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U.S. Seeks to Recover More Than $300 Million in Additional Assets Traceable to Funds Allegedly Misappropriated from Malaysian Sovereign Wealth Fund

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The Justice Department announced today the fil­ing of civ­il for­fei­ture com­plaints seek­ing the for­fei­ture and recov­ery of more than $300 mil­lion in addi­tion­al assets alleged­ly asso­ci­at­ed with an inter­na­tion­al con­spir­a­cy to laun­der funds mis­ap­pro­pri­at­ed from 1Malaysia Development Berhad (1MDB), a Malaysian sov­er­eign wealth fund.

Acting Assistnat Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division, and Chief Don Fort of IRS-Criminal Investigation made the announce­ment.

Combined with ear­li­er civ­il for­fei­ture com­plaints filed begin­ing in July 2016, the United States has sought the for­fei­ture of more than $2.1 bil­lion in assets trace­able to funds embez­zled from 1MDB. To date, as a result of these actions, the United States has recov­ered or assist­ed Malaysia in recov­er­ing near­ly $1.1 bil­lion in assets asso­ci­at­ed with the 1MDB inter­na­tion­al mon­ey laun­der­ing and bribery scheme. These actions rep­re­sent col­lec­tive­ly the largest action brought under the department’s Kleptocracy Asset Recovery Initiative as well as the largest civ­il for­fei­ture action ever insti­tut­ed in the Justice Department’s his­to­ry.

The com­plaints filed today in the Central District of California iden­ti­fy addi­tion­al assets trace­able to the 1MDB mon­ey laun­der­ing and bribery scheme. These assets include four dozen pro­mo­tion­al movie posters that Riza Aziz acquired with more than $4 mil­lion in funds trace­able to assets embez­zled from 1MDB as well as an escrow account main­tained in the United Kingdom hold­ing more than $300 mil­lion. As alleged in the com­plaint, the funds in this escrow account are trace­able to a line of cred­it extend­ed by Petroleos de Venezuela S.A. (PDVSA) to PetroSaudi Oil Services (PetroSaudi) in con­nec­tion with the use of two drill ships that PetroSaudi acquired with funds fraud­u­lent­ly obtained from 1MDB. As alleged in the com­plaint, PetroSaudi’s chief exec­u­tive offi­cer is Tarek Obaid, a cit­i­zen of Saudi Arabia and Switzerland.

According to the com­plaints, from 2009 through 2015, more than $4.5 bil­lion in funds belong­ing to 1MDB were alleged­ly mis­ap­pro­pri­at­ed by high-lev­el offi­cials of 1MDB and their asso­ciates. 1MDB was cre­at­ed by the gov­ern­ment of Malaysia to pro­mote eco­nom­ic devel­op­ment in Malaysia through glob­al part­ner­ships and for­eign direct invest­ment, and its funds were intend­ed to be used for improv­ing the well-being of the Malaysian peo­ple.

As alleged in the com­plaints, the mem­bers of the con­spir­a­cy – which includ­ed offi­cials at 1MDB, their rel­a­tives and oth­er asso­ciates – divert­ed more than $4.5 bil­lion in 1MDB funds. Using fraud­u­lent doc­u­ments and rep­re­sen­ta­tions, the co-con­spir­a­tors alleged­ly laun­dered the funds through a series of com­plex trans­ac­tions and shell com­pa­nies with bank accounts locat­ed in the United States and abroad. These trans­ac­tions alleged­ly served to con­ceal the ori­gin, source and own­er­ship of the funds, and ulti­mate­ly passed through U.S. finan­cial insti­tu­tions to then be used to acquire and invest in assets locat­ed in the United States and over­seas.

As alleged in the ear­li­er com­plaints, in 2009, 1MDB offi­cials and their asso­ciates embez­zled approx­i­mate­ly $1 bil­lion that was sup­posed to be invest­ed to exploit ener­gy con­ces­sions pur­port­ed­ly owned by a for­eign part­ner. Instead, the funds were alleged­ly trans­ferred through shell com­pa­nies and were used to acquire a num­ber of assets, as set forth in the com­plaints. The com­plaints also allege that the co-con­spir­a­tors mis­ap­pro­pri­at­ed close to $1.4 bil­lion in funds raised through bond offer­ings in 2012, and more than $1.2 bil­lion fol­low­ing anoth­er bond offer­ing in 2013. The com­plaints also allege that in 2014, the co-con­spir­a­tors mis­ap­pro­pri­at­ed approx­i­mate­ly $850 mil­lion in 1MDB funds under the guise of repur­chas­ing cer­tain options that had been giv­en in con­nec­tion with a guar­an­tee of the 2012 bonds.

The FBI’s International Corruption Squads in New York City and Los Angeles and the IRS-CI are inves­ti­gat­ing the case. Deputy Chief Woo S. Lee and Trial Attorneys Barbara Levy, Joshua L. Sohn and Jonathan Baum of the Criminal Division’s Money Laundering and Asset Recovery Section are pros­e­cut­ing the case. Assistant U.S. Attorney Jonathan Galatzan of the U.S. Attorney’s Office for the Central District of California pro­vid­ed sub­stan­tial assis­tance. The Justice Department’s Office of International Affairs pro­vid­ed sub­stan­tial assis­tance in this mat­ter.

The depart­ment also express­es its deep appre­ci­a­tion for the sig­nif­i­cant assis­tance pro­vid­ed by the United Kingdom author­i­ties, Office of the Attorney General and the Federal Office of Justice of Switzerland, the Attorney General’s Chambers of Singapore, the Singapore Police Force-Commercial Affairs Division, the Attorney General’s Chambers of Malaysia, the Royal Malaysian Police, the Malaysian Anti-Corruption Commission, the judi­cial inves­ti­gat­ing author­i­ty of the Grand Duchy of Luxembourg, the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg, and the International Anti-Corruption Coordination Centre (IACCC).

The Kleptocracy Asset Recovery Initiative is led by a team of ded­i­cat­ed pros­e­cu­tors in the Criminal Division’s Money Laundering and Asset Recovery Section, in part­ner­ship with fed­er­al law enforce­ment agen­cies, and often with U.S. Attorney’s Offices, to for­feit the pro­ceeds of for­eign offi­cial cor­rup­tion and, where appro­pri­ate, to use those recov­ered assets to ben­e­fit the peo­ple harmed by these acts of cor­rup­tion and abuse of office. In 2015, the FBI formed International Corruption Squads across the coun­try to address nation­al and inter­na­tion­al impli­ca­tions of for­eign cor­rup­tion. Individuals with infor­ma­tion about pos­si­ble pro­ceeds of for­eign cor­rup­tion locat­ed in or laun­dered through the United States should con­tact fed­er­al law enforce­ment or send an email to kleptocracy@usdoj.gov (link sends e‑mail) or https://tips.fbi.gov/.

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 United States.

Source: US Department of Justice
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