Real Estate Weekly
Image default
Deals & DealmakersFeatured

Government gets go-ahead to sell Iran-linked 650 Fifth

In what has been called the largest terrorism-related civil forfeiture in US history, the government can sell a midtown skyscraper it says was controlled by Iran and give the proceeds to victims or terrorism.

A jury found last week that The Alavi Foundation, which owns a 60 percent share in 650 Fifth Avenue, knowingly partnered with an Iranian bank after economic sanctions were imposed on the country in 1995.

The organization, which was founded by former Iranian leader Shah Mohammad Reza Pahlavi to provide loans and grants to religious groups, was found to have funneled funds to Iran through its charities.

In a written judgement, U.S. District Judge Katherine B. Forrest said she was “firmly convinced” that the foundation “takes directives from Iranian government officials, and its day-to-day operators have been appointed by Iranian officials to ensure conformity with the interests of the government of Iran.”

The verdict clears the way for the government to sell the building and to hand over the proceeds to terrorism victims who have won $5 billion in judgments against Iran. The tower has been valued between $800 million to $1 billion. SL Green Realty Corp. and Jeff Sutton own a 49-year leasehold interest covering the entire retail portion of 650 Fifth Avenue. They bought out the lease of retailer Juicy Couture in 2013 to accelerate the partnership’s ability to reposition the building’s retail corner location.


Boies Schiller Flexner’s Matthew L. Schwartz, a former Madoff Five and London Whale federal prosecutor, said the verdict could prompt more terror victims to go after shady US property owners.
“The government has enormous power to forfeit property in any way involved in or traceable to illegal activity. Those cases are rarely tried,ˮ said Schwartz.
“Today’s mixed verdict – holding that most, but not all, of the assets in question were traceable to violations of the U.S. sanctions program against Iran – shows that the jury listened carefully to the evidence and was able to understand both sides’ arguments, even where they turned on complicated issues of accounting and asset tracing.

“Although the verdict was mostly a win for the government, it may encourage more claimants to take their cases to trial.”
During the trial, Assistant US Attorney Michael Lockard said that the government has proven its case through witnesses and documents. This included testimony from George Wineriter, an FBI surveillance team member, who served as the lead-off witness in the case, according to AM New York.

Wineriter claims that he saw Farshid Jahedi, who the former president of the Alavi Foundation, destroy documents after receiving a subpoena in 2008. Wineriter retrieved the evidence after Jahedi dumped the documents at an upstate shopping center parking lot. Jahedi later pleaded guilty to an obstruction of justice charge.

The prosecution argued that Jahedi’s conduct shows that Alavi knowingly violated the sanctions.

John Gleeson, the counsel for Alavi, countered by accusing the prosecution of bias. He claims that the government had prematurely reached its conclusions before collecting information. “Blend everything together, paint everything, everyone, with the same brush,” Gleeson said.
Prosecutors have been trying to seize Alavi’s stake in the tower since 1998.

Related posts

Birch Group Reaches 90% Occupancy at 700 Alexander Park in Princeton


Crow Holdings Breaks Ground for New Logistics Development on Site of Former Marcal Paper Factory


The McBride Cohen Company, Cantor Fitzgerald & Silverstein Properties Announce the Closing  of a $223M Construction Loan for Multifamily Development in Tempe, Arizona