The U.S. government said it’s ready to proceed with the seizure of a billion dollar Manhattan skyscraper from the Alavi Foundation, an Iranian-American charity, to benefit victims of terrorism after a jury found Thursday that the charity’s majority ownership was derived from financial dealings that violated sanctions against Iran.
However, despite first filing a lawsuit in 2008, only yesterday did the US government win the right to seize the 36-story building, which is valued somewhere between $500 million and $1 billion.
Acting U.S. Attorney Joon H. Kim said the owners of the office tower near Rockefeller Center “gave the Iranian government a critical foothold in the very heart of Manhattan through which Iran successfully circumvented U.S. economic sanctions.
“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.”
Over the last month, lawyers for the Alavi Foundation argued that the charity was unaware if Iran was secretly benefiting from a partner who owned 40 percent of the building. The Alavi Foundation owns 60 percent.
Efforts to stop nefarious actors from setting up US companies in clandestine have failed time and again in Washington. But a bipartisan set of lawmakers hopes that by highlighting the risks to national security, their latest effort to pass a law forcing shell companies to disclose their real owner will succeed this time. In an interview with Quartz this week, New York congresswoman Carolyn Maloney pointed out exactly this potential for using rent or earnings from US property to finance terrorism.
“How irresponsible do you have to be to not know who owns your properties?” New York congresswoman Carolyn Maloney asked. The congresswoman, along with a bipartisan set of lawmakers, hope that by highlighting the risks to national security, their latest effort to pass a law forcing shell companies to disclose their real owner will succeed this time. “We had a bomb go off in my district on 23rd street [in Manhattan] maybe four months ago, and you wonder where they got the money from…the longer we wait to fix the the problem the more we put our country at risk.”
The sale of the building, worth nearly $1 billion, combined with several other properties around the country, would represent the largest terrorism-related civil forfeiture in U.S. history. The Fifth Avenue building was built in the 1970s on property acquired by the not-for-profit corporation and was valued at a mere $83 million in 1989.
The prosecutor said the verdict “allows for substantial recovery for victims of Iran-sponsored terrorism.”
The government is seeking to turn over proceeds of a sale to holders of over $5 billion in terrorism-related judgments against the government of Iran, including claims brought by the estates of victims killed in the September 11, 2001, attacks.
Government lawyers said Iran has secretly controlled the building for years as millions of dollars in rent payments are funneled to it from a partnership made up of Alavi and a shell company fronting for a secret interest held by the state-owned bank of Iran, Bank Melli.
The Foundation was first set up in the 1970s by Mohammad Reza Pahlavi, the late Shah of Iran, to advance Iran’s charitable interests in the US. Later re-branded as the Alavi Foundation, the organization’s mission statement is to “promote the study of Persian culture, language, art, literature, and civilization.”
The Foundation released the following statement in response to the ruling: “The Alavi Foundation is disappointed by today’s verdict and by the court’s decision in the related cases and is considering its options.”
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