Along the winding roads of some of L.A.'s toniest neighborhoods and in the often-opaque world of Hollywood film finance, federal officials say Malaysian officials stashed some of the billions they embezzled from a public fund.

The Justice Department moved Wednesday to seize more than $1 billion in assets -- including four posh L.A. homes, a Beverly Hills hotel and a stake in 2013 film “The Wolf of Wall Street” -- that it says were purchased with money stolen from the 1Malaysia Development Berhad fund, or 1MDB, court filings show.

Other assets the Justice Department is seeking to seize include a $35-million jet, several New York properties, music publishing rights of EMI Music and works of art by Vincent van Gogh and Claude Monet, according to court filings.

“The Malaysian people were defrauded on an enormous scale in schemes whose tentacles stretched around the world,” Andrew McCabe, the FBI’s deputy director, said at a news conference announcing the legal action.


1MDB was created by the Malaysian government to promote economic development and overseen by the country’s prime minister, Najib Razak.

Instead, the Justice Department said, its officials and their associates stole more than $3.5 billion from the fund between 2009 and 2015 and laundered at least $1 billion through the United States.

The fund’s officials tried to conceal the money’s origins through complex transactions that involved shell companies and bank accounts located in countries across the globe, prosecutors said in court filings.

For instance, prosecutors said five separate money transfers between accounts in Switzerland and Singapore led to the 2012 purchase of the former Ricardo Montalban estate in Los Angeles for $39.98 million.


Some of those transfers, according to court documents, were between accounts controlled by Jho Low, a flamboyant figure who’s been spotted partying with Paris Hilton and is now a central figure in the 1MDB investigation.

Eric Berg, a former Justice Department attorney who’s now at law firm Foley & Lardner, said that string of transfers suggests an attempt to obfuscate the source of the money.

“It’s a huge pain point for anyone investigating these crimes,” Berg said. “You have to follow this daisy chain.”

That transaction and others were made through limited liability companies, business entities that can offer some anonymity and that have become the subject of increased public scrutiny in the wake of this spring’s leak of the so-called Panama Papers, which showed how politicians and elites use shell companies and offshore accounts to hide their wealth.


Along with the L.A. property, some of the 1MDB money also went to Red Granite Pictures, which backed “The Wolf of Wall Street.”

The Hollywood company was founded by Riza Aziz, the prime minister’s stepson, and Kentucky businessman Christopher McFarland in 2009. The two were reportedly introduced by Low.

The Hollywood-based company’s finances have always had an air of mystery, as the firm long refused to name its backers, many of whom were from the Middle East and Asia.

For its highest-profile project, “The Wolf of Wall Street,” Red Granite struck a deal with Paramount Pictures to release the 2013 Martin Scorsese film. Red Granite fully financed the $100-million production, a risky bet for a fledgling film company that had only a dozen employees.


Its model of mitigating risk on film projects that seem like major gambles caught the attention of Hollywood. For example, Red Granite sold the international rights to “The Wolf of Wall Street,” limiting the company’s downside exposure.

The film about former stock broker Jordan Belfort was considered an even bigger bet because of its edgy content. Nonetheless, the movie grossed a strong $400 million in worldwide box-office sales and earned five Oscar nominations.

Now an established player in Hollywood, the company also produced the 2014 sequel “Dumb and Dumber To,” which grossed $170 million worldwide.

But the company has been occasionally dogged by questions over its business practices.


The release of “Dumb and Dumber To” was complicated by a legal dispute between Red Granite’s executives and the producers of the original “Dumb and Dumber,” Brad Krevoy and Steve Stabler. The two accused Aziz and McFarland of freezing them out of their rights to the sequel and funding the company with ill-gotten money.

The parties later settled, and Krevoy and Stabler apologized to Aziz and McFarland.

Red Granite said it had no knowledge of receiving tainted funds.

“Red Granite continues to cooperate fully with all inquiries and is confident that when the facts come out, it will be clear that Riza Aziz and Red Granite did nothing wrong,” the company said in a statement. It does not expect the lawsuit to impact day-to-day operations or future projects.


The Justice Department is seeking to seize future royalties from Red Granite as part of the largest action brought under the Kleptocracy Asset Recovery Initiative, a federal effort to recover assets stolen by foreign officials and laundered in the U.S. Those named in the complaint have not been charged with any crimes, though law enforcement officials confirmed there is an ongoing criminal investigation.

“We are seeking to forfeit and recover funds that were intended to grow the Malaysian economy and support the Malaysian people,” Atty. Gen. Loretta Lynch said Wednesday. “Instead, they were stolen, laundered through American financial institutions and used to enrich a few officials and their associates.”

With year-round sunshine, a vast luxury home market and access to the glamour and cachet of Hollywood, Southern California has long been an attractive place for foreign investors, including those who are looking to park ill-gotten gains.

Last year, federal officials seized more than $1.1 million in assets, including sale proceeds from a Newport Beach home, from the family of disgraced former South Korean dictator Chun Doo-hwan. He was ordered decades ago to pay more than $200 million in criminal restitution as punishment for taking huge bribes from corporations during his time in office.


In another kleptocracy case connected to Southern California, Teodoro Nguema Obiang, son of the president of Equatorial Guinea, agreed in 2014 to sell his Malibu mansion, a Ferrari and a collection of Michael Jackson memorabilia to settle federal allegations that he purchased those assets with the proceeds of bribes and kickbacks.

del.wilber@latimes.com

ryan.faughnder@latimes.com


james.koren@latimes.com

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UPDATES:

12:20 p.m.: This article was updated with more details about Red Granite Pictures.

9:40 a.m.: This article was updated with comments from the Loretta Lynch news conference.


8:25 a.m.: This post was updated to add that some of the real estate involved is in Los Angeles.

This article was originally published at 7:25 a.m.