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Wednesday, October 5, 2016

'Ponzi'-like scheme used to cover up embezzled SRC cash, says Swiss Authority

The Swiss Attorney-General Office (OAG) said investigations revealed that substantial amounts of money were allegedly misappropriated from former 1MDB subsidiary SRC International and that the fraud was committed based on a form of “Ponzi” scheme to cover it up.

"On analysing the evidence obtained, the OAG identified further suspect transactions involving the Swiss financial sector. Firstly, the sum of US$ 800 million appears to have been misappropriated from investments in natural resources made by the SRC sovereign fund.

"Secondly, it is suspected that a ‘Ponzi‘ scheme fraud (i.e. paying the returns on initial investments from funds obtained from subsequent investors rather than from legitimate revenue from the investments) was committed to conceal the misappropriations from both the SRC fund and from 1MDB," added the OAG in a statement.

The Swiss authority said these suspected misappropriations from 1MDB were the subject of the OAG’s first request for mutual legal assistance to the Malaysian authorities.

"The aim of the OAG’s latest request is therefore to obtain further evidence in corroboration of the latest findings, in addition to the assistance requested in the OAG’s initial request of January 2016, which is still pending," it added.

A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organisation, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.

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