US DOJ Sues for Assets That May Have Been Stolen from 1MDB Fund

Prosecutors in the US have filed lawsuits to seize assets that may be connected to an alleged financial fraud involving the 1Malaysia Development Bhd. (1MDB), which is a Malaysian state fund. The Justice Department is looking to recover $540M in property, assets, and other items. 1MDB was launched by Malaysian Prime Minister Najib Razak to help economic growth. The fund borrowed over $13B with little result to date.

It was in 2013 that The Wall Street Journal reported that almost $700M from the 1MDB fund, which was heavily in debt,had been moved to Prime Minister Najib’s personal bank account. Najib and 1MDB have denied wrongdoing and authorities in Malaysia have cleared him in their probe, which it has since closed.

The US government, however, claims that investors were bilked of billions of dollars in the financial fraud. Investigations into the alleged multi-billion dollar fraud are also ongoing in a number of countries, including Singapore, Luxembourg, and United Arab Emirates.

Acting assistant Attorney General Kenneth Blanco said that the asset seizure is part of the probe into how the fund’s money was used to pay for the “lavish lifestyles” of co-conspirators at cost to the Malaysian people. The luxury properties under seizure belong to Najib, his stepson, Riza Aziz, who founded production company Red Granite, and Nijab’s friend Jho Low.

The production company produced the film The Wolf of Wall Street and has ties to the movies Dumb and Dumber To and Daddy’s Home. The rights of the latter two were part of the asset seizure. Low is accused of giving gifts paid for by funds stolen from the Malaysian fund to actor Leonardo diCaprio, including an Oscar won by Marlon Brando for On the Waterfront, a Pablo Picasso painting, and other items.

The movie star, who is cooperating in the probe, has said that the gifts were donations for his foundation’s charity auction. Model Miranda Kerr, who dated Low for a time, was allegedly gifted $8M in jewelry.

Prime Minister Nijab’s press secretary and Malaysia’s attorney general have criticized these lawsuits.

Meantime, US authorities are now contending that about $850M of proceeds form $1.23B of loans issued by Deutsche Bank AG (DB) to the Malaysian fund were diverted to offshore entities and then to accounts run by Najib, Low, and Jasmine Loo. She is a 1MDB official with close connections to Low.

The SSEK Partners Group is a securities fraud law firm.

U.S. lawsuits link Malaysian leader to stolen money from 1MDB fund, Reuters, June 21, 2017

Wolf of Wall Street film linked to money ‘stolen from Malaysian fund’, US claims, The Guardian, July 20, 2016

FBI Probes Malaysia Development Fund, The Wall Street Journal, September 19, 2015