Tags: 1mdb | wolf | wall street | malaysian fund

'Wolf of Wall Street' Sued as US Seeks Malaysian Fund-Tied Assets

Image: 'Wolf of Wall Street' Sued as US Seeks Malaysian Fund-Tied Assets
In this Wednesday, July 8, 2015 photo, a 1MDB (1 Malaysia Development Berhad) logo is set against the Petronas Twin Towers at the flagship development site, Tun Razak Exchange in Kuala Lumpur, Malaysia. (AP Photo/Joshua Paul)

Wednesday, 20 Jul 2016 12:10 PM

The U.S. Justice Department is seeking to seize more than $1 billion in assets including real estate, art and proceeds from the “Wolf of Wall Street” movie that it says were illegally acquired through money diverted from the embattled Malaysian development fund known as 1MDB.

Funds diverted from 1MDB were used for the personal benefit of public officials and their relatives and associates to purchase luxury real estate in the U.S., pay gambling expenses at Las Vegas casinos and acquire more than $200 million in artwork, the Justice Department said in a court filing Wednesday in federal court in California.

“1MDB maintained no interest in these assets and saw no returns on these investments,” the government said.

The Malaysia fund, which is formally called 1Malaysia Development Berhad, is at the center of several international investigations into alleged corruption and money laundering by public officials. Prosecutors in at least four countries -- Singapore, Switzerland, Luxembourg and the U.S. -- are looking into money flows from the investment vehicle, which was established for national development.

Among the questions asked by some international authorities is whether politically connected individuals in Kuala Lumpur benefited financially from the fund, whose advisory board was headed by Malaysia’s prime minister, Najib Razak. Both 1MDB and the prime minister have denied wrongdoing.

Najib’s family has been entangled in various alleged links to 1MDB funds, alongside a separate donation scandal that has caused more than a year of political tension in Malaysia. The nation’s attorney general this year cleared Najib of graft over revelations that $681 million appeared in his accounts before the 2013 election. The money was a donation from the Saudi royal family and most was later returned, the government said.

The California complaint mentioned a Najib stepson, Riza Aziz, and a Malaysian financier, Low Taek Jho, who is known as Jho Low. Riza partly owns Red Granite Pictures, a Hollywood production company that backed “The Wolf of Wall Street.”

A spokesman for 1MDB didn’t immediately respond to a request seeking comment sent by e-mail. 1MDB in April said it had “never invested in nor transferred funds to Red Granite Pictures, whether directly or via intermediaries,” and has denied wrongdoing more broadly over its finances.

Criminal Probe

Low, who has been linked socially with Paris Hilton and is a close friend of Riza, has said he provided consulting to 1MDB that didn’t break any laws. Singapore said in May that it is closing Swiss bank BSI SA’s unit in the city-state, and Switzerland began criminal proceedings against the firm as investigations into 1MDB reverberate throughout the private bank’s international operations.

Attorney General Loretta Lynch plans to announce the forfeiture actions Wednesday at a news conference in Washington.

Among the assets the government is seeking are royalties from “The Wolf of Wall Street,” homes in Beverly Hills, California, a penthouse in the Time Warner building in Manhattan, and a Vincent van Gogh drawing, according to the filing. They total more than $1 billion, the Justice Department said in a statement.

Red Granite in May said it’s confident all money it received had been proper, and from a variety of sources including top-tier U.S. commercial and investment banks.

The 1MDB affair has stretched from Malaysia to Singapore, Abu Dhabi, Switzerland, the Caribbean, Hong Kong and the U.S. and touched the upper reaches of global finance.

Swiss authorities have estimated that about $4 billion may have been misappropriated from state companies in the Southeast Asian nation. A Malaysian parliamentary committee identified at least $4.2 billion of irregular transactions by the fund.

Three Phases

The suspected fraud occurred in three phases in which money was laundered through bank accounts in Singapore, Switzerland, Luxembourg and the U.S., the government said in the court filing.

In 2009, after 1MDB was set up to pursue development projects, officials of 1MDB and others, under the pretense of investing in a joint venture between 1MDB and a Saudi oil company, transferred more than $1 billion to a Swiss bank account.

In 2012, 1MDB officials and others diverted proceeds raised through two separate bond offerings arranged by Goldman Sachs Group Inc., according to the Justice Department. More than 40 percent of the proceeds, or $1.4 billion, were transferred to a Swiss bank account belonging to a British Virgin Islands entity. More than $1 billion was diverted from another bond offering arranged by Goldman Sachs in 2013.

The case is U.S. v. “Wolf of Wall Street,” 16-05362, U.S. District Court for the Central District of California.

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The U.S. Justice Department is seeking to seize more than $1 billion in assets including real estate, art and proceeds from the "Wolf of Wall Street" movie that it says were illegally acquired through money diverted from the embattled Malaysian development fund known as...
1mdb, wolf, wall street, malaysian fund
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2016-10-20
Wednesday, 20 Jul 2016 12:10 PM
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