Over the last few months, after the Justice Department made its high-profile seizure, Low's family has tried rather unsuccessfully to stake a claim. On Monday, they made a new attempt and told the judge that the "Government should not be rewarded for doing everything it could to prevent this case from being litigated on the merits."
In typical forfeiture cases, the government asserts some assets derive from a criminal enterprise and makes a claimant prove the contrary. Critics of the system don't like the presumption of guilt, but new Attorney General Jeff Sessions is apparently a fan of civil asset forfeiture. What's more, the program has expanded in recent years. In 2010, the Justice Department established its Kleptocracy Asset Recovery Initiative to target public corruption around the globe. The $1 billion 1MDB case was hailed by the government last July as its biggest kleptocracy case to date.
Members of the Low family haven't even had the opportunity to argue assets were wrongfully seized. That's because its alleged interest in EMI Music Publishing was held through a trust called JW Nile (BVI) Ltd., and the trustee refused to stake a claim without getting the government's assurance of not being prosecuted. So the family members tried to intervene in court only to be ruled without standing to do so. In December, a default was entered, although EMI itself has been granted additional time to respond to the government's complaint.
In court papers filed Monday, the Low family through JW Nile say that new trustees have been appointed after legal proceedings in the Cayman Islands and New Zealand. The new trustees "do not feel paralyzed" and "intend to fulfill their overriding fiduciary duty to defend the defendant assets from forfeiture," states a motion to set aside the default. "Since the outset of this case, Plaintiff, the United States of America has waged a public relations war by litigating this case in the media and in the court of public opinion. But in the Central District of California, the Government seeks to win this case on a procedural technicality rather than on the merits of its claims."
It's no sure thing that a judge will set aside the default, but such events do happen. If the Low family does get an opportunity, they signal how they intend to fight the government's seizure. They appear set to challenge much of the Kleptocracy Initiative's legality by bringing jurisdictional issues over the location of the assets and alleged predicate criminal acts like money laundering.
"Moreover, it does not appear that the Government has alleged, nor could it allege, a viable predicate unlawful activity sufficient to support forfeiture," adds the motion. "First, the Government’s predicate offenses supporting forfeiture -- wire fraud and the transportation or receipt of stolen property -- do not apply extraterritorially and none of the events potentially giving rise to such offenses occurred in the United States. Second, the Government has not stated a claim based on its other predicates for forfeiture -- which sound in fraud under Malaysian law -- because the Government has not alleged any material misrepresentations."
The 1MDB case has drawn significant attention, particularly in Malaysia of course, and the Low family thinks what hasn't happened is significant.
"Other serious matters call the merits of the Government’s case into question," continues the motion. "For example, although the complaint alleges that there was illegal activity under Malaysian law, the Attorney General of Malaysia has investigated the allegations and found no evidence of wrongdoing. The complaint thus fails to identify any victim of illegal conduct. If 1MDB were the victim of such conduct, one would expect the Malaysian government or 1MDB to have instituted legal action in Malaysia or sought restitution in the United States. But neither the Malaysian Government nor 1MDB has done so."
This article originally appeared in THR.com.