SINGAPORE (June 16): The US Department of Justice (DoJ) on Thursday filed its third lawsuit to seize an additional US$540 million ($747 million) worth of assets linked to corruption involving Malaysian sovereign wealth fund 1Malaysia Development Bhd (1MDB).
Together with two earlier civil forfeiture complaints – one filed last week and the other in July 2016 – US authorities are now seeking to recover a total of US$1.7 billion worth of assets that it says were purchased with funds siphoned from 1MDB.
From 2009 through 2015, more than US$4.5 billion in funds belonging to 1MDB was allegedly misappropriated by high-level officials of 1MDB and their associates, according to a 251-page document filed Thursday in the Central District of California.
“The misappropriation of 1MDB funds was accomplished with an extravagant web of lies and bogus transactions,” says Acting US Attorney Sandra Brown. “These cases involve billions of dollars that should have been used to help the people of Malaysia, but instead was used by a small number of individuals to fuel their astonishing greed.”
See: Why the 1MDB saga could be far from over for Singapore
In the latest filing, US authorities say 1MDB had borrowed a total of US$1.225 billion through two loans from Deutsche Bank in 2014, under the guise of repurchasing options it had given to a subsidiary of Abu Dhabi-owned International Petroleum Investment Company (IPIC) in 2012.
However, some US$850 million of this money was alleged to have been diverted to several offshore shell entities.
These affiliates appeared to be related to IPIC, but were in fact controlled by individuals who benefited from the 1MDB fraud in cooperation with mastermind Low Taek Jho, better known as Jho Low.
These stolen funds were then allegedly used to purchase several assets that the DoJ is moving to seize.
(See: How did Jho Low spend the money stolen from 1MDB?)
The assets include a 300-foot luxury mega-yacht, the Equanimity, which comes with a helicopter landing pad, an on-board gymnasium, a cinema, a massage room, a sauna, a steam room, an experiential shower, and a plunge pool. Awarded the prize for “Best in Show” at the Monaco Yacht Show in 2014, the Equanimity is valued at over US$260 million.
In addition, the US DoJ complaints allege the funds were used to purchase high-end properties, jewellery worth tens of millions of dollars, artwork, and certain film rights.
Assets flagged to be seized under the new lawsuit a Park Avenue condominium, a Pablo Picasso painting titled “Nature Morte au Crane de Taureau”, and rights to the movies “Dumb and Dumber To” and “Daddy’s Home”.
“A portion of the diverted loan proceeds were also allegedly used in an elaborate, Ponzi-like scheme to create the false appearance that an earlier 1MDB investment had been profitable,” the US DoJ says in a statement.
See: Jho Low gambled away millions from 1MDB funds in Las Vegas casinos: US DOJ
US authorities say it is seeking to seize the 1MDB-linked assets on grounds that they were “derived from violations of US law”.
Last year, the government sought to seize properties including a US$100-million interest in EMI Music Publishing Group, and a US$380-million stake in the Park Lane Hotel in New York.
The DoJ also accused Red Granite Pictures of using US$100 million that was diverted from 1MDB to finance the film “The Wolf of Wall Street”.
Authorities also sought to confiscate a US$35 million private jet belonging to 1MDB mastermind Low. The Bombardier Global 5000 jet was reported to have been impounded by Singapore authorities in February and grounded at Seletar Airport.
See: Singapore seizes $50 mil private jet belonging to 1MDB mastermind Jho Low: report
Last week, the US DoJ claimed in an asset seizure lawsuit that funds from 1MDB were illegally diverted via a series of bank accounts and shell companies, between 2013 and 2014, to partly finance the purchase of Coastal Energy.
The US government on Tuesday moved to seize London property that Low is said to have purchased with some of the US$350 million proceeds from the Coastal deal.
These include a Stratton Street penthouse in the upmarket Mayfair district with views of Buckingham Palace as well as a nearby office that served as headquarters for a lingerie company.
See: US authorities probe 1MDB, Jho Low links to US$2.2 bil deal: WSJ
The Malaysian sovereign wealth fund is at the centre of several international investigations by prosecutors in at least four countries – Singapore, Switzerland, Luxembourg and the US – into alleged corruption and money laundering by public officials.
The fund has consistently denied any misconduct.
Malaysia’s Prime Minister Najib Razak, who until last year was the chairman of 1MDB’s advisory board, has denied any wrongdoing and was cleared by Malaysia’s attorney general.
Najib’s press secretary Tengku Sariffuddin on Friday expressed concern that the DoJ has “again” failed to seek cooperation from the Malaysian government or 1MDB. Citing Malaysia investigations, he said “no crime was found” and warned that “unproven allegations should not be taken as facts.”
Alleged 1MDB mastermind Low has also brushed aside allegations of wrongdoing.
While Low’s whereabouts are unknown, reports say he has issued a statement saying the latest forfeiture action continues the US government’s “inappropriate efforts to seize assets despite not having proven that any improprieties have occurred.”
According to Bloomberg, Low said through a representative: “We look forward to the court being presented with the actual facts which demonstrate that the DoJ’s case is completely without foundation.”
