Jury Awards Iran-Tied NYC Tower to U.S. Government

MANHATTAN (CN) — A few blocks away from the Trump Tower on Fifth Avenue, a Midtown Manhattan skyscraper tied to the Iranian government has been the focus of a federal forfeiture prosecution for nearly a decade.

That effort drew toward a close on Thursday, as a New York-based federal jury awarded the building to the U.S. government.

Acting U.S. Attorney Joon Kim applauded what he called the “largest civil forfeiture jury verdict and the largest terrorism-related civil forfeiture in U.S. history,” capping off a nearly monthlong trial for a case that began in 2008.

“For over a decade, hiding in plain sight, this 36-story Manhattan office tower secretly served as a front for the Iranian government and as a gateway for millions of dollars to be funneled to Iran in clear violation of U.S. sanctions laws,” Kim said in a statement. “In this trial, 650 Fifth Avenue’s secret was laid bare for all to see, and today’s jury verdict affirms what we have been alleging since 2008: that through all the efforts to sanction and isolate Iran, a state sponsor of terrorism, the owners of 650 Fifth Avenue gave the Iranian government a critical foothold in the very heart of Manhattan through which Iran successfully circumvented U.S. economic sanctions.” 

The jury returned a mixed verdict regarding other properties in Maryland, Texas, California, Virginia and New York.

Falling at a fraught time for U.S.-Iranian diplomacy, today’s verdict will likely irritate rocky relations symbolized by the more than $500 million real estate at the heart of the case.

In 1973, then-Shah of Iran Mohammad Reza Pahlavi — widely perceived in his country at the time as a U.S.-installed autocrat — 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 government scrubbed away the former leader’s name from the organization behind the address, rebranding it the Mostazafan Foundation. That entity later became 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 Co., was created a decade after the revolution to help the owners lighten their U.S. tax load.

Though Bank Melli formally divested its ownership of Assa after former President Bill Clinton imposed broad sanctions on Iran in 1995, prosecutors say the Iranian bank hid a 40 percent interest in the property through a chain of straw entities.

Federal prosecutors here filed their forfeiture case on Dec. 17, 2008, during the final days of the George W. Bush administration.

The case carried over into the next administration, with U.S. Attorney Preet Bharara pursuing the case aggressively, even as President Barack Obama pursued his signature Iran deal.

Obama-appointed Bharara received a pink slip earlier this year from President Donald Trump, but the forfeiture case dragged on, amid new threats to the relaxation of U.S.-Iran relations.

Alavi’s attorney John Gleeson is a former Brooklyn federal judge, now with the firm Debevoise & Plimpton. “The Alavi Foundation is disappointed by today’s verdict and by the court’s decision in the related cases and is considering its options,” Gleeson said in an email.

Thursday’s verdict came a year after the U.S. Court of Appeals for the Second Circuit overturned a ruling in the government’s favor that would have averted a trial. Court watchers believe another appeal of today’s verdict to be likely.

If upheld, the proceeds from the forfeiture will be used to compensate the victims of Iran-sponsored attacks such as the 1983 Marine Barracks bombing in Beirut, Lebanon, as well as suicide bombings in Israel.

James Bernard, an attorney with the New York-based law firm Stroock & Stroock & Lavan, represents many of these families. “We are gratified to win this victory for the victims of Iran-sponsored terrorism, some of whom have waited more than two decades for this day,” Bernard said in a statement.

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