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‘Wolf of Wall Street’ Scandal Casts Wide Net of Suspicion

“The Wolf of Wall Street” traced the rise and fall of a real-life penny-stock swindler. Such scams are not uncommon, but the filmmakers managed to weave an epic tale of greed and debauchery.

It now appears they would have had a much grander story to tell had they turned the camera around. In a court filing released last week, the U.S. Justice Dept. accused the film’s producers and their associates of looting billions of dollars — corruption on a scale that can be carried off only with state sponsorship.

The case — in fact, several cases, one of which is titled United States of America v. “The Wolf of Wall Street” Motion Picture — spans the globe, from banks in Singapore to penthouses in London to art auctions in New York.

At its center are two friends: Riza Aziz, CEO of Red Granite Pictures, and Jho Low, a 34-year-old financier. Though neither was criminally charged, a forfeiture complaint alleges that they used funds stolen from 1 Malaysia Development Berhad, a state-run development fund, to buy luxury real estate, fine art, and jewelry, and to pay gambling expenses.

But the allegations go well beyond Aziz and Low. Indeed, the case could go so far as to destabilize the government of Malaysia, where Prime Minister Najib Razak is alleged to have received hundreds of millions of dollars in state funds. (Aziz is Najib’s stepson.)

The complaint also alleges wrongdoing by officials of Saudi Arabia and the Emirate of Abu Dhabi, who prosecutors believe were active participants in the fraud.

Leonardo DiCaprio, the star of “The Wolf of Wall Street,” is also caught up in the case. According to the complaint, he gambled with Low, Aziz, and a Malaysian official in 2012 at the Venetian Resort Hotel Casino in Las Vegas. On that occasion, Low allegedly withdrew more than $1 million from funds that traced back to the Malaysia fund.

The tight relationship with DiCaprio opened doors for Red Granite. One company that took financing from Red Granite in recent years said the movie star smoothed a path to the deal. An executive at the company, who declined to be named, said his film outfit knew little about the Aziz-headed enterprise, but “there were no red flags given that Leo was working with them. There didn’t seem to be anything odd there.” He added: “It was Leo who basically delivered Red Granite for the film.”

DiCaprio’s reps did not return calls seeking comment.

The allegations also raise questions about compliance procedures at major Western financial institutions. Goldman Sachs is cited in the complaint by name, and prosecutors went out of their way to note that the firm took nearly $500 million in fees on bond offerings that were later allegedly diverted for private use.

According to the feds, Goldman emphasized two goals in raising capital for the Malaysian fund: “confidentiality” and “speed of execution,” neither of which lends itself to a rigorous compliance process. (By contrast, the complaint notes that Deutsche Bank did raise red flags about a 1 Malaysia Development Berhad transfer, though the deal ultimately was approved.) In a statement, Goldman said it had “no visibility” into how the money was used after the bonds were sold.

The allegations also have ramifications for Sony. Low allegedly used $106 million in stolen funds to partner with Sony to buy EMI Music Publishing. The U.S. government is seeking to return that money to the people of Malaysia. (Sony declined to comment.)

Through it all, Red Granite is keeping up a brave face, saying the suit won’t affect day-to-day operations, and touting its slate of “exciting new projects.” The company also says it did not knowingly take stolen funds.

Red Granite will have its day in Los Angeles federal court, as the government seeks to seize future revenue from “The Wolf of Wall Street.”

If the company manages to survive, its own story would make one hell of a sequel.

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