A Dark Moment for Goldman Sachs Goes to Trial

‘Perhaps the single largest heist in the history of the world’

Today, the onetime banker Roger Ng is set to stand trial in a Brooklyn courtroom over allegations that he abetted the looting of the huge Malaysian state fund known as 1MDB. The legal proceedings will resurrect a scandal that saw $4 billion stolen from the Malaysian government and tarnished the reputation of Ng’s former employer, Goldman Sachs.

Ng is said to have introduced Goldman colleagues to Jho Low, the businessman accused of masterminding what Ng’s own lawyers called “perhaps the single largest heist in the history of the world.” According to prosecutors, Low, Ng and the onetime star banker Tim Leissner conspired to pay $1 billion in bribes to government officials, in order to win Goldman mandates for $6.5 billion in bond offerings for 1MDB. Money meant for the fund was then spent on a Beverly Hills hotel, a mega-yacht, a transparent grand piano, financing for “The Wolf of Wall Street” and more.

His former Goldman colleague is expected to be a key witness. Testimony from Leissner, who pleaded guilty in 2018 and agreed to forfeit up to $43.7 million in assets, is seen as crucial for the prosecution. He could begin testifying as soon as this week. (Low is still at large and denies wrongdoing.)

Ng says he’s being made a scapegoat. His lawyers will argue that Ng wasn’t a key player in putting together the 1MDB bond deals, and that their client was unaware that money he received came from proceeds diverted from those transactions. They could also point to evidence that Leissner was a con artist who deceived many at Goldman.

It’s a reminder of a nadir in Goldman history. The bank’s Malaysian subsidiary pleaded guilty to conspiring to violate U.S. anti-bribery laws, while its parent company reached a deferred prosecution agreement on a similar charge. Goldman also recouped or withheld millions in compensation from top executives, including former C.E.O. Lloyd Blankfein and current chief David Solomon.

HERE’S WHAT’S HAPPENING

Markets tremble as tensions over Ukraine continue. Stock futures are down, volatility is up and oil is near $100 a barrel, as traders worry that the standoff between NATO and Russia could significantly disrupt Russia’s output of oil and gas. Meanwhile, the national security adviser, Jake Sullivan, warned that Moscow could invade Ukraine soon despite diplomatic efforts to defuse the crisis.

Canadian authorities reopen a bridge blockaded by protesting truckers. The Ambassador Bridge, a major route for shipping cars and auto parts between Canada and the U.S., was reclaimed yesterday amid anti-government demonstrations. But protests around Parliament in Ottawa rolled into their third week, with no end in sight.

Lockheed Martin abandons a $4.4 billion deal over antitrust opposition. The defense contractor withdrew its takeover bid for Aerojet Rocketdyne after the F.T.C. sued to block the transaction. Tougher antitrust scrutiny of mergers is making investors more skeptical that deals will close.

President Biden says it’s too early to lift indoor mask mandates. In an interview with NBC, Biden said that removing mask rules was “probably premature,” though he understood Americans’ frustrations with pandemic restrictions. His comments came after a number of Democratic governors relaxed such requirements, citing declining case numbers.

Peter Thiel emerges as a Republican kingmaker again. After largely sitting out the 2020 election, the Silicon Valley billionaire has given over $20 million so far this election cycle, tying him with Citadel’s Ken Griffin as the biggest G.O.P. donor. The difference: Thiel’s donations are largely to hard-right candidates loyal to former President Donald Trump and keen on upending the Republican establishment.

The digital trail behind the big Bitcoin arrests

Perhaps the buzziest story in tech last week was the arrest of a married couple, Ilya Lichtenstein and Heather Morgan, on charges of conspiring to launder billions in stolen Bitcoin. (Netflix has already ordered a documentary on the case.) The Times dug into how the pair was caught.

A complex web of accounts behind a goofy facade. Until their arrest, Lichtenstein was known as a tech entrepreneur, while Morgan contributed to Forbes and made rap videos under the name Razzlekhan. But federal prosecutors allege that she and Lichtenstein were “highly sophisticated criminals,” with hundreds of millions in stolen crypto stashed in over a dozen accounts. Lichtenstein and Morgan also had access to several fraudulent identities bought on the darknet and had established financial accounts in Russia and Ukraine, according to the government.

Following the money:

• Five months after hackers stole money from the Bitfinex exchange in 2016, some of the crypto was moved in small, complex transactions into accounts that the couple controlled.

• Federal agents eventually traced those accounts and executed a search warrant at their Manhattan apartment last month. They found over $40,000 in cash and more than 50 electronic devices, many of which were at least partially encrypted.

• Then there was the cat. Agents allowed Morgan to retrieve her cat — an opportunity she used to try and lock one of her cellphones, which prosecutors say was meant to hinder the investigation.

A lawyer for the couple, Anirudh Bansal, wrote in court papers that the government’s case is weak and relies on “unsupported, conclusory leaps.”

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“Originally, it was under the mattress, and then it was the bank account in the Caymans. Now it’s crypto.”

— Jacqueline Newman, a divorce lawyer in New York, on how cryptocurrency is increasingly being used to hide assets in divorce cases, giving rise to a cottage industry of forensic investigators who hunt down soon-to-be-former spouses’ Bitcoin troves. (Yes, we know it’s Valentine’s Day.)

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What Super Bowl ads reveal about the economy

Last night’s game thrilled football fans, as the L.A. Rams’ risky gamble on their roster paid off in a 23-20 victory over the Cincinnati Bengals. But just as noteworthy, of course, were the pricey ads — NBC charged up to $7 million for a 30-second slot — and what they can tell us about this postpandemic moment:

Crypto and sports betting took top billing. The game had already been dubbed the “Crypto Bowl” for the sheer number of cryptocurrency advertisers that had booked slots: Coinbase ran an ad that featured only a QR code (to help people sign up for accounts), while FTX paid the comedian Larry David to be, well, Larry David. Betting apps also featured heavily, as companies like Caesar’s Sportsbook seized on the legalization of online sports betting.

Companies are anticipating a return to normality. Booking.com, Expedia and Turkish Airlines all booked ad slots, seizing on renewed interest in traveling as coronavirus restrictions are lifted. Others hoping to play on any waning of the pandemic were the online used-car seller Carvana and the razor maker Gillette. (In a reminder that the pandemic isn’t over, the at-home Covid test maker Cue Health also bought an ad.)

Welcome to the metaverse? Meta, the parent company of Facebook, ran a commercial featuring the reunion of two old pals in the virtual world, while Miller Lite ran its game-time ad in the metaverse (since it’s barred from advertising during the game). Salesforce pointedly ran an ad featuring Matthew McConaughey urging people to ignore virtual realms in favor of real life.

THE SPEED READ

Deals

• Cisco offered more than $20 billion to buy Splunk, the maker of data analysis software, though talks aren’t currently active. (NYT)

• The Australian casino operator Crown Resorts accepted a $6.4 billion takeover bid from Blackstone, ending a nearly yearlong acquisition effort. (FT)

• Two influential shareholder advisers recommended that investors reject Zendesk’s takeover bid for the parent of SurveyMonkey. (Reuters)

• Trading in warrants tied to SPACs suggest that investors don’t believe those blank-check funds will find worthwhile takeover targets — or any at all. (Bloomberg)

• Religion of Sports, the media company co-founded by the former N.F.L. stars Tom Brady and Michael Strahan, is reportedly seeking $50 million in new funding. (The Information)

Policy

• “Selling Trump: A Profitable Post-Presidency Like No Other” (NYT)

• The Justice Department is investigating Raytheon over accusations that it colluded with suppliers to limit hiring. (Bloomberg)

• The U.S. has temporarily halted imports of Mexican avocados after an American health inspector received a threatening phone call. (Insider)

• Switzerland approved a ban on tobacco ads in public spaces. (NYT)

• Kirin, the Japanese brewer, is withdrawing from Myanmar, a year after the country’s military overthrew its government in a coup. (Reuters)

Best of the rest

• New court filings in an age-discrimination lawsuit against IBM appear to show executives discussing plans to phase out older employees, disparaged as “dinobabies.” (NYT)

• Meet Jaz Brisack, the Rhodes scholar who helped organize fellow baristas at a Starbucks in Buffalo. (WaPo)

• Business has boomed for Kroger, but a number of its employees say they have been homeless or reliant on food stamps and food banks because of insecure part-time work shifts. (NYT)

• Elon Musk derided an order by U.S. authorities that Tesla disable a feature that lets its cars play sounds through an external speaker: “The fun police made us do it (sigh)” (Bloomberg)

• Ivan Reitman, the director behind “Ghostbusters” and “National Lampoon’s Animal House,” died on Saturday. He was 75. (NYT)

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