Dive Brief:

• Tim Leissner, Goldman Sachs’ former Southeast Asia chairman who pleaded guilty in 2018 to playing what prosecutors called “a central role” in the 1MDB scandal, was sentenced to two years in federal prison Thursday.
• Judge Margo Brodie, of the U.S. District Court for the Eastern District of New York, called Leissner’s behavior “brazen and audacious” during Thursday’s hearing, Bloomberg reported. Leissner’s cooperation with prosecutors “does not completely make up for the harm and devastation you knowingly caused through your conduct which was completely selfish. So some punishment is warranted.”
• Leissner apologized for his actions during the sentencing hearing, saying, “if I could turn back time, I would and I would do so without hesitation,” The Wall Street Journal reported. His prison term is set to begin Sept. 15. 

Dive Insight:

The Justice Department accused Leissner, fellow Goldman banker Roger Ng and Malaysian socialite Jho Low of conspiring to bribe government officials, to snag lucrative business for the Wall Street bank, and then laundering billions of dollars fraudulently diverted from Malaysian investment fund 1MDB between 2009 and 2014. 

Bribes were paid to foreign officials in Malaysia and Abu Dhabi, and in exchange, officials agreed to hire Goldman to orchestrate 1MDB bond transactions. Goldman earned about $600 million in fees and revenue for helping the Malaysian government raise $6.5 billion for 1MDB, prosecutors said. But about $4.5 billion of that was diverted. 

Leissner received about $73.4 million in kickbacks and aided in the transfer and laundering of hundreds of millions of dollars connected to the scheme, prosecutors said. Millions of dollars were used to buy art, real estate and other luxury items, and to produce the movie “The Wolf of Wall Street.” 

After pleading guilty to bribery and money-laundering charges in 2018, Leissner faced up to 25 years in prison. He contended his cooperation with prosecutors and testifying against Ng – leading to Ng’s conviction and more than $5 billion in fines against Goldman – should negate prison time; prosecutors, too, sought leniency. Ng, Goldman’s former head of investment banking in Malaysia, was convicted in 2022 and sentenced to 10 years in prison.

The bank, however, disagreed. In a May 21 letter to the judge, Goldman’s chief legal officer, Kathryn Ruemmler, said Leissner “extensively lied to and deceived many people” at the bank, and spent years engaged in criminal activity, putting Goldman at risk. From Goldman’s perspective, Leissner’s efforts are “deserving of sanction, not praise,” she wrote.

“Mr. Leissner’s serial lies, fraud, and deception at Goldman Sachs continued from the day he first brought the transactions to the firm through the day he left the firm,” Ruemmler wrote. Absent his misconduct, “the 1MDB transactions would not have occurred.” 

Goldman also took issue with what it saw as Leissner’s effort to link his misconduct to intense pressure from the bank to generate business, Ruemmler said. 

“The attempt to blame the industry denigrates the countless law-abiding people who work in it and draws focus from the true motivation for Mr. Leissner’s crimes: greed,” Ruemmler said. 

Leissner “has never acknowledged, let alone accepted responsibility for, the extraordinary harm and reputational damage that he caused to Goldman Sachs and his many partners and colleagues who trusted him,” Ruemmler wrote. 

The bank’s letter grabbed attention during the hearing, with prosecutor Drew Rolle likening Goldman’s statements to “a getaway driver showing up at a cooperator’s sentencing and saying: ‘You know, judge, we wouldn’t be in this mess if he hadn’t decided to rob a bank,’” Bloomberg reported. 

“I understand you to be saying the letter from Goldman Sachs was denigrating his cooperation,” Brodie said in response, according to Bloomberg. “But I read the letter as saying, ‘But for your conduct there would be no reason to cooperate.’”

As he left the courtroom Thursday, Leissner was handed a subpoena reportedly from Goldman Sachs, according to Bloomberg. In 2022, a Financial Industry Regulatory Authority panel ordered Leissner to repay Goldman about $20.7 million in compensation he had received. Ruemmler told the judge Leissner still has yet to repay the bank “one penny” of his compensation. 

The judge on Thursday also denied a request from Xavier Justo, who was seeking $18 million in restitution from Leissner. Justo, a whistleblower who exposed the scandal, worked at oil company PetroSaudi International, which had a joint venture with 1MDB.