Previous posts here and here discussed the recent two year prison sentence imposed on Tim Leissner (the former Southeast Asia Chairman at Goldman Sachs) who pleaded guilty to conspiracy to violate the FCPA and conspiracy to commit money laundering in connection with a bribery scheme involving various Malaysian and Abu Dhabi officials in connection with 1Malaysia Development Berhad (1MDB), Malaysia’s state-owned and state-controlled investment development company.
In connection with the sentencing, Xavier Justo (a former employee of PetroSaudi) filed a letter with the court seeking restitution from Leissner pursuant to the Mandatory Victims Restitution Act of 1996 (“MVRA”) and Crime Victims’ Rights Act (“CVRA”) in the amount of $18,266,909.31, inclusive of (i) $128,500 in costs directly flowing from Justo’s unlawful incarceration, (ii) $9,525,726 in lost property, (iii) $1,054.02 in expenses incurred during participation in the 1MDB investigation, and (iv) $8,611,629.29 in pre-judgment interest.
The MVRA provides that “the court shall order … that the defendant make restitution to the victim of the offense or, if the victim is deceased, to the victim’s estate.” A “victim” is “a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered, including … any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern.”
Justo claimed to have shared “critical documents” with a journalist that led to the exposure of the 1MDB scheme in a February of 2015 article published on Sarawak Report (the “2015 Sarawak Report”), and led to one of Leissner’s co-conspirators, former Malaysia Prime Minister Najib Razak, exercising his influence to ensure Justo’s incarceration. As a result of his incarceration, Justo “was forced to fund a battle for his freedom” and experienced the “loss of his businesses.” Justo argued that (1) Leissner pleaded to a qualifying offense under the MVRA, and (2) Justo is a victim under the MVRA who was directly and proximately harmed by Leissner’s conspiracies. Justo also argued that he is entitled to restitution for the full amount of his losses, including for his unlawful incarceration, lost business opportunities, the 1MDB investigation expenses, and prejudgment interest, and notes that his losses are undisputed.
Both Leissner and the DOJ opposed Justo’s restitution request.
Leissner opposed Justo’s restitution request because Leissner’s crimes of conviction did not directly or indirectly cause Justo’s harms. Leissner argued Justo’s harms, such as his incarceration and loss of business are “far afield” of Leissner’s crimes of conviction and thus are not contemplated by the MVRA. Leissner noted that Justo’s restitution request is “devoid of direct allegations against [him]” and that Leissner was not convicted or accused of “participating in a retaliatory scheme to imprison” Justo or others. Leissner also argued that Justo focuses on conduct in 2015 and 2016 that occurred after the conduct underlying Leissner’s conviction ended in 2014.
The DOJ argued that the Court should not award restitution to Justo “because his losses do not arise from the specific conduct that is the basis of Leissner’s offenses of conviction.” First, the government argued that “[n]othing about Leissner’s crimes of conviction indicates that losses to … Justo were reasonably foreseeable to Leissner.” In support, the government argued that Leissner testified at trial that “he lacked personal knowledge about the business relationship between” 1MDB and PetroSaudi and none of the sequence of events Justo describes involved Leissner. The government noted that Leissner did not mention Justo at trial or during his allocution and did not allocute to any post-2014 conduct Second, the government argued that there is insufficient evidence that Leissner’s offenses “directly and proximately caused the retaliation for his communications with journalists to [uncover] the 1MDB scheme.” In support, the government argued that, even if a “but-for” causal link existed, Justo has failed to show proximate causation because his incarceration and loss of business opportunities is “too far outside the risks” that Leissner’s criminal conduct created. The government also argued that Leissner’s testimony that he “drew some comfort” from Razak’s ability to “diminish or squash” an investigation into the 1MDB scheme does not constitute an admission that he could reasonably foresee Razak colluding to imprison Justo for leaking information to the press.
Recently, Judge Margo Brodie denied Justo’s restitution request.
The decision states in pertinent part (internal citiations omitted):
“Although Justo argues that his incarceration and business losses were caused by Leissner’s conspiracy offenses, Justo has not shown that he is a victim of Leissner’s offenses of conviction.
First, Leissner pleaded guilty to conspiracy to violate the FCPA and conspiracy to commit money laundering for conduct occurring between January of 2009 and October of 2014, and specifically allocuted to participating in a conspiracy to “pay bribes and kickbacks to obtain and then retain business from 1MDB for Goldman Sachs,” Leissner did not mention PetroSaudi or Justo during his plea allocution. Accordingly, Leissner may be liable for restitution for his conduct during the course of the conspiracy to pay bribes and kickbacks to generate business from 1MDB for Goldman Sachs, as well as the “ ‘reasonably foreseeable acts of all co-conspirators’ advancing that plan.”
Second, Justo’s incarceration and loss of business were not caused by Leissner’s offenses of conviction or the reasonably foreseeable acts of his co-conspirators in advancing the plan to generate business from 1MDB for Goldman Sachs. Although Leissner testified that he “drew some comfort” from the fact that Razak could “diminish or squash any kind of investigation” that “outweighed the concerns of the press,” there is no evidence Leissner knew “anything about PetroSaudi or the 1MDB joint venture,” or that he could reasonably foresee Razak exerting his influence to incarcerate Justo for providing information about PetroSaudi and 1MDB to journalists. Accordingly, Justo’s losses as a result of his incarceration and business losses were not foreseeable to Leissner, and therefore Justo is not entitled to restitution from Leissner.”
