On April 14, 2020, the U.S. Department of Justice announced that it has returned to the Malaysian government approximately $300 million in additional funds misappropriated from 1 Malaysia Development Berhad (1MDB), Malaysia’s investment development fund. The funds were apparently misappropriated and laundered through financial institutions in several jurisdictions including the U.S., Switzerland, Singapore and Luxembourg.
Together with the funds that the DOJ returned to Malaysia in May 2019, the U.S. has returned or helped Malaysia in recovering over $600 million of funds misappropriated from 1MDB. The DOJ says its efforts to recover funds misappropriate from 1MDB.
The first tranche of returned funds included: $57,036,688.68 from Red Granite Pictures, and stems from a March 2018 settlement in California courts. This amount has been received by Malaysia. Subsequently the DOJ returned $139,000,000 from the February 2019 sale of Manhattan’s Park Lane Hotel.
In 2019, the U.S. District Court for the Central District of California entered judgments forfeiting more than $700 million in assets obtained by Low Taek Jho, aka Jho Low, and his family in the U.S., U.K., and Switzerland. At present, DOJ has recovered or helped in the recovery of more than $1 billion in assets associated with the 1MDB international money laundering and bribery scheme. This represents the largest recovery under the DOJ’s Kleptocracy Asset Recovery Initiative and the largest civil forfeiture ever concluded by the Justice Department.
The civil forfeiture complaints allege that, 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, including Low, through a criminal conspiracy involving international money laundering and bribery. The government of Malaysia established 1MDB to promote economic development in Malaysia through global partnerships and foreign direct investment. The Malaysian government intended to use its funds to improve the well-being of the Malaysian people. The assets subject to the 2019 judgments included high-end real estate in Beverly Hills, New York and London; a luxury boutique hotel in Beverly Hills; and tens of millions of dollars in business investments that Low allegedly made with funds traceable to misappropriated 1MDB funds.
Under the terms of the 2019 settlement, Low, his family members, and FFP, a Cayman Islands entity serving as the trustees overseeing the assets at issue in these forfeiture actions, 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 DOJ in the orderly transfer, management and disposition of the relevant assets. From the assets formerly managed by FFP, the United States will release $15 million to Low’s counsel to pay for legal fees and costs. Under the agreement, none of those fees may be returned to Low or his family members.
Low separately faces charges in the U.S. District Court for the Eastern District of New York for conspiring to launder billions of dollars embezzled from 1MDB and for conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes to various Malaysian and Emirati officials, and in the U.S. District Court for the District of Columbia for conspiring to make and conceal foreign and conduit campaign contributions during the United States presidential election in 2012. Low is a fugitive and is believed to be in China.
The current issue of the IELR will have a more comprehensive discussion of the case, especially the AML issues for the U.S.