U.S. Government Working to Settle Foreign Corruption Claims Over 'Wolf of Wall Street'

Red Granite is in discussions with the Justice Department to resolve one component of the 1MDB Malaysian corruption case.
Paramount Pictures

On Tuesday, federal prosecutors told a California federal judge that the U.S. government is "actively discussing a potential settlement" with Red Granite Pictures, the financier of The Wolf of Wall Street. If a deal is reached, the Trump Administration will resolve a key component of the largest-ever targeting of alleged foreign corruption in an American court.

Less than a year ago, federal authorities filed several civil forfeiture cases aimed at seizing more than $1 billion in assets tied to a fund called 1Malaysia Development Berdhard (1MDB). The U.S. government alleged that money was diverted by high-level officials in Malaysia into shell companies and then into a variety of properties, including Beverly Hills and New York City real estate, artwork by Van Gogh and Claude Monet, a Bombardier jet, and funding for Red Granite, run by CEO Riza Aziz, the stepson of Malaysian Prime Minister Najib Razak.

In one of the cases, the U.S. government took the unprecedented step of seeking rights and profits from the Oscar-nominated film The Wolf of Wall Street, directed by Martin Scorsese, which, coincidentally, covered the real-life story of the FBI's takedown of a financial firm for corruption in the 1990s.

Red Granite has been due to respond to the government's forfeiture claim, but progress on a settlement has been enough that prosecutors have agreed to an extension. In court papers, the potential settlement is described as one "that would completely resolve this matter."

If a settlement doesn't occur, Red Granite would likely argue that for whatever happened in Malaysia, it is an "innocent owner" of a film property and that it lacked knowledge of 1MDB transactions. That's the strategy currently being pursed by Aziz in a fight to retain his real estate property.

The Justice Department has been reportedly eyeing criminal prosecution of Malaysian financier Jho Low, who has been described as an associate of Aziz with connections as well to celebrities like Wolf of Wall Street star Leonardo DiCaprio. No charges have yet been filed, and with a new political administration, it's possible that priorities have shifted at the Justice Department, but a deal with Red Granite would presumably entail some cooperation. 

Discussion of a possible settlement comes as the Cannes Film Festival begins. In recent years, Red Granite has made its presence felt in France, but with the controversy in the background, it's now staking a much lower profile.

The major Hollywood guilds also have a role in the Wolf of Wall Street forfeiture case. The Directors Guild of America, the Screen Actors Guild and the Writers Guild of America are each looking to ensure the continued flow of residuals and pension and health contributions. 

Meanwhile, while the Wolf of Wall Street case has drawn to a standstill, the government's separate attempt to seize music publishing assets tied to Low's family is heating up. The family had previously struggled to make a claim to assets that include The Temptations' "My Girl," Queen's "Bohemian Rhapsody" and Police's "Every Breath You Take" because its interest in EMI Music Publishing was held through a trust called JW Nile (BVI) Ltd., and the former trustee was concerned about becoming involved in an ongoing criminal probe. But that issue has now been apparently solved.

On Monday, JW Nile filed a motion to dismiss the government's case. It's arguing that the Central District of California lacks jurisdiction in the matter. "Remarkably, the Government does not claim that any of the Complaint’s California-related allegations has any direct causal relationship with the forfeiture of the Out-of-State Assets," states JW Nile's court papers. "Instead, the Government claims that it can avoid the statutory limitations on the Court’s jurisdiction by affixing a vague 'conspiracy' label to all of the allegations in the Complaint."

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