U.S. Prosecutors Recommend Goldman Guilty Plea for 1MDB, FT Says
U.S. Prosecutors Recommend Goldman Guilty Plea for 1MDB, FT Says
(Bloomberg) -- U.S. prosecutors recommended to senior Justice Department officials that Goldman Sachs Group Inc. be required to plead guilty to a crime to settle a probe of its dealings with Malaysia’s 1MDB state investment fund, the Financial Times reported.
The recommendation is still under consideration, the FT said, citing unidentified people familiar with the matter. Ultimately, a settlement may be less onerous. Shares of Goldman slipped 1.6 percent at 1:30 p.m. in New York.
The New York-based investment bank has blamed rogue employees for any wrongdoing in relation to scandal-plagued 1MDB, previously telling prosecutors it was deceived by regional executives at the firm including a former partner, Tim Leissner. Still, authorities in Malaysia have also faulted the company, alleging it misled investors while raising more than $6 billion for 1MDB in 2012 and 2013, knowing money would be misappropriated.
A spokesman for the Justice Department declined to comment on the FT’s report. Demanding a guilty plea would be inappropriate, said Jake Siewert, a spokesman for Goldman Sachs.
“We do not believe that such a charge would be warranted by the facts of the case or the law,” Siewert said, “particularly because senior management was unaware of the criminal activity by Mr. Leissner and his associate who took extraordinary efforts to hide their part in the illegal scheme from management, compliance, and legal functions at the firm.”
Assistant Attorney General Brian Benczkowski, who oversees the Justice Department’s criminal division, will be a key decision maker on any settlement with the bank, the FT said. He obtained an ethics waiver to participate in the case after Goldman Sachs hired his former law firm, the paper said.
--With assistance from Tom Schoenberg and Patricia Hurtado.
To contact the reporter on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, David Scheer, Alan Goldstein
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