US forfeiture case says stolen funds landed in Shearman account, seeks 'Wolf of Wall Street' profits
A civil asset forfeiture case filed by the U.S. Justice Department on Wednesday claims $3.5 billion was stolen from a Malaysian-owned economic development company, and some of the money temporarily ended up in law firm accounts in the United States.
The complaint alleges the diverted money was used to finance the film The Wolf of Wall Street and to buy property, high-priced art and a private jet, report Law.com, the New York Times, the Street and the Wall Street Journal (sub. req.) in stories here and here. The money was allegedly misappropriated from 1Malaysia Development Berhad, also known as 1MDB.
The Justice Department is seeking forfeiture or $1 billion in assets allegedly purchased with the diverted funds. One targeted asset consists of the profits from The Wolf of Wall Street.
The Law.com story focuses on the law firms mentioned in the complaint, including Shearman & Sterling. According to the complaint, about $368 million was transferred to a Shearman & Sterling interest on lawyer account in 2009 and 2010.
The complaint alleges a Malaysian national who laundered misappropriated funds used money transferred into the Shearman account for purchases in the United States.
Shearman is not accused of any wrongdoing. A Shearman spokesperson did not immediately respond to an ABA Journal request for comment, and did not respond to requests for comment by Law.com and the New York Times.
Other BigLaw firms represented parties and handled lesser amounts of funds in connection with purchases allegedly made with misappropriated money.
Law.com spoke with Arthur Burger, the chairman of Jackson & Campbell’s professional responsibility practice group. He said that, even when lawyers do their due diligence, they can be fooled by a sophisticated criminal enterprise. “The culpability is whether the lawyer knew or should have known that it is criminal or fraudulent,” he said.
