RiskNovember 1, 2019

US Recovers More Than $700 Million Stolen From Malaysian Sovereign Wealth Fund

Allegedly stolen funds were used for buying luxury real estate, artwork and gambling.

Reported by Michael Katz

The US Justice Department has reached a settlement of its civil forfeiture cases against assets acquired by Low Taek Jho and his family for using funds that were allegedly misappropriated from Malaysia’s sovereign wealth fund 1MDB, and laundered.

The allegedly ill-gotten assets were found in the US, UK and Switzerland, and are estimated to be worth more than $700 million. The Justice Department said the settlement brings the total amount the US has recovered or assisted in recovering to more than $1 billion in assets associated with the international money laundering and bribery scheme. It is the largest civil forfeiture ever conducted by the Justice Department.

“As alleged in the complaints, Jho Low and others, including officials in Malaysia and the United Arab Emirates, engaged in a brazen multi-year conspiracy to launder money embezzled or otherwise misappropriated from 1MDB,” General Brian Benczkowski, assistant attorney of the Justice Department’s Criminal Division, said in a statement. “And he used those funds, among other things, to engage in extravagant spending sprees, acquiring one-of-kind artwork and luxury real estate, gambling freely at casinos, and propping up his lavish lifestyle.”

Benczkowski said the settlement agreement forces Low and his family to relinquish hundreds of millions of dollars in ill-gotten gains that were intended to be a nest egg for people of Malaysia. He said it also sends the message that the US “will not be a safe haven for the proceeds of corruption.”

According to the civil forfeiture complaints, more than $4.5 billion in funds belonging to 1MDB were allegedly misappropriated from 2009 through 2015 by high-level officials of the fund. That occurred through a criminal conspiracy involving international money laundering and bribery. The sovereign wealth fund was created by the government of Malaysia to promote economic development in the country through global partnerships and foreign direct investment.

In the settlement, Low, his family, and a Cayman Islands entity serving as the trustees overseeing the allegedly pilfered assets, agreed to forfeit all assets subject to pending forfeiture complaints in which they have a potential interest. The trustees are also required to cooperate and assist the Justice Department in the transfer, management and disposition of the assets.

The assets subject to the settlement agreement include high-end real estate in Beverly Hills, New York and London, and a luxury boutique hotel in Beverly Hills. Also included were tens of millions of dollars in business investments that Low allegedly made with funds misappropriated from 1MDB.

The assets being forfeited in the settlement are in addition to nearly $140 million in assets previously forfeited in connection with Low’s investment in a business entity related to the Park Lane Hotel in New York. There was also a super yacht worth more than $120 million.

Low also faces separate charges in the Eastern District of New York for allegedly conspiring to launder billions of dollars embezzled from 1MDB, and for allegedly conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes to various Malaysian and Emirati officials.