U.S. prosecutors are examining an alleged transfer of hundreds of thousands of dollars from a former employee of a Malaysian investment fund to Tim Leissner, who was then a senior banker at Goldman Sachs Group Inc.’s Southeast Asia operations, according to people briefed on the matter.

One of the people said the transfer was an investment in a start-up company that Leissner was backing with the ex-1MDB employee. An internal investigation by Goldman Sachs didn’t spot such a transfer, according to another person briefed on the matter. That suggests any transfer or communications about one occurred outside Goldman’s networks.

More broadly, prosecutors are looking into Goldman Sachs’s role in helping raise more than $6 billion several years ago for the embattled investment fund, 1Malaysia Development Bhd., or 1MDB, according to three people familiar with the inquiry. Prosecutors have stepped up those efforts recently, they said.

The inquiry joins a second one by the Justice Department’s kleptocracy unit into 1MDB matters, as authorities in Singapore, Luxembourg and Switzerland trace how money flowed from the fund. Swiss prosecutors have said they have “serious indications” that billions were misappropriated from the 1MDB, whose advisory board was headed by Malaysian Prime Minister Najib Razak. Both 1MDB and the premier have denied wrongdoing.

‘Unauthorized Statements’

Leissner, the 18-year Goldman Sachs veteran who helped oversee three bond sales for 1MDB in 2012 and 2013, was subpoeanaed by the Justice Department earlier this year in connection with the 1MDB matter, people familiar with the situation have said. He resigned from Goldman after he was placed on leave in January over “inaccurate and unauthorized statements” in a letter of reference, according to Financial Industry Regulatory Authority records.

Leissner hasn’t been accused of wrongdoing. His attorney, Jonathan Cogan of Kobre & Kim, didn’t respond to a phone call and e-mail requesting comment.

Goldman Sachs hasn’t been accused of wrongdoing. Michael DuVally, a bank spokesman, declined to comment.

The 1MDB bond deals were notable for the above-average commissions generated for Goldman Sachs. Putting its own capital at risk, the investment bank earned commissions and expenses of $593 million, or more than 9 percent of the proceeds.

Six Figures

Leissner received a six-figure deposit into his account from Jasmine Loo about a year after she had left 1MDB, according to one of the people familiar with the situation. The transfer was made well after the Goldman-backed bond deals had been completed, the person said.

Loo didn’t immediately respond to messages left at her New York apartment building.

Goldman’s other regulators, including the Securities and Exchange Commission and Federal Reserve Board, are also reviewing the bank’s activities with 1MDB, said the three people. Representatives from the Fed and SEC declined to comment.

In a previously reported U.S. probe, the Justice Department’s kleptocracy unit has been looking into whether politically connected Malaysians embezzled state funds to buy art and trophy properties in the U.S., people familiar with the probe have said.

In recent months, the Justice Department has been relying on Goldman Sachs to provide information about its role in raising funds for 1MDB. Last year, Goldman hired an outside law firm to investigate the financing of 1MDB. The bank is cooperating with the probe, said a spokesman.

Source:
courtesy of BLOOMBERG

by Greg Farrell and Keri Geiger

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