U.S. conducting criminal probe focused on Malaysia 1MDB's stolen funds

[August 11, 2017]  KUALA LUMPUR (Reuters) - The U.S. Justice Department is conducting a criminal probe into 1Malaysia Development Berhad (1MDB) and has asked for a stay on its civil lawsuits in connection with $1.7 billion in assets allegedly bought with money stolen from the scandal-hit state fund.

A total of $4.5 billion was misappropriated from 1MDB by high-level officials of the fund and their associates, according to dozens of civil lawsuits filed by the U.S Justice Department in the past two years.

1MDB did not immediately respond to an emailed request for comment.

The department wants to delay the civil proceedings, saying that any disclosures would have an "adverse effect" on the government's ability to conduct its criminal probe, according to the latest court filing lodged at the Central District Court in California on Thursday.

The criminal investigation was started before the civil lawsuits, the department said. It said the investigation was "global in scope", with crimes committed over several years in numerous countries.

In a declaration included in the filing, a Federal Bureau of Investigation agent said that disclosures were "likely to reveal potential targets and subjects of the investigation".

"Such disclosures could result in the destruction of evidence, flight of potential subjects and targets, or the identification and intimidation of potential witnesses," the agent said.

The Malaysian fund, founded by Prime Minister Najib Razak, is facing money laundering probes in at least six countries including the United States, Switzerland and Singapore.

In its civil lawsuits filed previously, the Justice Department sought to seize a total of about $1.7 billion in assets that it said were bought with misappropriated 1MDB funds.
 

 A man walks past a 1 Malaysia Development Berhad (1MDB) billboard at the funds flagship Tun Razak Exchange development in Kuala Lumpur, in this March 1, 2015 file photo. REUTERS/Olivia Harris/File Photo

They include a private jet, a hotel and real estate in New York, and a $107 million interest in EMI Music Publishing purchased by Malaysian financier Low Taek Jho, or Jho Low, the department said.

Low is also accused in the lawsuits of gifting Hollywood actor Leonardo DiCaprio a $3.2 million Picasso painting, and buying about $9 million in jewelry for Australian model Miranda Kerr.

The lawsuits also said $681 million from 1MDB was transferred to the account of "Malaysian Official 1", which U.S. and Malaysian sources have previously identified as Najib.

Najib has denied any wrongdoing and a Malaysian government investigation has cleared him of any charges.

A representative for Low, whose whereabouts are unknown, did not immediately respond to an emailed request for comment. Low has previously denied wrongdoing, saying that the Justice Department's actions were "a further example of global overreach in pursuit of a deeply flawed case."

(Reporting by Rozanna Latiff; Editing by Praveen Menon and Muralikumar Anantharaman)

[© 2017 Thomson Reuters. All rights reserved.]

Copyright 2017 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.