U.S. Recovers More Than $700 Million From Malaysian Financier In Slush Fund Scandal

The Department of Justice has reached a settlement to recover more than $700 million in assets from Low Taek Jho, a.k.a. Jho Low, related to a kleptocracy scandal that centers on a Malaysian sovereign wealth fund called 1Malaysia Development Berhad — or 1MDB, as it's widely known.

The assets range from a luxury boutique hotel in Beverly Hills to millions of dollars in business holdings.

"This settlement agreement forces Low and his family to relinquish hundreds of millions of dollars in ill-gotten gains that were intended to be used for the benefit of the Malaysian people," said Assistant Attorney General Brian A. Benczkowski of the Justice Department's Criminal Division.

Authorities say Low helped create a scheme in which money was moved from the investment fund and into shell companies, which then made dozens of big-ticket purchases to shelter the funds.

The seized assets include high-end real estate in New York, California and London. A Bombardier Global 5000 business jet is part of the forfeiture; so is the Viceroy L'Ermitage luxury hotel in Beverly Hills and a large stake in EMI Music Publishing.

"The message in this case is simple: the United States is not a safe haven for pilfered funds," said U.S. Attorney Nicola T. Hanna of the Central District of California, in a Justice Department statement. "Our strict anti-money laundering controls are effective, and we will seize assets used by criminals to conceal ill-gotten gains."

With the new settlement, the U.S. government has now recovered or helped recover more than $1 billion worth of pilfered assets that were acquired through the 1MDB money-laundering and bribery scheme.

As for the fate of the massive amounts of money generated by the federal seizures, it's standard practice for such proceeds to go to the Treasury Department. In the 1MDB case, "The money will be returned" to benefit people who were harmed by the corruption in Malaysia, Justice Department spokesperson Peter Carr said in an email to NPR Thursday.

"Last May, the United States returned nearly $200 million to the Malaysian authorities to assist Malaysia in addressing the financial debts and consequences caused by the 1MDB" scandal, according to a statement sent by Carr.

The 1MDB fund was created by the Malaysian government to generate development in the country and draw direct foreign investment. But the U.S. says more than $4.5 billion in 1MDB funds were siphoned off by high-level officials and their partners — including Low — in a far-reaching criminal conspiracy. The scheme allegedly ran from 2009 through 2015.

Low, 37, is a fugitive wanted on criminal charges in both the U.S. and Malaysia. He's been reported to be living in China, and last summer he crossed from Hong Kong to Macau, despite an Interpol "red notice" seeking his arrest.

Low has insisted that he is innocent. And in a statement about the U.S. settlement, he stressed that the deal does not amount to an admission of guilt.

Low said he is "deeply appreciative of my lawyers and the trustees of the trusts, as well as the U.S. government for the constructive nature of these discussions, which enabled this positive resolution."

But the embattled financier added, "I will continue to fight the broad, sweeping, unproven, biased and politically motivated allegations against me, and I am confident that as facts come to light, the truth will be revealed."

Former Prime Minister Najib Razak, who created the 1MDB fund, is also facing criminal charges. The first of what will likely be several trials for the onetime leader is ongoing in Malaysia, where prosecutors want to know how some $10 million came to appear in Najib's bank accounts. In addition to that figure, he's accused of receiving hundreds of millions of dollars from the fund.

The 1MDB scandal has resulted in U.S. charges against two bankers at Goldman Sachs, which helped the fund $6.5 billion. And last December, Malaysian authorities lodged charges against Goldman Sachs itself. The bank has denied wrongdoing.

In one earlier action in the case, the Justice Department seized nearly $140 million in tainted assets, including a super-yacht called the Equanimity that was valued at around $120 million and an interest in the Park Lane Hotel, which sits next to Central Park in New York City.

The new settlement calls for the U.S. to release some $15 million that will go to Low's legal team, to pay for their legal fees and other costs. The Justice Department says the deal requires that none of that money will go to Low or his family.

In addition to charges that he masterminded the 1MDB scheme, Low also faces charges in the Eastern District of New York for conspiring to launder billions of embezzled dollars and paying bribes to officials in Malaysia and the United Arab Emirates.

And in Washington, D.C., Low is accused of "conspiring to make and conceal foreign and conduit campaign contributions during the United States presidential election in 2012," the Justice Department says.

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