Record-Breaking Action Brought to Battle International Fund-Laundering
kleptocracy (noun) – a society whose leaders make themselves rich and powerful by stealing from the rest of the people.
LOS ANGELES – The Justice Department announced yesterday that the U.S. seeks to recover nearly $540 million in forfeiture and the recovery of assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund.
Acting Assistant Attorney General Kenneth A. Blanco, Acting U.S. Attorney Sandra R. Brown of the Central District of California, Assistant Director Stephen E. Richardson of the FBI’s Criminal Investigative Division, and Deputy Chief Don Fort of the IRS-Criminal Investigation made the announcement.
The latest action follows civil forfeiture complaints filed in July 2016 that seek more than $1 billion, and complaints filed last week that seek approximately $100 million in assets. This case represents the largest action brought under the Kleptocracy Asset Recovery Initiative. Assets now subject to forfeiture in this case total nearly $1.7 billion.
According to the complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1Malaysia Development Berhad (1MDB) was 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.
Investigators found that “Funds stolen in 2014, in addition to money stolen in prior years, were used, among other things, to purchase a 300-foot luxury yacht valued at over $260 million, certain movie rights, high-end properties, tens of millions of dollars of jewelry, 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. 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.”
“The Criminal Division is steadfast in our efforts to protect the security, safety, and integrity of the American financial system from all manner of abuse, including by kleptocrats seeking to hide their ill-gotten or stolen wealth,” said Acting Assistant Attorney General Blanco. “Today’s complaints reveal another chapter of this multi-year, multi-billion-dollar fraud scheme, bringing the total identified stolen proceeds to $4.5 billion. This money financed the lavish lifestyles of the alleged co-conspirators at the expense and detriment of the Malaysian people. We are unwavering in our commitment to ensure the U.S. is not a safe haven for corrupt individuals and kleptocrats to hide their ill-gotten wealth or money, and that recovered assets be returned to the victims from which they were taken.”
Acting U.S. Attorney Brown said. “The misappropriation of 1MDB funds was accomplished with an extravagant web of lies and bogus transactions that were brought to light by the dedicated attorneys and law enforcement agents who continue to work on this matter. We simply will not allow the U.S. to be a place where corrupt individuals can expect to hide assets and lavishly spend money that should be used for the benefit of citizens of other nations.”
“Today’s filing serves as a reminder of the important role that the FBI plays in rooting out international corruption. When corrupt foreign officials launder funds through the U.S. in furtherance of their criminal activity, the FBI works tirelessly to help hold those officials accountable, and recover the misappropriated funds,” said Assistant Director Richardson.
The Kleptocracy Asset Recovery Initiative is led by a team of 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 use those recovered asset 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.
“Today’s announcement is the result of untangling a global labyrinth of multi-layered financial transactions allegedly used to divert billions of dollars from the people of Malaysia and fund the co-conspirators’ lavish lifestyles,” said Deputy Chief Fort. “The IRS is proud to partner with other law enforcement agencies and share its world-renowned financial investigative expertise in this complex financial investigation. It’s important for the world to see, that when people use the American financial system for corruption, the IRS will take notice.”
Those with information about possible proceeds of foreign corruption located in or laundered through the U.S. should contact federal law enforcement or send an email to email@example.com (link sends e-mail) or https://tips.fbi.gov/. The investigation continues, awaiting the court’s judgment.