DOJ ANNOUNCES "SIGNIFICANT KLEPTOCRACY ENFORCEMENT ACTION TO RECOVER MORE THAN $1 BILLION"

FROM:  U.S. JUSTICE DEPARTMENT  

Assistant Attorney General Leslie R. Caldwell Delivers Remarks at Press Conference Announcing Significant Kleptocracy Enforcement Action to Recover More Than $1 Billion Obtained from Corruption Involving Malaysian Sovereign Wealth Fund

Washington, DC United States ~ Wednesday, July 20, 2016

Remarks as prepared for delivery

Thank you, Attorney General [Loretta E.] Lynch.

This is the largest single action ever brought by the Kleptocracy Initiative, and a significant milestone in the department’s ongoing fight against global corruption.  The complaint filed today in federal court details the complex web of transactions these co-conspirators used to launder billions of dollars that they stole from the people of Malaysia.  We have several speakers today who will describe various aspects of this matter.

My remarks will focus on the allegations in the complaint involving two bond offerings in 2012 through which 1MDB (1Malaysia Development Berhad) raised money that was siphoned off by the corrupt officials and their associates.  The stated purpose of the 2012 bond offerings was to allow 1MDB to invest, for the benefit of the Malaysian government, in certain energy assets.  But almost immediately after receiving the proceeds of these two bond issues, roughly 40 percent of the funds raised—approximately $1.37 billion—was transferred out of 1MDB’s accounts.  The money went into the Swiss bank account of a shell company incorporated in the British Virgin Islands.  The complaint alleges that the name of this shell company was intended to suggest an affiliation with a legitimate company involved in the bond offering but, in fact, the Swiss bank account was controlled by corrupt officials.

From Switzerland, the corrupt officials and their associates transferred money using a complex series of transactions that involved still more shell companies and bank accounts across the globe.  Eventually, more than $230 million found its way into accounts controlled by shell companies whose beneficial owner was a close relative of a senior 1MDB official.  That individual used the stolen funds to buy luxury real estate in the United States and other assets, including funding a California-based motion picture company, Red Granite Pictures.

Red Granite Pictures, in turn, used more than $100 million involved in the theft from 1MDB to finance the award-winning 2013 film The Wolf of Wall Street.  Of course, neither 1MDB nor the people of Malaysia ever saw a penny of profit from the film, or from any other investments made with money diverted from 1MDB.  Instead, that money went to a relative and associates of the corrupt officials.  Because the assets used to finance the film were, as alleged, laundered money, future rights to that film are subject to the forfeiture complaint filed today.  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.

This case is yet another example of what happens when individuals and criminal organizations are able to use shell companies to move, and ultimately conceal, the proceeds of crime and kleptocracy.  Gaps in the legal regimes across the globe—including in the United States—allowed these criminals to avoid disclosing the ultimate beneficial owners of the accounts to which 1MDB funds were diverted.  Stronger laws and more effective frameworks for international cooperation are needed to close these gaps and overcome the challenges faced by law enforcement when we investigate international corruption, money laundering and other cross-border crimes.

In this case, the significant assistance we received from our international partners was critical in identifying and restraining assets.  That cooperation and the action we are taking today should send a message to kleptocrats and other criminals that the United States is not a safe haven for their stolen money, and that they cannot evade law enforcement authorities simply by laundering money through multiple jurisdictions and through a web of nominees, shell corporations and other legal structures designed to frustrate justice.  The department will continue to work to track and seize U.S. and other assets of these corruption schemes wherever they arise, no matter how secretive, no matter how sophisticated and no matter how sprawling.

Criminal Division
Speaker:
Meet The AAG
Updated July 20, 2016

U.S. FILES FORFETURE COMPLAINT AGAINST FORMER S. KOREAN PRESIDENT CHUN DOO-HWAN

Thursday, April 24, 2014

FROM:  U.S. JUSTICE DEPARTMENT 

U.S. Seeks to 

Recover Over $700,000 in Kleptocracy Proceeds of Former South Korean President Chun Doo-hwan

The Department of Justice filed a civil forfeiture complaint in the U.S. District Court for the Central District of California seeking to recover more than $700,000 in alleged corruption proceeds of Chun Doo-hwan, the former president of the Republic of Korea.

These monies were seized in February 2014 from the sale of a house located in Newport Beach, Calif., which President Chun’s son, Chun Jae Yong, had purchased in 2005 with proceeds allegedly traceable to his father’s corruption.   The United States is working with the Republic of Korea’s Supreme Prosecutor’s Office, the Ministry of Justice and the Seoul Central District Prosecutor’s Office to forfeit these corruption proceeds.

The announcement was made by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Division and Assistant Director John G. Connolly of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Office of International Affairs.

“While serving as Korea’s president, Chun Doo-hwan betrayed the Korean people by taking over $200 million in bribes, some of which his family members then illegally laundered into the United States,” said Acting Assistant Attorney General O’Neil.   “Through the department’s Kleptocracy Initiative, we are making crystal clear that the United States will not tolerate the use of its financial system by corrupt foreign officials – or their relatives – to harbor their ill-gotten gains.”

“The U.S. will not be a safe repository for assets misappropriated by corrupt foreign leaders,” said FBI Assistant Director in Charge Lewis.  “The FBI is committed to working with foreign and domestic partners to identify and return those assets to the legitimate owners, in this case the people of the Republic of Korea.”

“This most recent seizure is part of an ongoing effort by HSI to identify and seize illegal assets in the United States obtained by corrupt foreign leaders who use our country as a safe haven to conceal the illicit proceeds of their crimes,” said HSI Assistant Director Connolly.   “HSI special agents in our 67 offices in 48 countries will continue to work with our domestic offices as well as international law enforcement partners to hold these individuals accountable by denying them the enjoyment of their ill-gotten gains.”

As alleged in the forfeiture complaint, President Chun was convicted in Korea in 1997 of receiving more than $200 million in bribes from Korean businesses and companies.   President Chun and his relatives laundered some of these corruption proceeds through a web of nominees and shell companies in both Korea and the United States.

Through close cooperation between U.S. and Korean law enforcement and prosecution authorities, the $721,951 sought for forfeiture was identified and seized when President Chun’s relatives sold a home in Newport Beach that previously had been purchased with the laundered proceeds of President Chun’s corruption.

This case was brought under the Kleptocracy Asset Recovery Initiative by a team of dedicated prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, return those proceeds to benefit the people harmed by these acts of corruption and abuse of office.  Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to kleptocracy@usdoj.gov .

The investigation was conducted jointly by the FBI’s Kleptocracy Program of the International Corruption Unit within the Criminal Investigation Division and the West Covina Resident Agency of the Los Angeles Division and HSI Attaché Seoul, with assistance from HSI Miami.   The case is being prosecuted by Trial Attorney Woo S. Lee of the Criminal Division’s Asset Forfeiture and Money Laundering Section, with substantial support from the Criminal Division’s Office of International Affairs.