This article first appeared in The Edge Financial Daily on September 15, 2017 - September 21, 2017

KUALA LUMPUR: A California court has granted the US Department of Justice’s (DoJ) request to temporarily halt its civil forfeiture lawsuits on assets allegedly bought using funds misappropriated from 1Malaysia Development Bhd (1MDB), to avoid jeopardising the ongoing criminal investigation.

“Based on the government’s presentation, the court is satisfied that the continuing prosecution of these civil forfeiture cases would adversely affect the prosecution of the related criminal investigation,” the court said in the stay order, sighted by The Edge Financial Daily yesterday.

“The court sees no reason to doubt the government’s claim that a criminal investigation is ongoing into the underlying money laundering allegations that form the basis for all of these civil forfeiture cases,” read the order granted by Judge Dale S Fischer of the Central District of California court.

The court noted that the DoJ had stated how the disclosure of facts in the cases could reveal investigative methods of the investigation, subject witnesses and informants to intimidation or retaliation, and raise the potential for evidence destruction.

“Given the complex nature of the alleged crimes and the sensitive political and diplomatic issues involved, it is apparent that revelation of any significant amount of information by the government could endanger the operation of the criminal investigation,” it said.

The court is of the view that the stay would not violate any of the claimants’ due process rights. It said it can reassess the need for terminating the stay if the criminal prosecution extends for an excessive period.

The DoJ is to provide status updates on the investigation every 180 days to allow the court to assess whether to continue the stay.

Reuters previously reported that the investigation had started before the civil lawsuits, and that it involved crimes committed over several years in numerous countries.

Some US$4.5 billion was misappropriated from 1MDB by high-level officials of the fund and their associates, according to civil suits filed by the DoJ in the past two years.

The DoJ sought to seize some US$1.7 billion in assets that it said were bought with misappropriated 1MDB funds. They include a private jet, a hotel and real estate in New York, and a US$107 million interest in EMI Music Publishing bought by Malaysian financier Low Taek Jho, also known as Jho Low.

Low is also accused in the suits of gifting Hollywood actor Leonardo DiCaprio a US$3.2 million Picasso painting, and buying about US$9 million in jewellery for Australian model Miranda Kerr.

The suits also claimed that US$681 million from 1MDB was transferred to the account of “Malaysian Official 1”.

Besides the US, 1MDB is facing money laundering probes in a few other countries including Switzerland and Singapore.