The deal that linked the Abu Dhabi fund with 1MDB began after Malaysia’s Mr. Najib visited Abu Dhabi in 2009. Malaysian media said he announced the emirate would invest $1 billion in Malaysia’s real-estate, hospitality and energy businesses via the 1MDB state fund.

Abu Dhabi handed the energy part of this plan to IPIC. Instead of contributing money, however, IPIC supplied a guarantee on $3.5 billion of 1MDB bonds, making them easier to sell.

In return, 1MDB agreed to pay $1.4 billion of what was called “collateral” to IPIC’s Aabar unit. Mr. Al Qubaisi signed the deal without board approval, people familiar with it said.

The $1.4 billion of 1MDB money never reached Aabar, the Justice Department said, but instead was paid to a firm with a name nearly identical to Aabar’s that Mr. Al Qubaisi and Aabar’s CEO, an American named Mohamed Badawy Al Husseiny, had set up in the British Virgin Islands.

From that offshore firm, the Justice Department alleged in its July lawsuits, the diverted 1MDB cash was distributed to intermediaries, which sent it on to still other intermediaries, until hundreds of millions of dollars reached Mr. Najib, his stepson and others.

One of the others cited by the Justice Department was Jho Low, a Najib confidant who had helped to set up 1MDB. U.S. prosecutors have described Mr. Low as in the thick of the alleged fraud, helping orchestrate schemes to siphon away money. He is a subject of criminal investigations in the U.S. and Singapore, according to people familiar with them. Mr. Low has denied any wrongdoing.

The Najib stepson is Riza Aziz, one of the producers of the 2013 hit movie “The Wolf of Wall Street,” made with money the Justice Department has said was misappropriated from 1MDB. Mr. Aziz and his production company have denied wrongdoing, saying they had no knowledge that any money received had originated with 1MDB.

The Justice Department said in its July asset-seizure lawsuits that $473 million originating with 1MDB was transferred to a Luxembourg account owned by Mr. Al Qubaisi. The civil suits, filed in California federal court, said Mr. Al Qubaisi subsequently used some of the money to buy a $51 million New York penthouse and two Los Angeles mansions worth a combined $46 million.

The suits also said about $67 million of 1MDB money was transferred to two accounts owned by Mr. Al Husseiny, who was the Aabar CEO.

In asset-seizure lawsuits, parties who believe they legitimately own the assets can contest the Justice Department’s claims, a process that is now under way with the pending July suits. The suits are filed against the property itself and don’t include any individuals as defendants.

Like Mr. Al Qubaisi, Mr. Al Husseiny was forced out of IPIC and has come under investigation in Abu Dhabi for money laundering and other possible offenses, said people familiar with the investigation. He, too, is held in jail, they said. Mr. Husseiny hasn’t been charged.

Besides the $1.4 billion of bond-guarantee collateral, an additional nearly $1 billion of 1MDB money also vanished into the British Virgin Islands firm with a name very like Aabar’s, according to documents reviewed by the Journal and to people familiar with the investigations.

This was money 1MDB sought to pay to IPIC’s Aabar unit to cancel some options on energy assets. Investigators are still tracking this nearly $1 billion.

At one point, investigators believe, Messrs. Al Qubaisi and Al Husseiny had put more than $8.8 billion of IPIC’s money potentially at risk through guarantees of 1MDB-related deals and loans, according to people familiar with the probes. IPIC has said some of the guarantees weren’t authorized. It is locked in a commercial dispute with 1MDB.

Las Vegas nightclubs Omnia and Hakkasan were among ventures of an investment business Mr. Al Qubaisi managed for an Abu Dhabi prince. PHOTOS: GETTY IMAGES(2)

In other lines of inquiry, as described by people familiar with the 1MDB probes:

•Mr. Al Qubaisi’s management of Sheik Mansour’s investment business has led to a focus on Las Vegas. A restaurant company controlled by the sheik’s business spent $207 million building the Omnia nightclub at Caesars Palace and a club called Hakkasan Las Vegas, where British singer Rita Ora sang “Happy Birthday” to Mr. Al Qubaisi in 2013, according to someone who was there.

U.S. investigators are looking into whether any funds diverted from 1MDB were indirectly provided to the restaurant company, Hakkasan Ltd., said people familiar with the probe. There is no suggestion of wrongdoing by Hakkasan, which said its capital had no connection with 1MDB. The firm has said the Justice Department confirmed Hakkasan is “not the subject or target of their 1MDB investigation.”

•Investigators are examining whether 1MDB money ultimately transferred to an Al Qubaisi-controlled account was used to make payments on Sheik Mansour’s 482-foot yacht, the Topaz, whose eight floors include a swimming pool, cinema and two helicopter pads. Sheik Mansour didn’t respond to requests for comment.

•IPIC owns Swiss-based Falcon Private Bank, and investigators are looking at whether Messrs. Al Qubaisi and Al Husseiny used it to facilitate some transactions at issue. Swiss and Singaporean regulators recently fined Falcon for money-laundering breaches, including an alleged transfer of 1MDB money into Mr. Najib’s accounts. A Swiss regulator said the dealings were driven by “two representatives of the bank owners,” which a person familiar with the case said meant Messrs. Al Qubaisi and Al Husseiny. Falcon declined to comment.

Sheik Mansour’s yacht Topaz PHOTO: AFP/GETTY IMAGES

By 2015, Mr. Qubaisi’s wealth included bank accounts across the world, homes in France, private jets and about $31 million worth of automobiles in Switzerland, including a Bugatti Veyron and a Pagani Huayra. In his office, he kept fine cigars in a box emblazoned with his initials, KAQ. At least some of the assets now are frozen, including tens of millions of dollars in a Luxembourg bank account.

Around March of 2015, during a dispute between Mr. Al Qubaisi and a former employee, photos were published online showing him cavorting in a St. Tropez nightclub with a seminude woman sitting in a giant drinks glass. It was behavior of which the U.A.E. ruling family took a dim view.

During this period, fraud suspicions relating to missing 1MDB money were emerging. In April 2015, Abu Dhabi’s emir removed Mr. Al Qubaisi from IPIC without explanation.

In June of this year, IPIC reported a net loss, attributed to low oil prices, and said it was taking a $3.5 billion provision related to bond guarantees given to 1MDB. Abu Dhabi authorities said they had decided to merge IPIC into another state fund, Mubadala Development Co. They described the move as part of a strategic vision to streamline emirate-owned companies and funds.

People with knowledge of the discussions said Mr. Al Qubaisi’s ouster, caused in part by the 1MDB scandal, was a critical factor in accelerating the plans. Two months later, he and Mr. Al Husseiny were arrested.

—Simon Clark contributed to this article.

Write to Bradley Hope at bradley.hope@wsj.com and Nicolas Parasie at nicolas.parasie@wsj.com