NEW YORK – An office tower is subject to forfeiture because revenue from it was secretly funneled to a state-owned Iranian bank in violation of a U.S. trade embargo, a judge ruled Monday.
U.S. District Judge Katherine Forrest made the forfeiture finding in Manhattan, ruling in a case brought by the U.S. government in 2008.
The U.S. government had said the Alavi Foundation's sole partner in the ownership of the 36-story Manhattan building was a shell company fronting for a secret interest held by the state-owned bank of Iran, Bank Melli. The Iranian government has been designated by the U.S. as a sponsor of international terrorism, an allegation it has repeatedly denied.
The judge agreed that monetary transfers by the shell company, Assa Co., to Bank Melli violated money laundering statutes.
"There is substantial, un-contradicted evidence that Assa is owned and controlled by Bank Melli, and that Bank Melli is wholly owned and controlled by Iran," the judge said.
She rejected Alavi's "core defense," that a jury should decide whether the foundation knew that Assa was controlled by Iran between 1995, when providing services to Iran became illegal, and the date of the lawsuit. She said that many of the Alavi board members who were indisputably involved in the creation of Assa as a front for Bank Melli in 1989 remained with or returned to positions with Alavi after 1995.
"The Government argues that Alavi asserts a sort of collective amnesia," she said. "The court finds the analogy apt and its reality implausible. No rational juror could believe in such extraordinary amnesia."
The foundation said it was "obviously disappointed" with the judge's decision granting partial summary judgment against it. It said it disagreed with the court's analysis of the facts and the law and intended to appeal once a final judgment is entered.
"The Foundation was ready for trial and is disappointed that it did not have the opportunity to rebut the Government evidence before a jury," it said in an emailed statement.
The judge, in her opinion, recounted the history of the Fifth Avenue building, saying it was built in the 1970s on property acquired by a not-for-profit corporation formed in New York by then Iranian leader Shah Mohammad Reza Pahlavi, who was overthrown in 1979. She said it was valued at $83 million in 1989, when a partnership called the 650 Fifth Avenue Co. was formed, with Assa contributing $44 million in a deal the government maintained was designed to avoid U.S. taxes.
The judge said the building was subject to forfeiture on the money laundering accusations described by the U.S. government.
"The alleged money laundering occurred when the partnership, Alavi, and Assa Corp. distributed the rent with the intent to conceal that it was meant for the benefit of the Iranian government and caused partnership funds to be transferred abroad," she wrote. "Having engaged in a money laundering violation, the entirety of the 650 Fifth Avenue Building (the business premises) and all of the associated bank accounts are subject to forfeiture -- even if they were not used in the money laundering offense itself."