US Justice Department claims Wolf of Wall Street film was financed with $100m of laundered cash

  

A Hollywood film company behind The Wolf of Wall Street has become embroiled in a massive corruption scandal linked to the Malaysian prime minister.

Court documents lodged by the US Justice Department claim that money from a Malaysian investment fund was used to fund the movie and gambling trips to Las Vegas.

The US Justice Department claims that more than $1billion was siphoned off from the 1MDB fund by 'corrupt officials and their associates', funneling the cash through a Swiss bank account of a shell company incorporated in the British Virgin Islands

Assistant Attorney General Leslie R Caldwell told a news conference: 'According to the allegations in the complaint, this is a case where life imitated art.

'The associates of these corrupt 1MDB officials are alleged to have used illicit proceeds of their fraud scheme to fund the production of The Wolf of Wall Street, a movie about a corrupt stockbroker who tried to hide his own illicit profits in a perceived foreign safe haven.

'But whether corrupt officials try to hide stolen assets across international borders—or behind the silver screen—the Department of Justice is committed to ensuring that there is no safe haven.'

The Wolf of Wall Street was produced by Red Granite Pictures. The small Hollywood studio behind the Martin Scorcese hit was co-founded by Riza Aziz, who is the step-son of the Malaysian Prime Minister Najib Razak.

Razak has been linked to the scandal, which saw funds designated for energy investments to benefit Malaysia used to buy Van Gough paintings, private jets and even take Leonardo DiCaprio gambling in Las Vegas.

Red Granite Pictures pumped more than $100 million into the movie, however, federal authorities claim this cash came from a Malaysian Development Company.

The company is accused of using money siphoned from the fund to finance the movie.

However, the company has strongly rejected any claims of impropriety.

The company said: 'To Red Granite's knowledge, none of the funding it received four years ago was in any way illegitimate and there is nothing in today's civil lawsuit claiming that Red Granite knew otherwise.

'Red Granite continues to cooperate fully with all inquiries and is confident that when the facts come out, it will be clear that Riza Aziz and Red Granite did nothing wrong.'

According to the 136-page civil complaint filed by the US Justice Department, between June 2012 and November 2012, an investment firm tied to 1MDB sent $238 million  to an account controlled by Aziz.

About $100 million of these funds were subsequently sent to a bank account linked to the production house and used to fund its operations, including The Wolf of Wall Street.

Some of the money was also used for extravagant trips to Las Vegas where hundreds of thousands of dollars where spent gambling at The Venetian casino, according to the complaint.

Among those who were invited to take part in a July 2012 gambling jaunt was 'a lead actor in The Wolf of Wall Street' who won a Golden Globe for the movie, according to the complaint.

Although the court document does not name the actor, it is clearly referring to DiCaprio.

The actor won a Golden Globe in 2014 for his portrayal in the film of stockbroker Jordan Belfort, who fleeced investors of millions of dollars before ending up in prison.

Assistant Attorney General Leslie Caldwell told reporters on Wednesday that all assets and rights to the movie would be seized as they stem from laundered money.

According to comScore, the movie made $392 million. It was nominated for five Academy Awards.

Caldwell said: 'Neither 1MDB or the Malaysian people saw a penny of profit from that film or the other assets purchased with funds siphoned from 1MDB. Instead, that money went to relatives and associates of the corrupt officials of 1MDB and others.'

Red Granite said the complaint should not affect its ongoing operations.

'Red Granite does not expect the lawsuit -- which is limited to future proceeds generated by a single film, and which was not filed against Red Granite or any of its employees -- to impact its day-to-day operations, and the company continues to move forward with exciting new projects.'

Apart from The Wolf of Wall Street, the company has produced several other movies including Dumb and Dumber To, Horns and Friends With Kids.

1MDB, which Najib founded in 2009 shortly after he came to office, is being investigated for money laundering in at least six countries, including the United States, Singapore and Switzerland.

Singapore's central bank said on Thursday authorities have seized assets worth S$240 million in an investigation of 1MDB-related fund flows for possible money laundering, securities fraud, cheating and other offenses.

About half the seized assets belonged to Malaysian financier Low Taek Jho, known as 'Jho Low', and his immediate family.

The Monetary Authority of Singapore said its probe found 'deficiencies' at several major banks in the city-state.

1MDB said in a statement 'it is not a party to the civil suit, does not have any assets in the United States of America, nor has it benefited from the various transactions described in the civil suit'.

US prosecutors claimed money stolen from the fund moved through shell companies and hidden in the United States in purchases of high-end property and luxury items.

The people and institutions named in the complaint have not been charged with crimes, but the government wants to seize assets, among them luxury properties in New York and California, Monet and Van Gogh paintings and a Bombardier jet.

The Justice Department said it will seek to return recovered funds to Malaysia.

FBI Deputy Director Andrew McCabe said: 'The Malaysian people were defrauded on an enormous scale.'

Malaysia's attorney general said in January the money in Najib's bank account was a political donation from the Saudi royal family. Saudi Foreign Minister Adel Al-Jubeir said in April funds wired into Najib's personal bank account were a 'genuine' donation originating from Saudi Arabia.

A spokesman for the Saudi embassy in Washington declined to comment on Wednesday.

The leader of Malaysia's opposition People's Justice Party called on Prime Minister Najib Razak to step down on Thursday.

Wan Azizah Wan Ismail, the wife of jailed opposition figure Anwar Ibrahim, said the government should also push for an independent commission to investigate graft claims outlined by the civil suits filed in California on Wednesday.

Former Prime Minister Mahathir Mohamad said on Thursday Malaysians should push for a referendum on Najib's leadership as he launched a new opposition front that Anwar has endorsed.

Paramount Pictures, actor and producer Leonardo DiCaprio and Scorsese could not immediately be reached for comment.

Jho Low did not respond to requests for comment sent to his Hong Kong-based company, Jynwel Capital. Al Qubaisi and Al-Husseiny could not be reached for comment.

HOW FEDERAL PROSECUTORS LINKED WOLF OF WALL STREET TO THE CASE 

Q: WHY THE SCANDAL?

A: In early 2015, 1MDB was found to have accumulated $11.6 billion in debt. 

The fund nearly defaulted on a loan payment, and its huge debt raised fears a possible bailout could leave the government bankrupt.

Malaysian PM Najib Razak said that 1MDB's assets are worth more than its debts and that it needed more time to become financially stable.

A private audit has cleared 1MDB, but a parliamentary inquiry in April this year found massive unexplained payments in 1MDB and called for a police investigation of the fund's former head.

The finding, which was based partly on the auditor-general's report, warned that the government could face losses of around $4.9 billion if 1MDB fails to pay its debts.

Q: WAS NAJIB PERSONALLY INVOLVED?

A: The Wall Street Journal and Malaysia's Sarawak Report online news reported in July 2015 that nearly $700 million in Najib's personal bank accounts have been traced to entities linked to 1MDB. 

The Wall Street Journal report said five deposits were made into Najib's accounts and that the two largest transactions, worth $620 million and $61 million, were made in March 2013 ahead of general elections.

Attorney General Abdul Gani Patail confirmed receiving documents from investigators that linked Najib to the 1MDB fund.

However, the government abruptly terminated Gani's services, three months short of his scheduled retirement. Najib also axed his own deputy Muhyiddin Yassin, a vocal critic, and four other ministers. He also replaced anti-corruption officials involved with the investigation.

The Malaysian Anti-Corruption Commission cleared Najib of any criminal wrongdoing, saying $681 million was 'contributions from donors, and not funds from 1MDB.'

Malaysia's new attorney general in January also cleared Najib, saying the money was a donation from the Saudi royal family and that most of it was returned. The Saudi foreign minister later said he was aware of the donation but gave no details.

Q: WHAT OTHER ACTION HAS MALAYSIA TAKEN?

A: The attorney general rejected a request by the central bank for a criminal investigation.

The government also cracked down on media reporting on the scandal.

Malaysia's The Edge media group last year reported that businessman Low Taek Jho — a family friend of Najib — and PetroSaudi International had cheated Malaysia of $1.83 billion through an aborted joint venture with 1MDB in 2009.

The media group's publishing permits were suspended for three months.

The government also blocked the U.K.-based website Sarawak Report.

Q: WHAT ARE THE POLITICAL IMPLICATIONS FOR NAJIB?

A: Najib has strengthened his grip on power in the face of his biggest challenge since taking power in 2009 as head of a coalition that has ruled Malaysia since independence from Britain in 1957.

In August last year, tens of thousands of Malaysians took to the streets to demand Najib's resignation. Najib accused them of tarnishing the country's image.

Thousands of Najib's supporters, mostly ethnic Malays, rallied behind the prime minister.

Backing for Najib's National Front has eroded in the last two general elections. It won in 2013, but lost the popular vote for the first time to an opposition alliance.

Q: WHAT DID THE US SAY?

A: Acting on a complaint filed in Los Angeles, U.S. Attorney Eileen Decker said the government is seeking to recover more than $1 billion it says was stolen from 1MDB by people close to Najib.

The diverted funds paid for luxury properties in New York and California, a $35 million jet, art by Vincent Van Gogh and Claude Monet and financing for the Hollywood film 'The Wolf of Wall Street,' according to federal government complaints that demand the recovery and forfeiture of the assets.