by Justin Baer – The Wall Street Journal
US prosecutors have broadened their effort to seize assets they allege were bought with money stolen in a Malaysian financial scandal, filing lawsuits to claim diamonds given to model Miranda Kerr, movie posters and artwork given to Leonardo DiCaprio, and a megayacht known as the Equanimity.
The suits, filed by the US Justice Department, are the latest seeking to claim property and other assets linked to alleged fraud at a Malaysian state fund called 1Malaysia Development Berhad, known as 1MDB. The suits aim to recover $US540 million ($710m) in property, bringing the total amount claimed by the US Justice Department to more than $US1.6 billion.
The government is also trying to seize the rights to movies Dumber and Dumber To, starring comedian Jim Carrey, and Daddy’s Home, which are held by Red Granite Pictures, a production company chaired by the stepson of Malaysian Prime Minister Najib Razak.
Civil asset forfeiture lawsuits are filed against the assets themselves and not individuals. Owners of the assets can contest the forfeiture.
The latest lawsuits highlight the global nature of the scandal at 1MDB, which was launched by Mr Najib to spur economic development. The fund borrowed more than $US13bn but had little to show for it, and the Justice Department alleges that billions of dollars were stolen by people close to the prime minister.
This is the Justice Department’s largest ever anti-kleptocracy case. The alleged 1MDB fraud is under investigation in several other countries, including the United Arab Emirates, Singapore and Luxembourg. Malaysia closed all but one of its probes without finding wrongdoing.
“Today’s complaints reveal another chapter of this multi-year, multi-billion-dollar fraud scheme, bringing the total identified stolen proceeds to $US4.5bn,” acting Assistant Attorney-General Kenneth Blanco said. “This money financed the lavish lifestyles of the alleged co-conspirators at the expense and detriment of the Malaysian people.”
The seizure lawsuits, the first of which were filed last summer, include paintings by van Gogh and Monet, luxury real estate in New York, London and Beverly Hills, and profits from the movie The Wolf of Wall Street, which was produced by Red Granite, which was co-founded by Riza Aziz, Mr Najib’s stepson.
The US government also moved to seize luxury properties of Mr Aziz as well as hundreds of millions of dollars in property and investments owned by his friend and Mr Najib’s confidant, Jho Low. Mr Low got to know DiCaprio starting in 2009, say people familiar with their relationship, and he later gave the actor several gifts that the Justice Department alleges were bought with money stolen from 1MDB.
A spokesman for DiCaprio said the actor was co-operating with the government and has given it the items he received, including an Oscar originally won by Marlon Brando in 1955 for best actor in On the Waterfront. The item was given to DiCaprio as a gift by Red Granite for his work on The Wolf of Wall Street.
The actor also received as gifts a painting by Pablo Picasso, a Diane Arbus photograph and a collage by Jean-Michel Basquiat, according to the suit.
DiCaprio has said the gifts were donations for a charity auction for his foundation.
Red Granite said it was co-operating with the government and remained an active movie-production company. The government has already sued Red Granite for future income from The Wolf of Wall Street, and the studio has agreed to separate its future earnings from the film pending the outcome of the investigation. Mr Aziz couldn’t be reached for comment. Previously he has said he had no knowledge that the funds for Red Granite originally came from 1MDB.
The lawsuits also allege that Mr Low had given $US8m worth of jewellery to Kerr from New York jeweller Lorraine Schwartz, including an 11.72 carat heart-shaped diamond on Valentine’s Day in 2014.
Mr Low and Kerr were dating at the time, according to a person who knows them. Kerr was married last month to Snap co-founder Evan Spiegel.
Most of the assets in the lawsuits belong to Mr Low, a flamboyant Malaysian dealmaker who is a central figure in the alleged misappropriation of funds from 1MDB, according to the Justice Department. His yacht was sighted on Thursday off the coast of the Cambodian island of Koh Rong, according to the site MarineTraffic.
The lawsuits allege Mr Low used money siphoned from 1MDB to buy jewellery worth $US200m from firms around the world between April 2013 and September 2014. Some of that was given to Kerr, and nearly $US30m was given to Rosmah Mansor, the wife of Mr Najib, according to the suits.
Ms Rosmah received in early 2014 a 22-carat pink diamond necklace from Lorraine Schwartz worth $US27.3m, 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 $US1.3m worth of gold necklaces from Lorraine Schwartz. A spokesman for Ms Rosmah didn’t respond to requests for comment.
Mr Najib and 1MDB have denied wrongdoing and promised to co-operate with investigations. Mr Najib has been cleared by the Malaysian Attorney-General, who has said the funds that went into his account were a legal political donation from Saudi Arabia and that most of the money was returned.
In separate statements, Mr Najib’s press secretary and Malaysia’s Attorney-General criticised the lawsuits and said investigations found no wrongdoing at 1MDB. The Attorney-General said Malaysia would co-operate with any inquiry and added it had “strong concerns at the insinuations that have been made against the Prime Minister of criminal wrongdoing”.
The Justice Department filed three suits last week targeting about $US100m of high-end real estate controlled by Mr Low in London, including a penthouse apartment with views of Buckingham Palace.
Mr Low’s whereabouts are unknown. Mr Low has told news organisations he was the victim of political infighting in Malaysia and was only an informal adviser to 1MDB. Lawyers for Mr Low’s family have said they would contest the US asset-seizure lawsuits.
The lawsuits also seek to seize the proceeds of a $US150m investment made by Mr Low in the hedge fund Electrum Group.
The latest suit introduced a new phase of the alleged scheme: Authorities argued some $US850m of the proceeds from $US1.23bn in loans from Deutsche Bank to 1MDB were diverted to a pair of offshore entities. According to the suit, the money was later wired to accounts controlled by Mr Low, Mr Najib and Jasmine Loo, a 1MDB official with close ties to Mr Low. Ms Loo couldn’t be reached for comment.
Additional reporting: Aruna Viswanatha Bradley Hope | Source: The Australian
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