The U.S. government moved to seize four high-priced condominiums in Manhattan, as well as a stake in The Park Lane Hotel, in connection with a money-laundering scheme that allegedly diverted $3.5 billion away from a Malaysian investment fund. The government’s effort to seize the entities offers a rare glimpse into how dirty money is moved into some of the city’s most expensive properties by a complex global network of shadowy characters, mysterious business entities and willing bankers and lawyers.
In a complaint filed Wednesday, federal officials sought to seize valuable artworks, a private jet and real estate in New York and Beverly Hills amid its probe into how billions of dollars meant to benefit the Malaysian citizens were misappropriated from the 1Malaysia Development Bhd., or 1MDB.
According to filings, prosecutors working to recover some of those funds have targeted the assets of individuals closely connected to the scandal, including Malaysian businessman Jho Low; Riza Aziz, the stepson of the Malaysian prime minister and the producer behind “The Wolf of Wall Street”; and Khadem Al Qubaisi, who managed an entity known as the International Petroleum Investment Co. (IPIC), which guaranteed some of 1MDB’s bond sales and owned a minority stake in some of its energy assets.
The Manhattan properties include a full-floor penthouse at Walker Tower purchased for a then-record-breaking price of $50.9 million in 2014, as well as a penthouse at the Time Warner Center (bought for $30.55 million), Park Laurel ($33.5 million) and a condo at 118 Greene Street ($13.8 million). Federal prosecutors also moved to seize a roughly $200 million stake in the Witkoff Group’s Park Lane Hotel.
In the case of The Park Lane, the complaint alleges that Low sunk more than $200 million worth of misappropriated funds from 1MDB into the Central Park South development project. According to the complaint – and previous news accounts – Low, through Hong Kong-based Jynwel Capital, was part of an investor group that purchased the hotel for $654.3 million in 2013.
Steve Witkoff, head of the Witkoff Group, told the Wall Street Journal that he’s cooperating with the government in its investigation.
In all, the New York City real estate – worth nearly $350 million – represents a small slice of the funds federal prosecutors say were misappropriated from 1MDB. But they nonetheless served as a vehicle for concealing the stolen monies and they reflect the ability of anonymous corporations to launder money through U.S. real estate, the government alleges.
The 29-year-old Low — who has partied with Lindsay Lohan and played cards with Leonardo DiCaprio in Vegas — has said he worked as a consultant on the investment fund and denied breaking any laws. The fund and the prime minster have denied any wrongdoing and said they will cooperate “fully” the the Justice Department’s investigation. 1MBD hasn’t been named as a party to the federal government’s lawsuit.
At Walker Tower, the complaint claims that Qubaisi purchased the lavish penthouse for $50.9 million using funds diverted either from 1MBD or IPIC. According to the filing, Qubaisi signed a purchase agreement for the pad in late 2013, and later assigned the contract to an LLC managed by Neil Moffitt, CEO of the Hakkasan nightlife group.
The nearly 6,000-square-foot penthouse set a Downtown sales record when it sold for $50.9 million in 2014. Last year, it was relisted for $70 million, a nearly 40 percent premium. Amid the faltering ultra-luxury market – and after watching the pricey pad sit on the market for nearly a year, Moffitt shaved $15 million off the asking price, bringing it to $55 million.
The Time Warner penthouse, the complaint stated, was purchased in 2011 for $30.55 million using funds from the 1MDB account that were transferred using multiple checks and through various bank accounts. The original purchaser of the unit was Sabola Limited, a Seychelles company, which later assigned its contract to an LLC controlled by Low. In documents given to the board of the Time Warner Center, Low’s father – former MWE Holdings Bhd executive Larry Low – was supposedly the intended resident of the unit.
The complaint states otherwise.
“According to a realtor involved in the sale of the [penthouse], [Jho] Low was the intended occupant of the apartment, and Larry Low never even viewed the apartment before the purchase,” the complaint said.
At the Park Laurel, the complaint said another entity controlled by Jho Low purchased an apartment in 2010 for $23.98 million using money drawn from the 1MBD account. Two years later, Jho Low sold the same pad to Riza Aziz, his friend and co-founder of Red Granite Pictures, which produced the “Wolf of Wall Street.” An LLC controlled by Aziz, who is also a stepson of Malaysian Prime Minister Najib Abdul Razak, paid $33.5 million for the condo using misappropriated funds, the complaint alleged.
In addition, the U.S. government is seizing a condo at 118 Greene Street in Soho that Low purchased for $13.8 million in 2014 using funds from the 1MDB account, according to the complaint.