The Lawyer (UK) reports that Shearman & Sterling as well as other firms in their, as far as we all know, unwitting involvement in the Malaysia / HSBC banking scam
Shearman & Sterling bank account linked to stolen Malaysian $1bn
By Rachel Moloney 25 July 2016 16:15
Shearman & Sterling has become unwittingly caught up in the middle of the largest ever asset seizure by the US Department of Justice’s anti-corruption unit.
Funds transferred to the law firm’s bank account are alleged to have financed the “luxurious lifestyles” of several businessmen associated with the 1Malaysia Development Berhad (1MDB) sovereign wealth fund.
In civil filings to the United States District Court in Los Angeles, Shearman & Sterling is purported to have held millions of dollars in stolen funds in an Interest on Lawyer Account (IOLA) in the US.
US federal prosecutors have filed a series of civil complaints to seize $1bn in assets bought with stolen money from the fund, including commercial properties, paintings and a private jet.
While the New York-headquartered firm is not alleged to have committed any wrongdoing or to have had knowledge about how the funds were being misused, the legal challenge has raised serious questions about the role law firms can unknowingly play in supporting alleged criminal activity such as money laundering.
News of the misappropriated funds first emerged last year when the Wall Street Journal reported it had evidence that around $700m from the fund had been traced to the personal bank account of Malaysian prime minister Najib Razak.
In last week’s court filings, the US Justice Department claimed Malaysian financier Jho Low and his associates – who were linked to 1MDB – were able to “purchase assets and invest in business interests for their personal benefit”.
Included in those assets is understood to be the proceeds from 2013 film “The Wolf of Wall Street”, whose producer, Riza Aziz, is also named in the lawsuit. Aziz is the stepson of Malaysian premier Razak and denies any wrongdoing.
Shearman & Sterling is noted seven times in the 136-page court filing. One section outlines the purchase of a $700m property in Beverley Hills and quotes an email sent from financier Low to the property agent’s assistant in which he asks for a conference call to discuss the transaction.
The filings claim Low wanted to set up the meeting “so we can all call in jointly with our lawyers from Shearman so we can get up to speed and figure out a solution asap”.
A number of other law firms are also named in connection with the real estate purchases. The court documents claim millions of dollars are believed to have been transferred from the Shearman bank account in question to an attorney trust account held by Sullivan & Cromwell.
Further emails referred to in the court filings include correspondence between associates in the real estate world linked to Low and the law firms DLA Piper and Akin Gump Straus Hauer & Feld.
The filings claim Low “laundered around $200m in misappropriated funds” traceable to a 2013 bond sale into a US account belonging to DLA Piper.
Greenberg Traurig is also named as representative to an entity that purchased a penthouse property in New York, using funds that were traceable to the proceeds of a 2012 bond sale that were diverted from 1MDB.
The complaint filings are the largest single action ever brought under the Justice Department’s Kleptocracy Asset Recovery Initiative, which was set up to forfeit the proceeds of foreign official corruption.
Shearman & Sterling has been contacted for comment.
No accusations of unlawful civil or criminal activity have been made against any of the above law firms.