US keeps account of 1MDB kleptocrats’ loot

New York: The van Gogh and the Monet are safely in storage in Switzerland. The Oscar that once belonged to Marlon Brando is in a federal warehouse in Texas. Those were easy enough to corral.

But when the $US250 million yacht was finally captured in Bali, the US government couldn't let it bob in the water unattended, so it had to pay for a crew. The $US35 million Bombardier jet has been grounded, but it needed an engine test costing up to $US25,000.

Jho Low partying with the Hilton sisters, Paris and Nicky.

It is so expansive that just tracking down, retrieving and maintaining the loot has become a complex multinational operation in itself.

Court documents and interviews describe a recovery effort that involves half a dozen federal agencies, a bevy of contractors and investigators in countries including Switzerland, Luxembourg and Malaysia.

Its targets include more than a dozen properties in New York, California and London, including a $US31 million condominium in the Time Warner Centre in Manhattan, the Viceroy L'Ermitage Beverly Hills hotel and a $US17.5 million mansion in Beverly Hills that came with a gold-tipped pyramid floating in a reflecting pool.

Jho Low’s luxury superyacht Equanimity.Credit:Bloomberg

The process has been slowed because of the pending criminal case, which itself is lagging because Low, 37, is a fugitive believed to be hiding in China. There are also thorny legal issues because Low and some of the other defendants have denied wrongdoing and are challenging the forfeitures.

Several of the items are owned by trusts, and Low "does not consider it proper for any government to seize property belonging to the trusts or himself", said Robin Rathmell, Low's lawyer.

The United States took the lead in the investigation because it has been cracking down on the flow of illegal money through the US financial system, and because until a few months ago, Malaysia’s own government was being run by the very people accused of ripping it off.

The fund at the centre of the investigation, called the 1Malaysia Development Berhad fund or 1MDB, was supposed to benefit ordinary Malaysians. It raised billions of dollars from banks and borrowed from investors, ostensibly to finance projects such as a joint venture with a Saudi oil company and the purchase of power plants.

Miranda Kerr has relinquished jewellery that Jho Low gave her and has agreed to give up the piano – if the government even wants it back.Credit:New York Times

But prosecutors say 1MDB became a "massive, brazen and blatant" money-laundering scheme, in which billions were diverted into the bank accounts of senior officials, including former Prime Minister Najib Razak, his family and associates and Low.

The scandal led to the ouster of Najib. It also has ensnarled Goldman Sachs, which helped 1MDB raise money; a Justice Department employee who pleaded guilty to helping Low funnel money into the United States; and Elliott Broidy, a top fundraiser for President Donald Trump who was paid to lobby the administration to stop the investigation. (Broidy is not accused of any crime.)

Laundering the money, prosecutors say, involved a complex network of opaque bank accounts and shell companies registered in exotic locations like the British Virgin Islands.

Former Malaysian Prime Minister Najib Razak walks into a court room at Kuala Lumpur High Court in October. Credit:AP

But the idea was simple: Use 1MDB as a vehicle to draw in big money.

And then spend it.

Some $US200 million was used to buy artwork. There was a 22-carat pink diamond necklace worth $US27.3 million, said to have been given to Najib's wife. (Her lawyers say that while she saw the necklace, which has gone missing, she never actually received it.)

Tens of millions of dollars went toward financing Hollywood films including "The Wolf of Wall Street" and "Daddy's Home" through a production studio called Red Granite Pictures, which was owned by Riza Aziz, Najib's stepson. Red Granite has settled with the government for $60 million without admitting wrongdoing.

Leonardo DiCaprio as Jordan Belfort in ‘The Wolf of Wall Street’.

A quarter billion was spent on a custom-built mega-yacht with a movie theatre, helicopter pad and enough space for dozens of crew members. Indonesian authorities said the boat's transponder was turned off at times, making it difficult for the FBI to track it, but the yacht, called the Equanimity, was finally seized in Bali this year. The United States then staffed it with a crew until it was turned over to Malaysia's custody.

Low, who had a self-proclaimed taste for the very finest things, also used some of the money to lavish gifts on celebrities like Leonardo DiCaprio and Australian supermodel Miranda Kerr, prosecutors say.

In 2014, Low bought the clear-acrylic grand piano from Crystal Music Co in the Netherlands and had it delivered to Kerr in Malibu. Peter Tol, the company's founder, declined to discuss the price but said that his custom pieces now cost from $170,000 to upward of $1 million.

It has been a centerpiece of Kerr's home. She has been photographed lounging on its lid in a Giorgio Armani gown and has been recorded tapping out a simple song called “The Flea Waltz."

An acrylic see-through piano made by Crystal Music and costing anywhere from $US175,000 to $US 1million.Credit:Crystal Music

Mark Fabiani, a lawyer for Kerr, said she is happy to relinquish the piano. But it's not clear that it is worth the effort to get it out.

"If you move it, you might damage it, and then you have to restore it," said Michael Case, the asset forfeiture coordinator for the U.S. Marshals Service in Manhattan, speaking generally about such operations.

This extraction would be especially complicated.

When Tol delivered the piano, he was horrified to learn it would be left on an outdoor deck, protected only by an overhang.

"This was hurting my soul very much," he said. "I strongly advised them to close that area."

Kerr followed his advice. But those new walls are a problem for the government, which believes it would have to do some demolition to get the piano out, according to two people with knowledge of the investigation who were not authorised to speak publicly. Then a very expensive house would have to be repaired.

‘Saint-Georges Majeur’ (detail from) by Claude Monet is one of about $US200m worth of artworks Jho Low bought. It is being stored in Switzerland, having been recovered by US authorities.

So for now, the piano stays. Other tokens of Low's esteem have been easier to retrieve. Kerr handed over a substantial amount of jewellery, including a 11.71-carat heart-shaped diamond and a pair of 11-carat diamond earrings.

In Malaysia itself, the haul has been immense. Just days after Najib was voted out, police raided six residences connected to him. They seized 35 bags of cash in 26 currencies, and it took 22 officers three days to determine their full value — about $US30 million. There were bags of gold (25), Hermes handbags (272) and watches (423). Everything is being stored in Kuala Lumpur at the Malaysian central bank.

"The numbers were just too huge for us to do the accounting on the premises," said Amar Singh, who led the asset seizures for the Royal Malaysian Police.

Najib has denied wrongdoing, and Farhan Shafee, a member of his legal team, said, "As far as we can see and as far as the documents provided show, the assets that were seized have nothing to do with the charges that have been brought."

As for Tol, the piano maker, he said he felt terrible if he had unwittingly accepted money "destined for the normal people of Malaysia."

"I don't like it," he said. "It is not my way of life."

The New York Times

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