This could get ugly for Goldman Sachs.

On the heels of criminal charges by the Justice Department against two former Goldman Sachs executives, Quinn Emanuel Urquhart & Sullivan's Michael Carlinsky is leading a related civil suit against the investment bank and other defendants.

“This action seeks redress for a massive global conspiracy on the part of the defendants to defraud and injure plaintiffs,” wrote Carlinsky, who heads Quinn's complex litigation practice, in the suit filed last week in New York state court.

According to the complaint, Goldman and others conspired “to embezzle billions of dollars from 1Malaysia Development Berhad ('1MDB'), Malaysia's investment development fund, and to launder the proceeds of that theft through New York and elsewhere.”

Those are some serious allegations, though the actual details are complicated to untangle.

Carlinsky represents The International Petroleum Investment Company, or IPIC, an Abu Dhabi sovereign wealth fund that was a longtime Goldman client.

According to The Wall Street Journal, IPIC “entered into a series of deals with 1MDB that purported to invest in Malaysian development projects, such as real estate and power stations. Prosecutors in the U.S. and Malaysia allege the deals were elaborate scams to siphon money away for the benefit of individuals involved.”

Two former IPIC executives (who are also named in the new complaint) were allegedly part of the scam, taking bribes and abusing their authority “to further the business of Goldman Sachs and 1MDB at the expense of IPIC,” according to Quinn Emanuel.

IPIC blames Goldman Sachs for playing “a central role in a long-running effort to corrupt” the former IPIC executives.

(Which to me sounds a bit like blaming your teenager's friend for getting your teen drunk—i.e. it's the fault of the bad kid with the pilfered vodka, as opposed to your own kid for doing the drinking … but I digress.)

A Goldman spokesman told Reuters “We are in the process of assessing the details of the allegations and fully expect to contest the claim vigorously.” 

For IPIC, a key objective is to protect a massive arbitration settlement that the fund won last year from 1MDB and the Malaysian Ministry of Finance. Per Quinn Emanuel, the settlement “was implemented by an award from internationally renowned arbitrators,” with $1.2 billion paid at the end of 2017.

The problem? On October 30, 2018, Malaysia's attorney general announced that 1MDB and the government of Malaysia were filing an application in the United Kingdom to set aside the award.

Suffice to say, Carlinsky and his team won't make that easy.

According to Quinn Emanuel, IPIC plans to contest the application, to take steps to reaffirm the validity of the settlement and to protect its rights under both the settlement and the arbitration award.

The New York suit appears to be one piece of that strategy, with legal action also pending in the United Arab Emirates.

“IPIC will take any and all legal action necessary, now and in the future, to protect its business interests against the financial exposure and damages it has suffered as a result of this international conspiracy,” Carlinsky said.