday, as a government witness described how millions of dollars siphoned off in the 1MDB scandal were frittered away on lavish parties hosted by a high-flying Malaysian financier.
Ng is accused of conspiring with former star Goldman banker Tim Leissner to help the now-fugitive financier, Jho Low, steal the funds in exchange for kickbacks.
The jury in Brooklyn, New York, learned of invoices from a Las Vegas party for Low in which food, beverages, “talent” and “top quality models,” among other items, added up to more than $3.6 million.
That big bar tab included 65 bottles of Cristal Champagne for about $100,000 and a $38,955 tip.
Ng, the only former Goldman Sachs employee to stand trial in the U.S. for the scandal, is charged with conspiring to violate U.S. anti-money-laundering law to steal billions of dollars from the Malaysian fund 1MDB.
The expenses are what Low did with some of the $700 million he made off with in the global fraud, according to prosecutors.
As The Government Described The Fruits Of A Scam Stretching From Malaysia To Wall Street, The Jury Got A Look At Some Celebrity Fees:
* DiCaprio: $250,000
* Paris Hilton: $100,000
* Megan Fox: $250,000
* Kim Kardashian: $50,000
Basically, the panel was told, Low partied like there was no tomorrow.
The sums flew by as Alex Cohen, the chief financial officer of Strategic Group, an entertainment and marketing company that arranged parties for Low, testified.
Cohen described a series of shindigs that featured guests and entertainers such as Sean “Diddy” Combs, Jamie Foxx and Fergie.
He said Low provided the entertainment company with at least 25% of its profit in 2012 and that for one event it was paid $5,000 for the said model wrangling alone — all allegedly fueled by money Low took from 1MDB.
During cross-examination, defense lawyer Zach Intrater showed the jury a contract for DiCaprio for a November 2009 event to celebrate Low’s birthday at Caesars Palace in Las Vegas, which called for the actor to be flown in an “exclusive private plane” and to attend for one day.
The pay was $150,000 for attending the party and a dinner as well as “private gambling activities.”
“So he showed up for one day” and then “he gets paid $150,000?” Intrater asked Cohen.
“Yes,” Cohen said.
A July 2012 event Strategic handled for Low aboard a yacht on the French Riviera dictated that models be flown in. Intrater asked Cohen why he’d written “Strategic Escorts LLC” when referring to the company’s efforts to hire the models.
“I was poking fun that there were women coming on this boat trip and we were procuring these women,” he said.
The case is U.S. v. Low Taek Jho, 18-cr-538, U.S. District Court, Eastern District of New York (Brooklyn).
Senior Goldman Staff Knew About Jho Low In 1MDB, Leissner Testifies In Trial Over Scandal
* Former Star Banker Takes The Stand In Roger Ng’s Bribery Trial
* Leissner Pleaded Guilty, Is Key Government Witness Against Ng
Senior executives at Goldman Sachs Group Inc. knew that financier Jho Low was involved in transactions related to Malaysia’s 1MDB fund, former star banker Tim Leissner testified.
Leissner, who took the stand for the first time Wednesday as the U.S. government’s key witness in the federal bribery trial of his former subordinate, Roger Ng, described his role in the multibillion-dollar scandal.
He told jurors in a Brooklyn, New York, courtroom that he and Ng “and our colleagues knew that Jho Low was the key decision maker, so therefore we had to include Jho Low as well” in all major aspects of the lucrative 1MDB transactions.
And he said that while he and Ng concealed from Goldman compliance officials Low’s efforts and the bribes they paid to get the business, other Goldman colleagues knew about Low’s involvement. Leissner, 52, named for the jury his own boss at the time, Michael Evans, then Asia chairman, and several other former executives of the bank.
Leissner said Evans went with him to visit 1MDB executives after Goldman earned $220 million in the first bond transaction, known as Magnolia, and that Evans thanked the chief executive officer of 1MDB at the time for using Goldman.
“Don’t thank me,” Leissner said the CEO responded. “Thank Jho Low.” Leissner continued: “So Mike knew from that moment” and added, “Mike asked me during Magnolia if Jho was involved and I lied outright and I said no.”
He also named Andrea Vella, a former co-head of investment banking in Asia, saying he and Vella discussed Low’s role as a key decision maker in the 1MDB transactions.
He told the jury former executives Toby Watson and John Donne also knew Low, now a fugitive, was involved.
Michael Evans, now president of Alibaba Group, didn’t immediately respond to an email sent after business hours seeking comment on Leissner’s testimony.
Maeve DuVally, a spokeswoman for Goldman, declined to comment on Leissner’s testimony about his former colleagues.
“There were others at Goldman Sachs, on the business side, who we talked to about Jho’s involvement,” Leissner told the jury. He said he and Ng didn’t alert colleagues in compliance to the intermediary’s participation “because had they known, it would’ve raised red flags and stopped any transaction at Goldman Sachs.”
Leissner testified that he never disclosed to his fellow bankers the “full scope” of what he knew about Low and the bond transactions.
“They only knew of his influence and rumors or other things that Jho may be doing,” he told the jury.
Low’s close relationship with Malaysia’s prime minister at the time, Najib Razak, and his family allowed the financier to play a central role in 1MDB and provoked “rumors,” Leissner said.
He said that after the deals closed, he and Ng were hailed as “heroes” by Goldman superiors.
Leissner, who was the bank’s Southeast Asia chairman, has pleaded guilty to charges stemming from the global scheme. On the stand Wednesday, he told jurors that zeal for $6.5 billion in 1MDB transactions drove him and Ng to bribe foreign officials, because without them “these transactions would have never happened.”
Ng, who he said was the lead banker on the 1MDB deals, as head of investment banking in Malaysia, is charged with conspiring with Leissner to launder money and violate U.S. anti-bribery laws. He is the only former Goldman banker to go on trial in the scandal.
Leissner told the jury he was “best friends” with Ng and that they worked together to deceive Goldman superiors about bribes paid out in the scam, which prosecutors say Low hatched.
He said Low, the high-flying Malaysian financier who was also charged in the scheme, had decision-making power at 1MDB and that Leissner and Ng decided the chance to get a piece of the 1MDB business — which he called the largest set of deals in Goldman’s history — and the kickbacks they got made it worth the risk.
Leissner testified that Low was a critical player because of his close relationship with Najib and with officials in Abu Dhabi, who provided a crucial guarantee for the bond transactions.
“The actual success of these transactions relied upon bribes and kickbacks being paid,” he told the court.
It has been almost four years since Leissner pleaded guilty to his role in the fraud that stretched from Asia to Wall Street. The 1MDB affair included investigations in Asia, the U.S. and Europe and led to the ouster of Najib in 2018.
Authorities spent years tracking about $4.5 billion that was allegedly siphoned from 1MDB and flowed into high-end art, real estate and a super yacht and helped fund the hit movie “The Wolf of Wall Street,” which chronicled an earlier era of financial crimes.
Prosecutors claim Ng conspired to circumvent Goldman’s internal controls and engaged in the money-laundering plot with Leissner, who they say paid him $35 million to take part in the scheme.
Ng’s lawyers have argued that he played no role in it and that Leissner misled Goldman compliance officials about Low’s involvement in the 1MDB bond transactions.
Leissner pleaded guilty in August 2018 to conspiring to violate U.S. anti-bribery laws and launder money. He admitted to bribing officials in Malaysia and the United Arab Emirates to get bond deals for Goldman. He was ordered to forfeit $44 million.
In opening statements on Monday, Ng’s lawyer Marc Agnifilo assailed Leissner’s credibility and argued he was a “double bigamist” who was testifying for the U.S. only to save himself.
Goldman Sachs in 2020 agreed to pay more than $5 billion, including a record $2.3 billion fine in the U.S., and entered its first-ever guilty plea for its role in the scandal. The bank got a deferred-prosecution agreement while its Malaysian unit pleaded guilty.
Leissner faces the possibility of decades in prison when he’s sentenced this year.
The trial is in recess to accommodate a juror and will resume Tuesday with Leissner’s further testimony.
The case is U.S. v. Low Taek Jho, 18-cr-538, U.S. District Court, Eastern District of New York (Brooklyn).
In 1MDB Scam, Sheikh Wouldn’t ‘Get Out Of Bed’ For Less Than $100 Million, Leissner Says
* Witness In Trial Of Ex-Goldman Banker Testifies About 1MDB
* Jho Low Mapped Payoffs At Mayfair Home, Leissner Tells Jury
One hundred million dollars — that was the cost of doing business in the multibillion-dollar 1MDB scam, former Goldman Sachs Group Inc. banker Tim Leissner testified.
Leissner, 52, the U.S. government’s star witness in its case against ex-Goldman banker Roger Ng, provided a description of the payment system Wednesday for a jury in Brooklyn, New York.
Leissner told of a meeting at which Jho Low, the alleged architect of the massive fraud, spelled out who he said needed to be paid off for approval to raise and spend billions of dollars for Malaysia’s wealth fund, 1Malaysia Development Bhd.
One hundred million dollars — that was the cost of doing business in the multibillion-dollar 1MDB scam, former Goldman Sachs Group Inc. banker Tim Leissner testified.
Leissner, 52, the U.S. government’s star witness in its case against ex-Goldman banker Roger Ng, provided a description of the payment system Wednesday for a jury in Brooklyn, New York.
Leissner told of a meeting at which Jho Low, the alleged architect of the massive fraud, spelled out who he said needed to be paid off for approval to raise and spend billions of dollars for Malaysia’s wealth fund, 1Malaysia Development Bhd.
Leissner’s testimony about the alleged payments came in his third day on the stand in the trial of Ng, his former subordinate at the bank and the only Goldman employee to be put on trial for the 1MDB scandal. Billions of dollars were siphoned from funds meant for development in Malaysia.
Leissner pleaded guilty in 2018 and his cooperation in the trial may help him get a reduced sentence. Ng has pleaded not guilty to money laundering conspiracy and bribery charges, and his defense lawyers say he warned Goldman officials about doing business with Low.
The trial was interrupted Wednesday by revelations that the government failed to turn over more than 15,500 documents related to Leissner.
The judge has said she will pause the trial before defense lawyers begin questioning Leissner, and Ng’s attorney has said he may ask for a mistrial.
The meeting Leissner described while on the stand took place at Low’s home in the Mayfair section of London in 2012, not long before Goldman greenlighted work on 1MDB and raised $1.75 billion for the fund, Leissner testified.
The project couldn’t move forward unless 1MDB secured an outside guarantor for the debt it was about to take on, he told the jury.
He said Low, who held no official position at 1MDB but exerted outsize influence there, was able to get that guarantee from the sovereign wealth fund of Abu Dhabi and its subsidiaries.
At the meeting, Low took out a piece of paper and “started drawing boxes,” Leissner told the court. On one side of the page were several boxes for Malaysian officials who needed to be paid off, and on the other were boxes for the Abu Dhabi officials, he said.
Low said that at the top levels, payments to the Malaysia and Abu Dhabi sides of the criminal enterprise “had to be the same and be perceived to be the same,” Leissner testified.
“In my mind, that meant both sides had to get $100 million,” Leissner testified. “I can’t say I was surprised,” he added, saying years of working in emerging markets had taught him that bribes and kickbacks were sometimes associated with projects involving government officials.
At the end of his presentation, Low said Leissner and Ng would also be “taken care of,” Leissner testified.
“I was of course happy that I was about to make some additional money,” he told the jurors. “I wanted to make more money, even though I was well paid at Goldman Sachs.”
Leissner said that after the meeting he and Ng walked back to Leissner’s hotel.
“As Roger and I walked, we agreed we would never say anything to anyone at Goldman Sachs or outside Goldman Sachs” about the payments “other than the participants that were there,” Leissner testified.
“Bribes had to be paid to make it happen,” he said, “but we always kept it to the two of us.”
Jho Low Was An $87 Million Vegas Whale At Late-Night Baccarat Table
* Low Lost $1.75 Million In 90 Minutes Of Baccarat, Jury Told
* Venetian Executive Testifies At Roger Ng Bribery Trial
Jho Low was a big man in Vegas. He sported gold lame suits, traveled with an entourage and lost tens of millions of dollars, a New York jury was told.
In a single 90-minute stint playing baccarat, his game of choice, the Malaysian financier lost $1.75 million, Kirk Godby, a marketing executive at the Venetian in Las Vegas, testified.
All told, Low wagered almost $87 million at the Venetian and lost about $26 million, Godby estimated.
“He was extremely extravagant,” Godby said. “He had requests that were parallel to none. He made requests like he wanted disco balls, dance floors and DJs.”
Godby was testifying in the bribery trial of former Goldman Sachs Group Inc. banker Roger Ng over the multibillion-dollar 1MDB scam.
Ng is accused of conspiring with Low and Ng’s former boss Tim Leissner to help the financier steal billions of dollars from three bond deals Goldman underwrote for the 1Malaysia Development Bhd. wealth fund. Low is now a fugitive.
Prosecutors may have called Godby to refute Ng’s October 2009 claims to Goldman superiors that he had met Low only once before, when he recommended the financier as a private wealth client to the bank.
Low was known as a “premium” guest at the Venetian who spent more than $50,000 there, Godby said.
Godby, who said he’d been a marketing executive at the Venetian for more than 20 years, explained to jurors it’s his job to “get people in the casino, get them in the door.”
Casinos track visitors’ wagers through their loyalty cards, and provide complimentary services in part on how much people wager and spend.
“We have the whole enchilada if you will,” Godby said. “Rooms, food, beverages, spas, and shows, cash back.”
Ng gambled with Low during the former banker’s sole visit to the Venetian in late November 2010, Godby told the jury. Ng lost $22,500 playing baccarat during his visit, which took place before the first 1MDB bond deal closed in May 2012.
Low played at the same table as Ng on the morning of Nov. 29 at around 5 a.m. and placed $4 million in bets, Godby testified.
The Venetian wasn’t the only Las Vegas casino Low frequented though.
To celebrate his 28th birthday, Low had a bash at Caesars Palace, with Leonardo DiCaprio being flown in on a private jet and receiving $150,000 to attend the party and a dinner, the jury was told earlier in the trial.
The trial resumes Monday with prosecutors saying they expect to conclude their case as early as March 23. U.S. District Judge Margo Brodie told jurors they could get the case as early as March. 29.
Ex-Goldman Banker Rolled Dice On U.S. Trial At Lawyer’s Urging
Former Goldman Sachs banker Roger Ng was in a squalid prison in Southeast Asia for his role in the multibillion-dollar 1MDB scandal when his New York lawyer gave him a way out.
He persuaded Ng to come to the U.S. first for trial, rather than wait for the completion of the case in his native Malaysia. He did, and lived in New York free on bond for almost three years.
On Friday, Ng was convicted of conspiring to violate anti-bribery laws and launder money and now faces a prison term as long as three decades.
“I told him you’d be far better off in the United States, where we have a real system and a real trial,” defense attorney Marc Agnifilo said after the verdict. “I’ve rethought that decision ten thousand times.”
It took its toll. Agnifilo said his client last saw his daughter Victoria when she was 6 years old, after Malaysia barred Ng’s wife, Hwee Bin Lim, from leaving the country.
Lim was allowed to leave only for the New York trial, after the U.S. gave her a “safe passage” letter agreeing not to prosecute her. She testified in her husband’s defense.
1MDB “is a personal disaster in the life of that family,” Agnifilo said.
Ng, formerly Goldman Sachs Group Inc.’s head of investment banking in Malaysia, had been locked up for six months in Kuala Lumpur when he agreed to waive an extradition fight and travel to Brooklyn in U.S. custody.
On his arrival, he was released on a $20 million bond and had to wear an electronic ankle bracelet to track him while he awaited trial. Following the verdict Friday, he was allowed to remain free pending his sentencing.
Agnifilo, who vowed to challenge the conviction, said he and Ng’s lawyers in Malaysia are coordinating their efforts on his next legal steps.
“I have faith in our system, because I’m from here,” he said. “I think he still does, even though he’s not from here.”
Goldman’s Failure To Heed 1MDB Red Flags Offers Lessons To Banks
* Compliance Repeatedly Turned Down Low As Private Client
* Banker Admitted To Lying About Low’s Role In Bond Deals
The trial of former Goldman Sachs Group Inc. banker Roger Ng depicted a tale of greed and excess that includes bribery, bigamy and billions of dollars in stolen money. It was also a window into the missteps that cost of one of the world’s preeminent banks more than $5 billion.
Ng, 49, was found guilty of bribery and money laundering tied to $6.5 billion in bond deals that Goldman underwrote for sovereign wealth fund 1Malaysia Development Bhd., or 1MDB. He faces as many as 30 years in prison.
During the trial, jurors heard that Ng and his former boss, Tim Leissner, had extensive connections with a young Malaysian financier named Jho Low.
They also heard testimony that Low was considered too dodgy to take on as a private wealth client by Goldman, but he was still able to siphon off more than a billion dollars from 1MDB bond sales.
A central theme at the trial in federal court in Brooklyn, New York, was the tension between Goldman bankers in Southeast Asia seeking big deals after the financial crisis and the compliance and legal employees vetting their transactions.
Also at issue was the power that Goldman executives had to steer deal money into places it wasn’t supposed to go.
Goldman’s “catastrophic compliance failure” offers lessons for banks around the world, said Joan Meyer, a former federal prosecutor who oversaw foreign bribery investigations and is now at Thompson Hine. She said investment banks can’t hold double standards for star bankers or work with questionable intermediaries like Low, even as they’re motivated by big fees.
“It causes people to circumvent controls, cut corners, if they can get the deal in the door,” said Meyer.
‘A Name To Be Avoided’
Prosecutors said Low was the mastermind behind the 1MDB scheme. Leissner testified that he lied repeatedly to bank officials about Low’s plan to pay bribes and kickbacks, which brought Goldman $600 million in fees.
Low made off with $1.42 billion, spending it on artwork, houses, a yacht, and bribes to government officials before he disappeared, prosecutors say.
Prosecutors said Ng, a Malaysian national and former managing director, got $35 million in kickbacks. He was found guilty of two counts of conspiring with Leissner to violate the Foreign Corrupt Practices Act and one count of conspiracy to launder money. Low, who was also charged, is a fugitive.
Ng, who didn’t testify, denied wrongdoing, and claims Leissner falsely implicated him and lied repeatedly about him to curry favor with prosecutors.
His attorney Marc Agnifilo assailed Leissner as corrupt, citing the fact that he was twice married to two different women at the same time; kept $80 million of a 145 million-euro deposit Low sent him to hold; bought his mistress a $10 million home after she allegedly threatened to expose his work with 1MDB; and forged a Goldman letter claiming a due diligence review of Low raised no concerns about corruption.
Prosecutors offered Goldman compliance witnesses who described the due diligence on Low. They fretted about his political connections in Malaysia and Abu Dhabi and how he obscured the source of his wealth and partied with abandon. Ng knew Low well and had worked with him on a previous deal.
But Ng also urged caution, saying compliance shouldn’t accept Low’s claims at face value, jurors heard.
Patrick Kidney, a member of Goldman’s anti-money laundering team in London, described a PowerPoint summary of Low’s red flags from 2010. It said Low “has not generated sufficient personal earnings to cover his expenses.
He appears to be backed by undisclosed, potentially politically exposed funders.” Kidney told jurors that he couldn’t see “that relationship ever being onboarded.” Goldman denied Low in 2010.
Leissner, 52, recommended Low two more times, starting in 2011. Kidney wrote in an email to colleagues: “To be clear, we have pretty much zero appetite for a relationship with this individual.” Another compliance employee said Low is “a name to be avoided.”
Leissner had grown close with Low, who cultivated relationships with Malaysian Prime Minister Najib Razak and leaders in Abu Dhabi who backed the 1MDB bond deals. 1MDB was intended to fund long-term strategic development in Malaysia in order to secure the economic well-being of its people.
Jurors heard evidence that Leissner, in particular, worked hard to conceal Low’s role in the deals from compliance officials and legal reviewers.
Leissner said Low secretly paved the way for the three bond deals with massive bribes to Razak and 1MDB employees, as well as Abu Dhabi officials who guaranteed the transactions.
Prosecutors laid out a complex trail of how 1MDB bond proceeds were siphoned off at Low’s direction, moving through shell accounts he secretly controlled in tax havens around the world.
That sort of hidden corruption was a concern for Goldman’s compliance and control officials, as well as the Firmwide Capital Committee and the Sustainability Committees, which had to approve all major transactions.
The first deal, at $1.75 billion, was for 1MDB to buy a Malaysian energy company, and it was guaranteed by an Abu Dhabi sovereign wealth fund. Goldman underwrote that bond and two others for 1MDB.
The capital committee raised concerns about Low, testified Stephen O’Flaherty, who joined Goldman’s Business Intelligence Group, or BIG, after 30 years at British intelligence services.
O’Flaherty said he asked if Leissner could confirm that Low attended a meeting with an Abu Dhabi leader to discuss the deal. Leissner was “irritated by it, and said ‘No, Low wasn’t at the meeting,’” O’Flaherty testified.
He said he followed up with an email to Leissner and another senior banker, seeking reassurance that Low “was not in any way involved in this deal, and that neither he nor anyone else were acting as intermediaries and receiving any payments or giving any payments.”
Again, Leissner didn’t disclose Low’s role, O’Flaherty said.
“I didn’t think he would lie to me and all my colleagues and his co-partners on Capital Committee,” O’Flaherty said.
After the deal closed, Low arranged for $577 million to be transferred to a shell company he controlled. Some went to pay bribes, and $60 million funded the production of the film “The Wolf of Wall Street.”
Agnifilo assailed the government’s case in his summation, saying prosecutors offered no Goldman compliance witnesses to implicate his client.
He said while Ng violated Goldman policy by using personal email accounts, that didn’t mean “he must have a proclivity to commit international bribery of world leaders,” Agnifilo argued.
In the same courthouse 18 months ago, Goldman’s Malaysian unit pleaded guilty to conspiring to violate the FCPA. Goldman admitted providing about $1.6 billion in bribes to foreign officials and their relatives.
The bank itself was charged with conspiring to violate the FCPA and paid $2.9 billion to settle the case. But the U.S. agreed to defer prosecution and drop that charge next year if Goldman improves its compliance program.
In its statement of facts with its deferred-prosecution agreement, Goldman said it “failed to investigate these red flags or to perform an internal review of its role in the bond deals despite the clear implications that the deals had involved criminal wrongdoing.”
Goldman pledged to maintain effective internal accounting controls and a “rigorous anti-corruption compliance program.” It promised to periodically review its foreign bribery risks, discipline employees regardless of their position and adequately investigate the relationships of third parties with foreign officials.
“Wall Street has a very short memory, so they may temporarily learn a lesson and change their practices — but whenever greed takes over, that’s their downfall,” said Amy Lynch, who runs FrontLine Compliance, where she works with investment firms and institutional money mangers.
For many, these promises came too late. Meyer, the former FCPA prosecutor, said Goldman’s control employees “stuck their head in the sand. What they did was ask questions and accept answers that they shouldn’t have. They needed to do more.”
Former Goldman Banker Ng Found Guilty in 1MDB Fraud Scheme
* Ng Was Only Goldman Banker To Go To Trial Over Global Scandal
* Leissner Was Key U.S. Witness; Financier Jho Low Also Charged
Roger Ng, the only Goldman Sachs banker to go to trial over the global 1MDB scandal, was found guilty for his role in the epic looting of the Malaysian fund.
Ng, 49, was convicted on Friday of all three counts in the case, including conspiring to violate U.S. anti-bribery laws and conspiring to launder money. He faces a prison term as long as 30 years but is likely to get far less time.
The verdict came after an eight-week federal trial in Brooklyn, New York, that featured startling confessions from Tim Leissner, Ng’s boss at the time.
Leissner, the key witness against the former Goldman Sachs Group Inc. banker, admitted to telling a raft of personal and professional lies in the multibillion-dollar plunder of 1Malaysia Development Bhd. Goldman arranged a trio of bond deals for 1MDB.
Ng showed no reaction as the jury’s forewoman read out the verdict. On hearing it, his lawyer Marc Agnifilo hung his head.
Ng remains free on a $20 million bond. U.S. District Judge Margo Brodie didn’t set a sentencing date.
The verdict is “a resounding victory for justice and for the people of Malaysia who are the victims of this massive scheme carried out in a frenzy of greed,” Breon Peace, the U.S. attorney for the Eastern District of New York, said in a statement.
“The defendant and his cronies saw 1MDB not as an entity to do good” but “as a piggy bank to enrich themselves with piles of money siphoned from the fund,” Peace said.
It’s a hard-won verdict for the U.S. in the aftermath of fraud surrounding the sovereign wealth fund, set up for Malaysian energy projects and infrastructure but used instead to line the pockets of government officials, bankers and intermediaries with an estimated $2.7 billion.
Alleged mastermind Jho Low, who was indicted with Ng, is accused of paying tens of millions of dollars in bribes to officials in Malaysia and Abu Dhabi to clinch the bond deals and of taking $1.42 billion for himself.
Proceeds from the scam were used on items including a $200 million super-yacht and to finance “The Wolf of Wall Street.”
Low Remains At Large
The case was a black mark on Goldman. In 2020, a Goldman unit admitted it had conspired to violate U.S. anti-bribery laws, the first guilty plea ever for the firm, founded in 1869.
The bank paid more than $2.9 billion, the largest penalty of its kind in U.S. history, and more than $5 billion globally for its role in the scheme.
‘Brand New Territory’
Ahead of an appeal to a higher court, Agnifilo said, he would challenge the conviction before Brodie, particularly on the charge Ng conspired to violate U.S. anti-bribery laws by circumventing Goldman’s internal accounting controls.
During the trial, Agnifilo and prosecutors agreed this was the first time the charge had been considered by a federal jury.
“We’ve never been here before — it is all brand new territory,” he said after the verdict.
Agnifilo said he was “surprised” by the verdict and had expected an acquittal on all counts. Ng was charged with two counts of conspiring to violate the Foreign Corrupt Practices Act and one count of conspiring to commit money laundering.
Asked about his client’s reaction, he said Ng was “doing better than his lawyers,” adding, “He has great inner fortitude and always has.”
Ng still faces criminal charges over the 1MDB scandal in Malaysia, where his legal team hopes to negotiate a resolution. Agnifilo said Ng’s lawyers in the two nations are coordinating on how to proceed in the cases.
The jury of six women and six men left without speaking to reporters, but outside the courtroom a juror who declined to give his name stopped briefly when asked about the outcome.
“I have said all I have to say in the courtroom today with my verdict,” he said.
Ng was jailed for six months in Malaysia before agreeing to come to the U.S. three years ago to face the charges in Brooklyn. Agnifilo said he had advised Ng that he would probably get a fairer trial in the U.S.
“I have faith in our system, because I’m from here,” Agnifilo said. “I think he still does, even though he’s not from here.”
Ng’s wife, Hwee Bin Lim, testified in his defense at the trial. Agnifilo said the verdict was “a personal disaster in the life of that family.”
Leissner, 52, was once Goldman’s Southeast Asia chairman and is the highest-ranking Goldman banker to plead guilty to the scheme to steal from 1MDB in return for more than $60 million in kickbacks. Ng, who was Goldman’s head of investment banking in Malaysia, got $35 million in kickbacks, prosecutors said.
Leissner is scheduled to be sentenced on July 6 and may win leniency for his cooperation with prosecutors.
Former Malaysian prime minister Najib Razak, who prosecutors said pocketed $756 million, was sentenced to 12 years in prison after being convicted on corruption charges in Malaysia. He is free pending appeal.
Ng’s trial revealed new details of the scheme. Low hustled the stolen billions out of 1MDB immediately after each bond deal Goldman completed for the fund, according to testimony from prosecution witnesses. The FBI said those funds were then directed to co-conspirators.
Among them were Najib and his stepson, who got $238 million, including $60 million he spent financing the film, according to the U.S. Jurors were shown how the scheme funded a $23 million pink diamond necklace for Najib’s wife, as well as more than $1 million in luxury handbags for her.
Central to the government’s case was an FBI chart showing that Leissner sent $35 million of the booty to a shell company controlled by Ng’s wife, Lim. The FBI said she later spent $300,000 on diamond jewelry and $20,000 on a gold hourglass.
The panel also heard testimony about Low’s lavish spending, including more than $3.6 million he dropped on a birthday bash in Las Vegas, which records show he paid “Wolf” star Leonardo DiCaprio $250,000 to attend.
A casino employee testified that Low wagered almost $87 million at his resort and lost about $26 million at baccarat. Low’s partying eventually caught the attention of bankers and authorities.
Along the way, Leissner told the jurors he created phony email accounts in which he posed as his wife to talk to his girlfriend, bought his mistress a $10 million London home after she threatened to disclose the 1MDB fraud and was twice married to two women at the same time, both times forging divorce documents.
The U.S., which called 26 witnesses, argued that Ng and Leissner concealed the fraud from their superiors at Goldman, which made more than $600 million arranging the three 1MDB bond deals in 2012 and 2013.
Goldman paid Leissner at least $12 million, while Ng got $3 million after two of the bond deals closed, the government said.
Leissner, who pleaded guilty in 2018, spent 10 days on the witness stand, more than five of them under withering cross-examination by Agnifilo, who called him a “cunning liar.”
‘Hero’ For Goldman
The former star Goldman banker told the jury that he and Ng attended a February 2012 meeting at Low’s London home in which he said the financier charted out which Malaysian and Abu Dhabi officials would receive bribes.
Low told Ng and Leissner they would also be “taken care of,” Leissner testified.
After the meeting, Leissner said, he was “motivated” because he wanted to be “a hero” for Goldman, and Ng was “happy he was going to be paid some money.”
On cross-examination, Agnifilo noted that Leissner first mentioned such a chart to the FBI in 2021, almost three years after he began talking to the bureau.
The defense also cited a 2010 report that said Ng raised “red flags” and gave “negative feedback” about Low and said he didn’t find the financier’s claims about his wealth “credible.” Agnifilo argued that Leissner falsely implicated Ng and lied repeatedly to gain favor with prosecutors.
The defense called only a handful of witnesses — notably Ng’s wife. Lim testified that the $35 million infusion prosecutors called a kickback was for an unrelated transaction in China with Leissner’s former wife. The offshore entities were in Lim’s mother’s name, records show.
Prosecutors argued that emails linked to these accounts showed that while while Lim’s mother was the beneficial owner, Ng and his wife controlled the funds. Soon after investigations into 1MDB were launched in Malaysia and Singapore, Ng also deleted a series of email accounts he had used to communicate with Low and others involved in the scheme, according to the U.S.
Goldman Agrees To Settle Suit Over 1MDB For $79.5 Million
* Settlement Funds Will Be Used To Boost Compliance At Bank
* Pension Fund Sued Goldman, Executives For Lax Oversight
Goldman Sachs Group Inc. agreed to a $79.5 million settlement with shareholders who blamed lax oversight by the bank for its costly involvement in the 1MDB bribery scandal.
The money will be used to pay for “compliance activities” at the bank, including enhanced internal controls and accounting and the running of “a rigorous anti-corruption compliance program,” according to a pension fund that sued the company and its executives on behalf of shareholders.
The settlement will be paid by insurers for Lloyd Blankfein, Goldman’s former chief executive officer, David Solomon, its current chief executive officer, and ten other current and former bank executives, according to court papers filed Friday in federal court in Manhattan.
Neither Goldman nor the executives admitted to any blame in the settlement, which must be approved by the court.
The 1MDB scandal has already cost the bank more than $5 billion globally, including $2.9 billion paid to US regulators.
In 2012, Goldman issued $6.5 billion worth of bonds to 1MDB, a Malaysian development company. The bonds were earmarked for redevelopment but all but $2 billion of the money was diverted to pay bribes to government officials, federal prosecutors said.
In 2020, a Goldman unit admitted to conspiring to violate US anti-bribery laws. It was the first guilty plea ever for the 153-year-old firm.
Lawyers for the pension fund said the settlement was reached Friday and agreed to by all parties.
The case is Fulton County Employees’ Retirement System v. Blankfein, 19-cv-01562, US District Court, Southern District of New York (Manhattan).
Ex-Goldman Banker Tim Leissner’s 1MDB Sentencing Delayed Until 2023
* Tim Leissner Was Originally Supposed To Be Sentenced Today
* Judge Rescheduled Hearing Until Feb. 15 Without Explanation
Former Goldman Sachs Group Inc. banker Tim Leissner’s sentencing for his role in the 1MDB corruption scandal was delayed until next year.
Leissner, who pleaded guilty to charges in 2018 and testified against his former colleague Roger Ng, was originally scheduled for sentencing today, but US District Judge Margo Brodie in Brooklyn, New York, postponed the hearing to Feb. 15 without explanation.
The bribery and money-laundering charges to which Leissner pleaded guilty carry maximum sentences of decades in prison. But the former Goldman Southeast Asia chairman is likely to get much less time due to his cooperation with prosecutors.
He spent more than a week on the stand during Ng’s trial, describing 1MDB deals and the bankers’ scheming with financier Jho Low to loot the Malaysian sovereign wealth fund.
Leissner’s lawyer, Henry Mazurek, declined to comment on Wednesday.
Ng, who worked under Leissner and was the only Goldman banker to go to trial over the global 1MDB scandal, was found guilty in April by a federal jury after a two-month trial. Last week, Brodie set Ng’s sentencing for Nov. 9.
Leissner has been free on $20 million bail since his arrest by US authorities in June 2018. Brodie last month granted Leissner’s request to modify his bail, allowing him to relocate to Texas for a new job. She also sealed further information about the former banker after his lawyer said there were “credible concerns” regarding Leissner’s safety.
FBI Documents Show Leonardo DiCaprio, Kim Kardashian Grilled For 1MDB Secrets
Inside the US government’s effort to unravel a giant financial fraud, with some help from the celebrities who got paintings and bags of cash via a friendly future fugitive named Jho Low.
Leonardo DiCaprio was struggling to remember some of the details about his relationship with financier Jho Low.
In an office on Sunset Boulevard back in April 2018, an FBI special agent, an IRS investigator and three Department of Justice prosecutors started off their interrogation of the movie star with gentle questions, according to an FBI summary of the interview. They spoke about his acting career, his charity work and his production company, Appian Way.
Soon the interview turned to Low, the tycoon accused of orchestrating the looting of billions of dollars from Malaysian sovereign-wealth fund 1MDB, whom DiCaprio had met in 2010.
Low had lavished the actor with gifts, partying with him across the globe and financing his 2013 movie The Wolf of Wall Street.
DiCaprio recounted to the agents that the relationship began in a nightclub. He’d been told that Low’s money came from an unknown “whale of whales” in Abu Dhabi, he said, and that Low was the “Mozart of the business world.”
Only later, around 2015, did federal investigators target Low in a multibillion-dollar embezzlement probe. (He didn’t reply to a request for comment.)
As an FBI agent presented DiCaprio with emails and documents, the actor’s memory became less clear. He didn’t remember discussing one of Low’s companies with him, even though DiCaprio had once described Low in an email to a potential investor as “my friend” and the “CEO” of that same company.
When he looked at another email, DiCaprio told the agents it didn’t look like “something he would write”—he thought he “might have cut-and-pasted it.”
DiCaprio was sure his managers had vetted Low before working with him on The Wolf of Wall Street, but he didn’t recall what the background check had found.
Low’s connection to DiCaprio and other celebrities has come under renewed scrutiny as prosecutors prepare for the criminal trial of hip-hop legend Prakazrel “Pras” Michél, a member of the Fugees.
Michél stands accused of directing foreign money into Barack Obama’s 2012 presidential campaign and lobbying on behalf of Low and the Chinese government.
Among the bright lights on Michél’s potential witness list are DiCaprio, Obama, former President Donald Trump and hotel magnate Steve Wynn.
That Low liked to party with actors, record producers and models is no secret, nor are the paintings, supercars and cash he gifted them.
But previously undisclosed FBI documents reviewed by Bloomberg Businessweek offer a deeper accounting of those deals and show how federal agents squeezed celebrities and their handlers for information about Low.
Kim Kardashian, for instance, told the FBI in February 2019 how she’d met Low and partied with him in Las Vegas. He’d given her fiancé at the time, NBA journeyman Kris Humphries, $100,000 for fireworks at their 2011 wedding.
Years later he offered her a work by Basquiat, prompting her then husband, Kanye West, to ask for a Monet—“to mess with Low because both Kardashian and West found Low to be very fickle when giving gifts and never expected to actually receive a painting,” the agents wrote.
(A representative for DiCaprio declined to comment. Representatives for Kardashian, Humphries and West didn’t respond to detailed messages seeking comment.)
Kardashian also recounted an unusual money transfer. According to the FBI summary of her interview, she and others—including Wolf of Wall Street co-producers Riza Aziz and Joey McFarland—were at a casino in Las Vegas with Low. The group played baccarat in a private room.
At 5 a.m., Kardashian was ready to leave, but a friend told her to drink some coffee and stick around, because he’d “heard stories of Low giving people chips at the end of the night.”
As the gamblers screamed “monkey” (baccarat lingo that basically means “I need a 10 or face card”), Kardashian called out which bets to make and won a big hand.
She tried to turn the winnings over to Low, but he told her to keep the chips, by then worth $350,000. She told the FBI that when she went to the casino counter to cash out, she was handed $250,000 in “a trash bag full of one hundred dollar bills.”
“Kardashian put the trash bag full of cash in her carry-on bag and boarded a Southwest Airlines flight back to Los Angeles,” FBI agents wrote. She collected the other $100,000, again in a trash bag full of cash, during a later trip to party with Low in Las Vegas.
The FBI task force interviewed not only A-listers but also the middlemen who serve the world’s most famous people. Ralph DeLuca, a memorabilia broker, told the agents how he sold associates of DiCaprio and Low $10 million in vintage movie posters.
Famed jeweler Lorraine Schwartz recalled bringing a diamond to a yacht in Monaco for Low to examine and crafting a necklace worth more than $20 million for the wife of Malaysian Prime Minister Najib Razak, who was sentenced to prison in connection with the 1MDB scandal. (Her lawyers have said she didn’t request the necklace and never received it.)
“Low once told Schwartz not to tell other people about the purchases he made from his own account,” the FBI reported.
“Schwartz thought this was because Low did not want people to know how much he was spending on gifts for others, especially Miranda Kerr.”
(Kerr, a supermodel, briefly dated Low; she turned over gifts he’d given her to the government. Her representatives declined to comment for this story. DeLuca and Schwartz didn’t respond to messages.)
But Special Agent Robert Heuchling, of the FBI’s international corruption unit, did want to know. By September 2019, after leading a global hunt for the billions Low and others had allegedly looted, Heuchling and his colleagues were after every dollar they could find.
They were still eager to haul in more celebrities, to build a case against Low and figure out where the stolen funds had gone.
“Been thinking a bunch about Swizz,” he wrote to colleagues, referring to acclaimed record producer Swizz Beatz (who didn’t respond to a request for comment). “I think we need to bring Kerr to [the grand jury].”
One celebrity drew more attention from investigators than the others: DiCaprio, whose relationship with Low extended far beyond parties and largesse. Agents collected thousands of BlackBerry messages and emails between the two and their associates.
They built a spreadsheet of all the gifts Low had given to DiCaprio across five years and the $6 million he pledged to his charity.
They reviewed photos of the two wearing tuxedos at an event, signing paperwork and standing in front of a Basquiat Low donated to DiCaprio’s charity.
What emerged from the FBI’s investigation was a picture of how close the men became. The movie star introduced Low as “my man,” and the investor called DiCaprio “Ldogg.” Their mothers had met. DiCaprio connected Low with his friends in the art world, technology and real estate.
And the pair traded ideas about a megafund of $1 billion for more films, a Warner Bros. theme park in Asia with rides based on DiCaprio movies and the development of an eco-friendly resort in Belize.
“I was working for him,” DiCaprio later told a grand jury, “and that business also translates into being social. And so we saw each other more, and there was more interaction.”
Often in the middle of those interactions was Rick Yorn, DiCaprio’s manager. A powerful figure in Hollywood, Yorn represents a roster of A-listers including Jennifer Lawrence and Justin Timberlake.
(They haven’t been connected to the Low affair. A representative for Yorn declined to comment for this story.) For his biggest client, Yorn dreamed of a transformative deal and saw Low’s billions as a way to unlock it.
“Need to talk about what I think is the ‘cracking of the code’ structure/deal for you,” Yorn wrote to DiCaprio in December 2013.
“Been working on it quietly with a few people and I need to take you through it. Could be a game changer.
I’m hesitant to tell Jho about it now but I think I might give him a taste.” It’s unclear what kind of arrangement Yorn envisioned, or whether it was ever set in motion, but he later wrote back to DiCaprio: “I took Jho through it. He gets it big time.”
Yorn became a hands-on negotiator and peacemaker, working directly with Low. At one juncture, Low groused about Wolf’s budget to Yorn, telling him to “work your magic” and persuade director Martin Scorsese to cut costs.
At another point, when the deal seemed on the brink of falling apart, Yorn wrote to Low’s team: “I wish it could cost less. It’s not for lack of trying and the [$95 million budget] just can’t be done. I wish it could. We will be close.”
The emails show Yorn saw Low as a potential partner in future deals. He told DiCaprio he “would love to get Jho and the boys” to invest in a Cameron Diaz picture and credited Low with inspiring a $30 million cash offer from Aziz for DiCaprio to star in two other films, The Brigands of Rattleborge and Papillon. None of those deals worked out. (Aziz didn’t respond to a message requesting comment.)
Like DiCaprio, Yorn became part of Low’s social circle, visiting his yacht in the Mediterranean and planning to join the financier at a party in Las Vegas. Reflecting one night on Low’s relationship with another supermodel, he wrote to DiCaprio: “What a world, L. What a world.”
Even after the DOJ announced plans to seize Low’s assets and the rights to The Wolf of Wall Street, the financier continued to pitch Yorn and DiCaprio. When Low pestered DiCaprio about a Chinese film fund, DiCaprio told agents, he’d used his manager as a “buffer.”
“Buddy I know you don’t want to deal with Jho Low on this China deal,” he wrote to Yorn in August 2016, “but by not engaging with him or contacting him back, he is constantly contacting me. Again this is now falling in my hands.”
“I’ll do whatever u want,” Yorn responded. “I will deal. Just wanted some space. I told him after Labor Day … I’ll talk to him. I’m just protecting us.”
Later, Yorn wrote DiCaprio: “I texted Jho brother. R u having fun? We should rent that island out … with a bunch of hotties. Haha.”
DiCaprio told the FBI he wasn’t exactly sure where Low’s wealth came from.
He said it was the responsibility of Yorn and DiCaprio’s entertainment lawyer to look into him. DiCaprio said that his publicist, Shawn Sachs, had hired someone to conduct a background check on Low but that he didn’t “thoroughly read” it.
“Usually, DiCaprio relies on his reps to read the reports and give him an okay to continue to work with someone. In this case, his reps gave him the green light to continue to work with Low,” FBI agents wrote.
During the interview, they pressed DiCaprio on when he became aware of the growing suspicions surrounding Low. “DiCaprio lives in a world of rumors,” they recounted, “so he did not take any of them seriously until the main negative news stories about Low came out and his team told him it was now serious.”
And as news stories began to emerge about Low and 1MDB in 2015, something else had fractured the relationship. DiCaprio was planning a fundraiser in St-Tropez, France, for his foundation.
Low promised to donate a piece by the artist Roy Lichtenstein. As the deadline drew near, the piece still hadn’t shown up. Low promised it would be there, but it never arrived.
DiCaprio had to pull it from the auction. “DiCaprio started to distance himself from Low after this,” the agents wrote. “He was embarrassed.”
Prosecutors filed a sprawling forfeiture action against Low’s assets in July 2016, seeking to seize real estate, artwork and the rights to The Wolf of Wall Street.
About a year later, DiCaprio’s attorneys met with federal agents to hand over some of the gifts the actor had received, including a first edition of The Great Gatsby and the Oscar statuette Marlon Brando won for On the Waterfront.
During a meeting with prosecutors and FBI agents, DiCaprio’s attorneys asked the DOJ to “take all steps possible to minimize DiCaprio’s connection to any upcoming forfeiture complaints the government may file.”
They also drafted a press release and asked that prosecutors put it out to “thank Mr. DiCaprio for providing substantial assistance.” The government declined the request.
The Fugee, The Fugitive And The FBI
How rapper Pras Michél got entangled in one of the century’s great financial scandals, mediated a high-stakes negotiation between global superpowers and was accused of major crimes.
The phone call awoke Pras Michél in the middle of a spring night in 2017. His “cousin from China” needed to meet, the woman on the line said.
The caller was an ex-girlfriend who Michél, a rapper, producer and member of legendary hip-hop group the Fugees, hadn’t spoken to in years. He grew up in a Haitian family in New Jersey and doesn’t have a cousin from China, but he knew what the message meant.
Michél dressed and called a car to take him to the Four Seasons Hotel on 57th Street in Manhattan. The front desk clerk handed him a note.
It instructed him to exit the hotel and circle the block twice, scanning to see if he was being tailed. Michél did as he was told and returned to the clerk, who gave him a room key. He went up to an empty suite and waited.
After about 25 minutes there was a knock on the door. An austere-looking Chinese security agent in a suit gave Michél a second room key and told him to go to the penthouse.
Inside, another agent took Michél’s phones and placed them in a pouch. A table and two chairs sat in the middle of the room.
“They can’t kill me in the Four Seasons,” Michél said to himself.
Soon a short, chubby man with wavy hair arrived, surrounded by more security personnel. Michél had met him before. He was Sun Lijun, China’s vice minister of public security. Sun began shouting in Chinese. An interpreter translated for Michél: “Who the f— do the US government think they are?”
Sun said he’d come to the US for sensitive negotiations with President Donald Trump’s administration but had failed to secure a high-level meeting. For three years, Beijing had been targeting Chinese nationals living in America who it viewed as threats.
Agents had surveilled emigrés, visited their houses and detained family members still in China, aiming to persuade the targets to return home, where some would be charged with serious crimes. Called “Operation Fox Hunt,” the covert repatriation strategy had infuriated US officials.
Of particular concern to Sun was Guo Wengui, a real estate billionaire living on a temporary visa in New York. From his home overlooking Central Park, Guo had enraged the Chinese government by making a series of scandalous claims to the media, purporting to reveal the assets of top Communist Party officials.
China was prepared to release two American citizens—one of them pregnant—being kept in the country under a so-called exit ban if the US deported Guo.
Behind the scenes, the US government had been agitating for their return. But when Sun and his entourage arrived in Washington, hoping to make a deal, Attorney General Jeff Sessions was traveling and unable to meet with them, according to an email Sessions wrote in May 2017. Unsure what to do next, Sun sought Michél’s help. (The Department of Justice declined to comment.)
“This is way above my pay grade,” Michél said after Sun laid out the situation. “But if I were you, I would at least send the pregnant woman back as a token of good faith.”
“You think so?” Sun asked, now calmer and speaking in English. An agent handed Sun a telephone. After a brief conversation, he turned again to Michél. “When do you want her back?”
Michél, who’d won two Grammys with the Fugees before going on to a solo career, was unsure about the usual time frame for international hostage repatriations. “Tomorrow?” he asked.
“The weekend is no good.”
By Tuesday the woman was back in the US.
About two months later an FBI special agent interrupted Michél at brunch near his apartment in SoHo. The agent had 12 photos of Chinese officials and many questions: Who did Michél meet at the Four Seasons? Who else had contacted him from the Chinese government?
And of course: How had a famous rapper and record producer found himself in the middle of a high-stakes negotiation between global superpowers?
Michél’s audience with a top Chinese security official, reported here for the first time, was a flashpoint in one of the most unusual political influence campaigns in recent memory. His involvement began by chance, around 2006, when he met a baby-faced Malaysian businessman named Jho Low.
Low was a globe-trotting financier whose lavish spending would put him on familiar terms with dozens of A-list entertainers.
But by 2016, US investigators believed he’d masterminded the embezzlement of billions of dollars from the Malaysian sovereign wealth fund 1MDB, blowing much of it on artwork, real estate and gifts for celebrity friends including Leonardo DiCaprio and Kim Kardashian.
Few were as close to Low as Michél: Prosecutors seized $95 million that they alleged originated with Low from Michél’s accounts.
With US authorities closing in and moving to confiscate his assets, Low needed help. He turned first to Michél, hoping to cash in on the star’s connections to President Barack Obama, for whom Michél had raised money during the 2012 campaign.
Next, Low turned to China, one of the few countries that could protect him from the long reach of American law enforcement. (Low didn’t reply to requests for comment.
China’s Ministry of Foreign Affairs said in a statement that it was “unaware” of the events described in this story. Sun, who received a suspended death sentence for corruption offenses last year, couldn’t be reached.)
To investigate this wild tale of celebrity and political intrigue, Bloomberg Businessweek drew on legal filings, interviews with people close to the case and a cache of previously undisclosed FBI and Justice Department documents.
The records show how Michél, at Low’s request, helped assemble a team of Republican influencers—including fundraiser Elliott Broidy, businesswoman Nickie Lum Davis and casino magnate Steve Wynn—capable of reaching the highest levels of the Trump administration as it took hold of the US government.
Soon, all would be targeted by agents from the FBI’s international corruption division as well as federal prosecutors from Honolulu to New York.
The US didn’t catch Low, but it did squeeze his associates. Many agreed to cooperate and pursue plea deals with prosecutors. Michél declined, and the consequences for him could be dire.
Federal prosecutors charged him in 2021 with 10 offenses stemming from his dealings with Low, ranging from conspiracy to witness tampering and acting as an unregistered agent of a foreign government.
Michél maintains his innocence and has decided to fight the charges. “The common thread that runs through this is that Pras was trying to get the benefits for the United States that were being offered by Minister Sun,” says his attorney, David Kenner.
“Pras’s motivation was to try to assist the United States.” Kenner adds that Michél’s relationship with Low was rooted in a desire to secure investment for entertainment projects.
The trial is scheduled to begin in Washington in late March. If convicted, Michél could go to federal prison for decades.
All Michél knew about Low, the Malaysian guy he’d been asked to meet in 2006, was that he was loaded and liked to hang out with celebrities. The venue was a nightclub in Manhattan’s Meatpacking District.
A couple of other patrons that night, Wall Street types, paid the club for a chance to get on the microphone.
They announced that they were the richest people in the room and planned to buy everyone a drink. Not to be outdone, Low paid even more to use the mic and said he’d be buying every bottle the nightclub had on hand—and that staff should go to the club across the street so he could buy their bottles, too.
Later, around 2011, Michél and Low became close friends. He was just one of many celebrities Low cozied up to during a whirlwind of yacht vacations, club nights and gambling, lubricated by his vast financial resources.
Kardashian would later tell the FBI she’d bought a Ferrari using $305,000 Low gave her in cash. The supermodel Miranda Kerr, whom Low briefly dated, received about $8 million in jewelry.
Low was especially generous with DiCaprio, donating a $3.2 million Picasso and a $9.2 million Basquiat to his charity. He also financed The Wolf of Wall Street, a film DiCaprio had been trying to develop for years. (DiCaprio and Kerr later turned over items they’d received from Low to the US government.)
In Michél, Low had found a friend who was no less than music royalty. Born Prakazrel Michél, he’d been raised in a strict home in New Jersey, telling an interviewer in 2007 that his parents forbade him from watching TV or even wearing sneakers.
He met his future collaborator Lauryn Hill in high school, later forming the group that became the Fugees with one of his friends, Wyclef Jean. Their second album, The Score, was one of the most influential records of the 1990s, a double Grammy winner that sold more than 18 million copies.
The Fugees disbanded not long after releasing The Score, and apart from one hit, Ghetto Supastar (That Is What You Are), Michél’s solo career never took off.
But he continued to earn money from the band’s songs and maintained a lavish lifestyle, including a $30,000-a-month New York apartment. His tastes tended toward the flashy: Patek Philippe watches and a Lamborghini SUV, which he showed off on social media.
According to email records, Michél’s financial adviser periodically admonished him for spending beyond his means, complaining at one point that he’d gone $250,000 over budget in a two-month period alone. His lawyer, Kenner, says Michél’s financial situation wasn’t strained, however.
“Some have advanced the notion that Pras was hurting for money and that might [show] a motive to become involved in those matters that led to this indictment,” he says. “Nothing could be further from the truth.”
Michél was different from the other celebrities in Low’s coterie. He saw himself as something more than a rapper and producer, and he’d become what Kenner calls a connector—a man with a thick Rolodex of friends in politics, entertainment and finance.
Beyond music, Michél took on a range of projects, often focused on social-justice or political issues: spending nine days on Skid Row in Los Angeles for a documentary; traveling to the Somali coast in search of high-seas pirates for another film; serving as an adviser to Michel Martelly, the performer who became Haiti’s president in 2011.
Closer to home, Michél was a passionate supporter of President Obama. Government documents show that he wanted to become a more serious player, even mentioning a desire to be considered for an ambassadorship. (Kenner says Michél quickly dropped the idea “once he was told that he would have to live in the country where he was an ambassador.”)
Michél bankrolled a political action committee called Black Men Vote PAC and, in the runup to the 2012 US election, told a Democratic official in an email that he was “thinking about doing a fundraiser … looking to raise anywhere from 5-10 million.”
A mutual friend forwarded the email to Low and told him—erroneously—that “being a foreigner is not a problem.” (In fact, foreign nationals are prohibited from donating to US campaigns, including via PACs.)
Low wanted in. Federal prosecutors say he sidestepped the law by sending more than $21 million to Michél, who then used his own accounts and various “straw donors” to contribute about $2 million to Obama’s reelection effort.
It’s not clear what happened to the rest. (Kenner says Michél depended on a lawyer and advisers to manage his financial activities.)
Low was preoccupied with projecting an image of success, and after Obama won, he received some of what he craved. Another Democratic donor, tech executive Frank White Jr., told the FBI that in late 2012 he brought Low to a holiday party at the White House, where Low posed for a photo with the president and first lady.
(A representative for the Obamas declined to comment.) But if Low thought his donations would buy him political cover in Washington, he was mistaken.
In 2015, as press reports about the graft at 1MDB multiplied, the FBI and the DOJ opened an investigation, led by Robert Heuchling, a special agent with the bureau’s international corruption unit in New York.
According to a later FBI memo, the lines of inquiry included investigating the theft of embezzled funds and their laundering into the US, as well as potential violations of banking rules and anti-bribery laws by Low’s network of enablers. Agents soon identified Michél as a Low ally—and a potential cooperating witness.
About a year after the investigation was opened, federal prosecutors in California filed a sprawling forfeiture action, seeking to seize more than $1 billion in assets that Low and his associates had accumulated.
The filings spoke to the lifestyle of astonishing glitz they’d built since 1MDB’s establishment in 2009: in New York, a penthouse in the Time Warner Center and luxury condos in Chelsea and SoHo; in Los Angeles, a boutique hotel and multiple mansions; a Bombardier Global 5000 jet; a material stake in EMI Music Publishing, the rights holder for songs by Drake, Queen and other artists. The rights to The Wolf of Wall Street were also the subject of a seizure complaint.
In the summer of 2016, Michél was in St-Tropez, on France’s sun-soaked Côte d’Azur, when he ran into Low’s brother, Szen. Szen asked Michél to speak to Low, who explained his issues with the DOJ and dismissed the US allegations as “all lies.”
Low complained that his legal team was moving too slowly to resolve the cases, which were making it difficult for him to operate. He wondered if Michél had ideas about who could help.
After the Democrats’ defeat in the 2016 election, halting a case as large as the one against Low required pull with the freshly installed Trump administration. Michél didn’t have any, but he knew someone who might.
In early 2017 he spoke with an old friend, Nickie Lum Davis. A TV producer who split her time between Los Angeles and Hawaii, Lum Davis had an unusual political pedigree.
Her parents, Eugene and Nora Lum, had been major fundraisers for Bill Clinton and had eventually pleaded guilty to arranging illegal donations.
Lum Davis’s own connections were weighted toward Republicans. She’d converted to Judaism after meeting her now ex-husband, Jdate co-founder Joe Shapira, and become hawkishly pro-Israel.
On the coffee table at their home in Beverly Hills, the couple kept busts of Rudy Giuliani and George W. Bush.
Lum Davis suggested a name: Elliott Broidy, one of Southern California’s most prolific Republican fundraisers. Michél asked her to send supporting materials he could relay to Low, including photos of Broidy with Trump, as well as a brief bio and notes about his connections to the president.
“Has long standing relationship with Sec of Justice Dept – Jeff Sessions that goes back 15 years,” the material read. Broidy was also “One of two people who are close to the boss that were instrumental in boss getting there – that did not take a job in the administration.” (A representative for Broidy declined to comment; Lum Davis didn’t respond to a detailed request for comment.)
“When someone sends you a large sum of money and then wants to see you, you have to go to them”.
Early one morning in mid-March, Michél, Lum Davis and Broidy met at Broidy’s Los Angeles office to hammer out a potential deal to work for Low.
According to a later FBI interview summary, Michél told the others that Low was “not a bad guy,” but rather a smart businessman who simply wanted to deal with his legal issues.
Securing Broidy’s help would be expensive. A draft agreement the group prepared called for Low to pay a retainer of $8 million.
If the team succeeded in resolving the DOJ’s forfeiture actions within six months, he’d pay a $75 million success fee; if it took six months to a year, the amount would drop to $50 million.
(Kenner says Michél mistakenly thought Broidy was a lawyer and wanted him to represent Low—“not to influence government policy,” as the US government later asserted.)
To ensure he received what he felt was fair, Michél insisted that the money, and all communications with Low and his associates, go through him. He, in turn, would deal with Lum Davis, who would pass on information to Broidy.
He was “concerned about being cut out,” Lum Davis would later say. About a week after the meeting, a financial adviser set up two Delaware companies on Michél’s behalf, Anicorn LLC and Artemus Group LLC. By the end of the month, both companies had accounts at Los Angeles-based City National Bank.
The next step was to meet with Low, who was for obvious reasons avoiding the US. He proposed they gather in Thailand. Broidy told Lum Davis he’d need $1 million to get on the plane, from “untainted” funds.
Reluctantly, Michél fronted it himself. The group landed in Bangkok at the beginning of May. A few hours after they arrived at their hotel, Low showed up at Lum Davis’s suite.
According to court filings and grand jury testimony, Broidy told the group he believed he could use his ties to Sessions, Trump’s attorney general, to persuade the US government to drop its pursuit of 1MDB-related assets.
But before any of that, there was the matter of money. “You’ve had so many of your assets forfeited, so how are you going to pay?” Broidy asked.
Low told his visitors not to worry. “I have a friend who’s helping me to pay for my bills,” he said. The financier didn’t identify the generous friend.
Before the meeting ended, Michél raised another matter, one that revealed another interested party: the Chinese government. He told Broidy and Lum Davis that Low was interested in Guo, the businessman living in New York, who was making increasingly bold claims about corruption among high-ranking Chinese leaders.
China had issued a notice seeking his arrest through Interpol weeks earlier, claiming Guo was wanted for bribery. It wasn’t clear why Low would care about Guo’s status, but he had reasons to seek favor from Beijing.
According to the Wall Street Journal, China in 2016 had offered to bail out 1MDB, which owed billions more than it could repay. And with US criminal charges a possibility, being useful to the Chinese government might provide Low a measure of protection.
As the Bangkok meeting drew to a close, Low said that he was willing to move forward with the Americans and that information on payment would follow.
He was leaving town, and Lum Davis, Broidy and Michél returned to their rooms to book flights home. They had work to do in Washington.
Within days of the Bangkok meeting, Low started to demonstrate that he could pay. On May 8, 2017, $2.8 million landed in an account belonging to Anicorn, one of the companies Michél had incorporated. An additional $3 million arrived less than 10 days later.
The wires originated with a Hong Kong corporation called Lucky Mark (HK) Trading Ltd. Although it had no obvious connection to Low, US prosecutors allege that he used the company to move money.
As the payments came in, Low told Michél he wanted the group to meet again, in Hong Kong. They agreed. “When someone sends you a large sum of money and then wants to see you, you have to go to them,” Lum Davis would later tell the FBI.
As Michél, Lum Davis and Broidy arrived, the rapper received some news by phone. Their appointment had been moved. The new venue, he told Lum Davis, was “just outside Hong Kong,” on the Chinese mainland.
Lum Davis was alarmed. “We don’t have visas to go into China,” she said. “How are we going to be able to go?”
“I think they’ll take care of it. Don’t worry, we’ll be able to get over the border,” Michél replied.
At the boundary, the group handed over their US passports and were waved through to Shenzhen. Soon Lum Davis, Broidy and Michél were sitting in another hotel suite with Low. There was someone he wanted his visitors to see.
They walked to a different room, where Sun—the Chinese security official whom Michél would later meet in New York—was waiting with his entourage, all of them smoking.
After some pleasantries, Sun began talking through an interpreter about Guo and what China was willing to do if the US facilitated his return.
As a first step, Sun said, the government would release Americans it was holding and take back Chinese nationals convicted of crimes in the US whose deportations it had previously refused to accept.
It would also consider new cooperation on cybersecurity issues. It sounded like an attractive trade. “Maybe you’re just not getting the message to the right person,” Broidy suggested, according to court filings.
He said he could help arrange a meeting between Sun and Sessions, to “try to get your message through, that you really want this fugitive returned to China and what you guys are willing to offer.”
The three Americans went to Broidy’s room with Low and ordered lunch. Before leaving, Michél pulled out a USB drive and uploaded a file onto Lum Davis’s computer, asking her to pass its contents to Broidy.
It listed the purported legal allegations against Guo—including wire fraud, money laundering and even kidnapping. (Guo has denied wrongdoing; he didn’t reply to requests for comment.)
Soon after, Broidy sent an email to Rick Gates, who’d been a top figure on Trump’s campaign. He attached a memo addressed to Sessions, as well as the Interpol arrest notice for Guo.
Broidy didn’t mention Low in the document, saying only that he’d been “asked by my Malaysian business contacts” to meet with Sun. (Sessions later told prosecutors he didn’t recall seeing it; he didn’t reply to a request for comment.)
After listing steps the Chinese official had offered to take to “improve law enforcement relations,” Broidy got to the ask: “The one request China will make is that Chinese national, Guo Wen Gui,” be deported or extradited, “so he can be charged with these violations and go through regular criminal proceedings.”
Less than a week after the Shenzhen discussion, Sun was in Washington trying to secure an agreement from Sessions that Guo would be removed.
When Sessions couldn’t meet with him, prompting Michél’s late-night summons to the Four Seasons in New York, Sun took the rapper’s advice and authorized the release of the pregnant woman China was blocking from leaving.
The woman’s mother was a target of Operation Fox Hunt, Beijing’s pressure campaign against expatriates. She was described in a DOJ filing as an American citizen who previously worked at a Chinese state-owned enterprise and was accused by the government of embezzlement.
Her daughter had traveled to China to visit relatives in 2016; officials were keeping the daughter there under the exit ban until she persuaded her mother to return.
Within a few days of Michél’s intervention, the pregnant woman was on a flight to John F. Kennedy International Airport. Yet the Trump administration didn’t budge on Guo.
Michél wanted to gather information for Low on the reasons for the government’s resistance, official documents show, and in late June he made a bold gambit: He contacted the FBI directly and asked for a meeting. Agents soon came to see him at a restaurant in Manhattan.
Michél told the agents he’d been working with a friend named “Jon”—a thinly veiled reference to Low—to help China get Guo back.
According to an FBI summary of the conversation, he “probed the interviewing agents,” trying to understand whether Guo had some relationship with the bureau that would explain the government’s reluctance to deport him.
Although they assured Michél that the FBI didn’t have any arrangement with Guo, he “did not believe the interviewing agents and repeatedly asked if the FBI was meeting” with the businessman.
When the agents asked Michél why Chinese officials would be interested in his assistance, he said, “They believe that I can provide intelligence.” He also noted that he’d be reporting back to “Jon” on the discussion and said he’d be interested in keeping in touch about Guo.
It often takes years of painstaking work for FBI agents to identify people collaborating with foreign governments. But now, Michél had come to them, happy even to identify some of his contacts abroad.
He spoke to the FBI a second time in July, when Heuchling, the agent overseeing the sprawling probe into 1MDB corruption, turned up unannounced during Michél’s SoHo brunch.
Looking at photos from the FBI, Michél identified Sun as the minister he’d met at the Four Seasons and pointed out Sun’s security guard. (Kenner says Michél thought he was “operating in the best interest of the US” by providing assistance to the FBI and hoped the US could benefit from increased cooperation from China.)
In Washington, Broidy and Lum Davis were continuing to work their Trump administration contacts, stressing that China was willing to release more Americans in return for Guo.
With Guo’s visa soon to expire, Broidy also reached out to Steve Wynn—a major Republican donor who’d founded Wynn Resorts Ltd., which operates large casinos in the Chinese territory of Macau—to ask for help.
It “is critically [sic] that his new visa application he [sic] immediately denied,” Broidy texted. Wynn took the matter directly to Trump, bringing up the case at a White House dinner with the president and dropping off a copy of Guo’s passport with Trump’s secretary.
Wynn relayed an update to Broidy: “This is with the highest levels of the state department and defense department. They are working on this.”
To Lum Davis, it appeared victory was imminent. “You are the man right now,” she texted Broidy. “They are going to give you the President’s medal of freedom award after what you will accomplish for this [sic]the country.”
Broidy was determined to finish the job. “I am going to slam until it’s done,” he texted back.
On a Saturday in mid-July 2017, Michél called another old friend. A lawyer by training, George Higginbotham had helped Michél with dozens of legal matters over the years; he’d later describe his work for the rapper as ensuring nothing got “f—ed up.”
Even after Higginbotham took a job at the Department of Justice, in an office responsible for liaising with members of Congress, internal government documents show he continued doing work for Michél, including some related to Low.
Higginbotham helped move Low’s payments into US banks and edited contracts to ensure there were no references to Low or to companies that could be traced to him.
This time, Michél had an especially unusual request. He wanted Higginbotham to go to China’s Embassy the next day, a Sunday, and meet with the ambassador.
Higginbotham asked why Michél couldn’t go himself. “George, you’re an attorney,” Michél responded. “You’re more well-spoken than I am. He’ll have more respect for you.”
Higginbotham, a veteran bureaucrat, knew that meetings between the US and foreign powers were tightly choreographed. A DOJ staffer showing up at a Chinese compound in Washington could trigger alarms among America’s spy hunters.
Higginbotham asked Michél if they could hold the discussion at a different venue—a restaurant, a coffee shop, anywhere but the sovereign diplomatic territory of America’s main strategic rival. Michél said no—it had to be at the embassy.
Michél came to Washington to help Higginbotham prepare. They met at the Four Seasons in Georgetown on Sunday morning. Legal documents indicate Michél wanted to show Low that his American representatives were advancing his priorities, even if that wasn’t necessarily true.
He told Higginbotham to deliver a straightforward message to the Chinese: The White House was working on a solution for the Guo matter, and details on the logistics of extradition would follow. It was a simple job, Michél assured Higginbotham.
That afternoon, Higginbotham walked to the Chinese Embassy off Connecticut Avenue. Michél had given him a number for one of the ambassador’s aides, and Higginbotham called as he approached, asking for directions to the entrance.
He was escorted into a conference room decorated with pictures of Chinese leaders meeting US presidents.
“They are going to give you the President’s medal of freedom award,” Lum Davis texted Broidy
The ambassador, Cui Tiankai, entered after a short wait. “I’m here on behalf of my private client,” Higginbotham told Cui. “This has nothing to do with the Department of Justice, and I am here in absolutely no official capacity.”
After Higginbotham relayed the information instructed by Michél, Cui peppered him with questions: When would the deportation happen? Who would be getting in touch to make the arrangements?
But Higginbotham had nothing more to tell him. Still, the ambassador seemed appreciative, and Michél later told Higginbotham Low was pleased with how the meeting had gone.
Higginbotham didn’t know he’d triggered a diplomatic tripwire before setting foot inside the compound—the previous night, police officials from the Chinese Embassy had called their American counterparts to verify his identity.
The matter soon landed with the DOJ’s Office of the Inspector General, the agency’s internal watchdog. Upon being summoned, Higginbotham explained that he’d gone to the embassy on Michél’s instructions.
Higginbotham had just become another piece in a growing set of US investigations into Low’s and China’s activities. By now, American officials were looking into Lum Davis and Broidy, too, as the pair continued working to get the DOJ to back away from Low and dislodge Guo from the US.
Wynn’s involvement was also increasing. With Lum Davis as facilitator, he spoke by phone with Sun at least eight times, beginning in June 2017.
During the same period, according to legal filings and internal government documents, Wynn spoke about the Guo case with US officials including White House Chief of Staff Reince Priebus and his successor, John Kelly.
And that August, while yachting with Broidy and his wife off the coast of Italy, Wynn called Trump and asked about the status of Guo’s potential extradition.
Trump replied that he’d be happy to “have them”—Sun and his team—“come to see us at the White House” to discuss the issue. (Lawyers for Wynn said his role was as a “messenger conveying information,” rather than a lobbyist. In October a federal judge dismissed a DOJ suit that sought to compel him to register retroactively under the Foreign Agents Registration Act, which requires anyone lobbying for a foreign client to notify the government. Wynn didn’t respond to a request for comment.)
Soon afterward, according to a DOJ interview with Kelly last year, a Chinese delegation showed up at the White House, claiming they’d been told Trump had agreed to a meeting about Guo’s extradition.
Kelly recalled that he blocked them from seeing the president, directing his staff to connect the group with the DOJ and the Department of State, which ultimately denied the request.
He said the Chinese seemed stunned, because they were under the impression that the meeting was a “done deal.” (Trump and Kelly didn’t respond to requests for comment.)
Even with little progress being made toward Low’s goals, he was encouraged enough that large sums of money kept coming into the US from Lucky Mark.
In early August, $12.8 million arrived in an account belonging to one of Michél’s companies. (Kenner says the US government hasn’t proven that Low controlled or directed the funds sent by Lucky Mark.)
Michél then sent about $3 million to Broidy’s wife’s law firm, which in turn sent $900,000 to Lum Davis. A further payment of $10 million came to Artemus, the other Michél-controlled company, later in the month.
“George,” the agent asked, “you’re a smart guy, right? … Help me understand why you’re in the middle of all this. Why do they need you?”
It was Jan. 3, 2018, and Higginbotham was seated in a DOJ meeting room across from Harry Lidsky, a senior special agent from the inspector general’s office with responsibility for investigating “insider threats,” and one of his colleagues.
Lidsky made a point of telling Higginbotham the door was unlocked. He was free to leave if he wanted.
Internal DOJ and FBI messages and memos reveal that Michél had by now become a key target of their investigation into Low.
FBI agents considered him the “current best opportunity to get a co-operating witness” and were seeking ways of “getting leverage on Michél for the 1MDB investigation.”
Higginbotham, who was a DOJ employee and thus in Lidsky’s jurisdiction, was a smaller fish, but he had played a role in getting money from Asia into Michél’s accounts.
“You have a huge opportunity to make your position a lot better, but you can also make it worse”
At the time of the January interview, Higginbotham and Lidsky had spoken on several occasions, with Higginbotham insisting that nothing he’d done for Michél amounted to espionage or improper involvement in national security issues.
He said it was all just business, with Michél helping Low for a “financial motive.”
Lidsky began his questions, focusing on the payments from Lucky Mark and an additional $41 million sent from a different Hong Kong company.
Higginbotham had helped facilitate the transfers on Michél’s behalf, going as far as meeting with Low in Macau to discuss how best to move money into the US.
Weeks later he told inquiring executives at Michél’s bank that Lucky Mark was a souvenir manufacturer that had hired Michél for a “complex civil litigation matter” too sensitive to discuss. He made no mention of Low.
“You’ve had discussions with an individual by the name of Jho Low overseas in Southeast Asia,” Lidsky said. “Is that correct?”
“I have had discussions with him, yes.”
“And those discussions have included transferring money?”
Higginbotham told Lidsky he’d said Lucky Mark made souvenirs based on a description he found online. Lidsky replied that that was wrong.
Lucky Mark’s name was similar to a real souvenir manufacturer’s, but the government had concluded that the two entities were unconnected. Lidsky said to Higginbotham that this was a common Low tactic, intended to create confusion about where funds originated.
“George, there’s a problem here,” Lidsky told Higginbotham. “We have a bank fraud issue. We have false statements.” The Lucky Mark sending money to Michél “was started last year. They don’t sell anything. They don’t make anything. They don’t have services. They don’t do shit. They’re a shell company for money laundering.”
“OK,” Higginbotham replied.
“And don’t say, ‘Yeah, you’re right.’ Don’t say, ‘No, I disagree.’ Just take it all in for right now,” Lidsky said. “You’re a good guy at heart. So we’ve got to work to get you out of this.”
Continuing to squeeze Higginbotham, Lidsky laid out his case: “You’re creating paperwork and doctoring up contracts that facilitate money from this guy’s company, which you know—whether you knew before, you certainly know now—is a shell,” he said. “In a matter of weeks, millions of dollars start flowing” to Broidy, Lum Davis and Michél. “What did you get?”
“A buck seventy”—$170,000.
“Peanuts in the grand scheme of things.”
Lidsky continued: “You have a huge opportunity to make your position a lot better, but you can also make it worse.”
Days later, Lidsky and Heuchling met with Michél in Los Angeles. After the agents asked him about the money he’d been receiving from Asia, according to Heuchling’s written summary of the interview, Michél said the funds came from a Thai businessman who was investing in his entertainment projects.
He held that Low had “nothing to do” with his financial arrangements. When the agents asked Michél to account for Higginbotham’s visit to the Chinese Embassy, he had an explanation ready, Heuchling wrote.
Michél said he’d been working to promote Chinese investment in Haiti and had asked Higginbotham to update China’s ambassador in his stead.
“If Pras comes around,” Heuchling texted, “he’s going to realize he has a lot of time to work off”
The agents didn’t buy it. When they told Michél they were aware he’d been doing business with Low, his story changed, according to Heuchling’s summary.
He acknowledged working with Low since early the previous year. (Kenner disputes Heuchling’s summary and says Michél didn’t change his account.)
Still, Michél didn’t believe he’d done anything wrong. Heuchling wrote that Michél “wanted the interviewing agents to understand that because of his celebrity status and his connections, he travels all over the world and meets with all sorts of people.”
The FBI tried to convince Michél that it was in his best interest to cooperate with its 1MDB investigation. Later in January, Heuchling sent a text to his supervisor: “If Pras comes around, and he’s not there yet, he’s going to realize he has a lot of time to work off.”
Federal prosecutors in Washington were laying the groundwork to charge him with acting as an unregistered agent of a foreign government, an offense that carries a prison sentence of as much as 10 years.
He also faced potential charges for election-law violations relating to Low’s alleged political donations. According to people familiar with the matter, the government wanted Michél to plead guilty to a felony, forfeit the bulk of his wealth and agree to assist with other prosecutions to avoid a broader indictment.
Michél decided to reject the plea—for a number of reasons, Kenner says. “One of the most significant is that it would make him a felon by admitting to willful acts he didn’t believe were true.”
In late February, Heuchling wrote to another colleague to say that Michél’s then-attorney “pretty much told us he’s not comin back in.”
“Dang,” the colleague replied. “He knows what’s coming, right?”
Michél’s trial is set to begin on March 27 in Washington. It will feature a rare convergence of superpower rivalry, Beltway politics and Hollywood glamour.
Kenner, who’s previously represented rap artists such as Snoop Dogg and Suge Knight, is seeking to call Obama and Trump—both targets of Low’s influence efforts—as witnesses, though it’s uncertain whether either former president will appear.
Meanwhile, DiCaprio is also on the witness list for the government, as is Higginbotham, who filings show is cooperating with prosecutors.
His testimony will be crucial; Kenner says he’ll argue that Higginbotham is violating his professional obligations as Michél’s former attorney by disclosing their interactions.
If convicted, Michél is likely to be treated far more harshly than the other Americans involved in Low’s lobbying campaign. Higginbotham pleaded guilty in 2018 to a single count of conspiracy to make false statements to a bank, with any sentence to be determined later. (A representative for Higginbotham didn’t respond to a detailed message seeking comment.)
Lum Davis was sentenced to two years in prison for her own guilty plea to one count of aiding and abetting violation of the Foreign Agents Registration Act.
In October 2020, Broidy pleaded guilty to a count of conspiracy to violate FARA stemming from his work for Low, but he was pardoned by Trump three months later.
The following April he signed a cooperation agreement with the DOJ, which promised not to prosecute him for other crimes that may arise in its investigation, in exchange for his testimony and other assistance.
And for the time being, there’s little chance that the man who brought them all together will see a prison cell. Wanted on a range of charges by the US as well as Malaysia, Low is believed to be living in China with his family.
Although he’s keeping a low profile, he’s occasionally spotted in public. One of the last sightings was in 2019, at Shanghai Disneyland.
Ex-Goldman Banker Ordered to Forfeit $43.7 Million Over 1MDB Bribery Fraud
* Leissner Pleaded Guilty To Bribery, Money-Laundering Charges
* Meanwhile US Asks Judge To Make Roger Ng Forfeit $35.1 Million
Former Goldman Sachs Group Inc. banker Tim Leissner, who pleaded guilty to participating in the massive 1MDB foreign bribery fraud, was ordered to forfeit $43.7 million in cash as well as all 3.3 million shares in fitness drink company Celsius Holdings Inc.
US District Judge Margo Brodie on Friday ordered Leissner to surrender the assets as part of his earlier guilty plea to foreign bribery and money-laundering charges related to the 1MDB scandal.
Leissner has been free on $20 million bail since his arrest in June 2018. He pleaded guilty in August 2018 and was the government’s star witness against his former Goldman colleague Roger Ng.
The forfeiture order comes the same day the government is set to issue a sentencing recommendation for Ng. Ahead of the full recommendation, the US on Friday asked Brodie to order Ng to forfeit $35.1 million.
Henry Mazurek, a lawyer for Leissner, declined to comment on the judge’s order about his client. Marc Agnifilo, a lawyer for Ng, didn’t immediately return a call seeking comment.
The US said that both Leissner, Goldman’s former Southeast Asia head, and Ng conspired with financier Jho Low, the alleged mastermind of the sprawling fraud scheme, to bribe officials in Malaysia and Abu Dhabi to facilitate bond deals. Ng, 51, the only Goldman employee to go to trial over the multibillion-dollar looting, was convicted by a federal jury in April of three felony counts, including conspiring to violate US anti-bribery laws and conspiring to launder money.
Ng is scheduled to be sentenced on March 9.
Ownership of the Celsius shares remains in dispute. Ng sued Leissner in New York state court in November, alleging his ex-boss cheated him out of an investment worth at least $130 million. Ng alleged that Leissner took his original $1.25 million investment in Celsius, has since grown in value enormously. That case is still pending.
Brodie said in her Friday order that the Celsius shares were being held at a JPMorgan Chase & Co. account in the name of Leissner’s former wife, Kimora Lee Simmons. The judge said anyone who asserts a legal interest in the Celsius shares may file a petition with the court.
Low stole $1.42 billion from three bond transactions that Goldman arranged for 1MDB, according to a forensic accountant with the Federal Bureau of Investigation who testified at Ng’s trial. The US said evidence showed Ng collected $35.1 million in the fraud while Leissner received $73.4 million. Low remains a fugitive.
Former Malaysian Prime Minister Najib Razak reaped $756 million of the $6.5 billion raised in the bond offerings, while his stepson, Riza Aziz, pocketed $238 million, the US said. Aziz used at least $60 million of his 1MDB money to produce The Wolf of Wall Street, according to prosecutors.
Leissner testified at the trial that, as part of his guilty plea, he had agreed to surrender a stake in Celsius he estimated was now worth about $200 million and had previously posted 3.25 million shares in Celsius as collateral to secure his bond.
During his time on the witness stand he admitted to faking divorce documents, creating phony email accounts, marrying multiple women at the same time and keeping money that wasn’t his.
The case is US v. Leissner, 18-cr-439, US District Court, Eastern District of New York (Brooklyn).
Chinese Billionaire Guo Says He’d Be Worse Off If He Fled US
* Guo Faces Fraud, Money Laundering Charges In New York
* Billionaire Offers To Put Up A $25 Million Bond To Be Released
Chinese billionaire Guo Wengui, who was arrested in New York earlier this month on fraud charges, says he’d be worse off if he fled the US than if he stayed and faced trial.
Guo, also known as Ho Wan Kwok, asked to be released on a $25 million bond, arguing he’s not a flight risk. He noted that he hadn’t left the US since 2017, when he sought political asylum in the country. In fact, he argued that fleeing would endanger him more as it would expose him to the Chinese Communist Party that has long targeted him and his family.
“Mr. Kwok likely would face a fate far worse than incarceration in the United States should he attempt to flee,” Guo’s lawyers wrote in a letter Friday to the judge overseeing his case.
Guo, who’s detained in the Metropolitan Detention Center in Brooklyn, New York, has a bail hearing scheduled for Tuesday.
He and his financial adviser, Kin Ming Je, were charged with conspiracy, wire and securities fraud and money laundering. Prosecutors claim the two conspired to cheat thousands of victims out of more than $1 billion using “a series of complex fraudulent and fictitious businesses and investment opportunities,” according to the indictment. More than $300 million of the proceeds were alleged to have benefited them and their families.
Guo’s lawyers argue that he has no intention of jeopardizing his relationships with his wife and daughter, who live in Connecticut, by abandoning them in the US.
They also assert that he’s not a danger to the community, given that the proposed conditions of his release would include house arrest, GPS monitoring and restrictions on his ability to engage in financial transactions.
Guo’s lawyers cited several other defendants accused of fraud, who have been released on bail, including FTX chief Sam Bankman-Fried, who is subject to home detention and allowed to use a cell phone, while posting a $250 million bond.
“None of the above defendants were denied bail even though they face similar charges and share many of the same attributes that the government asserts warrant Mr. Kwok’s detention,” Guo’s lawyers wrote.
The case is US v. Ho Wan Kwok, 23-cr-00118, US District Court, Southern District of New York (Manhattan).
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