The Ryen Russillo Podcast - Tom Wright on Billion Dollar Whale | The Ryen Russillo Podcast

Episode Date: October 16, 2019

Russillo is joined by journalist and co-author of New York Times bestseller Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World Tom Wright, to discuss the story of Jho Low, a businessman from Malaysia who pulled off a 5 billion dollar scam. His story is riddled with fraud, money laundering, politics, celebrities, and more! Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World by Tom Wright and Bradley Hope Learn more about your ad choices. Visit podcastchoices.com/adchoices

Hey, it's Ryan Russillo podcast. Today we have Tom Wright on from the great book, Billion Dollar Whale. It is a great read. It's entertaining. It's probably going to teach you a few things about international banking. May bum you out too. And it's just really entertaining because there's all sorts of celebrities involved in it if you like that kind of stuff.

So we'll do that in a sec. But today's episode of the Ryan Rosselló show is brought to you by State Farm. If you're fumbling with insurance, State Farm agents are here to help because with over 19,000 agents, they're local to you and available to help. Whether you connect in person by phone or through the State Farm mobile app, agents are here to help. So go with the one that has coverage and agents you can count on. State Farm, talk to an agent today.

I've debated doing an open on LeBron's response that was pretty disappointing off of Daryl Morey's tweet and this whole thing that's gone on now for a week. And the last thing I want to do is like, hey, I don't feel like doing that as if I'm above it because I do feel like doing it. But I just don't feel like doing it today. And I've written out this thing that I've been working on for a while. And this piece of the story adds to it and just all the different stuff we talk about. But sometimes I feel like it's a little repetitive and I'm just sharing with you editing this show on the fly. So I'm just going to do the interview, A Billion Dollar Whale. Again, the book is out. Well, it's been out hardcover for over a year. The paperback is out Tuesday.

There is a movie rights deal on this. And as a writer, this stuff can take some time. So we'll see. And we're going to ask Tom about all of that. Now, Tom is a guy that's been a business reporter, stationed in Hong Kong for a very long time, was with the Wall Street Journal forever, and ended up leaving the Wall Street Journal. And he's still been working on this book. And we're going to talk to Tom now.

Before we do the timeline of all of this and what went into this multi-billion dollar scam here with Malaysia and this fund, how did you first hear about Jho Low? Well, Jho Low came onto the scene, you first hear about Jolo? Well, Jolo came onto the scene. Actually, one of the first people to write about him was Page Six in New York because they had heard about how much he was spending in nightclubs, including in Avenue in New York City. And this was around the time that the fraud started in 2009. And he had gone and bought a bunch of champagne for Lindsay Lohan on her birthday. And he had gone and bought a bunch of champagne for Lindsay Lohan on her birthday. That was really some of the first news coverage of Jho Low. And then in early 2015, a Malaysian newspaper and an investigative website called the Sarawak Report broke a story about how Jho Low had been involved in pilfering potentially hundreds of millions of dollars from a Malaysian state fund. And that was really when people first started to hear about this guy. And we got involved about a few months after that when we were leaked documents that showed that the Malaysian prime minister, who was Jho Low's protector, had received $681 million into his private bank account.

And that was a stunning, that was a front page story in the Wall Street Journal where I worked at the time. And that was a stunning revelation because that was a sitting prime minister. And it caused huge reverberations when we published that because the prime minister denied that he had been involved in this scam and tried to sort of cover it up. And it took sort of two or three more years of digging from that point to get to where we are today, where we really understand the full import of the whole scandal. So I'd like to start at the beginning so we understand Joe Lowe more intimately,

of the beginning so we understand Joe Lowe more intimately because understanding him I think is a great way to tell the story and understand his motivations. But this was essentially a kid who actually came from a very wealthy family in Malaysia, multimillionaires. He was at Wharton. I don't know if it's that in the book, it seems like he's obsessed with class, he's obsessed with fame and that wasn't good enough for him. And that's kind of the origin of this guy deciding that he's going to make sure that he is a celebrity or, you know, a public figure. Like it seemed like he was extremely driven to pursue this lifestyle that he felt at that time was not obtainable. Yeah. We have a chapter in Billion Dollar Whale called The Asian Great Gatsby.

So when Jolo, Jolo was a student at Wharton, as you mentioned, and while he was there, he would put on these crazy parties, one at Shampoo Nightclub in Philadelphia, and he was sort of the compare of these parties. He would organize for naked women to have sushi put on their bodies at the party. He would pay for everybody. He would organize for naked women to have sushi put on their bodies at the party. He would pay for everybody. He would pay bar tabs of $60,000 for everyone on campus to come along. But he was always trying to organize things so that he was making contacts. And back then at Wharton, his endgame wasn't that clear. He was just getting to know very wealthy people, wealthy Arabs who were studying at Wharton, other Middle Easterners. And he also got to know the son of, the stepson of, who would then become Malaysia's prime

minister, Najib Razak. So he was constantly looking to get close to people, people who were in power. he was constantly looking to get close to people who were in power. And I don't know back then when he was a student what his endgame was. But when he left Wharton, he was able to become what is quite common in emerging markets. He became a broker for big deals, for investment deals. And he became a broker for deals between the Middle East and Malaysia. And that was really the genesis of his fraud, because he was able to work out that there was billions of dollars moving money available for investment in the Middle East. These are the petrodollars. You know, his oil prices were so high. And he was able to work out a way to sway the people who ran that big pot of money in the Middle East to put

it into Malaysia. And that was the first, he did a deal like that after Wharton, of which he took a cut and that kind of sort of corruption is endemic in the emerging markets. And then when Najib became prime minister of Malaysia in 2009, he persuaded Najib to set up this big investment fund. 2009, he persuaded Najib to set up this big investment fund. And together with co-conspirators in the Middle East, Jho Low just proceeded to steal hundreds of millions of dollars. And the way he did that was he had a government on both sides of the deal. He had the protection of the Malaysian prime minister on one side, and he had his corrupt co-conspirators in the

Middle East on the other side. And in the book, we compare this to sort of, you know, run-of-the-mill fraud, if you will, like Bernie Madoff's pyramid scheme or, you know, Michael Milken's junk bond scheme of the 1980s. Those were years in gestation, whereas Jolo simply took hundreds of millions of dollars overnight. And that was the money that he then had to go on this crazy spending spree in Las Vegas and in nightclubs across America and across the world. And that's why we call the book Billion Dollar Whale, because he was the largest nightclub or casino anyone had ever encountered. So we have this thing, and fans of The Office always kind of

laugh because there's a scene where the manager says, explain this to me like I'm nine. And this isn't hard to follow. And it's really actually, once you read the timeline of this connection, you go, is it really this simple? Because like you say, he has the protection of the prime minister because he befriended the stepson. And then they're trying to figure out some sort of way to just start a fund. And they get in with the Petro-Saudi guys where it's the son of a prince who's kind of like, yeah, I want to get in on this too. And I mean, it seems as simple as just some fake emails,

some fake email account names, these non-affiliated banks that would just, they put money in Zurich and all these things. Was it as simple as just everybody kind of feeling like, oh, well, if he has these Saudis involved, then he must be good. And the Saudis going, well, if he has the Malaysian government behind him, then he must be good. And then they just get on the phone with these banks and say, hey, can you push 700 million through? And then sometimes the banks would be like, what the hell's going on here? And they'd be like, no, no, you have to do this. You'd have

to do this. And then some overrider would just go yeah you know what they're fine they're fine like looking back on it it it actually feels less impressive but yet it was extremely simple to pull this off which is scary i think you have it exactly right look i mean the word is kleptocracies right coming from the greek rule by thieves so there are all these countries around the world that are basically, I mean, we call them mafia-like organizations, of which Malaysia under Najib was one, and in which other Middle Eastern governments, you can include other Middle Eastern governments under that rubric. And those countries are not ruled, the way that the money is invested is not in the interest of their people. It's in the interest of a very narrow elite. Now, where this gets really nasty for the West is that and what Billion Dollar Well shows is that Wall Street banks, white shoe law firms in New York, auditors, you know, big, big, the big four audits, audit firm. They all enable this fraud.

They all enabled this fraud. And the way, and it's what you just said, all of those entities are supposed to sound the alarm when they see fraud going on under American law and under the laws in many Western countries and under the norms of global capitalism. But because everyone was making so much money with the money that was being sent around by JOLO, by this fund called 1MDB in Malaysia, from which all the money was stolen,

everybody turned a blind eye to what they thought, to the red flags that they saw. And yes, you know, here's one example. KPMG, the auditor, had a problem with 1MDB's financials, but it actually got a letter from the fund saying, look, this is business between Malaysia and Saudi Arabia, official business. And that's how they got comfortable with it. And that was the way in which people were able to allow these massive movements of money through, even though they smelled really rotten. I want to, before we get to the Goldman part of this, because it's such a big part of it, and I can understand how this happens. I think some of the things you're talking about with

fees and people that understand the banking fees, it's almost like, well, this may be sketchy, but let's just get on the fees. It is very similar, at least in principle, to the mortgage crisis of like, yeah, we'll just keep approving all these people because we're getting mortgage fees and we can just package the mortgage and sell them to somebody else and just moving paper around as long as we're getting the fees. And that's really just, I mean, that's the answer to almost all of this stuff. But as he is starting to have access, it's not even him accumulating the wealth. He just all of a sudden has access to this wealth and he's taking care of people. He's very smart in the way he's doing that. And some of that ended up coming back to Burnham, but he's taking care of the

Saudis and he's also taking care of the prime minister's wives where he's allowing her to go on these spending sprees and these real estate deals where the stepson gets some sort of deal. Give me a breakdown of the peak of his partying. Because at one point in the book, you mentioned that over what? Not even a full 12-month run, he spent 80 million with his entourage partying, casinos, private jets, and these elaborate vacations, correct? Yeah, that's right. And that's actually mentioned in the Department of Justice lawsuit. We should say the Department of Justice in America is investigating all of this now. Yeah. So when he first takes this money, and we should also add

that this money was supposed to be the fund from which all the money was stolen, was supposed to help Malaysian people. It was supposed to invest in infrastructure for Malaysia, and Malaysia's a relatively poor country, to improve its life. So when he took all that money, what's the first thing he wanted to do? Well, he wanted to party. He had had, while he was at Wharton, he sort of developed a fixation on Paris Hilton. So he paid Paris Hilton hundreds of thousands of dollars to come and hang out with him in various nightclubs in Vegas and in Saint-Tropez and be on yachts with him. And he wanted to get close to Leonardo DiCaprio.

I think at first just to party. I think at first just to party but then later he persuaded DiCaprio that he would give DiCaprio hundreds of millions of dollars in film financing that DiCaprio could then use to make films and of course they went on to make the film The Wolf of Wall Street with this stolen money one of the interesting things we show in the book is how he was able to pay for the partying at the casinos, the nightclubs, the bottle service in New York and all of that.

And obviously the money was stolen, so he had to wash it through various different offshore entities. And one trick he used was he set up accounts with Shearman and Sterling, or he set up these lawyer trust accounts with Shearman and Sterling, a law firm in New York. And actually, the Department of Justice lawsuits show that those trust funds were used to pay for a lot of this partying that you just referred to. So he was kind of ingenious in the way that he got the money to the casinos and covered up his tracks. And yeah, as I said, he was one of the biggest nightclub casino whales anyone had ever known. One of the party story, there's a bunch. I mean, that alone is really entertaining in the book. But he had this boat, the south of France, A-list.

I mean, just absolute A-list of guests. Kanye performs, Kim Kardashian shows up. And the irony is you mentioned him funding Wolf of Wall Street with Scorsese and DiCaprio is that Jordan Belfort, who is the Wolf of Wall Street, who the book is based on, he wrote the original book, who actually is a neighbor of mine now. I couldn't help but laugh at how funny it was that Belfort was on that boat watching this excess. And apparently this is a true story, right? I mean, you have it in here that he turned to his girlfriend and was like, these guys are crooks because there's no way anyone would spend their own money that they worked this hard for in the way these guys are spending it.

Right. So they set up a film company called Red Granite Pictures, and they used the stolen money to bankroll. Well, they make, they make, I think a couple of other films first friends with kids. I think it's called the friends with kids. Yeah.

But then, but then they come out, they, they, they have this party at the Cannes film festival in France where it says sort of coming, the red granite pitches coming out party. And they,

they say, look, we've got this deal to make. I think Leonardo Di caprio had bought the rights to jordan belfort's memoir he'd beaten brad pitt in a bidding war and then red granite pictures came up with this party saying we're going to make this movie and and they invited jordan belfort himself to the party and he's standing there uh watching kanye perform and and and pharrell perform and all of this thinking, wow, these guys are spending

millions of dollars on this launch party when they haven't even really made any films yet. And that's just weird. And then Jolo offers, I think, offers $500,000 to Jordan Belfort to come and attend some party. And Belfort says no, says no. And according to him, you know, he realized these guys were fraudsters from the beginning, which didn't stop Belfort from, you know, I think he still, uh, dealt with them. You know, they still bought the rights to his, his, uh, book, but yeah, he, he, he saw that

they were fraudsters. Oh, so he wasn't at the party then, or he was, he was, yeah. Belfort was at the party. Um, but he, but yeah, I mean, the, the, the, that the belford said later that he knew these guys were fraudsters at the time but guess what i'm saying is that then well they still went ahead and made the movie nobody nobody stopped it no and look it was a great movie and it had all sorts of artistic freedom which is what scorsese and dicaprio wanted as you point out the book and actually makes sense it's a great movie um did you know he's flying paris hilton to ski trips he's obsessed with her um you know he he has people around him at all times and i can imagine anybody even celebrities going you know this guy has endless amount of money that we've never even earned

let's just go and he he becomes this guy this this legendary guy in a way and dicaprio's with him all the time and i can understand dicaprio from a business sense going, all right, I'm going to get close to this guy because I want to take care of a guy that's going to want to invest and let me make the movie that I want to make. And at one point, Jolo buys DiCaprio an almost $10 million painting. They spend another 40 something million on another painting. And he's giving DiCaprio all these gifts and all these people. Did people like him?

Did you ever get a sense in researching this that any of these celebrities, these people actually ended up liking him as just a guy, or was he just a bank account for them? Well, I think Jho Low is an interesting character, but a bit of an empathy vessel in some ways. I mean, he's this sort of pudgy Malaysian. He was pretty soft-spoken. He was only in his late 20s when he initiated this fraud. Born in 1981. And most people,

if you ask, you know, push them to say something about him, he seemed like a kind of boring guy. Soft-spoken, a bit shy around women. And there's this great scene in the book where DiCaprio and Jolo and about 20 or so Playboy playmates are all partying in the Palazzo Hotel in Las Vegas. We talked to some of the Playboy playmates who were there, and they said, well, Jolo didn't really have anything to say.

One of them said, well, he seemed intimidated by women. But he was very careful to make sure he gave people what he wanted. So when, you know, we talked earlier about when he first started off, you know, he's from a millionaire family, but he was getting to know billionaires. He made sure he was useful to them, you know, helping broker deals and all that kind of stuff. And he kept on doing that. I think he was always making sure people were happy, making sure they got what they wanted. Do you have enough champagne? Do you have enough Cristal? Trying to get people involved in deals. But then when he

became more powerful, when he had access to all this money that he'd taken, then I think his personality began to change and he became a little bit more willing to say what he wanted. So there's this other scene in the book where he tells a British model called Roxy Horner, he says, oh, you know, you're getting a bit fat. You know, so those are the kind of things that he wouldn't have done earlier on in his

story, basically. But yeah, definitely a hard guy to understand his motivation because, again, other fraudsters, you know, Bernie Madoff, for example, that's a pyramid scheme, right? You take money from the newest investor to pay earlier investors, and that's a typical fraud, and it's how you keep it going. But Jho Low, when he'd taken this money basically from the Malaysian people, from the Malaysian treasury, didn't really seem to have any end game of how he was going to make money. Maybe he was going to make money from The Wolf of Wall Street, which he actually did. They made money from that movie. But he just seemed to think that he could keep on taking money from the Malaysian government. And that's an interesting thing about him. How did he think this would

really end? Maybe he didn't give it much thought. Yeah, I don't think he did. And that's something I'm going to follow up on here within a second. But as you'd mentioned with Goldman Sachs, it almost felt like they saw all this emerging market stuff happen and they go, all right, we need to get in on this. There's this fund down in Malaysia, this Jolo guy. So they send one of their guys, it's Tim Leisner, I believe, who's still, and I was researching this late last night still, that it feels like that's still an open case and trying to figure out what's going on there. Correct me at any point here. And it just felt like Goldman's like, look, we're left out of this.

Let's get involved. We're talking major fees. And that really without Goldman, it doesn't feel like the next step of this thing to get to a $10 million fund where $5 million goes missing. It feels like without Goldman's role in this, which they've now blamed Tim as this rogue agent, which is hard to prove as a defense considering what kind of money we're talking about here. Without Goldman, I don't know that this is even possible. I think that's the argument that you make in the book. That's the argument that you make in the book. No, I think you're right. So, you know, you mentioned earlier the first fraud in 2009 that Jolo carries off. He does that with his Saudi Arabian prince, who's a friend of his. And they use the connection between Malaysia and Saudi Arabia to steal the money that's supposed to be used for this Malaysian fund.

And then Tim Leissner is a German banker who worked for Goldman Sachs. He was a partner, which is the sort of highest level of Goldman banker based in Hong Kong. But he would often be in Malaysia. And he got to know Jolo. And he saw how much money was sloshing around in this fund. And he was looking for ways for Goldman to make money from the fund. Now, you've got to remember, this is post-global financial crisis. And so,

U.S. market's pretty weak. Goldman, under Lloyd Blankfein, the CEO, he's told his bankers, go and be Goldman in more places, meaning, you know, go and look for ways to make money in other places. Well, you know, the U.S. is struggling out of the housing market collapse and market problems. And Leissner makes his connection with Jolo. And then Jolo sort of, he takes, initially takes sort of about around a billion dollars. He amazingly fritters that away on partying and paying his co-conspirators and the like. And then when they want to sort of push ahead with the Wolf of Wall Street and red granite pictures and the whole Hollywood dream, he needs more money. And that's where Goldman comes in. Goldman raises money for the 1MDB fund on global markets.

It raises $6.5 billion in bonds. And half of that money is stolen. And nobody's saying Goldman, everyone at Goldman knew about this fraud. They saw an opportunity, most people there saw an opportunity to make a lot of money out of this fund. Leissner has pleaded guilty in the U.S. to this ongoing Department of Justice criminal investigation to helping Jolo steal money and pay bribes. So we're awaiting his sentencing.

And as you say, that's one of the great unresolved parts of this story. But the other big question about Goldman is whether as a firm, they will have to admit to some kind of wrongdoing, criminal wrongdoing, because Goldman says, as you just mentioned, well, this guy Tim Leissner was rogue. He was a rogue banker. And there's one other Malaysian Goldman banker who's also been charged in the U.S. And they were rogue.

Malaysian Goldman banker who's also been charged in the U.S., and they were rogue. But at the very least, Goldman's senior executives, including Blankfein, who stepped down last fall, missed huge red flags here. Because one of the biggest red flags was that 1MDB, the Malaysian fund, was willing to pay Goldman huge fees to organize these bonds. And normally selling bonds for a state fund, you'd make maybe a million dollars. Goldman made hundreds of millions of dollars from this business. And that was a red flag in itself. More from Tom here in a second. But did you know that socks are the number one most requested clothing item in homeless shelters?

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and I think you'll back me on this, is that Goldman was always thought to be the bank that got it and that Goldman is the gatekeeper. And yeah, there's other banks that are screwed up and there's other banks that will sell themselves out for any kind of fee, but that Goldman Sachs is the standard and they're the ones that get this. And I feel like this is even more disappointing. We can play this game and be like, oh, everybody's corrupt and everybody's screwed up. And that's another part of this conversation I'd like to ask you about. But isn't there even more disappointment throughout the financial world that Goldman's involved in this as opposed to other banks?

Well, yeah, Goldman are the sort of gold standard of Wall Street investment banks, right? But there's an argument that some people make, which is that under Lloyd Blankfein, who became CEO in 2006, stepped down last year, and his number two, Gary Cohen, who went on to become Donald Trump's chief economic advisor, they were both traders at heart.

They had sort of forged their careers in Goldman's trading business. And they brought a sort of real trader mentality to the way they ran the bank, which included making money from quick trades. And even late on in 2014, when there were big questions about the 1MDB business, Blankfein was holding up Tim Leissner as a standard to other bankers. He actually said, look what Tim is doing in Malaysia, look how much money he's making. And other bankers who were sort of the head of one of the heads in Asia, David Bryan,

had raised concerns about this in real time. These voices were snubbed. And so, yes, I think there's a big, there's a lot of soul-searching going on at Goldman at the moment about what went wrong, about how the hell was this able to happen. And, you know, like I said, Goldman's line on this

is, look, we could not have been expecting, Tim Leissner went rogue. He conspired with Jolo to steal all this money and we could not have known that. But Leisner is currently cooperating with the Department of Justice. And he's, one of the things he said when he was arrested, we know this from court documents, is that there was a culture of sort of turning a blind eye to this kind of thing at Goldman

in the pursuit of making cash. And that's the big question. Like you said, it's easy to just say, look, big banks are corrupt and all this, but it's not that easy. You have to be very careful about what we say about who knew what and when, but all that's still to come out in the legal process in the US and it's going to be fascinating. I always think whenever older generations make fun of younger generations or complain or criticize them and say they don't understand anything, and then we try to make it more specific right now with the pushback of, say, a guy my age in his 40s and say, oh, these millennials don't understand anything. That's just very repetitive. It will happen again and millennials will rip on the generation behind them and it's just a very cyclical thing.

But if I'm a younger person that grew up with a financial crisis as kind of being my intro into understanding any world economic stuff, I can understand how somebody looks at this and goes, well, maybe everything is screwed up. You look at Gary Cohn, whose nickname is Carried Interest, who was able, I believe, to sell all of his Goldman shares at a 0% tax rate when he went to work for Trump. And then a year later, he's out. And so you go, okay, yeah, as you pointed out, like a traitor at heart. And there's parts of me when I was younger, I had no money. I mean, none, zero, and no idea if I was ever going to

make any money. And I still felt like capitalism was the way. And I think I still feel that way. And sometimes when I'll hear about regulation, I'm like, is that really the best case? But the stories that come out, it's hard to argue with a younger generation that maybe leans socialists going, well, when does it end? It becomes this thing. And it's always funny when I think of Michael Lewis's first book, Liar's Poker, where he's at Solemn Brothers and he talks about it just being a total shit show and no one is impressive and nobody really knows what they're doing and none of it makes any sense. Yet you just sort of hop on for the ride and see if you end up winning at the end of it and instead of you know when he would go to speak at colleges instead of people being turned off by

banking he had people lining up asking if he could give him the recommendation to get a job so part of me wonders is it all just full of shit and it's up to you to say all right well i'll sign up for this and see if i can make my money and I'm not going to worry about it? Or is the great correction coming one day where society and citizens are so fed up with this cycle of figuring out what the next fee scam is that we'll see a different way of the economy being run? I mean, I know this is like a really big, this is almost like a college course type of theory. Yeah, this is a 10,000-foot question, right? No, look, I think at its best, banking obviously serves a very important function. It helps us take in, it takes people's deposits and it uses capital to help businesses grow. And Goldman now is trying to go back to doing more basic banking.

One of the reforms after the financial crisis was to stop banks from doing proprietary trading, which means trading with their own money, which they were making billion-dollar bets, and that was extremely risky. And the bets on the housing market were one of the reasons why they had to be bailed out. And so banking does serve a function. But I think one of the problems here is that, and it's the same problem you see with, you know, all these unicorns like WeWork and private equity. They just aren't that many good trades or that many good investments. And you've got a lot of hungry A-type personalities all chasing after the same investments, right?

So you had this guy, Tim Leissner, who was based in Hong Kong looking for ways to, and he made partner in 2006, and then he's looking for ways to make big deals. And to make multi-billion dollar deals in Southeast Asia or in Asia is quite difficult, right? Because it isn't the US, it isn't the country like Malaysia doesn't have big deals.

So it ended up being he ended up getting involved with state corruption because that was just the way that he was going to justify his paycheck and get his big bonuses. And, you know, I think a lot of business in Asia is difficult because you're dealing with governments that are, you know, more or less corrupt. And that's the big problem. If you're a big Wall Street bank, how do you operate in the world in a way that you may ensure that you're doing compliance and that you're not furthering corruption in these places? And this is not just 1MDB and Malaysia and Goldman, by the way. I mean, Credit Suisse, the big Swiss bank,

two of its bankers just got indicted earlier this year for a very similar corruption. I think it was Mozambique where Credit Suisse had lent $2 billion to buy some fishing boats for the government. And that was obviously a made-up number and all that money was stolen or a bunch of that money was stolen. And this kind of thing is common, right? It's just the way that bankers are able to ensure they get their bonuses by making these big deals. Okay. So how did this all then end up becoming exposed other than all sorts of trails of like, this doesn't make any sense. As you mentioned, the Mozambique boating thing, there was something very similar with this

fund where they thought they were buying these things and like the things didn't even exist. and they just raised the price of them just to be able to move the prices around. It sounds like after a while, people close to this, although Jolo did a very good job of not letting too many people know what he was doing, that the leaks start happening and then the walls start closing in on these people. So how did that start? Well, I call this the last great email fraud or fraud conducted via email because the co-conspirators in it wrote everything down in email. I think nowadays people use these sort of messaging apps like Signal or Telegram or whatever. If they're going to conduct a fraud, they don't do it. They don't use email. So what happened was, as we mentioned earlier in this conversation, the first fraud was with the Saudi Prince and Jolo.

And the Saudi Prince had a company that was involved in the fraud. And there was a disgruntled employee of that company who stole the email service. And he sort of, he believed he was owed money and he stole the email service. He knew something dodgy was going on. And in those email services,

sort of all the, not all, not 100% of the fraud was explained by those emails, but you were able to get a taste of what had gone on from their correspondent between Jolo and the people at that company. And he then gave those emails to this investigative website called the Sarawak Report, which I mentioned earlier, and The Edge, which is a Malaysian newspaper. And they were able to publish a story in February of 2015 that sort of outlined the fraud. And that was how it first got into the public domain. And then the Department of Justice got involved. So America is very keen. The problem for America is that it has obviously the world's biggest economy. These foreign leaders and corrupt business people, they always want to buy property and other assets in the U.S. If you want to buy a billion-dollar apartment or hundreds of millions of dollars of apartment, there aren't that many places in the world you can do that. London is one, New York, Los Angeles.

New York, Los Angeles. And so the Department of Justice has something called the Kleptocracy Initiative where what they try to do is if they know this is going on, they try to seize the assets that were purchased with stolen money. They did that with Sani Abacha, the former Nigerian dictator.

They've done that in multiple cases. And then the idea is you give that money back to the state from which it was stolen in the first place, in this case, Malaysia. And so the Department of Justice got involved. That was what's called a civil action. It wasn't a criminal case. But it subsequently became a criminal case when, by the time, by 2016, the Department of Justice realized that this was probably one of the largest frauds ever conducted.

And so what we've been describing today is that criminal case is still ongoing, looking at Goldman's role. And we haven't even talked about Jolo, by the way, who is the architect of this fraud. I want to get to that because what's the latest with Jolo on his... Give us like a timeline of once it was all exposed. And I know he has a website and he's defending himself. He's saying the book is inaccurate inaccurate and i always kind of feel it's a little bit like that tv show mind hunter where the serial killer is in jail and it's like well yeah i i did that but here's what you guys are wrong about it's like okay well congrats congrats on a couple of things that you thought were inaccurate, but the general premise here is that $5 billion is missing.

You, in effect, almost took down your own country with co-conspirators that were supposed to be trusted officials. So what's he been doing since the book came out and kind of his exit off the face of the earth? Because it sounds like he's kind of missing right now. Yeah, so when those first stories about him came out in 2015, Najib, the Malaysian prime minister, was still in power. And he told Jho Low, look, you better get out of Malaysia and lie low for a while because there's a huge spotlight on what's going on. Najib then tried to cover everything up. He fired his attorney general. He refused to cooperate with the US in these investigations. And Jho Low went to

China. Thailand and China were the two places he was living, sort of keeping quite a low profile. And then this extraordinary coda to the whole story occurred, which was while he was in China with the backing of Najib, he negotiated a bunch of corrupt infrastructure deals in Malaysia with a Chinese state firm. And the idea was that they would pad those contracts and then use the excess money. They steal the excess money and use it to fill the holes that had been created by all the earlier thievery of the money from 1MDB. And because we know this because we actually got um documents of the meetings in china between jolo and some of these very senior chinese officials and then what happened was in may of 2018 there was an election in malaysia and najib lost power that was terrible for jolo because

suddenly you've got this this government in malaysia and one of the reasons he lost power was because the people of malaysia knew all fraud. You know, Najib considered bringing in the army, considered turning his back on democracy. But in the end, he stepped out. He tried to flee the country. He got arrested. And Najib's trial is ongoing. And then Jho Low was sort of left in China. And the new government in Malaysia wants him back to face charges.

Jho Low has been criminally charged in Malaysia. He's also been criminally charged in the US. But China is refusing to send him back. And we believe that's because Jho Low knows too much about these infrastructure deals. And this is another fascinating part of the story because it shows a lot about China's role in the world and how China interacts with these kind of characters like Jho Low. Yeah, the China role alone, especially with everything on the sports side and everything that's come up in the last couple of weeks. So it's assumed he's in China because I know the other day Abdul Hamid, who is I believe the top law official in Malaysia, there was a rumor that

I believe like the top law official in Malaysia. There was a rumor that he was in, that Jolo was in Los Angeles last week at some Hollywood party. And Hamid said, absolutely. I think that was a page six story. And I'm not sure, I'm not sure there's too much backing for that. I mean,

Jolo would not travel to the U S because there's a, an arrest warrant for him, right? There's a, there's a criminal indictment and he would, I imagine he would be arrested at the border unless he came in under a false name. So I very much doubt he's in the U.S. or, frankly, anywhere which cooperates with the U.S. and would arrest him under an Interpol red notice. He's much more likely in China and living with the protection of the Chinese government.

However, that has not stopped him from continuing to wage a legal campaign against our book. So our book came out in the U.S. in September of 2018 in hardback, and the paperback is coming out next week on October the 22nd. But the book did not release in the U.K. because the U.K. has different defamation laws to the U.S., ones which are more easier to launch a defamation lawsuit in the US, ones which are more, it's easier to launch a lawsuit, a defamation lawsuit in the UK than it is in the US. And so JOLO's law firm, a firm called Shillings, which is based in London, they mounted this quite extraordinary campaign against the book,

which included sending hundreds of letters to bookstores saying if you carry a billion-dollar whale, you yourself as a bookstore could be the subject of a defamation suit, which is really not very usual. I mean, and actually it's nonsense because why would a bookstore be, why could a bookstore be held liable in that case? We finally got our book published in the UK a few weeks ago. It's doing well there. But the big question here is how is shillings able to get paid by JOLO? I mean, their services cost millions of dollars.

JOLO is shut out from the global financial system at the moment. He's living in exile. You know, we sent hundreds of questions to JOLO over the years by his lawyers, and he's not responded materially to any of them so how is he able to pay these lawyers and another big question is are these lawyers you know they say this is client um lawyer client privilege but the question is well when are you when is it law and client privilege and when are you actually just doing pr for somebody in this case so that So that's a really interesting question.

Yeah, because we both know that anybody that had access to 10 billion and 5 billion went missing, and the way he moved money around, there's zero doubt in my mind that there's a few hundred million stashed away somewhere that he has access to. And if China's taking care of him, if he's paid people off, then he... I don't think China would do this for free or just because he has access to information that's embarrassing to China. He has to put money somewhere, right? Right. And the US also does not criminally charge people just on a whim. It does so with a lot of evidence.

And Jolo says, well, he can't come to face trial and to face the charges against the U.S. or Malaysia because he won't get a fair hearing. That's his line, but totally unclear why he thinks that. Oh, and just going back to the whole celebrity angle in all of this, even very late in the day when he was living in Thailand and China, celebrity, his celebrity friends continued to go and party with him for money. You know, the epilogue of our book includes a party in Bangkok, the capital of Thailand, in February 2017, where one of Jho Low's celebrity pals is kind of called Swizz Beatz, who's Alicia Keys' husband and a sort of top record producer. He goes there and takes part in the party. Nicole Schertzinger, the former Pussycat Dolls singer is there.

The America's Got Talent judge is there. So it seemed that he was able to keep this celebrity group of friends very, very late in the day, even when he was on the run, which is really astounding to me. Yeah, Swiss bees never gave up on him. It's very clear in the book, at least towards the end. And I don't know what they're following each other on Instagram as of today, but it really is a crazy story that really feels like the origin of this is kind of a chubby Malaysian kid who's a little insecure at Wharton and decides he wants to get bottle service with Paris Hilton. And it leads to the prime minister once voted out, almost putting tanks in front of his palace to defend himself yeah exactly

we should say that some of the some of the celebrity friends did peel away though for example DiCaprio um stopped partying with him um oh we haven't even mentioned that Jolo dated Miranda Kerr the Australian supermodel for a year between 2014 and 2015. And when those guys got wind of what was really going on, you know, nobody's saying that DiCaprio knew about corruption, right? When they got wind of what was going on, they actually voluntarily returned the gift that Cholo had given them to the Department of Justice. So DiCaprio was returned a Picasso painting.

Miranda Kerr's returned all this jewelry that Cholo gave her. But yeah, but some of the other celebrities did continue to sort of hang with him, which I just find really interesting. I, for one, was shocked that the Miranda Kerr relationship ended once all this started going south. But I will not ask you to comment on that, Tom.

Hey, can we, before we let you go, because my lane is always sports, except for the times that I'd like to do something different like this and open up this world of people that maybe would listen to a review of this kind of book. But you've been in Hong Kong for such a long time. Can you give us an insider who's still sort of an outsider's perspective of what this Hong Kong relationship is with China. You're probably fascinated to see how all of this has been consumed by us in the States in the last week. Oh, you're talking about the basketball stuff? Yeah. My personal view is that you should be allowed to say what you want, even if you're a manager of an NBA team. It's important. I saw LeBron James made some comments about it yesterday with that,

and I'm not sure I agree with those. I think it's important here that people do realize that China is an autocratic state. What's going on in Hong Kong is that the Hong Kong people believe that they have an agreement. Well, they don't believe it. They do. There's an agreement that China allows Hong Kong

to be ruled under a different system to China for a number of more years, and that they believe that that's been eroded by China. You know, it's a very complicated thing, but China, you know, is China. Um, you know, it's quite a very complicated thing, but China, um, you know, is doing things like, um, you know, taking people from Hong Kong and arresting them. And then those people are sort of popping up in mainland China. So the Hong Kong people feel that their protections that they have been eroded. Um, and I don't think to point that out is bad or wrong.

I think LeBron said it was wrong, but I don't think it's wrong. It's just very difficult for American firms, not just sports franchises, but all kinds of firms to deal with this because China is this huge economic power, very important market now and in the future. economic power, a very important market now and in the future. So how do you, you know, if you're a big company or a sports franchise, how do you ensure that you keep that market open? And it's going to be a problem because

China is an authoritarian state run by, you know, guys in their 70s and 80s, almost no women. It isn't a democracy. There's no rule of law. You can be locked up there without a proper trial.

And so it's just important that people know that. And I think that's why the Hong Kong protests are so important and that these sort of young students who are protesting in Hong Kong, they're sort of shining a light on that for the rest of the world when most people might not realize that about China. Yeah, it's definitely interesting to have us kind of forced into, all right, make some sort of statement, have a position as an opinionated person. And then once the sports leaks into politics and it really had nothing to do with sports anymore, it puts a lot of us in a spot where you're like, okay, what am I comfortable

saying? And a lot of us are comfortable sharing our opinions all the time, but it doesn't mean that we know what the hell we're talking about. So, Tom, the book is Billion Dollar Whale. As you said, the paperback is out next Tuesday, and there's also a movie coming out, correct? Didn't you guys close a deal on that? I know it takes forever, but that's what I'd heard. That's right. We signed a deal with a company called SK Global, which they were the guys who made Crazy Rich Asians, which was a big hit last year. And so, yeah, it's currently, they're trying to find a screenwriter and we're very excited.

I think it'll be a great movie because it's, you know, it comes from the world of Crazy Rich Asians, but it sort of says a lot about where we're at in global finance and says a lot about inequality as well, because this is really a story about the 0.01%, the people that know how the levers of finance work and make tons of money from it. Well, I can't wait, because it's actually, despite the technical stuff, the financial stuff, it's a very fun read. And I'm sure the movie would be fun as well. And thanks so much for all your hard work on this, because it is an important story. So I thank you for it again. Great to talk to you.

Thanks for having me. Cool. I hope you guys enjoyed that. I'm going to start doing some more stuff like that from time to time, a couple other books that are lined up. And if anybody is friends with Ron Chernow, let me know. So we will talk to you on Friday, although I have something else that's kind of a bonus thing coming. So I'm not quite sure how I'm going to do it this week. We'll have to talk to the suits, see if I'm allowed to do it. I think everybody would be cool with it. But we have part one and two of the NBA overs for every team with Bill, myself, and House. And part one, I think we're going to release on Bill's pod.

And then part two is going to be Friday's pod. So look, we're less than a week away from this thing and ready to start talking some NBA. So there will be more NBA on this podcast moving forward. It's not going to be football three days a week, but I want to do some college ball this week too. So a lot going on, but we were able to do this interview with Tom. So again, I hope you liked it. Please subscribe, tell your friends, rate and review, and we'll talk to you on Friday. Outro Music