US can seize Iran-owned 650 Fifth

After nine-year battle, jury finds that charity was front for Iranian government

New York /
Jun.June 29, 2017 04:00 PM

A federal jury on Thursday paved the way for authorities to seize the Alavi Foundation’s 650 Fifth Avenue, finding that the nonprofit violated U.S. sanctions against Iran.

The decision is the “largest civil forfeiture jury verdict and the largest terrorism-related civil forfeiture in U.S. history,” acting U.S. Attorney Joon Kim said in a statement Thursday. The jury found that the Alavi Foundation was controlled by the government of Iran, which handpicked its board members and ultimately benefited from income brought in by the nonprofit’s real estate holdings.

Kim said that the 395,000-square-foot, 36-story office tower, valued at more than $500 million, created “a gateway for millions of dollars to be funneled to Iran.”

John Gleeson, an attorney for the Alavi Foundation,  said the nonprofit is “disappointed” by the verdict and is considering its options. Bloomberg first broke the news of the decision earlier Thursday.

In a separate decision — delivered in a related bench trial — U.S. District Judge Katherine Forrest agreed that Alavi effectively operated as Iran’s alter-ego.

“Despite nominal adherence to corporate formalities, its independence has—in fact—been a fiction,” the order states. “The Government of Iran’s control will not manifest as an Iranian flag flying over the 650 Fifth Avenue building or any other subject property. But the evidence is there, it is clear, and it is dispositive.”

Alavi — then known as the Pahlavi Foundation, named for the last Shah of Iran, Mohammad Reza Pahlavi — purchased the property in 1974 and finished constructing the tower four years later, using a $42 million loan provided by the New York branch of Iran-controlled Bank Melli.

Federal authorities first tried to take control of the building in 2008. In 2014, they reached a deal to seize the tower based on financial sanctions imposed on Iran in 1995. But in July 2016, a federal appeals court found that prosecutors hadn’t proven that Alavi knowingly partnered with Iran.

SL Green Realty and Jeff Sutton’s Wharton Properties own the long-term leasehold for the retail portion of the property. In June, Nike inked a lease for more than 60,000 square feet there, in what was regarded as one of the city’s priciest-ever retail deals.

Officials plan to sell the office portion and direct the proceeds to victims of Iran-sponsored terrorism.


Related Articles

arrow_forward_ios
A photo illustration of Related Companies' Jeff Blau (Getty)
Related proposes 1,500-room resort in Hudson Yards casino bid
Related proposes 1,500-room resort in Hudson Yards casino bid
Jared Kushner and 666 Fifth Avenue (Getty, David Shankbone, CC BY 2.5 - via Wikimedia Commons)
Congress probes Jared Kushner’s dealings amid 666 Fifth Avenue sale
Congress probes Jared Kushner’s dealings amid 666 Fifth Avenue sale
Council member Pierina Ana Sanchez and RSA’s Joseph Strasburg (Getty; Twitter)
Citing Bronx fire, Council pushes building violation crackdown
Citing Bronx fire, Council pushes building violation crackdown
SB Development’s Joseph Stern and Northwind’s Ran Eliasaf with rendering of Nova (LinkedIn, NOVA)
SB Development, Hazelton Capital score $62M loan for LIC condo tower
SB Development, Hazelton Capital score $62M loan for LIC condo tower
Illustration of Mayor Eric Adams (Getty; Illustration by Kevin Rebong for The Real Deal)
Oh, rats! Eric Adams contests summons for infestation
Oh, rats! Eric Adams contests summons for infestation
Brookfield's Bruce Flatt with 1100 Newark Turnpike (Loopnet, Brookfield)
Brookfield buys CSX industrial site in Northern New Jersey for $67M
Brookfield buys CSX industrial site in Northern New Jersey for $67M
Connecticut Governor Ned Lamont (Registered Citizen, Getty)
Half of Section 8 vouchers have gone unused in Connecticut
Half of Section 8 vouchers have gone unused in Connecticut
198 Scholes Street, 65 Kent Avenue, 506 DeKalb Avenue and 11 Gunther Place (Illustration by the Real Deal with Getty, Google Maps)
Avi Philipson deal to acquire All Year portfolio is back on
Avi Philipson deal to acquire All Year portfolio is back on
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...