riza aziz
Why is this man smiling? Malaysian Prime Minister Najib Razak's stepson Riza Aziz.Wikipedia

At least $50m (£35m, €44m) that was allegedly diverted from scandal-ridden Malaysian state investment fund 1MDB was invested in expensive real estate in New York and Los Angeles, by the stepson of Malaysian Prime Minister Najib Razak, according to a published report.

The Wall Street Journal obtained documents, which were corroborated by sources, revealing that film producer Riza Aziz used suspected funds from the 1Malaysia Development Berhad fund to buy a massive $33.5m (£23.2m, €29.5m) duplex in the Park Laurel condominium tower overlooking Manhattan's Central Park, as well as a $17.5m (£11.8m, €15.3m) mansion in Beverly Hills, California.

Those purchases are under investigation by the FBI, which is conducting a probe into alleged misappropriation of billions of dollars from 1MDB, sources told the Journal.

Investigators believe money spent on the real estate was part of at least $238m (£165m, €209m) held in an offshore company, Red Granite Capital, which officials believe may have played a key role in a suspected multi-billion-dollar fraud of the giant government-backed fund. Red Granite is owned by Aziz.

The Journal previously reported that Aziz's film company received $155m (£107m, €136m) in loans from 1MDB, much of which, ironically, financed the movie The Wolf of Wall Street. Both Aziz and Najib have denied any wrongdoing.

"There has never been anything inappropriate about any of Red Granite Pictures or Riza Aziz's business activities," a company spokesman told the Journal.

The feds are taking a careful look at the US property purchases after officials discovered that more than $1bn (€700m, €880m) from 1MDB ended up in Najib's private bank accounts.

The FBI also is investigating real-estate purchases by an Aziz associate, Malaysian businessman named Jho Low, the Journal also stated in its report. Low originally purchased the Park Laurel condo and Beverly Hills mansion before selling them to Aziz. He also bought a $31m (£21m, €27.2m) penthouse in Manhattan and a $39m (£27m, €34m) home in Los Angeles, according to sources.

Earlier in May 2016 the fund's sole shareholder, the Ministry of Finance, stepped up to undertake a major reshuffle of1MDB's assets and management. A first step was the dissolution of the fund's advisory board, chaired by the prime minister.

Regardless of where the money disappeared to, the Malaysia government and taxpayers will eventually be responsible for all of the fund's financial obligations, even though some of them have been guaranteed by Abu Dhabi's sovereign fund International Petroleum Investment Company (IPIC).

The IPIC recently paid $52.4m (£36.3m, €46m) in interest payments on 1MDB's $1.75bn (£1.21bn, €1.54bn) fixed rate notes. But IPIC warned that it fully expects to recover the payment.