A U.S. Court of Appeals in New York ruled on July 20th that the Federal government could not seize a multi-million dollar Manhattan office building that is claimed as being a front for the Iranian government, reversing two lower court decisions. The U.S. Marshals Service confiscated the building three years ago from a firm with that had allegedly violated U.S. sanctions against Iran.
The owners of the 36-story building at 650 Fifth Avenue were accused of acting as “shell companies” for the Iranian government. The U.S. Government claimed that the nonprofit Alavi foundation, which owns 60 percent of the building, knew that the building’s minority owner, Assa Corp., was owned by, and engaged in money laundering with the Iranian state owned bank Melli. Attorney said Alavi was in violation of the U.S. trade sanctions against Iran, constituting the largest terrorist-related forfeiture in U.S. history.
But a three-judge panel released a decision Wednesday that reversed the forfeiture under the Foreign Sovereign Immunities Act, saying the plaintiffs lacked adequate evidence of the Iranian government’s involvement with the building’s owners.
Now a lower court will be left to determine whether the companies could be considered agencies or instruments of Iran in accordance with the Terrorism Risk Insurance Act. If the case is successful, the families of victims of the 1983 Beirut bombings of U.S. Marine barracks, the 1996 Saudi Arabia bombing of the Khobar Towers, and the 2001 bombing of a Jerusalem restaurant would be compensated from the proceeds of business transactions of the related firms.
The 5th Avenue skyscraper was originally bought by an organization with close ties to former Iranian Shah Reza Pahlavi, but ownership was then transferred after his ouster in the 1979 revolution. Worth $83 million in 1989, the building now has an estimated value of up to $1 billion, and revenues of $20 million a year. A spokesman for Preet Bharara, one of the U.S. Attorneys involved, once deemed the office building “Iran’s slice of Manhattan.”