Manhattan U.S. Attorney Files Civil Action Seeking Forfeiture of Alavi
Foundation's Interest in Fifth Avenue Office Tower Controlled by Iran
NEW YORK, Nov. 12 /PRNewswire-USNewswire/ -- Preet Bharara, the U.S. 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 U.S. 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 Corporation'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 Feb. 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 Dec. 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 Dec. 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 FBI, 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 U.S. Attorneys Sharon Cohen Levin, Anna Arreola and Michael D.
Lockard are in charge of the civil forfeiture action.
SOURCE U.S. Department of Justice
Yusill Scribner or Rebekah Carmichael or Janice Oh, +1-212-637-2600, all of
the Office of United States Attorney Preet Bharara, Southern District of New
York
