NEW YORK: A federal magistrate judge on Monday said the Justice Department is engaged in plea negotiations with a former managing director of Goldman Sachs Group Inc. who was extradited from Malaysia, a development that could help prosecutors build a case against the bank and Goldman employees in the scandal involving a Malaysian government fund.
News of the talks between the former banker, Roger Ng, and federal prosecutors in Brooklyn was revealed by U.S. Magistrate Judge Peggy Kuo during Mr. Ng’s initial court hearing. He arrived Monday from Malaysia, where he had been held in jail since his arrest in November.
Marc Agnifilo, a lawyer for Mr. Ng, appeared to dispute the judge’s characterization, saying there had been no active plea negotiations. “At this point, we haven’t made a decision of how we’re going to deal with the case,” he said, adding that his client wasn’t ruling out any option.
The Justice Department has been weighing whether to force Goldman to agree to a guilty plea for its involvement in the scandal involving the fund called 1Malaysia Development Bhd, said people familiar with the matter. Multiple people within the department are advocating for a guilty plea, while the bank’s lawyers are pushing back.
The decision likely will be made at the highest levels of the department.
If Mr. Ng agrees to cooperate with prosecutors, his testimony could play an important role in the Justice Department’s decision on Goldman.
On Monday, Mr. Ng pleaded not guilty to charges of money laundering and violating antibribery laws. He was released on $20 million bond and ordered to confinement in a New York-area home with GPS monitoring pending trial. His next hearing is set for May 23.
Another former Goldman employee, Tim Leissner, has already pleaded guilty and agreed to cooperate with prosecutors.
Goldman underwrote about $6.5 billion in bonds for 1MDB. The indictment alleges the bankers bribed government officials to get the bond deals, controlled offshore accounts where proceeds of the bond sale that were stolen were diverted, and helped launder the proceeds.
Goldman has consistently denied wrongdoing. The bank said certain individuals from the former Malaysian government and 1MDB 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 actions as laid out in the U.S. charges against Mr. Ng.
It isn’t clear what charges Goldman could face, but the bank could be accused of violating U.S. laws banning bribery or ones that require banks to report suspicious transactions. The views of authorities in Malaysia, which the Justice Department believes were a victim in the alleged scheme, will be a factor in the department’s decision on Goldman.
Malaysia has said it was seeking a fine well above the $2.7 billion allegedly stolen by two former Goldman bankers and a Malaysian financier named Jho Low, whom U.S. prosecutors have accused of conspiring to loot the fund. Mr. Low has denied any wrongdoing.
In an indication of the level of interest in the matter within the Justice Department, both Attorney General William Barr and the assistant attorney general overseeing the criminal division, Brian Benczkowski, requested and received waivers to participate in the case. They were both originally recused from the matter because the bank had hired their former law firm, Kirkland & Ellis, to represent it in the investigation.
At a Senate hearing last week, Mr. Barr said his staff sought the waiver in order to receive his input in the case, and that career ethics officials had approved the recommendation.
“The impetus…didn’t come from me,” Mr. Barr said, adding: “The criminal division asked me to get a waiver because of the importance of this investigation.”
Mr. Ng, 46, was charged in November in the U.S. 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.
Mr. Ng had been fighting extradition, but in February he volunteered to be sent to the U.S. Malaysian authorities initially declined to let him go but later agreed to surrender Mr. Ng to the U.S. temporarily, Malaysia’s attorney general, Tommy Thomas, said in a statement Monday.
The financial scandals at 1MDB have sparked multinational investigations, including in Switzerland, 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 in 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. - WSJ
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