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A Swiss ex-banker who revealed the plunder of Malaysia’s 1MDB state investment fund is seeking $18mn in victim compensation from a corrupt former Goldman Sachs executive due to be sentenced over the affair on Thursday.
Xavier Justo, who served a prison sentence in Thailand over what he claims was a trumped-up blackmail case relating to 1MDB, argues the money would recognise the price he has paid for a decade for telling the truth about the fund.
Justo’s claim, made in a filing to a New York judge in the case of Tim Leissner, former chief of Goldman’s south-east Asia operations, will test the application of US laws on restitution to victims of federal crimes.
If granted even in part by district court judge Margo Brodie, who is scheduled to sentence Leissner on Thursday, it could create a new avenue for people affected by white collar crime to claim compensation.
It is unclear when Brodie will rule on the claim, which highlights the still incomplete reckoning over the international multibillion-dollar 1MDB scandal.
It relies in part on the idea — contested by Leissner and the US government — that the ex-Goldman banker’s crimes should be considered as part of the broader 1MDB conspiracy and he can therefore be held responsible for harm to Justo.
Justo’s claim was “fascinating” and would “change white collar criminal prosecutions” if he secured any significant portion of his request, said John Coffee, professor at Columbia Law School.
“In cases where the defendant is solvent, victims will line up, having been identified by plaintiff’s attorneys,” Coffee said, though he added that Brodie might be cautious about such a ruling. Justo’s inclusion of a claim for interest on money he had been prevented from using was “a bit of a stretch”, he said.
The case against Leissner, a former Goldman high-flyer, centred on the alleged misappropriation of more than $2.7bn from bond deals arranged by the bank for 1MDB in 2012 and 2013.
Leissner agreed to co-operate with US authorities in 2018 and pleaded guilty to money laundering and foreign bribery charges.
Justo worked for PetroSaudi International, an oil company that was in a joint venture with 1MDB. When he left the company in 2011, he took with him a trove of emails. Those communications eventually led to a February 2015 story on the Sarawak Report blog alleging a conspiracy to steal at least $700mn from 1MDB.
Justo was arrested by Thai police a few months later on the island of Koh Samui, where he was building a resort complex. He pleaded guilty to blackmail and attempted extortion in relation to attempts he had made to secure severance money he said he was due from PetroSaudi, and was sentenced to three years in prison.
Justo has since said he confessed because Thai officials and PetroSaudi representatives threatened him with a long sentence if he did not. Both PetroSaudi and Thai authorities have denied any improper behaviour.
A Swiss court last year convicted PetroSaudi’s principal executives Tarek Obaid and Patrick Mahony of embezzling more than $1.8bn from 1MDB in what prosecutors branded the “scam of the century”. The pair are appealing.
“Mr Justo . . . got in the way of Mr Leissner’s and his co-conspirators’ plans after he shared critical documents with a journalist that exposed the criminal nature of the 1MDB scheme,” reads the filing by Justo’s lawyers.
“Mr Justo manifested the precise risk that Mr Leissner and his co-conspirators had for years identified and successfully managed: that someone would bring to light the fact that 1MDB was nothing more than a vehicle for the theft and misuse of billions of dollars,” it reads.
Justo, who was released from prison in Bangkok in 2016, argues he should be entitled to compensation under the US Mandatory Victims Restitution Act and Crime Victims’ Rights Act. His claim includes $9.5mn for lost property and business including at the Thai resort, which he says he was forced to sell at a discount, and $8.6mn in interest.
Leissner objected to the $18mn compensation claim in a court filing, arguing his criminal conduct was not the cause of any harm Justo might have suffered. Leissner said he was never accused of being part of the alleged retaliatory scheme to imprison Justo in Thailand and Justo did not qualify as a victim under US law.
The US justice department opposed the claim on similar grounds. Justo’s “losses do not arise from the specific conduct that is the basis of Leissner’s offences of conviction”, it said in a filing.
The 1MDB case went to the top of Malaysian politics and led to the jailing in 2022 of former prime minister Najib Razak. Investigators in the US allege at least $4.5bn was stolen from the fund via several plots masterminded by Malaysian financier Jho Low, who remains at large but maintains his innocence.
