Goldman Sachs Unit Pleads Guilty Over Fraud Scheme


“Goldman’s involvement with 1MDB was no ordinary crime in terms of scale, scope, consequence and egregiousness,” Mr. Kelleher said.

All told, Goldman will have to shell out billions in penalties and returned money in Malaysia, the United States and Hong Kong. The scandal also brought down Mr. Najib, the former prime minister, who is appealing his conviction in a corruption trial in Malaysia.

As part of the plea deal, Goldman has agreed to a statement of facts compiled by federal authorities that it will not be able to dispute. That document outlines a number of internal control failings at Goldman that authorities said should have detected the wrongdoing by its former employees, as well as Mr. Low’s involvement.

Mr. Low, a flamboyant businessman who had befriended many Hollywood celebrities and was known for staging wild and extravagant parties in Las Vegas, was introduced to a Goldman banker, Tim Leissner, in 2009. Mr. Leissner, the husband of the fashion designer and model Kimora Lee Simmons, began talking to Mr. Low about finding ways for Goldman to increase its business activities in Malaysia, but encountered obstacles when some at Goldman objected to Mr. Low’s becoming a client of the bank because it was unclear how he had amassed his wealth.

In early 2011, some in Goldman’s compliance division pushed backed on the idea of the bank’s doing business with two of Mr. Low’s companies. Prosecutors wrote that one person at Goldman in March 2011 went so far as to say, “To be clear, we have pretty much zero appetite for a relationship with this individual.”

Even so, Mr. Leissner and Mr. Low remained connected, and Goldman earned the fund’s business. By December 2012, just a few weeks before the bank arranged a third bond deal for 1MDB, Mr. Low met with Mr. Blankfein at Goldman’s offices in New York. — just one of several meetings that top executives at the bank had with him between 2009 and 2014. One meeting, prosecutors wrote, took place on a yacht in southern France.

“Personnel at the bank allowed this scheme to proceed by overlooking or ignoring a number of clear red flags,” Brian C. Rabbitt, acting assistant attorney general for the Justice Department’s criminal division, said during a news conference.



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