The Park Lane, a luxury 46-storey hotel in Manhattan with panoramic views of the legendary Central Park and New York City skyline was said to have been priced at US$1 billion.
The hotel was one of the assets seized by the DoJ which had initiated a civil forfeiture action in 2016 to seize many of the assets purchased in the course of the alleged fraud.
“No bids came in, or at least none that came anywhere near the US$1 billion the seller was looking for,” the US daily reported, quoting three people who had been briefed on the auction but were not authorised to discuss it.
Malaysian businessman Low Taek Jho, better known as Jho Low, had agreed to finance 85% of the US$654 million purchase price when the hotel was bought in an auction in July 2013, by Steven Witkoff, a New York developer.
The other 15% was taken up by Witkoff and his partners.
Jho Low was previously reported by NYT to have provided a US$100 million non-refundable deposit, which was said to be twice the normal amount that any buyer would put up as a deposit, after the successful bid to buy the hotel.
Eventually, when the deal was finalised in November the same year, Jho Low was said to have negotiated with Abu Dhabi-based Mubadala Development to take up 30% of the deal, leaving him with 55%.
The DoJ had revealed in its suit filed in Los Angeles in July 2016, that in an email exchange with a staff in Witkoff’s company, Jho Low said the money for his side of the deal was coming from “Low family capital”, and “Just all the family.”
Instead, the DoJ alleges in its suit that the money was actually from 1MDB.
The DoJ said the US$202.2 million from Jho Low had come directly from client escrow accounts under one of his law firms, DLA Piper.
Forced to sell
“This was the best site in New York City and maybe the world. We designed what the entire partnership thought was a beautiful building.
“Little did we know we’d face circumstances like this,” Witkoff had previously told NYT over being forced to sell the property after reaching an agreement with the DoJ.
According to NYT, under a cooperation agreement with the DoJ, the owners of the Park Lane, led by Witkoff, agreed to sell the hotel and Jho Low’s share would be placed in escrow as the DoJ proceeds with its criminal investigation into the alleged embezzlement of funds from 1MDB towards the purchase of assets in the US.
In July last year, the DoJ through its investigation found that over US$3.5 billion was misappropriated from 1MDB.
The DoJ then filed a civil forfeiture suit sought to recover all the assets and investments made using the funds allegedly embezzled from 1MDB, including but not limited to The Park Lane in NY, a luxury hotel in Beverly Hills, condominiums in New York, a private jet, expensive works of art, as well as the financing of Martin Scorsese’s movie “The Wolf of Wall Street”, which starred Leonardo DiCaprio.
Jho Low was named in that suit, as well as in another suit filed by the DoJ in June this year, in which it sought to seize US$540 million in assets including art works, jewellery, a yacht worth US$165 million, and film rights purchased with funds allegedly embezzled from 1MDB.
The total value of assets sought by the DoJ is US$1.8 billion (RM7.7 billion).