Mukasey Recuses Self in Probe of Building's Owner

By Glenn Kessler
Washington Post Staff Writer
Friday, December 19, 2008

Attorney General Michael B. Mukasey has recused himself from the investigation of Iranian ownership of a Midtown Manhattan office building because he represented one of the entities under scrutiny while in private practice, a Justice Department spokesman said yesterday.

Mukasey represented the Alavi Foundation, the majority owner of the building, in a real estate dispute in the early 1980s -- when the foundation operated under a different name -- and his former law firm, Patterson Belknap Webb & Tyler, continues to be listed as its general counsel in tax filings.

The Justice Department alleged Wednesday that Alavi's partner in a 36-story Fifth Avenue office building is a front for an Iranian bank accused of helping finance the Islamic republic's nuclear program. Alavi owns 60 percent of the building, and Justice documents strongly suggested that the foundation also has connections to the Iranian regime.

Tax records show that Alavi earned nearly $4.5 million in tax-free income from the building in 2006, the latest year for which such records were available. The Pahlavi Foundation, a nonprofit charitable organization associated with the shah of Iran, constructed the building in the 1970s, but after the Islamic revolution in 1979, the Pahlavi family lost control of the foundation.

Alavi dispenses about $4 million every year to students and Islamic institutions in the United States, in addition to funding and owning properties in this country, such as the Islamic Education Center in Potomac. It has strongly and consistently denied any links to Iran, but accusations of secret ties have swirled around it for more than a quarter-century.

A lengthy investigation by Newsday in 1995 concluded that the foundation was controlled by Iran's clerical leadership and that several officers and directors had been implicated in arms and technology shipments to Iran. Newsday also disclosed the partnership deal on the building, saying it allowed the foundation to become exempt from paying millions of dollars in federal tax from rent income. The Justice Department filing this week made the same allegation.

Oliver "Buck" Revell, a former top FBI official who now heads Revell Group International in Dallas, said yesterday that the FBI has long believed Alavi is a front organization for Iran, which uses it to gather intelligence on the United States. "It was a foundation controlled by the shah. The Khomeini government took it over. They changed the name but kept the foundation," he said.

Revell, who stressed that he does not know details of the current probe, said there are many reasons federal officials would not act against a foreign front organization in the United States, including a lack of resources, and questions about whether any of its actions were illegal and about how many levels might separate the organization from the foreign country. "But there is no question they would continue to monitor" and hope that the organization makes a mistake that permits authorities to pursue a case, he said.

John D. Winter, an attorney for the Alavi Foundation and a partner at Patterson Belknap, did not return messages yesterday.

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