US Justice Dept files lawsuits seeking to seize properties worth more than $1.35 billion tied to Malaysia's 1MDB

The United States Department of Justice filed a lawsuit on Wednesday (July 20) seeking to seize properties tied to 1MDB.
The United States Department of Justice filed a lawsuit on Wednesday (July 20) seeking to seize properties tied to 1MDB.PHOTO: REUTERS

WASHINGTON (REUTERS/AFP/BLOOMBERG) - The United States Department of Justice filed lawsuits on Wednesday (July 20) seeking to seize dozens of properties worth more than US$1 billion (S$1.35 billion) tied to Malaysian state fund 1Malaysia Development Berhad (1MDB), saying that over US$3.5 billion (S$4.7 billion) was misappropriated from the institution.

The lawsuits, filed in Los Angeles, seek to seize assets"involved in and traceable to an international conspiracy to launder money misappropriated from 1MDB". The lawsuits said the alleged offences were committed over a four-year period and involved multiple individuals, including Malaysian officials and their associates, who conspired to fraudulently divert billions of dollars from 1MDB.

None of the lawsuits named Malaysian Prime Minister Najib Razak. But they named Riza Aziz, his step-son, as a "relevant individual" in the case. They also named Malaysian financier Low Taek Jho, or Jho Low, and Abu Dhabi government officials Khadem al-Qubaisi and Mohamed Ahmed Badawy Al-Husseiny.

The US lawsuits said funds misappropriated from 1MDB were transferred to the co-founder of Petrosaudi, a company that had a joint venture with 1MDB, and thereafter to a high-ranking official in the Malaysian government it identified only as "Malaysian Official One".

The assets involved in the case include penthouses, mansions, artwork, a private jet and proceeds from the "Wolf of Wall Street" movie that it says were illegally acquired through money diverted from 1MDB.

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

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

"That misappropriation occurred in multiple phases over the course of several years," the lawsuits said.

"The misappropriated funds were then used to purchase the Defendant Asset, as well as to fund the co-conspirators' lavish lifestyles, including purchases of artwork and jewelry, the acquisition of luxury real estate, the payment of gambling expenses, and the hiring of musicians and celebrities to attend parties," it added.

US Attorney-General Loretta Lynch will hold a news conference on Wednesday to discuss the suit seeking to recover more than $1 billion linked to a conspiracy to launder money misappropriated from a Malaysian sovereign wealth fund.

The Justice Department said Ms Lynch and other law enforcement officials would hold a news conference at 11.30am Eastern Daylight Time to announce the filing of civil forfeiture complaints seeking to recover more than US$1 billion in assets.

A spokesman for 1MDB did not immediately respond to a request seeking comment sent by e-mail.

The Malaysia fund is at the centre of several international investigations into alleged corruption and money laundering by public officials. Prosecutors in at least four countries - Singapore, Switzerland, Luxembourg and the United States - 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 may have benefited financially from the fund, whose advisory board was headed by Mr Najib.

Both 1MDB and the Prime Minister have denied wrongdoing.