WASHINGTON, D.C.—Dennis Kelleher, Cofounder, President, and CEO of Better Markets, issued the following statement on the sentencing of Tim Leissner today in United States v. Leissner, 18-CR-439 (E.D.N.Y.):
“The good news is that the Goldman Sachs partner who orchestrated and led the bank’s central involvement in the 1MDB scandal is going to prison. The bad news is that he faced 25 years in prison and deserved more than just two (as detailed here). Goldman and Leissner’s crimes weren’t just financial, even though their looting of $4.5 billion from a Malaysian Wealth fund was one of the greatest financial heists in history. They undermined democracy in an entire country, which enabled a corrupt prime minister to stay in power for five years and to crush his opponents, during which a prosecutor was butchered. While no sentence would likely really serve justice, a two-year prison sentence is certainly well below what the facts and the law warrant here.
“Unfortunately, Judge Margo Brodie, in handing down the prison sentence, reportedly relied in part on a letter from Goldman Sachs saying that ‘the 1MDB fraud would never have taken place without Leissner.’ While that is true, more than 30 Goldman Sachs executives and supervisors were involved with 1MDB, including its then-CEO and its now-CEO. The 1MDB fraud would never have happened if Goldman Sachs hadn’t committed crimes, if it hadn’t installed a minimally effective compliance system, if management hadn’t overridden or ignored the compliance department objections, or if the bank hadn’t turned a blind eye to the many red flags indicating that there were innumerable irregularities if not fraud happening under the noses of the supposedly smartest bankers in the world. Goldman pocketed the extraordinary fee of $600 million for a few months’ work placing de facto sovereign bonds, which clearly blinded them to what should have been obvious illegal conduct. Judge Margo Brodie should have said that ‘the 1MDB fraud would never have taken place without Goldman Sachs’ conduct which included enabling Leissner to engage in his criminal conduct.’
“Leissner’s lawyers’ reported comments in court about Goldman’s letter that Judge Brodie referred to are on point: they come from an ‘institution continuing to resist responsibility for its central role’ in the scandal. ‘It’s sort of like a getaway driver showing up at a cooperator’s sentencing.’
“Finally, while Leissner cooperated with prosecutors, he decided to cooperate only after he was caught, after he tipped off some of his co-conspirators (who remain fugitives), and after he failed in attempting to blame others. Moreover, once he flipped, Leissner helped prosecutors move down the corporate chain of authority, not up the chain of command as happens in virtually every other notable case. Testifying against a junior colleague who reported to you isn’t usually viewed as worthy of a reward. The result is that individual accountability at Goldman Sachs stopped at Leissner, and didn’t reach any of the other 30 Goldman Sachs executives or supervisors.
“Goldman’s and Leissner’s acts were egregious, willful, prolonged, and extraordinarily damaging, and all just based on unbounded greed. While some jail time is more meaningful than the get-out-of-jail free card Leissner was arguing for, it’s not commensurate with the gravity of the crimes Goldman and Leissner committed. Ultimately, it is minimal punishment and questionable if any deterrence, thereby undermining the twin goals of justice.”
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Better Markets is a non-profit, non-partisan, and independent organization founded to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
