by Edvard Pettersson
Bloomberg
December 14, 2016
A U.S. effort to seize about $1 billion in assets allegedly acquired with funds siphoned from 1Malaysia Development Bhd. is moving ahead over objections from relatives of the Malaysian financier at the center of the scandal.
A Los Angeles federal judge’s ruling Monday blocking family members of Low Taek Jho, known as Jho Low, from intervening in the forfeiture lawsuits gives the government the upper hand as it seeks to confiscate properties including a $100-million interest in EMI Music Publishing Group, a $35 million Bombardier jet and a $380-million stake in the Park Lane Hotel in New York.
To fight back against the U.S. in Low’s absence, four of his relatives, including his father and brother, are trying to replace the Swiss trustees holding the assets that have declined to oppose the forfeiture. According to the family, the Swiss trustees fear being exposed to criminal liability if they get involved.
U.S. District Judge Dale Fischer refused in Monday’s ruling to give the relatives additional time to pursue legal action in New Zealand and the Cayman Islands, where they are trying to replace the trustees with others who are more willing to defend their interests.
While they are beneficiaries of the trust, the Low family members don’t control the assets and therefore aren’t qualified to ask the court to delay proceedings in the forfeiture cases, Fischer said. The judge also said that their request to intervene was denied because they are already participants in the lawsuits by having filed proposed claims.
Robin Rathmell, a lawyer for the family members, told the judge the family members expected to secure court orders overseas replacing the trustees as soon as next month. Rathmell declined to comment on the ruling.
The Justice Department contends that the family members have no standing to contest forfeiture of the assets.
Low has said he provided consulting to 1MDB that didn’t break any laws. His family members have said that without a trustee defending the assets, they may go to the U.S. by default.
Even if the U.S. wins a default judgment, there may be years of legal wrangling ahead for the government to actually take possession of the real estate and investments at issue, said Raj Malviya, an estate planning lawyer with Miller, Johnson, Snell & Cummiskey Plc.
“A U.S. judgment is not going to be conclusive,” Malviya said in a phone interview. “The government will need to enforce it against a foreign trust in a foreign jurisdiction that may not give full faith and credit to a U.S. judgment.”
The case is U.S.A. v. Any Rights to Profits, Royalties and Distribution Proceeds Owned by or Owed to JW Nile (BVI) Ltd., 16-cv-05364, U.S. District Court, Central District of California (Los Angeles).