US$265m trust hearing fraud case delayed

Friday 20 January 2017 11:45 AM

US$265m trust hearing within billion-dollar fraud case delayed

By Sophie Boot

Jan. 20 (BusinessDesk) - A defended hearing in Auckland’s High Court involving family members of Malaysian businessman Jho Low has been delayed nearly two hours this morning.

The relatives - Low Hock Peng, Goh Gaik Ewe, Low May Lin and Low Taek Szen - are beneficiaries of New Zealand trusts which own assets which the US Department of Justice alleges to be proceeds of a multi-billion dollar money laundering scheme, including a Bombardier jet, the Viceroy L’Ermitage Hotel in Beverley Hills and property in New York and Los Angeles.

The Low family members have asked the court to remove six present trustees - Rothschild Trust (Schweiz) Ag, Elephant Sun, Stars Tower, Boluo Investments (US), Global One Real Estate and Indigo Management - and replace them with FFP (Cayman), a company incorporated in the Cayman Islands, and FFP Trustee (NZ), a New Zealand registered company. The trustees don’t consent to the relief but are not actively resisting it, they said in their filings.

The US government alleges the trusts’ assets can be traced to an international conspiracy to launder money from Malaysian wealth fund 1MDB. The DOJ is trying to recover more than US$1billion, of which some US$265 million of assets are involved in today's dispute.

The US position is that only the direct owners of the assets can argue against asset forfeiture, although Low family members have brought legal action to intervene in forfeiture proceedings. The plaintiffs say the current trustees haven’t opposed the forfeiture attempts, thus their desire to replace them.

The trustees want the court to make an ancillary order to reimburse them for costs they have incurred to preserve and enhance the trust’s assets, which they say are considerable, along with future costs from transferring the assets to the new trustees and any future legal costs.

The plaintiffs say an equitable lien against the trust assets created by the indemnity that the trustees have is enough, but the trustees argue that the structures and the forfeiture proceedings from the US government “create some uncertainty about the value of this equitable lien.” The trustees want the court to make sure they’re paid back out of “clean funds”, meaning funds which aren’t part of the alleged money laundering.

The hearing was scheduled to start at 10am, but has been delayed until 11:45 am at this stage.

(BusinessDesk)

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