2nd Circ. Frustrates Feds, Families in Iran Case

     MANHATTAN (CN) — The U.S. government and victims of terrorist attacks cannot acquire a 36-story tower in Manhattan and other Iran-linked assets without a trial, the Second Circuit found in twin rulings on Wednesday.
     In 2009, federal authorities seized a Midtown skyscraper located at 650 Fifth Ave. and other properties in Maryland, Texas, California, Virginia and New York allegedly tied to the Iranian government.
     Prosecutors also sought the forfeiture of several bank accounts said to be linked to Iran.
     In 2013, the government won a federal judge’s ruling for the forfeiture of the properties, and dozens of families filed class-action lawsuits a year later demanding that the sale of these assets compensate the victims of Iran-sponsored attacks.
     Lead plaintiff Jason Kirschenbaum was maimed in a suicide bombing in Jerusalem that his parents and siblings believed had the Islamic Republic’s fingerprints on it.
     U.S. District Judge Katherine Forrest, who presided over both cases, found in favor of the government and the families without a trial.
     On Wednesday, the Second Circuit unanimously overturned these decisions because it is unclear that the majority owner of the buildings knew of any sanctions violation.
     There is “ample evidence,” on the other hand, of the New York City skyscraper’s historic ties to Iran, the appeals court found.
     In 1973, then-Shah of Iran Mohammad Reza Pahlavi created a foundation in his name to acquire the coveted address. The state-owned Bank Melli loaned the foundation $42 million two years later for the construction of what became known as the Piaget Building.
     Shortly after the shah’s overthrow in 1979, Iran’s post-revolutionary regime scrubbed away the former leader’s name from the organization behind the address, rebranding it the Mostazafan Foundation.
     The entity is currently known as the Alavi Foundation, which also owns several other properties across the United States.
     The 650 Fifth Ave. Co., a partnership between Alavi and the Jersey Island-based Assa Company, was created a decade after the revolution to help the owners lighten their U.S. tax load.
     After former President Bill Clinton imposed broad sanctions on Iran in 1995, Bank Melli formally divested its ownership of Assa, but prosecutors say the Iranian bank hid a 40 percent interest in the property through a chain of straw entities.
     Judge Richard Wesley questioned whether Alavi knew of these transactions, in an 88-page opinion.
     “While the record admits no factual dispute as to Bank Melli’s ownership and control of Assa after 1995, there is a genuine dispute of fact as to whether claimant Alavi knew of that ownership,” he wrote for a unanimous three-judge panel.
     Alavi’s former president Farshid Jahedi received a three-month sentence for obstruction of justice, after prosecutors charged him with destroying documents about Bank Melli’s relationship with the foundation.
     On remand, federal prosecutors may lose access to a larger trove of evidence — including Alavi’s computers, electronic storage devices, servers and more than 200 boxes of documents — that authorities found during a December 2008 search.
     Finding that the warrant justifying this search may have been unconstitutionally broad, the Second Circuit sent the question back to Judge Forrest to determine whether authorities acted in good faith.
     In a separate ruling, Judge Wesley found that the families had not yet proven that Alavi, Assa and 650 Fifth Ave. Co. are “instrumentalities” of a declared terrorist entity and whether their properties are “blocked assets” under Foreign Sovereign Immunities Act and the Terrorism Risk Insurance Act.
     Attorney James Bernard, a partner for Strook & Strook & Lavan who represents the families, predicted that his clients would ultimately succeed.
     “The Second Circuit has now sent the case to trial on several issues,” he wrote in a statement. “We look forward to a quick recovery for our client at trial.”
     Attorneys for Alavi and 650 Fifth Ave. Co. did not immediately respond to emailed requests for comment Wednesday.
     The Manhattan U.S. Attorney’s office declined to comment.

%d bloggers like this: