BROOKLYN, N.Y. (CN) - A former managing director at Goldman Sachs was arrested Thursday as federal prosecutors announced that the bank’s former Southeast Asia chairman pleaded guilty to a $2.7 billion money-laundering scheme rooted in Malaysia.
Unsealing the guilty plea this morning along with a criminal information document, the government says former Goldman banker Tim Leissner was part of a long-running scheme to bribe officials in Malaysia and Abu Dhabi so that the investment development fund 1Malaysia Development Berhad would execute lucrative bond deals with his bank.
Malaysia had created the fund known as 1MDB in 2009 as a way to stimulate economic growth, but the project was quickly infiltrated by a multibillion-dollar embezzlement scheme whose proceeds were laundered around the world. As traced in earlier court papers, the money flowed among other places through art auctions, luxury New York City real estate and Hollywood production companies, one of which produced the Oscar-nominated Martin Scorsese film “The Wolf of Wall Street.”
While prosecutors tied 48-year-old Leissner today to the laundering of more than $2.7 billion diverted from 1MDB, at least $4.5 billion is believed to have been looted from the fund in total. As part of his guilty plea, Leissner was ordered to forfeit $43.7 million. The banker is married to Kimora Lee Simmons, a model and TV personality with whom he has a son.
In addition to announcing Leissner’s plea, the government today unsealed a three-count criminal indictment against another former Goldman banker, 51-year-old Ng Chong Hwa, and the well-connected financier Low Taek Jho.
Ng, who goes by Roger, was arrested early Monday in Malaysia pursuant to a provisional arrest warrant issued at America’s request, but the 36-year-old suspect otherwise known as Jho Low remains at large. Malaysian authorities have been unable to locate Low as well, despite having canceled Low’s passport and having Interpol issue an arrest warrant.
Prosecutors claim Low masterminded the 1MDB scheme and that Ng and Leissner relied on his close relationships with high-ranking government officials, one of whom had authority in the Malaysian government to approve 1MDB business decisions.
The government estimates that Goldman Sachs earned about $600 million in fees through the three 1MDB bond deals in 2012 and 2013. Meanwhile Leissner and Ng raked in big Goldman bonuses while also receiving kickbacks for their work from Low, according to the court filings.
Marc Kasowitz of Kasowitz Benson Torres represents Low, while Robert O’Neill of Freeh Sporkin and Sullivan represents Leissner. Neither responded Thursday to requests for comment.
A spokesman for the U.S. Attorney’s Office also declined to comment beyond what the government put in a press release.
Representatives for Goldman Sachs noted in an email that the bank "continues to cooperate with all authorities investigating this matter.”
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