The U.S. ruling emerged at a London court hearing this week where Petrosaudi Oil Services (Venezuela) Ltd. is battling to win release of hundreds of millions of dollars at the heart of the case.

U.S. District Judge Dale Fischer in Los Angeles earlier this month granted Petrosaudi’s request to dismiss the Justice Department’s forfeiture claim, ruling that the government had failed to make an adequate allegation between the money and any criminal offense. The Justice Department created the Kleptocracy Asset Recovery Initiative in 2010, with the aim of seizing proceeds from foreign corruption.

“It appears that the government would like to take advantage of an inference that one or more PetroSaudi entities were knowingly involved in the theft of the $700 million and the subsequent laundering and cover-up without actually making any allegations to that effect,” Fischer said in her March 9 ruling.

The 1MDB scandal has spurred court cases around the world, as Malaysian authorities try to track down more than $4 billion that was siphoned off from the country’s economic development fund. U.S. prosecutors, for their part, have been seeking to recoup at least $1 billion that was allegedly spent on yachts and paintings by Claude Monet and Vincent Van Gogh and other luxury goods.

The DOJ alleges that the alleged perpetrators of the 1MDB scam pledged $1 billion in Malaysian state funds to a proposed joint venture between Petrosaudi and PDVSA, Venezuela’s state-owned oil producer, only to redirect $700 million of that into their own account for their personal benefit, leaving the venture with just $300 million.

The Justice Department has until March 29 to file an amended complaint. A Justice Department spokesman and the prosecutors leading the forfeiture effort, who’ve also been heavily involved in the broader 1MDB asset recovery efforts, didn’t return messages seeking comment.