Malaysian Leader Najib’s Stepson Allegedly Funded U.S. Property Deals With 1MDB Money

At least $50 million allegedly diverted from a state investment fund in Malaysia was spent on luxury properties in New York and Los Angeles by the stepson of the Malaysian prime minister, according to documents reviewed by The Wall Street Journal and people familiar with the matter.
Riza Aziz, a film producer and stepson of Malaysian leader Najib Razak, used money that originated from the 1Malaysia Development Bhd. fund to acquire a 7,700-square-foot, $33.5 million duplex in the Park Laurel condominium tower overlooking New York’s Central Park, the documents and people said.
Mr. Aziz also used money originating from 1MDB to buy an 11,000-square-foot walled mansion in Beverly Hills with a 120-foot-long pool for more than $17.5 million, the documents and people said.
The financing of those acquisitions is under investigation by the Federal Bureau of Investigation, which is conducting a wide-ranging inquiry into alleged misappropriation of billions of dollars from 1MDB, according to people familiar with the probe. 1MDB was set up in 2009 to benefit the Malaysian people.
Investigators believe that money used to buy the two properties was part of at least $238 million—more than the Journal previously reported—that was transferred to an offshore company wholly owned by Mr. Aziz, Red Granite Capital, by a firm which investigators believe played a central role in the alleged multibillion-dollar fraud. The Journal previously reported that Mr. Aziz’s film company received $155 million in loans originating with 1MDB, much of which went to finance the 2013 movie “The Wolf of Wall Street.”
Mr. Aziz, who according to people who know him lives in a rented apartment in Los Angeles while the Beverly Hills mansion is being renovated, has denied wrongdoing, as has Mr. Najib.
“There has never been anything inappropriate about any of Red Granite Pictures or Riza Aziz’s business activities,” said a spokesman for Mr. Aziz’s film company. “What they have done and will continue to do is develop and produce successful and acclaimed movies that have generated more than $825 million in world-wide box-office revenues.”
He said Red Granite “is responding to all inquiries and cooperating fully.”
The 1MDB fund denies wrongdoing and says it is ready to cooperate with any investigation. It says it hasn’t been contacted by an investigative agency so far.
Mr. Aziz’s real-estate purchases are among a series of personal and political expenditures which investigators say were funded with 1MDB money. The fund is struggling to pay off billions of dollars of debt it accumulated, ostensibly to fuel economic development in Malaysia, though few of its official business plans came to fruition.
The focus by investigators on U.S. properties comes after disclosures that more than $1 billion originating from 1MDB landed in Mr. Najib’s private bank accounts. Some was used to pay for political spending in Malaysia as well as clothing and jewels, the Journal has reported, citing people familiar with probes in two countries, bank-transfer information and other documents.
Mr. Najib has said the money he received was a legitimate donation from Saudi Arabia and that most of it was returned. Malaysia’s attorney general agreed the money came from Saudi Arabia legally and cleared Mr. Najib of wrongdoing.
The FBI also is investigating tens of millions of dollars of real-estate purchases by an associate of Mr. Aziz, a Malaysian businessman named Jho Low, according to people familiar with the FBI’s probes.
The Journal reported in April that Mr. Low, who was instrumental in setting up 1MDB in 2009, received hundreds of millions of dollars as part of a set of transactions involving a deal between 1MDB and a Saudi Arabia company.
Mr. Low bought the Park Laurel condominium and Beverly Hills mansion, which he later sold to Mr. Aziz, according to people familiar with the matter. The two became friends when they lived in London early last decade, according to people who know them.

Mr. Low also purchased a penthouse at the Time Warner Center in Manhattan, for $31 million, in 2011. And he bought a glassy, modern house in the Bird Streets area of Los Angeles for nearly $39 million in 2012. He still owns both, the people said.
A lawyer for Mr. Low didn’t respond to requests for comment.
The money Mr. Aziz used to buy the two properties from Mr. Low came to him through a company called Aabar Investments PJS Ltd., according to people familiar with the matter and bank documents.
The Journal reported earlier that Aabar Investments PJS Ltd.’s name is similar to that of a company whose parent, an Abu Dhabi sovereign-wealth fund called International Petroleum Investment Co., was a key business partner of 1MDB.
IPIC said in April that more than $3.5 billion 1MDB said it sent to the IPIC subsidiary as part of its business arrangements with IPIC was never received. Instead, it went to Aabar Investments PJS Ltd. in the British Virgin Islands, according to Malaysian investigators. IPIC said that company isn’t part of its corporate structure.
Aabar Investments PJS Ltd. then transferred money to Red Granite Capital, a British Virgin Islands company owned by Mr. Aziz. Aabar Investments PJS Ltd., which was set up by two executives of the IPIC subsidiary, was later closed. The executives were removed from their positions and declined to comment.
The Journal further reported that investigators believe Red Granite Pictures, a film company partly owned by Mr. Aziz, funded “The Wolf of Wall Street” with money received from 1MDB through Aabar Investments PJS Ltd., including $105 million sent to Red Granite Capital and another $50 million through other intermediaries in 2012.
Additional new documents reviewed by the Journal show an additional payment of $133 million went to Red Granite Capital from Aabar Investments PJS Ltd. in June 2012, bringing the total sent from Aabar Investments PJS Ltd. to $238 million.
The new documents also show that $60 million of the total received by Red Granite Capital was sent on the same day that 1MDB Energy (Langat) Ltd., a 1MDB unit, sent roughly $790 million to Aabar in the British Virgin Islands.
Loan documents for some of the money given to Red Granite Capital to help fund “The Wolf of Wall Street” show that Red Granite Capital used a relationship manager at the Singapore branch of the Swiss private bank BSI who was also the relationship manager for Mr. Low, Aabar Investments PJS Ltd. and 1MDB, according to documents reviewed by the Journal and court filings in Singapore.
Mr. Aziz, who studied in London, has been spending more time in the U.S. since about 2010. He has hobnobbed with celebrities including “The Wolf of Wall Street” star Leonardo DiCaprio and became a collector of movie memorabilia. Representatives for Mr. DiCaprio didn’t respond to requests for comment.
He bought through a broker a vintage “King Kong” movie poster for several hundred thousand dollars from Kirk Hammett, lead guitarist for the band Metallica, according to people familiar with the matter. A spokesman for Mr. Hammett didn’t respond to requests for comment.
Mr. Aziz’s New York duplex is by far the most expensive property in the Park Laurel building, a prominent luxury address near Lincoln Center. It has seven bedrooms and five full bathrooms. Mr. Aziz stays in the apartment when he visits New York, according to a doorman there.
Monthly real-estate tax and maintenance fees are likely more than $20,000, according to brokers.
Mr. Aziz’s property on Hillcrest Road in Beverly Hills was described in an advertisement as a four-bedroom home that is a “stunning architectural statement,” with 14-foot high ceilings, a screening room and a large golden pyramid over an indoor water area.
A visit by a Journal reporter found the property is undergoing renovations while Mr. Aziz lives in his rented Los Angeles apartment.

Write to Bradley Hope at bradley.hope@wsj.com and Tom Wright at tom.wright@wsj.com