Goldman Under US Scrutiny in 1MDB Fraud

Federal prosecutors in Los Angeles drafted a criminal complaint against a former Goldman Sachs banker early this year for his alleged role in a vast Malaysian fraud, but the charges were never filed because of a US Justice Department turf battle, according to two people familiar with the investigation.

Now, these people and two others say, the inquiry is solely in the hands of federal prosecutors in Brooklyn, who are investigating a target much bigger than a single Wall Street banker: Goldman Sachs itself, Staronline reported.

The investigation centers on the disappearance of about $4 billion from a giant Malaysian government investment fund known formally as 1Malaysia Development Berhad, or 1MDB.

Prosecutors in the United States and elsewhere believe that a group of people with close ties to the former Malaysian prime minister Najib Razak stole from the fund to buy paintings, yachts, real estate and even investment stakes in movies like “The Wolf of Wall Street.”

Goldman provided an array of services to the fund, including helping it sell billions of dollars in bonds to investors. The bank earned about $600 million in fees for its work. Authorities are examining whether the firm played a role in the 1MDB fraud or should have done more to uncover the misappropriation of funds.

Goldman has repeatedly played down its role in the 1MDB scandal, saying it was unaware of how money from the fund was being used.

The firm has said it was cooperating with the investigation. “Goldman Sachs had no visibility into whether some of the funds we helped raise for 1MDB may have been subsequently diverted to other purposes,” said Michael DuVally, a Goldman spokesman.