Former Banker Tim Leissner Pleaded Guilty to Conspiring to
Launder Money and to Violate the Foreign Corrupt Practices Act Related to 1MDB
BROOKLYN, NY – A three-count criminal indictment was
unsealed today in federal court in the Eastern District of New York charging
Low Taek Jho, also known as “Jho Low,” and Ng Chong Hwa, also known as “Roger
Ng,” with conspiring to launder billions of dollars embezzled from 1Malaysia
Development Berhad (1MDB), Malaysia’s investment development fund, and
conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes
to various Malaysian and Abu Dhabi officials.
As part of the three-count indictment, Ng is also charged with
conspiring to violate the FCPA by circumventing the internal accounting
controls of a major New York-headquartered financial institution (Financial
Institution), which underwrote more than $6 billion in bonds issued by 1MDB in
three separate bond offerings in 2012 and 2013, while Ng was employed at the
Financial Institution as a managing director.
Ng was arrested earlier today in Malaysia, pursuant to a provisional
arrest warrant issued at the request of the United States. Low remains at large.
Also unsealed today in federal court in the Eastern District
of New York was the guilty plea of Tim Leissner, the former Southeast Asia
Chairman and participating managing director of the Financial Institution, to a
two-count criminal information charging Leissner with conspiring to launder
money and conspiring to violate the FCPA by both paying bribes to various
Malaysian and Abu Dhabi officials and circumventing the internal accounting
controls of the Financial Institution while he was employed by it. According to court filings, Leissner has been
ordered to forfeit $43,700,000 as a result of his crimes.
Richard P. Donoghue, United States Attorney for the Eastern
District of New York, John P. Cronan, Principal Deputy Assistant Attorney
General of the Department of Justice’s Criminal Division, William F. Sweeney,
Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York
Field Office (FBI), and R. Damon Rowe, Special Agent-in-Charge, Internal
Revenue Service-Criminal Investigation (IRS-CI), Los Angeles Field Office,
announced the charges.
The Criminal Scheme
1MDB is a Malaysian state-owned and controlled fund created
to pursue investment and development projects for the economic benefit of
Malaysia and its people. As alleged in
court filings, between approximately 2009 and 2014, as 1MDB raised money to
fund its projects, billions of dollars were misappropriated and fraudulently
diverted from 1MDB, including funds 1MDB raised in 2012 and 2013 through three
bond transactions that it executed with the Financial Institution. As part of the scheme, and as alleged in
court filings, Low, Ng, Leissner and others conspired to bribe government
officials in Malaysia, including at 1MDB, and Abu Dhabi to obtain and retain
lucrative business for the Financial Institution, including the 2012 and 2013
bond deals. They also allegedly
conspired to launder the proceeds of their criminal conduct through the U.S.
financial system by purchasing, among other things, luxury residential real
estate in New York City and elsewhere, and artwork from a New York-based
auction house, and by funding major Hollywood films.
As alleged, Low’s close relationships with high-ranking
government officials in Malaysia and Abu Dhabi were central to the scheme. Ng, Leissner, and others at the Financial
Institution allegedly knew Low was close to these government officials,
including a high-ranking Malaysian government official who had authority to
approve 1MDB business decisions (Malaysian Official #1). According to allegations in court filings,
beginning in approximately 2009 and continuing through 2014, Low, Ng, Leissner
and the other co-conspirators used Low’s relationships to obtain and retain
business for the Financial Institution through the promise and payment of
hundreds of millions of dollars in bribes, including to ensure 1MDB awarded the
Financial Institution a role on three bond transactions known internally at the
Financial Institution as “Project Magnolia,” “Project Maximus” and “Project
Catalyze.” As a result of its work for
1MDB during that time, the Financial Institution allegedly received
approximately $600 million in fees and revenues along with increased
reputational prestige. At the same time,
Ng, Leissner and others allegedly received large bonuses and enhanced their own
reputations at the Financial Institution.
In total, according to allegations in court filings, more than $2.7
billion was misappropriated from 1MDB and Low, Ng, Leissner and others
conspired to launder this money through the U.S. financial system to pay bribes
to foreign officials and for the personal benefit of themselves and their
relatives.
Project Magnolia
In early 2012, according to allegations in court filings,
following a series of meetings in Malaysia and the United Kingdom, Low,
Leissner, Ng and the co-conspirators agreed that, with the assistance of the
Financial Institution, 1MDB would issue $1.75 billion in bonds guaranteed by an
entity wholly owned and controlled by the government of Abu Dhabi. Low allegedly explained to Ng, Leissner and
others at the time that, to complete the transaction, bribes would need to be
paid to officials in Malaysia and Abu Dhabi and, as alleged, hundreds of
millions of dollars were actually paid to officials in these countries. Low, Ng, Leissner and other co-conspirators
also knew that Low intended to use funds misappropriated from the bond
transaction to bribe and influence the officials to obtain the necessary
approvals and any additional assistance needed to execute Project Magnolia for
the Financial Institution and to pay kickbacks to Ng, Leissner and others.
In or around March 2012, 1MDB allegedly selected the
Financial Institution to be the sole bookrunner and arranger for Project
Magnolia. As part of the scheme, Low and
other co-conspirators enlisted the assistance of 1MDB officials, promising to
pay them bribes and kickbacks. In one
instance, as alleged in court filings, in connection with Project Magnolia, Low
told one 1MDB official that he would “[g]ive [the official a] big present” when
the transaction closed. According to
allegations in court documents, the fact that bribes and kickbacks were being
paid in connection with Project Magnolia was known to Ng, Leissner and other
employees of the Financial Institution.
After Project Magnolia closed on or about May 21, 2012, more
than $500 million of the bond proceeds were misappropriated and diverted from
1MDB through numerous wire transfers to bank accounts in the name of shell
companies beneficially owned and controlled by Low, Leissner, Ng and other
co-conspirators, including a high-level official at the Abu Dhabi entity that
guaranteed the Project Magnolia bonds and a close relative of Malaysian
Official #1. As alleged, the bond
proceeds transferred to Malaysian Official #1’s close relative were later used
by the relative’s U.S. motion picture company to assist in the production of
the film “The Wolf of Wall Street,” a movie based on a previous Eastern
District of New York prosecution.
Project Maximus and Project Catalyze
Court filings further allege that from May 2012 and
continuing through 2013, Low, Ng, Leissner and their co-conspirators continued
to work to ensure that the Financial Institution obtained and retained
additional 1MDB business, including the bond transactions known as “Project
Maximus” and “Project Catalyze,” which transactions generated substantial fees
and revenues for the Financial Institution.
As alleged, although both transactions were designed to raise more than $4
billion for 1MDB’s investment and development projects, Low, Ng, Leissner and
other co-conspirators allegedly used the transactions to further the criminal
scheme, ultimately laundering hundreds of millions of dollars of diverted funds
from these transactions into bank accounts beneficially owned and controlled
by, among others, the co-conspirators, including Low, Leissner and officials in
Malaysia and Abu Dhabi. As alleged in
court filings, throughout this time, Ng, Leissner, and at least one other employee
of the Financial Institution knew that Low would and did pay bribes to
influence officials in Malaysia and Abu Dhabi to obtain the necessary approvals
to execute Project Maximus and Project Catalyze. Low, Ng, Leissner and others allegedly knew
that large portions of the bond proceeds would be illegally diverted to
themselves and others, including to foreign government officials.
As part of the scheme alleged in court filings, Low, Ng,
Leissner and other co-conspirators again used a series of wire transfers to
launder billions of dollars of misappropriated and fraudulently diverted funds
from Project Maximus and Project Catalyze.
As alleged, following the close of Project Maximus, approximately $790
million of the bond proceeds was transferred through a series of shell company
accounts beneficially owned and controlled by Low, Leissner and others,
including accounts of officials in Malaysia and Abu Dhabi. In particular, Leissner and Ng caused
millions of dollars of these funds to be transferred to accounts of 1MDB
officials or relatives of such officials in exchange for their assistance in
obtaining and retaining business for the Financial Institution. Over $35 million of the bond proceeds also
allegedly was used by a co-conspirator to help acquire a condominium in New
York, New York beneficially owned by Low.
Similarly, according to allegations in court filings, after
Project Catalyze closed in March 2013, more than $1 billion dollars of diverted
funds, traceable to the transaction, were laundered, at Low’s direction, to
bank accounts in the name of entities beneficially owned and controlled by Low,
Leissner and others, including 1MDB officials.
As alleged, more than $4 million of the funds were transferred to a bank
account beneficially owned by a relative of Ng.
Additionally, as part of the scheme, Low used a shell company account to
receive more than $1 billion of the Project Catalyze bond proceeds and spent
approximately $137 million of these funds to purchase works of art at a
high-end art auction house in New York, New York.
Post-Catalyze 1MDB Transactions at the Financial Institution
The Financial Institution continued to seek business from
1MDB after Project Catalyze. As alleged,
Leissner and others were particularly focused on securing a role for the
Financial Institution on a proposed initial public offering (“IPO”) of 1MDB’s
energy assets. To influence certain
officials to award the Financial Institution a role in the proposed IPO, Low
and Leissner allegedly continued to pay bribes to certain officials at 1MDB.
For example, as alleged, in an online chat between Low and
Leissner in June 2014, Low and Leissner discussed the need to “suck up to” a
1MDB official and to send “cakes” to a person believed to be the wife of
Malaysian Official #1. A few months
after this chat, a bank account owned and controlled by Leissner and his
relative was used to transfer approximately $4.1 million to a high-end New York
jeweler, in part, to pay for gold jewelry for the wife of Malaysian Official
#1.
The charges in the indictment as to Low and Ng are
allegations, and those defendants are presumed innocent unless and until proven
guilty.
The investigation was jointly conducted by the FBI’s
International Corruption Unit and IRS-Criminal Investigation. The government’s criminal case is being
handled by the Business and Securities Fraud Section of the United States
Attorney’s Office for the Eastern District of New York and the Criminal
Division’s Money Laundering and Asset Recovery Section (MLARS) and Fraud
Section. Assistant United States
Attorneys Jacquelyn M. Kasulis and Drew Rolle and Trial Attorneys Jennifer E.
Ambuehl, Woo S. Lee, Mary Ann McCarthy, Katherine A. Nielsen and Nikhila Raj
are prosecuting the case. Additional Criminal Division Trial Attorneys and
Assistant U.S. Attorneys within U.S. Attorney’s Offices for the Eastern
District of New York and Central District of California have provided valuable
assistance with various aspects of this investigation, including with civil and
criminal forfeitures.
The Criminal Division’s Office of International Affairs
provided critical assistance in this case.
The Department also appreciates the significant cooperation and
assistance provided by the U.S. Securities and Exchange Commission, and the
Board of Governors of the Federal Reserve System along with the Federal Reserve
Bank of New York. The Department also
appreciates the significant assistance provided by the Attorney General’s
Chambers of Malaysia, the Royal Malaysian Police, the Malaysian Anti-Corruption
Commission, the Attorney General’s Chambers of Singapore, the Singapore Police
Force-Commercial Affairs Division, the Office of the Attorney General of
Switzerland, the Judicial Investigating Authority of the Grand Duchy of
Luxembourg, and the Criminal Investigation Department of the Grand-Ducal Police
of Luxembourg.
The Defendants:
LOW TAEK JHO
Age: 36
NG CHONG HWA
Age: 51
E.D.N.Y. Docket No. 18-CR-538 (MKB)
TIM LEISSNER
Age: 48
E.D.N.Y. Docket No. 18-CR-439 (MKB)
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