US Targets USD540 million in assets bought with 1MDB Funds

June 16, 2017

1Malaysia Development Bhd

US Targets USD540 million in assets bought with 1MDB Funds

Latest move to recover money allegedly stolen from Malaysian sovereign wealth fund

by David J Lynch in Washington

The US Department of Justice on Thursday moved to seize an additional $540m in assets purchased with funds stolen from Malaysian sovereign wealth fund 1MDB, including a luxury yacht, a Picasso painting, jewellery and rights to the movie Dumb and Dumber.

Image result for 1mdb scandal

The Wolves of 1MDB

The suit, which was filed in federal court in Los Angeles, is the latest move in an ambitious US effort to recover money allegedly siphoned from the fund in a sophisticated operation that ran from 2009 until 2015.

The US now estimates that a total of $4.5bn was pilfered by Malaysian public officials and their associates including Jho Low, a well-connected Malaysian businessman who held no formal role in the project.

Including the new lawsuit and earlier civil forfeiture actions, the US government has moved to recover $1.7bn of that amount, according to Kendall Day, acting deputy assistant attorney-general. This represents the largest such US seizure action under a DoJ initiative aimed at recovering money stolen by corrupt foreign officials.

Mr Day said the latest action was aimed at recovering “proceeds of a massive fraud”.

The scheme involved $1.2bn that 1MDB borrowed from Deutsche Bank in 2014, ostensibly to repay options connected with an earlier bond offering, prosecutors say. Of that borrowing, $850m was stolen to fund the lavish lifestyles of individuals including Mr Low and an official identified only as “Malaysian official 1”, a designation that in previous court filings has matched the biography of Malaysian Prime Minister Najib Razak.

The Prime Minister has denied any wrongdoing, as has Mr Low.

In a statement on Thursday the Malaysian government said it would co-operate with any lawful investigation of the country’s companies or citizens but expressed concern “that again the DoJ has failed to seek such co-operation from the Malaysian government or 1MDB”.

The proceeds from two Deutsche Bank loans also were used to operate a Ponzi scheme designed to show that an earlier 1MDB investment in a joint venture with PetroSaudi International, a private Saudi Arabia-based oil services company, had been profitable.

In reality, none of the fund’s investments, which were to have promoted economic growth and foreign direct investment in Malaysia, paid off, according to Mr Day.

The fund obtained the loans “through material misrepresentations and omissions to Deutsche Bank”, according to the lawsuit. At one point, when bank officials requested documentation verifying key financial details, a 1MDB official replied that the fund had suffered a “server breakdown and all files were lost”, according to court filings.

The fund eventually defaulted on the larger of the two loans.Several 1MDB officials, along with their relatives and associates, used a global network of shell companies and bank accounts in the US, Singapore, Switzerland, and Luxembourg to pull off the heist, prosecutors say.

Mr Day said the investigation is continuing. The Financial Times reported last year that prosecutors are investigating Goldman Sachs’ handling of the proceeds of $6.5bn in bond offerings it conducted for the fund to determine whether it complied with reporting requirements of the Bank Secrecy Act. The bank has not been accused of any wrongdoing.

Among the assets targeted in the civil lawsuit filed on Wednesday was a $261m yacht called “The Equanimity”, which prosecutors said was constructed in 2014 and could hold 25 guests and a crew of 33. The 300 feet long vessel boasted a helicopter pad, a gymnasium, cinema, and plunge pool, prosecutors said.

The US also moved to seize 2.5m shares of Palantir stock, a Madison Avenue condominium, a framed colour poster for the 1927 silent movie Metropolis, and rights to the movie Daddy’s Home, which starred Will Ferrell and Mark Wahlberg.

The lawsuit also targeted several diamonds, including a nearly 12-carat heart-shaped item, and the painting “Nature Morte au Crane de Taureau” by Picasso.

The Picasso was given in January 2014 as a birthday gift to the actor Leo DiCaprio, who starred in the movie The Wolf of Wall Street. The film was produced by Red Granite, which was backed financially by individuals allegedly involved in the scandal, including Riza Aziz, a relative of Mr Najib, and Mr Low.

Through a spokesman, Mr DiCaprio said on Thursday that before the government filed its latest action, he had “initiated return of these items, which were received and accepted by him for the purpose of being included in an annual charity auction to benefit his eponymous foundation”.

The actor also has returned an Oscar originally won by Marlon Brando, which he received as another gift from Red Granite.

The company, which also produced Dumb and Dumber and Daddy’s Home, said it “is actively engaged in discussions with the Justice Department aimed at resolving” the civil litigation.

Last year, the US filed civil forfeiture actions seeking more than $1bn in assets purchased with money allegedly stolen from the 1MDB fund.

The new suit says assets belonging to several individuals or businesses such as Jho Low; Low Taek Szen; JW Hospitality (VHG Intl) Ltd; FFP (Cayman) Ltd; Mubadala Development Company PJSC; Viceroy Hotel Group; and Jynwel Capital Ltd, may be affected by the action.

Additional reporting by Kara Scannell in New York

Follow David J Lynch on Twitter: @davidjlynch


16 June 2017

1. We note the United States Department of Justice’s (DoJ) latest civil lawsuits brought against various assets. The Malaysian government will fully cooperate with any lawful investigation of Malaysian companies or citizens in accordance with international protocols. So we are concerned that again the DoJ has failed to seek such cooperation from the Malaysian government or 1MDB, the Malaysian company concerned.

2. We are also concerned by the unnecessary and gratuitous naming of certain matters and individuals that are only relevant to domestic political manipulation and interference. This suggests a motivation that goes beyond the objective of seizing assets.

3. There have been numerous and extensive investigations by Malaysian authorities into 1MDB, including by independent and bi-partisan bodies such as the Public Accounts Committee, and no crime was found. 1MDB is still the subject of an investigation by the Royal Malaysia Police. If there is evidence of wrongdoing, Malaysia will not hesitate to take action.

4.Until then, unproven allegations should not be taken as facts. And we take note of DoJ’s own press release, which states that “A civil forfeiture complaint is merely an allegation that money or property was involved in or represents the proceeds of a crime. These allegations are not proven until a court awards judgment in favor of the U.S.”.

5. The judicial process is not served by headline seeking. Malaysia stands firm in its support of transparency and good governance. That includes ensuring that accusations have a basis in fact, rather than smears briefed by political opponents. We are confident that justice will take its course and Malaysia will continue to cooperate with all willing international agencies. As the Prime Minister has always maintained, if any wrongdoing is proven, the law will be enforced without exception.

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18 thoughts on “US Targets USD540 million in assets bought with 1MDB Funds

  1. Perhaps Mr Low’s biggest mistake was to become
    a US citizen – he has dual nationality. Full force of US law will
    be applied to him.

    Question: since when did Malaysia also recognise dual nationality?
    JL is a special case?

  2. This is all part of a heinous right-wing Christian plot by the Trump administration following on from the previous administration to seek to unlawfully topple a democratically elected PM of an Islamic Malaysia.

  3. The lawsuits allege that Jho Low used money siphoned from 1MDB to buy jewellery worth $US 200 million from firms around the world between April 2013 and September 2014. Nearly $US 30 million was given to Rosmah Mansor, according to the suits.

    Rosmah received in early 2014 a 22-carat pink diamond necklace from Lorraine Schwartz, a New York jeweler, worth $US 27.3 million, allegedly arranged by Mr Low and paid for with money stolen from 1MDB, according to the suit. Later that year, Mr Low arranged for Ms Rosmah to get a further $US 1.3 million worth of gold necklaces from Lorraine Schwartz. A spokesman for Ms Rosmah didn’t respond to requests for comment. (from The Australian)
    Ambassador Malott,

    DOJ will nail these crooks so that it will be a lesson to others who dare to defy the Rule of Law. –Din Merican

  4. Supposedly 1MDB is not so important to voters anymore. BUT how about competence? Details of the scandal proves, Najib and those around him ARE RECKLESS and basically basically over estimate their own competency. 1MDB proves NAJIB IS INCOMPETENT.. Seriously, if you are going to steal so much, to be reckless and let it get so out of control says serious issue of competency and recklessness. SInce when it that not relevent to voters income, economic and social health?

  5. Looks like JL is not a US citizen but a citizen of some
    small Caribbean nation.
    One of the passport sellers. Still, he will not dare set foot on
    US soil.

  6. MO1 has a gang of arse hole cover specialist who pretend that there is no evidence that funds had been hijacked from 1MDB by traitors to the nation. All can read from the printed media of banks licences cancelled, bankers fined and jailed for laundering 1MDB funds and the name JHO LOW came out in bold letters. If Jho Low has no position in 1MDB then who banked the money to his account . Who are JHO LOW, ERIC TAN and a host of names raised by the Singapore Prosecutor?
    Mention was made that the DOJ neither contact the Malaysian government nor 1MDB.
    The Swiss AG did but to now is still waiting for a response. Hello somebody please wake up instead of writing from dreamland.

  7. Aiyoyo.., ayah, amah, achee – last July was just the starting shot – now comes the juice..! Pink diamonds, gold, yachts, paintings, Oscar statuettes, up-scale properties, chain fitness gyms(?), Camel Humping Sheikhs and open legged starlet gifts – sound very much like the movie script of The Wolf on Wall Street, Dumb n Dumber, Launderette Porn and Bollywood Gangsta Rap all rolled up, ya? I propose that we call this ball buster: 1MDBollocks. Toldja the Perps were celebrity obsessed, including the morbidly Obese ones. Ketuanan and cellulite in extremis.

    So all the Drumpfs in the world ain’t gonna save Jibros from the electronic paper trail. Not with 6 countries pursuing the trail, with the US holding the complete evidence.

    Intent to Commit Fraud, followed with a Ponzi Scam and Money Laundering on a massive scale is definitely Criminal, ain’t it? But Jibrosian enablers and handlers will deem it a Civil case – with the AG hee-hawing (that’s the only sound it makes) and the Keruak berak blaming the Oppo, insinuating treachery.

    I figure DoJ will take another few months of thorough investigations before nailing Feh JLo, Reza and their minions to their toilet seat. Followed by further damning expose with ‘Trumped-up’ charges for MO1 and Spouse. However, Obstruction of Justice and Malfeasance charges will need Malusians to revamp the Judiciary, empty the AG chamber-pot and do away with the culture of Impunity. How do we do that, with UMNOb Junkies conjugating with the Holy Shit in PAS?

    But Hisap, might still save the day for his beloved, but beleaguered Cousin by sending them to Marawi asap. Duterte is a ‘friend’ right?

    No wonder my PRC acquaintances say: “Stupid until they ooze..”

  8. According to a certain know-it-all, Dr M is behind this entire DoJ bumbling. How this is possible is beyond comprehension. The know-it-all in question is aka RPK.

  9. Lesson learned ?
    Never !
    Since 1979/83 RM 2.5 b BMF Loan Loss + a life lost.
    Worst ( many times) scandals had continued till this day- accumulated losses estimated up to a 1 Trillion Ringgit by todays value.

    The power-that-be was forewarned then with the message drawed from US senate committee findings that,
    ” Banks just dont fail. It was robbed from the inside ” . It recommened swift actions and strong punishment against those found guilty. (Of course “Banks” could means institutions, corporations and political parties and the likes.)

    It did not happen. If it did, scandalous losses that followed would be few.Mahathir the PM at that crime described the scandal “a heinous crime”.
    Those involved were never punished. Most got away with tap on the hand.

    Now 1 MDB may have come to pass. But FGV is making wave with political quake, potentially measuring 7-9 on the Richter Scale of 10. Epi-centre-Umnob-Putrajaya

  10. Edit:

    Paragraph 2, line 3

    ” Banks dont just fsiled. It was robbed from the inside.”

    should read ,

    ” Banks don’ t just failed .They are robbed from the inside”

  11. Does anyone really think that all this will play well with the demographic that keeps these morons in power ?

  12. “Does anyone really think that all this will play well with the demographic that keeps these morons in power ?” Conrad

    It will, if the Oppo knows how to go about it. To inundate the morose faculties of this particular cohort, use parables and comparisons – not the number of zeroes, which only serves to confuse simple folks who can’t count beyond 4 digits.

    The kampong folks are not idiots, but their culture (whatever’s left of it) demands a level of politeness and not barefaced facts and figures, what-more from Mat Sallehs? Their sense of morality-ethics is exclusive, localized and tribal.

    For instance, just show the Nelayan a picture of the super-yacht Equanimity or the womenfolk the Pink ‘Berlian’ necklace, with gold accessories and ask them what that means. Then point out their poverty of material and spiritual mores..

    Perception and self realization is a most powerful tool for change – not self aggrandization, asking for pity nor other transactional pleadings like Gua-Lu Tolong’isms.

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