The DOJ filed its latest civil forfeiture on Thursday, a controversial measure that allows the US government to take assets from persons suspected of involvement in crime or illegal activity without having to charge or convict them.
The latest confiscation order is seeking around $540m and follows similar action in July 2016 seeking $1bn and in June 2017 to recover $100m.
Total assets now sought amount to nearly $1.7bn, making it the largest action brought under the DOJ’s Kleptocracy Asset Recovery Initiative, a team of dedicated prosecutors who work in partnership with federal law enforcement agencies and the US Attorney’s Offices.
High-level misappropriation
Between 2009 and 2015, more than $4.5bn belonging to IMDB was allegedly misappropriated by high-level officials of the sovereign wealth fund and their associates.
1MDB was created by the Malaysian Government to promote economic development in the country through global partnerships and foreign direct investment. Its funds were intended to be used for improving the well-being of the Malaysian people.
Laundering in the US
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 US and abroad.
These transactions served to conceal the origin, source and ownership of the funds, and ultimately passed through US financial institutions to then be used to acquire and invest in assets located in the US and overseas.
The complaints filed Thursday allege that, in 2014, the co-conspirators misappropriated approximately $850m under the guise of repurchasing certain options that had been given in connection with a guarantee of 2012 bonds.
1MDB reportedly borrowed around $1.2bn from a syndicate of banks to fund the buy-back of the options, of which approximately $850m was instead diverted to several offshore shell entities.
From there, the funds stolen in 2014, in addition to money misappropriated in prior years, were used, among other things, to purchase a 300-foot luxury yacht valued at over $260m, certain movie rights, high-end properties, tens of millions of dollars of jewellery, and artwork.
A portion of the diverted loan proceeds were also allegedly used in an elaborate, Ponzi-like scheme to create the false appearance that an earlier 1MDB investment had been profitable.
