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 firstname.lastname@example.org (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.