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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 1: Former Goldman Sachs bankers, and a fugitive Malaysian financier have

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Speaker 1: been charged over the alleged plunder of billions of dollars

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Speaker 1: from Malaysia's State Development Fund. Roger Ung, the only person

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Speaker 1: in all of Goldman sacks to stand trial in the

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Speaker 1: US over the scheme to lute billions from the Malaysian

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Speaker 1: one MDB fund, was convicted on all counts conspiring to

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Speaker 1: launder money and to violate anti bribery laws. The alleged

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Speaker 1: mastermind of the scheme, Joel is still a fugitive, and

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Speaker 1: Ung's former boss, former Goldman banker Tim Leisner, made a

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Speaker 1: deal and became the state's star witness, joining me as

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Speaker 1: Bloomberg Legal reporter Patricia Hurtado, who covered the trial that

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Speaker 1: let's start almost at the beginning, tell us how On

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Speaker 1: came to be in the United States to face trial

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Speaker 1: he had been charged by Malaysia, and then in November,

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Speaker 1: the US government files an indictment against Roger Ung and

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Speaker 1: Joe Low, and based on that US document, he gets

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Speaker 1: picked up and held in testody in a Malaysian prison

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Speaker 1: under very harsh circumstances. So his American defense lawyer, Mark Igniffolo,

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Speaker 1: who defended him at the trial, convinced him to wave

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Speaker 1: extradition and come to the US and face the charges first.

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Speaker 1: The Malaysia broke in agreement with the US government to

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Speaker 1: let him go to trial first in the US and

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Speaker 1: then he'll have to go back now to Malaysia. But

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Speaker 1: he was really being held in a Malaysian prison under

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Speaker 1: what I understand, we're pretty horrific circumstances. This case featured

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Speaker 1: startling confessions from Tim Leisner the pet It seemed like

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Speaker 1: Ung was at the bottom of the ladder, so to speak.

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Speaker 1: So if you think about it, the mastermind of this

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Speaker 1: scheme is Joe Low, the Malaysian finance here who came

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Speaker 1: up with this idea. According to Tim Eisner, Kim Leisner

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Speaker 1: is Roger Own's boss that Goldman Sacks, and Roger was

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Speaker 1: allegedly the relationship banker that knew Joe Low and introduced

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Speaker 1: him to Tim Leisner. Tim Leisner described a host of

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Speaker 1: crimes that he said he engaged in with Joe Low,

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Speaker 1: and what the government did in this case was they

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Speaker 1: had Tim Leisner lead guilty and cooperate down if you will.

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Speaker 1: So you're having like the equivalent of the mob boss

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Speaker 1: cooperating down and testifying against an underling who may be

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Speaker 1: less coupable. But because this is conspiracy, if one person

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Speaker 1: takes an act and further into the conspiracy, even if

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Speaker 1: they're an underling, they can be held responsible for the

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Speaker 1: more prolific crimes of their co conspirators, either the boss

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Speaker 1: or a Joe low type. And Leisner made some startling

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Speaker 1: confessions in his ten days on the witness stand. So

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Speaker 1: we had Tim Leisner admitting that he committed a lot

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Speaker 1: of crimes, that he put Roger in with him in

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Speaker 1: this scheme, and that was the story the jury heard.

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Speaker 1: But they also heard, you know, admitting that he was

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Speaker 1: twice married to two different women at the same time,

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Speaker 1: that he had fabricated certain claims that he had stolen money,

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Speaker 1: even from Joe low. He admitted that he was holding

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Speaker 1: on to eighty million dollars of a hundred forty five

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Speaker 1: million euro transaction that Lowe sent him to quote unquote

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Speaker 1: hold for him, and that he promised that he would

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Speaker 1: pay it back, but he just hadn't had a chance

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Speaker 1: to the defense was arguing that Wisner had also stolen

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Speaker 1: at least one point five million from Roger, and that

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Speaker 1: he was implicating Roger um in these crimes to basically

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Speaker 1: not have to pay him back. Does this verdict mean

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Speaker 1: the jury believed Leisner. Well, the government's argument was, it

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Speaker 1: doesn't matter if you believe him or not, because you

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Speaker 1: look at the evidence, and the government did have a

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Speaker 1: very crucial piece of evidence. They traced the transactions. The

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Speaker 1: money is going out from oldman Sacks and it went

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Speaker 1: into a fund that was supposedly to bank roll or

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Speaker 1: fund the Trio of bond transaction, and billions of dollars

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Speaker 1: went into the account, but it was siphoned off through

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Speaker 1: if you will, it was like an offshore copycat bank

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Speaker 1: account that Joel set up with his cronies, and hundreds

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Speaker 1: of millions of dollars literally the next day after a transaction,

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Speaker 1: we're getting siphoned off and diverted to other offshore companies

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Speaker 1: and entities that Joel controlled. So all this money gets

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Speaker 1: siphoned off immediately, and the FBI traced it back and

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Speaker 1: they showed jurors eventually downstream, Roger's wife got the money

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Speaker 1: in an account which she said she created for her

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Speaker 1: elderly mother. And I guess it's telling that the jury

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Speaker 1: requested her testimony almost as soon as they began their deliberations. Yes,

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Speaker 1: and the government really went after her that her credibility.

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Speaker 1: You know, she had this story that she had done

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Speaker 1: a business trans an action with Tim Leisner's former wife,

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Speaker 1: Judy Chan Leisner, who uh family's wealthy in China and

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Speaker 1: has one of the China's largest vineyards, so very successful businesswoman.

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Speaker 1: And their claim was the money had come from the

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Speaker 1: two wise and the business transaction. She didn't have any

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Speaker 1: evidence to support that, and the jury wanted to see

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Speaker 1: her testimony direct and cross and what she said about it.

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Speaker 1: Now she did not have any supporting documents. And her

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Speaker 1: story was that she had made this ratuitous investment early

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Speaker 1: on in China with a friend of her family, and

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Speaker 1: then that the man was dying and told her that

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Speaker 1: he she would have to get it out of out

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Speaker 1: of mainland China, and because she's not a Chinese resident,

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Speaker 1: she was Malaysian Chinese, that had to be somehow handled,

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Speaker 1: so that she asked Judy Chan Leisner to take the

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Speaker 1: money for her and invest it with her family, and

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Speaker 1: that she had done very very well. It was really

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Speaker 1: telling in a way, because you'd see that the government

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Speaker 1: had traced all the money to these bank accounts related

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Speaker 1: to Roger Longs life, and because she testified, they were

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Speaker 1: able to show documents and statements she made to bank

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Speaker 1: employees stating dear Mr and Mrs um, here's your mail

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Speaker 1: or here's your transaction. So the government argued, here's evidence

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Speaker 1: that it was really not an account belonging to Roger's

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Speaker 1: mother in law, but really belonging to Roger un in

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Speaker 1: his life. What surprised me is that his lawyer, Mark Agnifolo,

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Speaker 1: had expected an acquittal on all counts and was surprised

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Speaker 1: by the verdict. I don't know the thinking of it.

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Speaker 1: I guess that they were basically banking on the idea

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Speaker 1: that the jury was going to scrutinize everything that Wisner

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Speaker 1: said through the lens of hey, you better question it

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Speaker 1: because he's not really reliable. And in fact, the read

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Speaker 1: the day before they reached a verdict, they asked for

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Speaker 1: a copy of this document that Tim Leisner said had

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Speaker 1: had been drawn up. His testimony was that Joe Lo

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Speaker 1: in a secret meeting he had in London in early

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Speaker 1: as the start of this one MVB fraud was beginning.

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Speaker 1: That he sat everybody down in his London house and

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Speaker 1: he sketched out for Roger and Tim Weisner and some

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Speaker 1: other people that were employees of one m VB how

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Speaker 1: this fraud was going to go down, and he who

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Speaker 1: was going to get the bride? And it was a

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Speaker 1: chart with names on it, and he said Abu Dhabi

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Speaker 1: was on one side and Malaysia was on the other,

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Speaker 1: and the name the people, including the Prime Minister of

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Speaker 1: Malaysia and his wife, and that he promised the two

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Speaker 1: golden bankers that they'd be taken care of. That was

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Speaker 1: the words. And the jury wanted to see this chart,

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Speaker 1: and at Diflo had said there's no chart, doesn't exist,

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Speaker 1: and asked Tim Leisner about it, and he said, well, yeah,

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Speaker 1: there was a chart. Well where is the chart? And

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Speaker 1: he said, isn't it true that you didn't mention this chart?

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Speaker 1: For almost three years of cooperating when you were talking

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Speaker 1: to the FBI, you never mentioned it, and then all

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Speaker 1: of a sudden you announced it almost three years later. Well,

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Speaker 1: the jury asked to see the chart, and then there

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Speaker 1: was a discussion in the courtroom. Well, what do you

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Speaker 1: tell the jury and that the government said, well, there

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Speaker 1: is a chart, and the defense said, well, there isn't

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Speaker 1: a chart that describes this because this has only been

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Speaker 1: testified to, but there is no actual chart in evidence.

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Speaker 1: And the government said, well, yes, there is a chart

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Speaker 1: because it was testified to undirect and costs, and the

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Speaker 1: defense that, but there isn't a chart that is in evidence,

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Speaker 1: is there? And finally the judge broke her the deal

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Speaker 1: and she decided that she was going to tell the

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Speaker 1: jury there is no such chart describing what you want,

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Speaker 1: and led me to think, wow, maybe his jury is

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Speaker 1: going to go back and say, wait a minute, symbolized

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Speaker 1: or testified about something that's not in evidence there. Therefore,

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Speaker 1: maybe you were misled by him or something, and maybe

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Speaker 1: we'll go back and look some more. Maybe they did that,

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Speaker 1: but they seemed to be satisfied, and they still, you know,

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Speaker 1: came back with a guilty accounts on everything. The defense

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Speaker 1: is already planning an appeal. What issues are they looking at?

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Speaker 1: There was account that the jury found Roger owned guilty of,

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Speaker 1: and it's basically circumventing internal controls and accounting practices of

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Speaker 1: Goldman Stacks in conspiracy to violate the US anti bribery laws.

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Speaker 1: This is the first time that count has gone to

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Speaker 1: a jury, and Mark Agniffulo, who descended him, argued that

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Speaker 1: the count should be dismissed and that there was no

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Speaker 1: accounting controls. His view was that would go more to

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Speaker 1: embezzlement of money from Goldman stacks, and no money was

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Speaker 1: embezzled from Goldman sacs. If any money was embezzled, it

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Speaker 1: was stolen after it left Goldman and it went to

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Speaker 1: one MDB, So that's an arcane argument. He also has

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Speaker 1: appeals issues anyway, because there was the belated handing over

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Speaker 1: of thousands of documents they found discovery and they handed

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Speaker 1: it over like literally the day and a half after

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Speaker 1: opening arguments, as well as there was a disclosure of

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Speaker 1: fifteen thousand five other documents that were suddenly discovered and

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Speaker 1: belatedly turned over. He's facing a maximum thirty years in prison.

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Speaker 1: What's he likely to get Obviously, he's not going to

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Speaker 1: get thirty years in prison with this kind of charge.

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Speaker 1: It's a white collar case, it's non violent, and the

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Speaker 1: other things. It's still unclear how are they're going to

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Speaker 1: proceed with the interplay with the Malaysian case because technically

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Speaker 1: now he has to go back to Malaysia to face

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Speaker 1: trial on that case. But according to Agnipolo, depending on

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Speaker 1: the kind of sentence he received in the US, Malaysia

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Speaker 1: made default to the US prosecution and say, all right,

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Speaker 1: let's let that take care of an encompass any kind

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Speaker 1: of punishment we could ever impose in Malaysia. The appeal

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Speaker 1: will probably deal with it. But you know, Malaysia has

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Speaker 1: not had raving success with bringing forfeit shured cases to

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Speaker 1: the people involved in this, including the wife of the

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Speaker 1: former Prime Minister of Malaysia. They sued her to recover

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Speaker 1: all these millions of dollars in diamond pink diamonds, including

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Speaker 1: a twenty three million dollar diamond necklace, and other like

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Speaker 1: one point five million dollars in luxury handbacks, including their

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Speaker 1: mess backs, and they sought to forfeit it and they

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Speaker 1: lost the case. So it's not like they have great success.

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Speaker 1: And yet US prosecutors at roger Owns trial, we're saying, oh, look,

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Speaker 1: this is the booty that was purchased with the fraud

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Speaker 1: that Roger helped create and helped execute. And yet in Malaysia,

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Speaker 1: Malaysia lost that case. Thanks pat, that's Patricia Hurtado, Bloomberg

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Speaker 1: Legal reporter. You're listening to Bloomberg Law with June Grasso

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Speaker 1: from Bloomberg Radio. In recent years, law enforcement agencies around

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Speaker 1: the world have had to learn quickly about how to

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Speaker 1: deal with cryptocurrencies, often in amounts that eclipse traditional assets

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Speaker 1: such as cash, gold, jewelry, cars, and real estate. Law

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Speaker 1: enforcement is becoming more sophisticated in identifying and accessing a

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Speaker 1: suspect's cryptocurrency and navigating the challenges of securing it and

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Speaker 1: eventually liquidating it. Joining me as Bloomberg Legal reporter David

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Speaker 1: voreakus how much cryptocurrency is being seized nowadays. Law enforcement

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Speaker 1: agencies around the world are seizing more and more, and

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Speaker 1: in the United States they've broken several records recently. Just

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Speaker 1: in February they had the largest financial seizure ever that

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Speaker 1: was about three point six billion in bitcoin that was

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Speaker 1: stolen during the hack of the bit the next current

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Speaker 1: the Exchange. There were nin nineteen million dollars in cryptocurrency

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Speaker 1: being held by the U. S. Marshall Service through the

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Speaker 1: end of last year, and the Marshals are the largest

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Speaker 1: agency that hold and sell cryptocurrency on behalf of the

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Speaker 1: US government. The i r S Criminal Investigation Division also

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Speaker 1: does the overwhelming majority of its seizures in cryptocurrencies. So

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Speaker 1: agencies not only in the US but around Europe are

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Speaker 1: seizing more and more and the numbers are in the

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Speaker 1: billions of dollars. What makes cryptocurrencies attractive to criminals, Well,

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Speaker 1: generally the perception is that they're hard to trace, and

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Speaker 1: that it's easy to move money through crypto, across exchanges

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Speaker 1: and from one currency to another. And the real key

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Speaker 1: for law enforcement is they need to be able to

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Speaker 1: find the strings of random words that are that serve

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Speaker 1: as the key to getting into a wallet. They're known

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Speaker 1: as seed phrases, and authorities can trace crypto across the blockchain,

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Speaker 1: but unless they have the password to get into a wallet,

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Speaker 1: they're not able to actually see that money. That phrase

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Speaker 1: is that sort of like a password that you put on,

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Speaker 1: you know, a web account or something that only the

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Speaker 1: person who created it knows, yes, And it's a much

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Speaker 1: more elaborate password. And part of the problem is um

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Speaker 1: they're very hard to remember, so people will write them down.

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Speaker 1: And we said that agents have discovered seed phrases hidden

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Speaker 1: on a gun wrapper, inside a TV instruction manual, and

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Speaker 1: on tiny pieces of pa paper stuff in a suitcase

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Speaker 1: and closet. We also had an example of a case

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Speaker 1: in France where someone wrote it on a piece of

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Speaker 1: paper inside a recipe book. So it's that hard to

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Speaker 1: remember that you can't just memorize it. They're generally not

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Speaker 1: at all easy to remember, and so people go to

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Speaker 1: great lengths to try to place it in a secure

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Speaker 1: place and not lose it, but of course they end

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Speaker 1: up losing it or not putting it in a secure place.

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Speaker 1: So let's say authority sees a crypto wallet or something

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Speaker 1: and they're unable to find the seed phrase. Does that

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Speaker 1: mean that there's no way that they can open that wallet?

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Speaker 1: There's no other option that's correct. So they need to

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Speaker 1: be able to figure out the seed phrase so they

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Speaker 1: can get access to the wallet. It's a much more

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Speaker 1: complicated form of cryptology, if you will, UM, and so

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Speaker 1: that's a challenge for law enforcement. So first, is it

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Speaker 1: easy to recognize a crypto wallet. It is easy to

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Speaker 1: track it on most blockchains and only the Bitcoin blockchain. UM.

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Speaker 1: That's a way that m law enforcements can see it

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Speaker 1: moving across the blockchain, and UM that blockchain is immutable

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Speaker 1: and is not going to change over time than as

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Speaker 1: a permanent record. So we talk to people who think

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Speaker 1: that in that way there's more transparency on the blockchain

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Speaker 1: of bitcoin than there is in the legacy financial system

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Speaker 1: where money can move around the world through um you know,

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Speaker 1: front accounts, David. In some instances, are there huge stashes

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Speaker 1: of bitcoin that are sitting around because the authorities can't

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Speaker 1: find the seed for rays there are My understanding is

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Speaker 1: there are in some instances large stashes a bitcoin sitting

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Speaker 1: in wallets that are marked m known by either the

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Speaker 1: government or cryptocurrency research firms, and they know that that

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Speaker 1: crypto is considered tainted or the product of criminal activity,

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Speaker 1: and they are waiting for someone to take action and

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Speaker 1: move it, and then they may try to seize it um.

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Speaker 1: But UM, the real challenge is primarily to try to

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Speaker 1: identify who the owner is of that crypto, because it

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Speaker 1: may be held anonymously. Say, investigators find the crypto wallet

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Speaker 1: and the seed phrase tell us about the challenges of

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Speaker 1: securing it and liquidating it well. Authorities want to be

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Speaker 1: able to store it UM in a place that is

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Speaker 1: secure and vulnerable to hacking, so they'll often put it

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Speaker 1: in what's known as cold storage or moving it offline,

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Speaker 1: and they want to be able to use a Generally,

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Speaker 1: governments are moving towards companies that store and sell crypto

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Speaker 1: on their behalf, and there's done a lot of uncertainty

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Speaker 1: and turmoil even among governments and just how they're going

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Speaker 1: to handle crypto, especially as the amounts have gotten larger

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Speaker 1: and larger and the value of bitcoin has has really

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Speaker 1: soared in recent years. So there are firms that are

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Speaker 1: dedicated just to this. UM. We discussed how the U. S. Marshals,

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Speaker 1: which again is the largest government agency in the US

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Speaker 1: handling crypto sales. They issued a contract last year to Go,

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Speaker 1: but than that award fell through because the company was

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Speaker 1: supposed to be designated as a small business and Bidgo

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Speaker 1: was considered too large. Then UM they awarded the contract

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Speaker 1: to Anchorage Digital and UM that contract is also on hold,

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Speaker 1: pending the outcome of a protest we cited in the story.

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Speaker 1: For instance, in Germany, prosecutors in each of the country's

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Speaker 1: sixteen states decide how they're going to manage these property UM.

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Speaker 1: So there's a lot of different options on the table

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Speaker 1: for government. We also talk about a company UM that

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Speaker 1: is strictly in the business of advising governments and other

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Speaker 1: entities how to store and sell their crypto assets. So

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Speaker 1: let's say the government liquidates the assets when they try

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Speaker 1: to return some to the victims. Do the victims get

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Speaker 1: the bitcoin that they had initially or the bitcoin that

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Speaker 1: maybe has increased in value a lot sitting around for years.

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Speaker 1: That's an excellent question, and my understanding is it remains

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Speaker 1: a bit of an open question. UM. Governments tend to say, UM,

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Speaker 1: we're going to sell the asset that we have so

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Speaker 1: that we can do our best to make the victim

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Speaker 1: whole now. And UM, if it's going to appreciate in

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Speaker 1: value over the years, we can anticipate that, and our

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Speaker 1: duty is to try to get the most value that

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Speaker 1: we can't now. UM. For all they know, the value

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Speaker 1: of the cryptocurrency may decrease considerably, as you know, the

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Speaker 1: markets so volatile and it's gone up and down. So

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Speaker 1: generally governments have taken the position that they're going to

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Speaker 1: sell it when they get it through the seizure process.

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Speaker 1: But there are some who argue that that's not fair

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Speaker 1: to victims. They who have been defrauded in a crypto

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Speaker 1: scam that why should they get, you know, say a

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Speaker 1: hundred thousands in proceeds when the bitcoin they had is

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Speaker 1: now worth five hundred thous and so that's a very

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Speaker 1: interesting question for the courts to grapple with. And it's

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Speaker 1: easy for investigators to find the victims through the blockchain ledger.

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Speaker 1: Not necessarily, there's a whole notification process that goes on,

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Speaker 1: at least in the US federal courts UM, and there

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Speaker 1: is generally a set time period in which victims need

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Speaker 1: to respond UM and I've talked to people in the

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Speaker 1: government who have had a hard time trying to find

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Speaker 1: victims in a timely way. People who believe they also

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Speaker 1: have a claim to seized cryptocurrency have a fixed period

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Speaker 1: of time to put in a claim to be resolved

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Speaker 1: by the courts. And there's some um hotly disputed cases

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Speaker 1: over who has rights to seized currency. There's a particular

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Speaker 1: case that's going on in federal court in San Francisco

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Speaker 1: in which UM, the US government took UM claim to

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Speaker 1: a billion dollars in stolen cryptocurrency that had belonged to

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Speaker 1: a person referred to as Individual X and UM. This

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Speaker 1: was bitcoin that had been hacked from the Silk Road

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Speaker 1: Digital market place UM and in about and UH. It

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Speaker 1: was confiscated in November of and there's been UM court

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Speaker 1: case going on ever since. There are several people who

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Speaker 1: say some of that sees bitcoin belongs to them, and

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Speaker 1: the judge just recently ruled that it didn't and now

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Speaker 1: there's no appellate action going on in response to the

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Speaker 1: judges ruling. Is this mostly the FBI doing these kind

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Speaker 1: of investigations to states also have the expertise at this

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Speaker 1: point to investigate this, dates are doing it. The lead

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Speaker 1: agency really in the US as I understand it, are

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Speaker 1: the FBI and the Internal Revenue Services Criminal Investigation Division

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Speaker 1: or c i D. They've done the biggest cases homely,

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Speaker 1: and Security Investigation has also done some big cases. But

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Speaker 1: the technological advances by these large government agencies have really

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Speaker 1: been tremendous in the last couple of years and that's

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Speaker 1: how they've been able to make these very large seizures.

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Speaker 1: They also work with big outside research firms that helped

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Speaker 1: them correlate data that they've gathered through a number of

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Speaker 1: different UM investigations, M summons procedures and UM and they

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Speaker 1: they can track over time the wallets UM on the blockchain,

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Speaker 1: and what other sorts of ways they can corroborate who

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Speaker 1: might own those those wallets At this point with their knowledge,

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Speaker 1: is it any more difficult than dealing with criminals who

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Speaker 1: have their gains in in cash or assets In some ways,

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Speaker 1: it is more difficult. In other ways, UM, they can

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Speaker 1: tell just where um, you know, the crypto went. Now

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Speaker 1: they need to identify who's behind that crypto. It's not

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Speaker 1: that different than the challenge of money that gets moved offshore,

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Speaker 1: say into um nominee accounts in the Cayman Islands or

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Speaker 1: the British Virgin Islands or Jersey or Panama UM. And

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Speaker 1: there are tremendous um secrecy provisions in many of those

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Speaker 1: tax savings and even in the United States that make

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Speaker 1: it very difficult for investigators to trace those types of assets. Well,

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Speaker 1: the Marshal's auction off bitcoin the way they auction off

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Speaker 1: boats and cars and paintings. Well, as we point out,

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Speaker 1: for several years they did auction off bitcoin in just

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Speaker 1: that manner. In the last couple of years they've tried

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Speaker 1: to hire outside contractors and and they've had these problems

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Speaker 1: with the contracting process. So the marshals are selling them

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Speaker 1: through um, they're selling them themselves working with a company

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Speaker 1: that is helping them to store the crypto, but they

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Speaker 1: haven't been forthcoming about just how that process works. What's

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Speaker 1: the best story you've heard involving crypto and investigations? Well,

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Speaker 1: I guess the Individual X story is kind of amazing. Um.

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Speaker 1: In November, US authorities sees the billion dollars in bitcoin

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Speaker 1: from someone only identified as Individual X, and um within

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Speaker 1: a year or so, that was worth three billion dollars. UM.

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Speaker 1: It's now worth less than that. But um, that was

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Speaker 1: a tremendous seizure. And you know, as I understand that

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Speaker 1: there's there's the authorities expect there's going to be a

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Speaker 1: lot more of that to come as their sophistication increases.

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Speaker 1: Thanks so much, David. That's Bloomberg Legal reporter David Vorriakus.

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Speaker 1: That's it for this edition of the Bloomberg Law Show.

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Speaker 1: Remember you can always get the latest legal news by

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Speaker 1: listening to our Bloomberg Law podcast. You can find them

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Speaker 1: on Apple Podcasts, Spotify, and wherever you get your favorite podcast.

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Speaker 1: I'm June Grosso and you're listening to Bloomberg,