U.S. Links Iranian Bank To Fifth Avenue Building
Thursday, December 18, 2008
A Fifth Avenue building in Manhattan that houses a Charles Schwab branch, a trendy espresso boutique and Juicy Couture's flagship store is secretly co-owned by an Iranian bank that helped finance that country's nuclear program, the Justice Department alleged yesterday.
Justice is seeking to seize the share of the property and related bank accounts, charging that 40 percent of 650 Fifth Avenue has been co-owned by Iran's Bank Melli for nearly two decades. That bank was previously designated by the Treasury Department as a key financier of Iran's nuclear and ballistic missile programs and a banker to the Iranian Revolutionary Guard Corps and its Quds Force, which has been linked to terrorist groups.
Citing a series of alleged sham transactions and e-mails, Treasury and Justice write in court documents that Assa Corp., which holds the 40 percent interest, is a shell company that funnels the rental proceeds through a parent company in the Channel Islands, off the coast of France, to the Iranian bank, which is wholly owned by the Iranian government. Under various laws and presidential orders, the government of Iran and related entities are prohibited from doing business in the United States without a license from Treasury.
"This scheme to use a front company set up by Bank Melli -- a known proliferator -- to funnel money from the United States to Iran is yet another example of Iran's duplicity," said Stuart Levey, the Treasury Department's undersecretary for terrorism and financial intelligence.
Peter I. Livingston, an attorney for Assa, said he had not seen the Justice filing but believed it was in error. "It's a mistake on the part of the government," he said. "We don't believe this is accurate at all."
The soaring 36-story building, located a block from the Museum of Modern Art, was built in the 1970s by the Pahlavi Foundation, a nonprofit charitable organization associated with the shah of Iran. Bank Melli helped construct it with a $42 million loan. At one point, disgraced financier Ivan Boesky kept his office in the building.
The other 60 percent of the building is owned by the Alavi Foundation -- successor to the Pahlavi Foundation -- which has repeatedly faced accusations that it has links with the current government of Iran. The Justice Department filing makes no specific allegations against Alavi, but suggests that the foundation was aware that Assa was a shell company. The government alleges that in 1989, Alavi, then known as the Mostazafan Foundation, created the partnership with Assa to avoid paying taxes on its rental revenue.
John D. Winter, an attorney for Alavi, denied that the partnership was created to avoid taxes. He added that he has successfully defended Alavi five times against allegations that it is linked to Iran. "I have no idea if Assa is or is not affiliated with Bank Melli," he said. "Assa has been a quintessential partner that just collected its checks."
According to the government filing, Assa has one employee in the United States -- Mohammad Tafti, a naturalized Iranian citizen born in India who first came to the United States in 1999.
The government cites 13 e-mails dating back to 2003 that Tafti sent to officials affiliated with Bank Melli that detail problems with sending funds and with an unsuccessful deal to sell Assa's interest in the building. The government says the e-mails demonstrate that Tafti sent regular reports to Bank Melli about Assa's business dealings and also followed instructions from the bank.
At times, Tafti expresses concern about the fact that the nominal owners of Assa list their residence as Tehran. "At present, shareholders are forbidden from have residences in Iran and . . . the American government may freeze the capital of the shareholders," he wrote on July 2, 2005, to the head of Bank Melli's department of overseas branches.
From 2000 to 2007, more than $17 million was deposited in one of Assa's accounts, the filing said. In October, the government seized $1.9 million from a Citibank account and $1.2 million from an account at J.P. Morgan Chase.