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Manhattan U.S. Attorney Files Civil Action Seeking Forfeiture of Alavi Foundation's Interest in Fifth Avenue Office Tower Controlled by Iran
PREET BHARARA, the United States Attorney for the
Southern District of New York, announced today the filing of an
amended civil Complaint seeking forfeiture of the Alavi
Foundation's interest in a 36-story office tower located at 650
Fifth Avenue in Midtown Manhattan (the "Building"). The Building
is owned by 650 Fifth Avenue Company, a partnership between the
Alavi Foundation and Assa Corporation. The original Complaint,
which was filed in December 2008 and amended today, sought
forfeiture of Assa Corporation's interest in the Building.
The amended Complaint alleges that the Alavi Foundation
has been providing numerous services to the Iranian Government
and transferring funds from 650 Fifth Avenue Company to Bank
Melli, a bank wholly owned and controlled by the Government of
Iran.
In addition to the Building, the amended Complaint
seeks forfeiture of all other assets of the Alavi Foundation and
Assa Corporation, including bank accounts owned by 650 Fifth
Avenue Company, the Alavi Foundation, and Assa Corporation; and
real properties owned by the Alavi Foundation in New York,
Maryland, Virginia, Texas, and California. The Amended Complaint
alleges that the properties are forfeitable as the proceeds of
violations of the International Emergency Economic Powers Act
("IEEPA"), 50 U.S.C. §§ 1701 et seq., together with Executive
Orders and United States Department of Treasury regulations, and
as property involved in and the proceeds of money laundering
offenses. As alleged in the amended civil forfeiture Complaint
filed today in Manhattan federal court:
Overview
The Alavi Foundation has been providing numerous
services to the Iranian Government, including managing the
Building for the Iranian Government, running a charitable
organization for the Iranian Government, and transferring funds
from 650 Fifth Avenue Company to Bank Melli. Likewise, Assa
Corporation and Assa Company Limited ("Assa Co. Ltd.") have been
providing numerous services to Bank Melli in contravention of
IEEPA and the Iranian Transactions Regulations promulgated
thereunder, including transferring rental income generated from
650 Fifth Avenue Company to Bank Melli, following Bank Melli's
instructions with regard to Assa Corporation's affairs, reporting
back to Bank Melli on Assa Corporations's financial situation and
business dealings, and managing the affairs of Assa Corporation
for the benefit of Bank Melli.
IEEPA confers upon the President the authority to take
certain actions, defined in 50 U.S.C. § 1702, in response to
declared national emergencies. The President has declared
national emergencies with respect to the actions and policies of
the Government of Iran: Executive Orders 12957, 12959, and 13059,
and with respect to the proliferation of weapons of mass
destruction ("WMD"), Executive Orders 12938 and 13382. The
Treasury Department's Iranian Transactions Regulations ("ITR"),
31 C.F.R. Part 560, and Weapons of Mass Destruction Proliferators
Sanctions Regulations, 31 C.F.R. Part 544, implement these
Executive Orders.
The Building was constructed in the 1970s by the
Pahlavi Foundation, a non-profit organization operated by the
Shah of Iran to pursue Iran's charitable interests in the United
States. The Building's construction was financed by a
substantial loan from Bank Melli.
Following the Iranian revolution of 1979, the Islamic
Republic of Iran established the Bonyad Mostazafan, also known as
the Bonyad Mostazafan va Janbazan ("Bonyad Mostazafan"), to
centralize, take possession of, and manage property expropriated
by the revolutionary government. The Bonyad Mostazafan was
created in or about March 1979 by order of the Ayatollah Khomeini
and approved by the Revolutionary Council of the Islamic Republic
of Iran, and is controlled by the government of Iran. The Bonyad
Mostazafan sought to take control of the Shah's property, including the assets of the Pahlavi Foundation. The Bonyad
Mostazafan reports directly to the Ayatollah.
Between approximately October 1978 and approximately
October 1979, all five previous directors of the Pahlavi
Foundation resigned, and four new directors took their places.
On or about February 25, 1980, an amended Certificate of
Incorporation for the Pahlavi Foundation was filed renaming the
Foundation "The Mostazafan Foundation of New York." The
Mostazafan Foundation of New York later renamed itself the Alavi
Foundation.
The Government of Iran's Involvement In
The Management Of The Building
In 1989, the Alavi Foundation and Bank Melli formed a
partnership, 650 Fifth Avenue Company, in order to avoid paying
federal taxes on rental income from the Building. Bank Melli's
ownership interest in 650 Fifth Avenue Company, however, was
disguised through the creation of two shell companies. The Alavi
Foundation transferred 35 percent of 650 Fifth Avenue Company to
Assa Corporation, an entity wholly owned by Assa Co. Ltd. Assa
Co. Ltd. is a Jersey, Channel Islands, United Kingdom, entity
owned by Iranian citizens who represent the interests of Bank
Melli. In conjunction with the transfer of the 35 percent
interest in 650 Fifth Avenue Company to Assa Corp., Bank Melli
cancelled its loan on the Building. Today, the Alavi Foundation
owns 60 percent of 650 Fifth Avenue Company, and Bank Melli owns
40 percent of 650 Fifth Avenue Company, through Assa Corp. and
Assa Co. Ltd.
The decision to convert Bank Melli's mortgage on the
Building into a partnership interest in 650 Fifth Avenue Company
was discussed and approved by high-level Iranian government
officials. Among others, the head of the Bonyad Mostazafan (also
the Deputy Prime Minister of Iran), the Office of the Prime
Minister of Iran, the director of the Central Bank of Iran, and
the general director of Bank Melli, as well as other Bonyad
Mostazafan and Bank Melli officials, discussed and approved the
partnership between the Alavi Foundation and Bank Melli. After
the Alavi Foundation and Assa Corporation entered into the
650 Fifth Avenue Company partnership agreement, a Bonyad
Mostazafan official forwarded the agreement to a Bank Melli
official, noting that "the partnership is based on prior
agreements between the Ministry of Finance, Bank Melli Iran, and
the Bonyad Mostazafan, with the only change being the building
will be valued at two million dollars less than as previously
agreed . . . ."
The Iranian Government's control of the Alavi
Foundation has continued. In 1989, KAMAL KHARRAZI was named as
the new Iranian Ambassador to the United Nations. As a result of
tension between the new Ambassador and the Alavi Foundation
president, the Ambassador eventually demanded the president's
resignation. According to the minutes of a May 16, 1991, board
meeting held in Zurich, Switzerland, the head of the Bonyad
Mostazafan explained that, as directed by the Supreme Leader,
several board members were to resign. In a letter, the Alavi
Foundation's president described how, a few days later, the
Ambassador called the president and another board member to his
office. The Ambassador said that "the Foundation from here on
out is under the oversight of Haj Agha, not Mr. Rafighdoost [then
the head of the Bonyad Mostazafan]. . . . [F]rom now on, the role
of the Managing Director and the role of the Board of Directors
will be just a formality and he [the Ambassador] will be
conducting all of its [the Foundation's] affairs." The president
of the Alavi Foundation then wrote a letter to the Ayatollah
cautioning that although the Ambassador's "appointment to a
position of responsibility connected to the Foundation's affairs
presents enormous political, security, and economic dangers, we
feel assured that the Supreme Leader has made this decision with
discernment, unique insight, and a thorough knowledge of all
pertaining aspects." In July 1991, the president resigned his
position and he was replaced that August by an individual who
served as president until the summer of 2007.
In 1992, the Alavi Foundation's new president met in
New York and in Tehran with Bank Melli officials concerning
$1.7 million in real estate taxes owed by 650 Fifth Avenue
Company and $2.2 million in unpaid distributions owed by the
partnership to Assa Corp. The Tehran meeting was attended by a
Bank Melli board member, the head of Bank Melli's Overseas
Network Supervisory Department, the head of Bank Melli's New York
branch, and the head of Bank Melli's Foreign Affairs. The head
of the board of directors and managing director of Bank Melli
forwarded the minutes of the Tehran meeting to the head of the
Bonyad Mostazafan along with a cover letter stating, among other
things, that "It is hoped that your firm instructions and the
extra attention of the brothers from that esteemed Foundation,
who are responsible for the Alavi Foundation of New York, will
resolve the partnership's mutual problems quickly . . . ."
Iranian Ambassadors to the U.N. continued to direct the
affairs of the Alavi Foundation and to attend meetings of the
Alavi Foundation board. In the late 1990s, two Bank Melli
employees sought Ambassador KHARRAZI's permission for Assa Corp.
to sell its interest in 650 Fifth Avenue Company. The Ambassador informed Bank Melli that the Building would be sold when the real
estate market improved. Ambassador SEYED MOHAMMAD HADI NEJAD
HOSSEINIAN, KHARRAZI's successor, originated the Alavi
Foundation's project funding formula. In 2004, Hosseinian's
successor told the Alavi Foundation to settle a lawsuit with a
company controlled by a former Alavi Foundation president for $4
million.
In October 2007, Alavi Foundation board members met
with the Ambassador and another former Iranian government
official to address issues relating to the Building's management
and Alavi's charitable services. According to notes taken by a
board member, the Ambassador stated, among other things, that it
was necessary to increase the profit from the Building; the
Ambassador was worried about Assa Corporation's 40 percent share;
the Foundation should only allocate to Shiites; and that the
Ambassador would determine the composition of the board. The
Ambassador ordered a study about the possibility of increasing
the Foundation's revenue and profit, stating that a business plan
and comparative analysis had to be done. The Ambassador
instructed: "I have to definitely see the proposed allocations
before a final decision is reached. I have to be kept informed
and I have to be able to state my opinion in order for you to
make a decision." The Ambassador told the board members that
"[i]f there is an issue that needs to be conveyed to Tehran, let
me know, I will convey it."
The Original Complaint
On December 17, 2008, this Office filed a civil
Complaint seeking forfeiture of the 40 percent interest held by
Assa Corporation in 650 Fifth Avenue Company. In the Amended
Complaint, the United States seeks to forfeit all right, title
and interest in 650 Fifth Avenue Company, including the Alavi
Foundation's 60 percent interest in the company. The United
States also seeks to forfeit the contents of bank accounts held
by 650 Fifth Avenue Company, the Alavi Foundation, and Assa
Corporation, as well as other real properties owned by the Alavi
Foundation.
The Obstruction of Justice Allegations Against
The Former President Of The Alavi Foundation
On December 19, 2008, FARSHID JAHEDI, who at the time
was the president of the Alavi Foundation, was arrested for
obstruction of justice for allegedly destroying documents
required to be produced under a grand jury subpoena concerning
the Alavi Foundation's relationship with Bank Melli Iran and the ownership of the Building. The charges and allegations contained
in the Indictment against JAHEDI are merely accusations, and he
is presumed innocent unless and until proven guilty.
Mr. BHARARA praised the investigative work of the
Federal Bureau of Investigation, the Internal Revenue Service,
Criminal Investigation Division, and the Police Department of the
City of New York. He also thanked the Counterterrorism Section
of the Department of Justice National Security Division and the
Manhattan District Attorney's Office for their initiation and
assistance in this case.
Mr. BHARARA said, "As today's complaint alleges in
great detail, the Alavi Foundation has effectively been a front
for the Government of Iran. For two decades, the Alavi
Foundation's affairs have been directed by various Iranian
officials, including Iranian ambassadors to the United Nations,
in violation of a series of American laws. The Alavi
Foundation's former President remains under investigation for
alleged obstruction of justice, and both the criminal and civil
investigations are ongoing."
Assistant United States Attorneys SHARON COHEN LEVIN,
ANNA ARREOLA, and MICHAEL D. LOCKARD are in charge of the civil
forfeiture action.
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