Red Granite Pictures has paid off the balance of its $60 million settlement with the U.S. government, bringing an early end to its involvement in a $4.5 billion Malaysian corruption case.
The production company behind “The Wolf of Wall Street” and “Daddy’s Home” reached a deal with federal prosecutors in March. Under the agreement, the company did not admit wrongdoing and promised to pay the settlement amount in three installments over the course of nearly a year. The company has now paid the final installment four months ahead of schedule, officially ending the case.
“Red Granite paid its obligation to the government in full,” they said in a statement. “The company is pleased to put this matter behind it.”
Red Granite was accused of using more than $100 million embezzled from 1MDB, a Malaysian development fund. The 1MDB scandal led to the downfall of Malaysian Prime Minister Najib Razak, who was recently arrested in Malaysia on corruption charges. His stepson, Riza Aziz, is the CEO of Red Granite.
Red Granite borrowed from Brevet Capital in order to finance the settlement, according to an industry source. The funds will ultimately be returned to the Malaysian government, once certain processing fees are paid.
Under the terms of the settlement, Red Granite had until January to complete its restitution. By paying early, the company avoids paying interest on the balance, which was accruing at 2% per year. The settlement was surprising to some observers, because the amount is roughly equivalent to the valuation that the government placed on the production company, according to knowledgeable sources. Red Granite made the rounds in the investment community to try to get funding, reaching out to the likes of Comerica, Fortress, and Aperture Capital, industry sources tell Variety. Financial terms of the loan from Brevet are unclear.
John Kucera, assistant U.S. attorney for the central district of California, arranged the settlement. Benjamin Waisbren, a financial adviser and Hollywood producer, also played an integral role, advising on the deal and helping the Justice Department value Red Granite. Waisbren declined to comment.
“This case was resolved to the satisfaction of both sides with the payment of $60 million, which fell squarely in the estimated valuation of Red Granite Pictures, as determined by an outside expert,” said Thom Mrozek, a spokesman for the U.S. Attorney’s Office in Los Angeles.
The Red Granite case has generated a great deal of media attention because of its mixture of celebrity and industrial-scale corruption. Najib lost his re-election bid and was arrested last summer on embezzlement charges.
Prosecutors filed a civil asset forfeiture action against Red Granite in July 2016, as part of a much broader effort to recoup more than $1 billion allegedly embezzled from 1MDB, a Malaysian state-run development fund. Money that was allegedly stolen from the fund didn’t just pay for film investments, it was also reportedly used to throw lavish parties, including a Cannes bash that included a Jamie Foxx/Kanye West “Gold Digger” duet, and elaborate gifts such as the Oscar that Marlon Brando won for “On the Waterfront” that Red Granite gave to Leonardo DiCaprio.
The Justice Department has accused financier Jho Low of masterminding a scheme to steal $4.5 billion from the fund.
Despite the negative headlines, Red Granite is continuing to operate as a going concern. It is unclear if Aziz, who reportedly fled the U.S., will continue as CEO and who owns the company. Its future looks cloudy. Red Granite financed the recent flop “Papillon,” but has little else in development. It only has roughly a half dozen films in its library, and most of these are only generating revenues from television licensing deals.
Aziz’s legal problems may not be behind him. The government is also seeking to seize several luxury properties, which Aziz allegedly bought with stolen funds. Federal prosecutors in Brooklyn are also pursuing a criminal investigation, and he has been questioned by Malaysian anti-corruption authorities.