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1MDB: DOJ forfeiture complaints now target $1.7 billion

The Justice Department filed civil forfeiture complaints Thursday against $540 million in assets allegedly bought with money looted from a Malaysian sovereign wealth fund.

The DOJ has now filed forfeiture actions against nearly $1.7 billion in assets linked to 1Maylasia Development Berhad.

Complaints filed in July 2016 targeted more than $1 billion in assets. And last week the DOJ filed other forfeiture complaints against about $100 million in assets.

1MDB now "represents the largest action brought under the Kleptocracy Asset Recovery Initiative," the DOJ said.

The complaints filed Thursday seek forfeiture of Red Granite Pictures' interest in the movies “Dumb and Dumber To” and “Daddy’s Home.”

Other assets targeted by the new complaints include a condominium in New York City worth nearly $5 million, diamond jewelry, artworks by Picasso and Basquiat, and a $260 million megayacht called The Equanimity, the DOJ said.

More than $4.5 billion was looted from 1MDB from 2009 through 2015 "by high-level officials" of the fund and their associates, the DOJ said.

“These cases involve billions of dollars that should have been used to help the people of Malaysia, but instead was used by a small number of individuals to fuel their astonishing greed,” the DOJ's Sandra Brown said.

Last year Singapore seized property and bank accounts worth about $177 million linked to money allegedly diverted from 1MDB.

In May, Singapore's financial regulator ended a two-year investigation of the Malaysian fund.

The Monetary Authority of Singapore stripped BSI Bank and Falcon Bank of their licenses because of money-laundering violations related to 1MDB.

MAS also fined DBS Bank about $720,000, Standard Chartered Bank $3.7 million, and Coutts & Co $1.73 million.

MAS sanctioned eight individuals for 1MDB-related offenses.

Tim Leissner, the former chief of Goldman Sachs (Southeast Asia), was banned from the Singapore financial sector for ten years.

MAS said he issued an unauthorized reference letter to a bank in Luxembourg in June 2015, using Goldman Sachs letterhead. The letter vouched for a central figure allegedly involved in 1MDB.

Leissner resigned from Goldman Sachs in February 2016. He had managed the client relationship with 1MDB for its three bond issues from 2012 to 2013, MAS said.

MAS also imposed lifetime bans against the former Singapore branch manager of Falcon Private Bank, Jens Fred Sturzenegger, and two other former Falcon employees.

Sturzenegger pleaded guilty in Singapore to six charges related to Falcon Bank's AML failures. He was sentenced to 28 weeks in jail and fined about $92,000.

The DOJ said Thursday that 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," the DOJ said.


Richard L. Cassin is the publisher and editor of the FCPA Blog.