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The global financial scandal that has spread from Malaysia to Hollywood

Shashank Bengali, Los Angeles Times on

Published in Business News

SINGAPORE -- Accepting his 2014 Golden Globe Award for acting in "The Wolf of Wall Street," Leonardo DiCaprio thanked "Joey, Riz and Jho," three little-known producers and financiers, "for taking a risk on this movie."

The film is based on the memoir of a stockbroker who defrauded investors out of millions of dollars in the 1980s.

The three men -- Joey McFarland, Riza Aziz and Jho Low -- have since been accused in connection with an even bigger fraud: the theft of more than $4.5 billion from a Malaysian government investment fund known as 1MDB.

The newest charges in the case came against Riza, who was arrested in Malaysia last week and pleaded not guilty to laundering nearly a quarter of a billion dollars, in part to finance the movie.

The globe-spanning investigation also has implicated a former Malaysian prime minister, employees of a prestigious Wall Street investment bank, a member of the Fugees rap group and a top Republican fundraiser.

Here's the latest:

 

What is 1MDB?

Short for 1Malaysia Development Berhad (which means limited), the fund was set up in 2009 by then-Prime Minister Najib Razak to invest government revenues in real estate, Middle East oil and other sectors.

Questions about the fund arose in early 2015 when it failed to meet payments on $11 billion in debt. The Wall Street Journal then published documents showing that about $700 million from 1MDB-linked entities had ended up in Najib's personal bank accounts just before elections in 2013.

Investigations on three continents soon uncovered evidence that Malaysian government funds had been siphoned into bank accounts in the U.S., Switzerland and Singapore and spent on lavish purchases, including property in the Hollywood Hills and Manhattan, French Impressionist artwork, a private jet and a $260-million yacht.

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