The US Justice Department has filed yet another inquiry into cases of alleged corruption and money laundering related to a major Malaysian investment fund known as 1MDB, as the probe widens to include properties and bank accounts on both sides of the Atlantic and across the US.
Kristian Rouz — The bribery and money laundering scandal surrounding Malaysian fund 1Malaysia Development Berhard, or 1MDB, is expanding as the US Justice Department has filed a motion to recover some $38 million from the scheme.
The newest filing, announced Monday, brings the total sum of US claims in the 1MDB case to a whopping $1.7 billion.
In the filing, the DOJ said the 1MDB scheme involved luxury properties in London and New York, among other assets, as well as securities in a Kentucky-based property management company. All these assets, prosecutors believe, are connected to bond issues from the Malaysian fund, dating back to 2012 and 2013.
“These new lawsuits target assets collected by corrupt officials and their associates through a massive scheme that stole billions of dollars from the people of Malaysia and laundered the proceeds across the world”, Nick Hanna, a US Attorney in Los Angeles, Calif., said.
The DOJ’s latest motion was filed with a California court, and might affect other parties of interest that recently emerged in the case.
Separate reports have suggested the DOJ is also targeting Hollywood producer Joey McFarland, whose bank account reportedly came under scrutiny due to his suspected ties to 1MDB. Prosecutors believe the case also involves financier from Los Angeles Jho Low, whose whereabouts are currently unknown.
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Prosecutors believe the Kentucky-based property management firm was used by McFarland — who is a business partner of Low’s — to funnel the proceeds of corruption in Malaysia to a law firm in the US. According to the DOJ, at least $1.3 million in dirty money could have been laundered that way.
The DOJ also said its anti-corruption unit is looking into Low’s revenues from sales of bonds related to 1MDB. Investigators suggest Low used that money to buy high-end residential property in London.
Yet another report claims that Malaysian prosecutors have indicted British national Paul Stadlen, for laundering some $3.5 million in a 1MDB-related scheme. The announcement came on Thursday, and narrowly predates the DOJ’s recent filing.
Stadlen served as a media adviser to former Malaysian Prime Minister Najib Razak, who is believed to be heavily involved in the multi-billion dollar corruption and laundering scheme. Stadlen allegedly transferred illicit funds into a law firm’s account on behalf of corrupt Malaysian officials and their affiliates.
Prior to working with Najib, Stadlen had been head of the Malaysian branch of PR firm APCO Worldwide. APCO has previously drawn scrutiny over its questionable connections to lobbyists and supposedly corrupt officials and businesspeople, however, there is little clarity as of yet whether the PR firm will be targeted by 1MDB-related probes.
Stadlen became the subject of an investigation after online reports suggested he’s been living a lavish lifestyle he couldn’t afford. Several blogs posted his pictures in upbeat London nightclubs, alleging possible ties to transnational corruption.
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For its part, the DOJ also said some $4.5 billion was misappropriated from the Malaysian budget between 2009 and 2014 for 1MDB-related projects. The fund was established as Malaysia’s national development and foreign investment vehicle, but quickly became a money-laundering enterprise, investigators believe.
US investment bank Goldman Sachs helped raise funds and underwrote up to $6.5 billion worth of bonds for 1MDB and its projects. Goldman officials claim they hadn’t known they were dealing with the proceeds of corruption and other illicit activities.
As the probe into 1MDB-related assets widens, DOJ officials said the investigation is set to continue until the full scope of this corruption scheme is revealed.