NEW YORK: Once conduits for hundreds of millions of dollars looted from 1Malaysia Development Berhad (1MDB), a group of offshore entities are being repurposed to try to track down the Malaysian sovereign wealth fund’s stolen money.
Three British Virgin Islands-based companies linked to 1MDB on Tuesday filed for Chapter 15 bankruptcy in Florida, utilizing the section of the U.S. code that allows foreign debtors to bring proceedings in the states. Their aim is to recover a portion of the $8.5 billion allegedly stolen from 1MDB, some of which may be in the U.S., the companies said.
The offshore entities were “part of the fraud perpetrated against 1 Malaysia Development Berhad,” they said in the filing, with some likely created solely to receive stolen funds or transfer them on to other entities. They are now being overseen by administrators appointed by the Malaysian government.
The Chapter 15 filing is designed to help the administrators gather information from those involved in the deals, and seize whatever assets they’re able to locate.
The overseers for the funds “have identified various individuals and entities located in the United States who either participated or otherwise possess knowledge” related to the transactions at issue, according to court papers. “Some of the missing funds passed through U.S. entities, including investment managers, fund managers and other U.S. entities who provided services to the participants in the fraud.”
The move comes as a jury in Brooklyn, New York, decides the fate of former Goldman Sachs Group Inc. banker Roger Ng, who was accused of conspiring with his former boss, Tim Leissner, and Malaysian financier Jho Low to loot 1MDB. Leissner pleaded guilty and testified against Ng, while Low remains a fugitive.
The entities said U.S. Justice Department efforts to recover funds stolen in the scheme have seen some success, but they said they believed $1.15 billion stolen from 1MDB subsidiary SRC Malaysia, the parent of the funds behind Tuesday’s filing, had fallen through the cracks.
“There are companies and trusts that are yet to be uncovered related to the fraud,” lawyers for the funds said in court papers.
The case is In re SRC Strategic Resources Ltd., 22-12656, U.S. Bankruptcy Court, Southern District of Florida (Miami).