US court throws out ruling allowing seizure of Iran-linked Manhattan tower
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US court throws out ruling allowing seizure of Iran-linked Manhattan tower

Appeals bench allege ‘troubling pattern of errors’ in 2017 verdict that let government take over New York City building to cover terror-related verdicts

This May 30, 2017 photo shows 650 5th Avenue in New York. Assistant US Attorney Michael Lockard on Monday, June 26, 2017 urged a jury to conclude a charity must give up majority ownership in the Manhattan skyscraper, saying it is secretly controlled by Iran (AP Photo/Mary Altaffer, file)
This May 30, 2017 photo shows 650 5th Avenue in New York. Assistant US Attorney Michael Lockard on Monday, June 26, 2017 urged a jury to conclude a charity must give up majority ownership in the Manhattan skyscraper, saying it is secretly controlled by Iran (AP Photo/Mary Altaffer, file)

A federal US appeals court over the weekend overturned a previous ruling allowing the government to seize a Manhattan skyscraper claimed to be effectively controlled by Iran, pointing out problems with that verdict.

In June 2017, a jury found an Iranian-American charity knew that the New York City building it owns on 650 Fifth Avenue was 40-percent owned by a front company for an Iranian state-owned bank, violating US sanctions on the Islamic Republic and prompting the government to say it was ready to seize the tower and sell it for an estimated sum of almost a billion dollars.

The government had sought to turn over proceeds of a sale to holders of over $5 billion in terrorism-related judgments against the government of Iran, including claims brought by the estates of victims killed in the September 11, 2001, attacks.

Acting US Attorney Joon H. Kim said at the time that the owners of the office tower near Rockefeller Center, the Alavi Foundation, “gave the Iranian government a critical foothold in the very heart of Manhattan through which Iran successfully circumvented US economic sanctions.”

“For over a decade, hiding in plain sight, this 36-story Manhattan office tower secretly served as a front for the Iranian government and as a gateway for millions of dollars to be funneled to Iran in clear violation of US sanctions laws,” Kim said in a statement then. “In this trial, 650 Fifth Avenue’s secret was laid bare for all to see, and today’s jury verdict affirms what we have been alleging since 2008.”

The building at 650 5th Avenue in New York at the center of a case related to compensation for victims of Iran-sponsored terror. (Screen capture: Google street view)

But on Friday, the 2nd US Circuit Court of Appeals in Manhattan threw out that ruling in a 3-0 decision, saying Judge Katherine Forrest had made a “troubling pattern of errors on relatively straightforward issues,” the Reuters news agency reported.

That included refusing to hear depositions by former Alavi board members and accepting videos of them invoking their Fifth Amendment right against self-incrimination — they said they were coerced into doing so and that they would have agreed to testify — as well as refusing to allow the foundation an opportunity to prove the government had filed the complaint too late.

“If this case returns to trial, a properly informed jury may or may not find for the government – a topic on which we have no opinion,” wrote judge Richard Wesley. “But getting to any outcome requires a fair and procedurally adequate process, something that has been lacking in this case. There are no shortcuts in the rule of law.”

The decision is a blow to the US government and the Justice Department. A spokesman for US attorney Geoffrey Berman, whose office represented the government, refused a request for comment, Reuters reported.

The lawyers for Alavi, Daniel Ruzumna and John Gleeson, said “We are obviously pleased. All we have ever wanted and asked for is a fair shake,” the news agency reported.

The Fifth Avenue building was erected in the 1970s on property acquired by the not-for-profit corporation. It was valued at $83 million in 1989 and has steadily risen in value.

Government lawyers have alleged Iran has secretly controlled the building for years as millions of dollars in rent payments are funneled to it from a partnership made up of Alavi and a shell company, Assa Corp, fronting for a secret interest held by the state-owned bank of Iran, Bank Melli.

Alavi has argued it was unaware of that.

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