KATHERINE B. FORREST, District Judge.
This Opinion resolves five pending motions: (1) a summary judgment motion filed by several judgment creditor groups against defendants Assa Corp. and Assa Co. Ltd. (collectively "Assa"), the Alavi Foundation ("Alavi" or "the Foundation"), and 650 Fifth Avenue Company ("650 Fifth Ave. Co.") (ECF No. 869); (2) a summary judgment motion filed by the judgment creditors against Alavi to turn over seven properties and three bank accounts held solely in Alavi's name (ECF No. 950); (3) a summary judgment motion filed by the Government against Alavi to forfeit its interest in the seven Alavi-only properties (ECF No. 956); (4) a summary judgment motion filed by the government against Alavi to forfeit its interest in the three Alavi-only bank accounts (ECF No. 1075); and (5) a petition filed by Alavi pursuant to 18 U.S.C. § 983(g) (ECF No. 1019).
First, the Greenbaum, Acosta, Beer, Kirschenbaum, Heiser, Havlish, Peterson, and Rubin judgment creditor groups
The judgment creditor plaintiffs have also filed a supplemental motion for summary judgment to turn over the seven properties and the three bank accounts owned in Alavi's name only, which the Court severed in the September 2013 Opinion, pursuant to TRIA and the FSIA. (ECF No. 950.) That motion became fully briefed on October 23, 2013. (ECF Nos. 977, 996.) On October 7, 2013, the Hegna judgment creditors filed a memorandum arguing that they are also entitled to turnover of all property owned by the defendants for largely the same reasons as those stated in the judgment creditors' motion. (ECF Nos. 954, 955.)
The Government has also filed a motion for summary judgment with respect to the same seven Alavi-only properties, seeking to forfeit the properties as traceable to violations of the International Emergency Economic Powers Act ("IEEPA") and traceable to property involved in money laundering. (ECF No. 956.) That motion became fully briefed on October 23, 2013. (ECF Nos. 979, 998.) The Government has also filed a motion for summary judgment to forfeit the three Alavi bank accounts. (ECF No. 1075.) That motion became fully briefed on January 29, 2014. (ECF No. 1086.)
For the following reasons, the Court GRANTS all four motions for summary judgment filed by the Government and the judgment creditors, and DENIES Alavi's petition pursuant to 18 U.S.C. § 983(g).
The Court assumes familiarity with the facts underlying this action, particularly the facts described in the September 16 Opinion.
In 1973, Shah Mohammad Reza Pahlavi formed the Pahlavi Foundation as a New York not-for-profit corporation. (Corrected Local Rule 56.1 Statement of Undisputed Facts ("Gov't 56.1 I") ¶ 1; McReynolds Decl. Ex. 1, ECF No. 687.)
In 1979, Ayatollah Ruhollah Khomeini ordered the formation of the Bonyad Mostazafan to manage property controlled by the revolutionary government. (Gov't 56.1 I ¶ 6; Lockard Decl. Ex. 1, at 1-3, ECF No. 686.) In 1980, the Pahlavi Foundation was renamed the "Mostazafan Foundation of New York" ("MFNY"). (Gov't 56.1 I ¶¶ 10-11; McReynolds Decl. Ex. 13.)
In July 1987, the Iranian Deputy Prime Minister and then-head of the Bonyad Mostazafan, Tahmasb Mazaheri, reported to the Prime Minister of Iran, Mir-Hussein Mousavi, about a tax situation relating to income generated by the Building. (Gov't 56.1 I ¶ 19; McReynolds Supp. Decl. Ex. 1.) Mazaheri discussed a potential solution to the tax issue with the Director General of Bank Melli, Majid Ghasemi, who promised to assist. (Gov't 56.1 I ¶ 21; McReynolds Supp. Decl. Ex. 1.) This solution called for the creation of an entity in New York that would own the Building and take responsibility for a Bank Melli loan, ultimately causing a transfer of $45 million to the "Islamic Republic of Iran Central Bank." (Gov't 56.1 I ¶ 20; McReynolds Supp. Decl. Ex. 1.) Mazaheri stated that this solution would "surely be beneficial to the Islamic Republic." (Gov't 56.1 I ¶ 21; McReynolds Supp. Decl. Ex. 1.)
In March 1989, Seyed Mohammad Badr Taleh, then the Managing Director of the Mostazafan Foundation of New York MFNY, proposed to Mazaheri that the MFNY lease the Building's retail space in order to avoid the tax. (Gov't 56.1 I ¶ 27; McReynolds Decl. Ex. 29.)
In May 1989, the MFNY, the Bonyad Mostazafan, and Bank Melli met in Iran to finalize an agreement for a partnership between Bank Melli Iran and the Foundation in New York. (Gov't 56.1 I ¶ 28; McReynolds Supp. Decl. Ex. 4.) At the meeting, it was decided that "Bank Melli Iran" would partner with "the New York Foundation." (Gov't 56.1 I ¶ 29; McReynolds Supp. Decl. Ex. 4.) To do so, Bank Melli Iran would create "two companies in Jersey Island," and one of those companies would "become partners with the New York Foundation via the other company." (
In July 1989, the Mostazafan Foundation entered into an agreement with Assa to form a partnership called the 650 Fifth Avenue Company. (McReynolds Decl. Ex. 37.) In August 1989, Issa Shahsavar Khojasteh, an assistant director for the Bonyad Mostazafan, wrote to Mohammed Bagherian, then head of the Bonyad Mostazafan, to request that Bagherian "endorse the partnership" between Assa, which he stated "belongs to Bank Melli," and MFNY. (Gov't 56.1 I ¶ 30; McReynolds Decl. Ex. 31.)
The partnership between Assa Corporation and the Mostazafan Foundation was formed in October 1989. (Gov't 56.1 I ¶ 32; McReynolds Decl. Ex. 37.) In November 1989, Badr Taleh wrote to the General Director of Bank Melli to report that Assa Corp. was a partner in the ownership of the Building and that this arrangement would exempt Bank Melli from millions of dollars in taxes. (Gov't 56.1 I ¶ 34; McReynolds Decl. Ex. 111.) He also expressed his thanks to Mohammad Behdadfar, a member of Bank Melli's board, and to Mohammad Karjooravary, the president of Bank Melli's New York branch, because they had "truly done whatever possible to safeguard the interests of the Islamic Republic." (
In February 1990, Karjooravary described the 650 Fifth Ave. Co. partnership as intended to resolve tax issues related to the Building: he stated that the tax issue had been solved through the "efforts of the Foundation and bank officials in Tehran and New York." (Gov't 56.1 I ¶ 37; McReynolds Decl. Ex. 32.) A September 1990 telex describes a transfer of Assa (referred to as the "mother company") from indirect ownership by Bank Melli officials to ownership by Bank Melli itself. (McReynolds Decl. Ex. 109.)
In May 1991, Badr Taleh wrote a letter to the Ayatollah stating that Ambassador Kamal Kharrazi had told him that henceforth the Ambassador—not the Bonyad Mostazafan—would oversee the Foundation. (Gov't 56.1 I ¶ 63; McReynolds Decl. Ex. 80.) Badr Taleh also wrote, "[T]he Supreme Leader has made this decision with discernment, unique insight, and a thorough knowledge of all pertaining aspects." (Gov't 56.1 I ¶ 64; McReynolds Decl. Ex. 80.) Also that month, three of the Foundation's board members wrote to the Ayatollah that they would resign pursuant to instructions conveyed to them by Haj Mohsen Rafighdoost of the Bonyad Mostazafan, a representative of the Ayatollah. (Gov't 56.1 I ¶ 60; McReynolds Decl. Ex. 76.) That letter also stated that the "Foundation's interests. . . in truth belong[ed] to the people of Iran." (
In the 1990s, individuals with judgments against the Government of Iran filed civil lawsuits against the MFNY and the Bonyad Mostazafan. (Gov't 56.1 I ¶ 72; McReynolds Decl. Ex. 62.)
By August 1992, the MFNY had been renamed the "Alavi Foundation of New York." (Gov't 56.1 I ¶ 41; McReynolds Decl. Ex. 83.)
In December 1993, Bank Melli's Overseas Network Supervisory Department ("ONSD") expressed concern to the head of Bank Melli's New York office that an Assa director's affiliation with Bank Melli might be discovered. (Gov't 56.1 I ¶ 45; McReynolds Decl. Ex. 38.) The letter asked for an inquiry into whether "Mr. Naghshineh—the Assa Corp. New York Director whose affiliation with the Bank could easily be proven—could be replaced with another individual whose affiliation with the Bank could not be easily proven." (
From approximately 1996 to 2008, one employee, Mohammed Hassan Dehghani Tafti, represented Assa in the United States. (Gov't 56.1 I ¶ 53.) Tafti and Bank Melli officials exchanged emails in 2005 discussing the residence of the two purported then-owners of Assa Co. Ltd., Davood Shakeri and Fatemeh Aghamiri, residents of Iran. (
From 1989 through 2008, when this action was filed, Alavi played an active and critical role in managing the Partnership and the Building, acting as the Managing Partner and overseeing all of the Partnership and Building's finances. (Gov't 56.1 I ¶ 85; McReynolds Decl. Exs. 37, 107.) The 1989 Partnership Agreement required the Foundation to administer the "day-to-day business and affairs of the Partnership" and stated that Alavi had the authority to execute instruments on behalf of and to bind the Partnership. (McReynolds Decl. Ex. 37.)
Between 1996 and 2008, the Building generated approximately $228,217,798 in gross rents for 650 Fifth Ave. Co. (Gov't Local Rule 56.1 Statement of Undisputed Facts ("Gov't 56.1 II") ¶ 1, ECF No. 958.) During those years, Alavi received over $50,000,000 in income from the Building through 650 Fifth Ave. Co. partnership distributions, and approximately $63,461,181 in gross income. (
Approximately 89% of all of Alavi's revenue was derived exclusively from rental income from the 650 Fifth Avenue Building. (
Alavi owns seven other real properties at issue: one each in Houston, Texas ("the Texas property"); Queens, New York ("the New York property" or "the Queens property"), and Carmichael, California ("the California property"); and two each in Virginia ("the Virginia properties") and Maryland ("the Maryland properties"). (Am. Compl. 3-4; see generally Judgment Creditor Pls.' Local Rule 56.1 Statement of Undisputed Facts ("Judgment Creditors 56.1") ¶¶ 1-55, ECF No. 953.)
Five of Alavi's real properties—the Texas, New York, California, and Maryland properties—are leased pursuant to usage agreements that are, according to their terms, "deemed to be . . . contract[s]" to house educational and religious organizations. (
Under the usage agreements, the tenant organizations that occupy those five properties undertake a number of obligations that confer various financial benefits on Alavi. The tenants assume responsibility for: (1) maintaining insurance on the leased facility on behalf of themselves and Alavi; (2) paying "any taxes and assessments that may be charged or imposed" on the property; (3) maintaining and making "all major and minor repairs"; and (4) paying "utility charges for water, sewer, gas, heat, electricity, power, air conditioning, telephone and other utility services" for the Texas and California Properties." (
Alavi leases the Virginia properties to private individuals for traditional rent payments. (
Alavi purchased the New York property in April 1997 for approximately $1,057,485, and the property is presently valued at approximately $17,000,000. (Gov't 56.1 II ¶¶ 6-7.) Between March 1996 and March 2008, Alavi made improvements to the New York property totaling $5,997,007. (
The Mostazafan Foundation, which later became Alavi, purchased the Maryland properties in the 1980s for a total of $1,720,000. (
Alavi purchased the Texas property in 1988 for $1,100,000. (
Alavi purchased the Virginia properties in 1990 for a total of $1,285,680. (
The Mostazafan Foundation, which later became Alavi, purchased the California property in 1989 for $223,375. (Gov't 56.1 II ¶ 24.) The property is presently appraised at $212,000. (
The Foundation allows a number of religious and educational not-for-profit organizations to use its properties rent-free as part of its mission to promote and support Islamic culture and the study of Persian language, literature, and civilization in the United States. (Alavi Seven Properties 56.1 I Add'l Facts 1, 4.) The usage agreements described above between Alavi and the tenants of the Texas, New York, California, and Maryland properties provide that the organizations will only use the space in furtherance of their cultural and religious purposes. (
Alavi also states that it made payments for each of the seven properties prior to 1995. (Alavi & 650 Fifth Ave. Co.'s Resp. to Gov't Statement of Undisputed Facts ("Alavi Seven Properties 56.1 II") Add'l Facts 2-5, ECF No. 981.) Moreover, Alavi received management fees from 650 Fifth Ave. Co. for its work managing the partnership and the Building. (
The remainder of the Alavi-only properties at issue are three bank accounts at Sterling National Bank—a "small business account," a "money market account," and a "pro checking account" (referred to as the "Sterling accounts"). (See generally Am. Compl. 4-5; Judgment Creditors 56.1 ¶¶ 56-84.) Alavi used the small business account to receive at least one payment from 650 Fifth Ave. Co., to issue student loans, to disburse 401(k) and payroll payments to its employees, and to make tax payments. (
According to its tax returns, 650 Fifth Ave. Co. generated $228,217,798 in gross rents received from its tenants at the Building. (Gov't's Local Rule 56.1 Statement of Undisputed Facts ("Gov't 56.1 III") ¶ 22, ECF No. 1017; Alavi's Response to Gov't's Statement of Undisputed Facts ("Alavi Bank Accounts 56.1") ¶ 22, ECF No. 1087.) The Alavi Foundation declared $62,633,722 in income from 650 Fifth Ave. Co., although the parties disagree as to whether Alavi in fact received that income, as opposed to reporting it as income. (Gov't 56.1 III ¶ 23; Alavi Bank Accounts 56.1 ¶ 23.) Between fiscal years 1996 and 2009, the Alavi Foundation reported a total of $69,387,242 in gross income. (Gov't 56.1 III ¶ 24; Alavi Bank Accounts 56.1 ¶ 24.) While the Government asserts that 90% of the Alavi Foundation's total income during this time was derived exclusively from rental income in the Building, Alavi disputes this, on the basis that the funds identified in Alavi's tax forms do not reflect actual funds received by the Government in a given year. (
In 2008, the Government commenced this in rem civil forfeiture action against assets owned by Assa. (ECF No. 1.)
On September 16. 2013, the Court granted summary judgment to the Government with regard to their interests in the Building and the associated bank accounts.
Following that decision, the Greenbaum, Acosta, Beer, Kirschenbaum, Heiser, Havlish, Peterson, and Rubin judgment creditor plaintiffs filed two motions for summary judgment arguing that they are entitled to turnover of all property owned by the defendants, including the Building at 650 Fifth Avenue and the associated bank accounts at issue in the September 16 Opinion, as well as the seven properties and three bank accounts held in Alavi's name only that were severed by the September 16 Opinion. (ECF Nos. 869, 950.) Those motions became fully briefed on October 11, 2013. (ECF Nos. 879, 938, 969, 977, 996.) On October 7, 2013, the Hegna judgment creditors filed a memorandum and accompanying letter arguing that they are also entitled to turnover of all property owned by the defendants pursuant to the FSIA for the reasons stated in the judgment creditors' motion, as well as for other reasons. (ECF Nos. 954, 955.)
The Government also filed motions for summary judgment seeking to forfeit the same seven Alavi-only real properties and three Alavi-only bank accounts as traceable to proceeds of IEEPA violations and traceable to property involved in money laundering. (ECF Nos. 956, 1075.) Those motions became fully briefed on January 29, 2014. (ECF Nos. 979, 998, 1086.)
Alavi also filed a petition pursuant to 18 U.S.C. § 983(g) arguing that forfeiture of the entire building at 650 Fifth Ave. would be unconstitutionally disproportionate. That motion became fully briefed on December 19, 2013. (ECF Nos. 1044, 1055.)
Summary judgment may not be granted unless a movant shows, based on admissible evidence in the record before the Court, "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The moving party bears the burden of demonstrating "the absence of a genuine issue of material fact."
Once the moving party has asserted facts showing that the nonmoving party's claims cannot be sustained, the opposing party must set out specific facts showing a genuine issue of material fact for trial.
Only disputes relating to material facts—
The undisputed facts show that defendants Assa, Alavi, and 650 Fifth Ave.
Co. "are" the Government of Iran within the meaning of TRIA and the FSIA, thus subjecting defendants and the properties at issue to the jurisdiction of this Court. Furthermore, the seven real properties and three bank accounts are used for commercial activity and are not immune from execution pursuant to the terms of TRIA and § 1610(a)(7) of the FSIA. The judgment creditor plaintiffs are therefore entitled to summary judgment on all of their turnover claims.
Sections 1604 and 1605 of the FSIA establish the framework for determining whether a court may exercise jurisdiction over a foreign state or its agencies or instrumentalities.
In a prior Opinion & Order, the Court denied defendants' motion to dismiss for lack of subject matter jurisdiction.
The Court now returns to the question of jurisdiction in the context of immunity from attachment or execution. Sections 1609 and 1610 describe when a court may exercise jurisdiction over an action for the execution of property. "[F]ederal courts lack subject matter jurisdiction over enforcement proceedings against the property of a foreign state unless a statutory exception to immunity applies. . . . In the context of an enforcement proceeding, § 1609 renders the property in the United States of a foreign state immune from execution or attachment, including garnishment, unless §§ 1610-11 provide otherwise."
Before consulting each of those four provisions, the Court deals with a threshold question common to the three FSIA exceptions to immunity: whether the assets here owned by Assa, Alavi, and 650 Fifth Ave. Co. are "property . . . of a foreign state" within the meaning of those provisions. For the following reasons, they are indeed property of the foreign state of Iran.
The fact that the Government of Iran wholly owns and controls Bank Melli is undisputed. (
In the September 2013 Opinion, the Court found no issue of material fact as to whether Assa performed services for and acts on behalf of Bank Melli, and therefore for and on behalf of Iran.
Likewise, there is no issue of material fact as to whether Alavi performed services on behalf of Bank Melli and therefore on behalf of Iran. For example, Alavi acted as a managing partner of 650 Fifth Ave. Co. since its inception, in which position it provided partnership and building management services to Assa—and consequently to Iran. (
Finally, there is no issue of material fact as to whether 650 Fifth Ave. Co. acted on behalf of Iran. 650 Fifth Ave. Co. made quarterly distribution payments— through Alavi as its manager—to Assa until December 1, 2008. (Government's SOF ¶ 56; McReynolds Decl. Ex. 51.) Furthermore, 650 Fifth Ave. Co. "is simply Alavi and Assa together."
Defendants' actions on behalf of Iran are sufficient to deem them the
Government of Iran under the Iranian Transactions Regulations (ITRs), 31 C.F.R. § 560, and Executive Order 13599 (E.O. 13599).
The regulations define Iran as the "state and the Government of Iran, as well as any political subdivision, agency, or instrumentality thereof, including the Central Bank of Iran," and any "person to the extent that such person is, or has been, since the effective date, acting or purporting to
Defendants argue that 31 C.F.R. § 560 and E.O. 13599 are not acceptable means of interpreting "foreign state" within the definition of the FSIA. (
Accordingly, it is proper to use the terms of 31 C.F.R. § 560 and E.O. 13599— just as it is to use other materials outside the four corners of the statute—in order to define "Iran." "The FSIA is designed to provide immunity to sovereign governments (unless an exception applies); it does not purport to provide an exclusive manner of defining a sovereign government," particularly because the statute does not itself provide a definition.
Defendants also argue that, contrary to the Treasury regulations and executive order, a foreign state must be "`an entity possessed of a defined territory and a permanent population, controlled by its own government, and engaged in or capable of engaging in relations with other such entities.'" (Alavi TRIA/FSIA Opp. 2 (quoting
The Second Circuit faced a very different context in the two cases cited by defendants. In
There is no dispute of material fact as to whether defendants acted for or on behalf of Iran. There is thus no triable issue as to whether they fall within the definition of Iran pursuant to Treasury regulations and E.O. 13599.
Even if Treasury regulations and E.O. 13599 were not dispositive, defendants "are" Iran under an "alter ego" theory. That theory allows parties to reach assets where defendants might otherwise "escape liability for acts . . . simply by creating juridical entities whenever the need arises."
Accordingly, if a plaintiff can show that a defendant that would otherwise be "a foreign instrumentality that does not fit within an FSIA exception to sovereign immunity" is in fact an "alter ego" for an entity that would be subject to jurisdiction under the FSIA, then jurisdiction is proper over that defendant just as it would be over that other entity.
An alter ego is an entity that "is so extensively controlled by its owner that a relationship of principal and agent is created," such that "one may be held liable for the actions of the other."
Here, no rational juror could find that defendants are not the alter egos of Iran; no rational juror could find that Iran does not exercise sufficient control over defendants. For example, Shah Mohammad Reza Pahlavi initially formed the Pahlavi Foundation, later the Mostazafan Foundation and then the Alavi Foundation. (Gov't 56.1 I ¶ 1; McReynolds Decl. Ex. 1.) In 1979, the Ayatollah ordered the formation of the Bonyad Mostazafan to manage property controlled by the revolutionary government. (Gov't 56.1 I ¶ 5.) In 1989, the Mostazafan Foundation met with the Bonyad Mostazafan and Bank Melli to finalize an agreement for a partnership. (
These facts drive inexorably toward the conclusion that Alavi and 650 Fifth Ave. Co. have no true separate decision-making authority or real existence except that which is allowed and directed by the Iranian government. No reasonable juror could find otherwise. Accordingly, defendants are alter egos of Iran, and therefore "are" Iran.
Alavi and 650 Fifth Ave. Co. "are" Iran under a third theory as well. They fall within the definition of an "agency or instrumentality of a foreign state" under 28 U.S.C. § 1603(b), and in turn constitute a "foreign state" itself within the meaning of the FSIA.
Under the first prong of the three-part "agency or instrumentality" definition, the entity in question must be "a separate legal person, corporate or otherwise." 28 U.S.C. § 1603(b)(1). Here, Alavi is incorporated in New York, and 650 Fifth Ave. Co. is organized as a partnership under New York state law. (
Second, the entity must be "an organ of a foreign state." 28 U.S.C. § 1603(b)(2). "Although there is no specific test for `organ' status under the FSIA, various factors are relevant: (1) whether the foreign state created the entity for a national purpose; (2) whether the foreign state actively supervises the entity; (3) whether the foreign state requires the hiring of public employees and pays their salaries; (4) whether the entity holds exclusive rights to some right in the [foreign] country; and (5) how the entity is treated under foreign state law."
Here, various undisputed facts show that Alavi and 650 Fifth Ave. Co. are organs of the Iranian government. For example, looking to the first factor, the Shah created the Pahlavi Foundation "for a national purpose,"
Under the third prong of the "agency or instrumentality" definition, the entity must be "neither a citizen of a State of the United States . . . nor created under the laws of any third country." 28 U.S.C. § 1603(b)(3). The Court is mindful that the Shah incorporated the Foundation in New York in 1973, and that the partnership was created in New York. (
Thus, Alavi and 650 Fifth Ave. Co. meet all three requirements to be an "agency or instrumentality of a foreign state."
The judgment creditors first seek turnover of defendants' assets (the Building, the seven Alavi-only properties, and the three Alavi-only bank accounts) pursuant to section 201(a) of TRIA. (
Under TRIA, "in every case in which a person has obtained judgment against a terrorist party on a claim based upon an act of terrorism, or for which a terrorist party is not immune under [28 U.S.C. § 1605(a)(7)],
The first element is easily met here. The judgment creditor plaintiffs have all obtained judgments against Iran in the District Court for the District of Columbia and the Southern District of New York pursuant to two exceptions to sovereign immunity, under §§ 1605(a)(7) (in effect until January 2008) and 1605A of the statute.
The second element is also met. TRIA defines the term "terrorist party" as "a terrorist, terrorist organization . . ., or a foreign state designated as a state sponsor of terrorism under section 6(j) of the Export Administration Act of 1979." TRIA § 201(d)(4). Iran has been designated as a "state sponsor of terrorism" since 1984, and therefore is a "terrorist party" within the meaning of TRIA.
Finally, the third element is met, because the Building and associated bank accounts at issue here fall within the definition of "blocked assets." Under TRIA, the term "blocked asset" includes "any asset seized or frozen by the United States under . . . the [IEEPA]." TRIA § 201(d)(2)(A). First, as to Assa, "the Assa Defendants' assets constitute `blocked assets' of Bank Melli, an instrumentality of Iran," because they appear on OFAC's "Specially Designated Nationals and Blocked Persons List."
Alavi and 650 Fifth Ave. Co. argue that their properties are not "blocked under TRIA," because "[t]o seize or freeze assets" within the meaning of TRIA "transfers
There is no issue of material fact as to whether plaintiffs have obtained judgments on their claims or whether defendants' assets are "blocked" within the meaning of TRIA. Plaintiffs are entitled to turnover of all of defendants' assets— the Building, the associated bank accounts, the seven Alavi-only properties, and the three Alavi-only bank accounts—under TRIA.
Second, the judgment creditors seek turnover of defendants' assets pursuant to § 1610(g) of the FSIA. (
Under § 1610(g) of the FSIA, "the property of a foreign state against which a judgment is entered under [28 U.S.C. § 1605A], and the property of an agency or instrumentality of such a state, . . . is subject to attachment in aid of execution, and execution, upon that judgment." 28 U.S.C. § 1610(g)(1). There are thus two elements to plaintiffs' claim under § 1610(g): (1) the property in question must be the property of a foreign state or agency or instrumentality of such a state, and (2) judgment must have been entered against the foreign state under § 1605A. For the reasons stated above, defendants here are properly deemed the Government of Iran, i.e., a foreign state; therefore, their property is the property of a foreign state. Some of the plaintiffs have also already obtained judgments against Iran pursuant to § 1605A based on the aforementioned acts of terrorism sponsored by Iran. (
Therefore, as a matter of law, defendants' interests in the Building, its associated bank accounts, the seven Alavi-only properties, and the three Alavi-only bank accounts are subject to attachment and execution under § 1610(g) of the FSIA. This ruling applies to the Acosta, Beer, Kirschenbaum, Heiser, Havlish, and Hegna judgment creditors only.
Third, the judgment creditors seek turnover of defendants' assets pursuant to § 1610(a)(7) of the FSIA. (See TRIA/FSIA Mot. 9-12; Judgment Creditors Seven Properties Mot. 7-15.)
Section 1610(a) of the FSIA renders "property in the United States of a foreign state, . . . used for a commercial activity in the United States" subject to "attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States . . . if . . . the judgment relates to a claim for which the foreign state is not immune under section 1605A or section 1605(a)(7) (as such section was in effect on January 27, 2008), regardless of whether the property is or was involved with the act upon which the claim is based." 28 U.S.C. § 1610(a)(7).
As explained above, defendants' actions on behalf of Iran render them a foreign state for purposes of the FSIA as a matter of law. Their assets located in the United States are therefore "property in the United States of a foreign state."
There is one remaining element that must be met to satisfy the requirements of this provision: the properties must have been used for a "commercial activity." Under § 1603 of the FSIA, "Definitions," "the commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose." 28 U.S.C. § 1603(d). The Court has "a great deal of latitude in determining what is a `commercial activity' for purposes of" the FSIA. H.R. Rep. No. 94-1487, at 16 (1976).
The Supreme Court has stated, in the context of the § 1605 exception,
In
While leasing may not always constitute "commercial activity," courts have found leasing to be commercial activity in certain cases. The House Report accompanying the Act states that "a foreign government's . . . leasing of property . . . would be . . . included within the definition." H.R. Rep. No. 94-1487, at 16 (1976);
Additionally, in order to render defendants' assets subject to attachment, "the property [must have been]
Here, there is no triable issue as to whether the Building and the associated 650 Fifth Ave. Co. bank accounts were "used for a commercial activity" within the meaning of § 1610(a) of the FSIA. For example, Alavi has the authority to lease space in the Building to tenants pursuant to the 1989 Partnership Agreement with Assa. (Gov't 56.1 I ¶ 87.) According to 650 Fifth Ave. Co.'s tax filings, the Building generated approximately $17 million per year in revenue between 2002 and 2004, and approximately $19 to $21 million per year between 2006 and 2009. (
Defendants' bank accounts associated with the Building were also used for commercial activity. 650 Fifth Ave. Co. is engaged entirely in the ownership and distribution of proceeds from the Building, and it made regular distributions of revenue from its bank accounts to Alavi and Assa. (Gov't 56.1 I ¶¶ 20, 22, 56.) Assa, which had been created specifically as a front for Bank Melli, obtained its bank accounts solely as a result of its ownership interest in and the revenue generated by the Building. Assa then used these bank accounts to receive distributions from 650 Fifth Ave. Co. and to transfer funds to its principal, Bank Melli. For these reasons, defendants' use of the Building and associated bank accounts was, as a matter of law, a commercial activity—an action "by which a private party engages in trade and traffic or commerce,"
For the following reasons, the seven Alavi-only properties and three Alavionly bank accounts were also "used for a commercial activity" within the meaning of § 1610(a) of the FSIA. The Court is mindful of the philanthropic character of the lessees who occupy these properties, including mosques, non-profit schools, and education centers. Nonetheless, as set forth below, the Court must evaluate the leases by their nature, not their purpose; on that standard, the Alavi-only properties and accounts are indeed commercial.
To start with, the Virginia properties are most obviously used for commercial activity; Alavi leases those properties to private individuals for rent. (Judgment Creditors 56.1 ¶ 46; Alavi Seven Properties 56.1 I ¶ 46.) Nothing distinguishes the leases from private leases other than the identity of Alavi as a foreign state. See Ford, 2010 WL 2010867, at *3;
Alavi also used the other Alavi-only real properties for commercial activity. The usage agreements are legally binding contracts that confer significant financial benefits on Alavi. Although the tenant organizations do not pay rent to Alavi, as with the Virginia properties, the tenants assume numerous of Alavi's liabilities in exchange for the right to use the properties, which indirectly compensates Alavi for the property. (
Whether or not Alavi receives rent in the form of money, these are contracts for the use of real property through which Alavi receives tangible benefits—that is, leases.
Alavi argues that "the Second Circuit has determined . . . that a lease by itself does not constitute a commercial activity." (Alavi's Mem. of L. in Opp. to Private Pls.' Joint Supp. Mot. ("Alavi Seven Properties Opp. I") 10, ECF No. 977 (citing
Alavi's fundamental argument is that the properties are "used by religious and charitable organizations as mosques, not-for-profit schools, and Islamic education centers," and that they serve "in furtherance of its charitable mission." (Alavi Seven Properties Opp. I 6.) Alavi characterizes its leases as "rent-free charitable use agreements." (
Analogizing the seven real properties to "donations to charity" mischaracterizes their use.
Alavi's arguments that its three bank accounts were not "used for a commercial activity" within the meaning of § 1610(a)(7) also fail. Alavi admits that it has used its bank accounts to support its "general operations, including issuing a student loan, paying staff salaries, and making other payments needed to maintain the Foundation's purposes." (
For these reasons, there is no issue of material fact as to whether defendants have generated, received, and distributed revenues, thus operating in the manner of a private player in the market rather than as a regulator.
Finally, the judgment creditors seek turnover of Assa's assets pursuant to § 1610(b) of the FSIA. (
Under § 1610(b), "property in the United States of an agency or instrumentality of a foreign state engaged in commercial activity in the United States shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States . . . if . . . the judgment relates to a claim for which the agency or instrumentality is not immune by virtue of" § 1605A or § 1605(a)(7) (as in effect on January 27, 2008). 28 U.S.C. § 1610(b)(3). Unlike §§ 1610(g) and 1610(a), this provision requires that property belong to an "agency or instrumentality of a foreign state."
As stated in the June 2013 Opinion and as reiterated above, Assa is an instrumentality of Iran pursuant to OFAC's determination that "Assa Corporation is controlled by, acts for or on behalf of, and had provided financial support for, and services in support of Bank Melli."
As a result, there is no issue of material fact as to whether Assa's assets are subject to execution pursuant to § 1610(b)(3) of the FSIA. Moreover, unlike § 1610(a)(7), which is applicable only to property involved in commercial activity, this provision renders
There is no triable issue as to whether Alavi's investments in its seven defendant properties are traceable to proceeds of International Emergency Economic Powers Act (IEEPA) violations and traceable to property involved in money laundering. The Government is therefore entitled to summary judgment as to the properties.
Alavi's investments in the seven properties are forfeitable both as traceable to IEEPA violations and as involved in money laundering.
Any "property, real or personal," "is subject to forfeiture to the United States" if it "constitutes or is derived from proceeds traceable to a violation of . . . any offense constituting `specified unlawful activity' (as defined in section 1956(c)(7) of this title), or a conspiracy to commit such offense." 18 U.S.C. § 981(a)(1)(C). Under § 1956(c)(7), the term "specified unlawful activity" includes, among other things, violations of "section 206 (relating to penalties) of the [IEEPA]." 18 U.S.C. § 1956(c)(7). That section in turn makes it "unlawful . . . to violate, attempt to violate, conspire to violate, or cause a violation of any license, order, regulation, or prohibition issued under this title." 50 U.S.C. § 1705.
Presidents Reagan and Clinton and the Department of the Treasury have issued executive orders and regulations pursuant to the IEEPA that prohibit a broad range of conduct with respect to Iran, including conduct relating to imports from Iran, exports to Iran, dealings in Iranian goods and services, and financial dealings with Iran, without a valid license.
Courts apply a "but for" test to determine whether property is "proceeds" of an offense for the purposes of § 981. "Proceeds are property that a person would not have but for the criminal offense . . . ."
When proceeds of unlawful activity are spent to obtain or improve property, any appreciation traceable to those proceeds is forfeitable.
The summary judgment record contains no facts to alter the Court's conclusion in the September 2013 Opinion that Alavi engaged in IEEPA violations by providing services to Iran in violation of 31 C.F.R. §§ 560.204, 560.206, and 560.208.
Moreover, the present record contains no facts to alter the Court's conclusion as to what proceeds are subject to forfeiture. The Pahlavi Foundation, the precursor to Alavi, built the Building through a 1975 loan from Bank Melli Iran. (Gov't 56.1 I ¶ 3; McReynolds Decl. Ex. 3.) The 650 Fifth Ave. Co. partnership was created as a solution to a tax situation related to income generated by the Building and in order to benefit Iran. (Gov't 56.1 I ¶¶ 19-21.) Later, Alavi acted as the general partner of the 650 Fifth Ave. Co. partnership while knowing that Bank Melli and the Government of Iran controlled Assa; this enabled Bank Melli to conceal its identity and enabled Iran to receive partnership distributions and the value of the partnership assets. "Alavi's entire partnership is therefore traceable to illegal services . . . ."
Thus, each of the seven properties is forfeitable to the extent that Alavi spent forfeitable proceeds from the Building on the property, whether in the form of repairs, improvements, or payments of real estate taxes.
Alavi argues that the relevant proceeds are not all of its partnership distributions from the 650 Fifth Ave. Co. partnership, but only its "management fees." (
Alavi argues that rents cannot be "proceeds" of such a service, because, if Alavi had never concealed Assa's identity, control, and ownership, then it would never have violated the IEEPA in the first place, while continuing to receive rental income. (Alavi Seven Properties Opp. II 9-10.) As a result, Alavi's IEEPA violation cannot be the "but for" cause of its receiving ownership distributions.
Alavi's theory is wholly implausible and contrary to the factual record. Alavi is the latest iteration of an organization that the Shah formed as the Pahlavi Foundation and that purchased the Building using a loan from Bank Melli Iran. (Gov't 56.1 I ¶¶ 1, 3.) Alavi was present at the creation and birth of Assa, and, along with Bank Melli, directly participated in the plan to create Assa as a company to act on behalf of Bank Melli. (
Additionally, without providing the services to Iran—that is, "but for" having provided the services—Alavi would not have retained its partnership interest.
Section 981(a)(1)(A) subjects to forfeiture "[a]ny property, real or personal, involved in a transaction or attempted transaction in violation of section 1956 [and] 1957 . . . of this title, or any property
Alavi argues that the funds that it spent on the seven properties were not "involved in" or "traceable to" money laundering transactions. Alavi's argument fails. Alavi's services in violation of the IEEPA enabled the partnership to earn rent from the Building; the partnership, Alavi, and Assa Corp. then distributed that rent intending to conceal that it was meant for the benefit of Iran, and caused partnership funds to be transferred abroad.
Thus, the funds that Alavi received from the partnership distributions—rent revenue from the Building—were both "involved in" money laundering transactions and "traceable to" the Building, which was itself involved in money laundering. It is undisputed that Alavi used those revenues to pay for Alavi's activities, including paying for improvements to its properties. (Gov't 56.1 II ¶ 3, 5.) Accordingly, all of the money that Alavi spent to maintain, improve, and pay for taxes on the properties is forfeitable as property traceable to property involved in money laundering.
Alavi argues that the Government may only forfeit the properties to the extent that the property received proceeds of its violations, and that the Government has failed to trace the funds derived from the Building into the property to show the proportion of each property that it may forfeit. Alavi's argument fails. Under a "proceeds" theory pursuant to § 981, the Government seeks to forfeit 89% of Alavi's expenditures on each property from 1996 to 2008, as follows:
The Government has met its burden to show the tracing required by § 981(a)(1)(A). As set forth above, Alavi's entire partnership interest in 650 Fifth Ave. Co. constitutes proceeds of Alavi's illegal services, and Alavi's partnership interest is therefore forfeitable in its entirety. Accordingly, any funds that Alavi received from its partnership interest—i.e., distributions in rental income—are forfeitable as proceeds traceable to Alavi's violations. Because 89% of all of the funds that went into Alavi's accounts came from the Building, 89% of the payments that Alavi made on its properties are similarly traceable to the IEEPA proceeds.
Alavi does not dispute the relevant facts: 89% of its income during 1996 to 2008 came from rental income from the Building, these payments went into its bank accounts, and Alavi used these funds to pay for its activities, including improvements to real estate and expenses such as property taxes. (Gov't 56.1 II ¶¶ 3, 5.) Rather, Alavi argues that other sources of revenue made up 11% of the Foundation's total income during the relevant period. (
However, Alavi does not proffer any facts supporting its barebones argument that the Government's traceability calculation—under which 89% of Alavi's expenditures on each property are traceable to the forfeitable 89% of Alavi's income—is incorrect. Rather, Alavi presents only an argument or a theory, without supporting facts. Summary judgment is therefore proper.
Under this theory, the Government is entitled to forfeiture of each property in the full amount that Alavi spent on each property, because all of the Government's expenditures are "traceable to" property "involved in" money laundering. Alavi argues that forfeiture is permissible only to the extent that tainted funds were invested in the properties.
As part of its motion, the Government seeks to forfeit $83,683.34 in taxes that Alavi paid for the Virginia properties. (Mem. of L. in Supp. of Gov't's Mot. for Summ. J. ("Gov't Seven Properties Mot.") 12, ECF No. 957.) Alavi argues that, because "[c]ivil forfeiture is an in rem proceeding against property involved in or traceable to crime, not an action to recover monies from the owner," tax payments are not forfeitable because they are not part of property. (Alavi Seven Properties Opp. II 16.)
Alavi's argument fails. The Government does not seek to forfeit tax payments themselves, but the portion of the Virginia properties equal to the funds that Alavi spent on tax payments. Alavi spent $83,683.34, which was traceable to proceeds of IEEPA violations and money laundering, to pay taxes on the Virginia properties. (Gov't 56.1 II ¶ 23.) But for those tax payments, the Virginia properties would have been vulnerable to tax liens, and but for those tax payments, Alavi would not have its present ownership interest in the properties.
The Government is also entitled to forfeit the percentage of appreciation in the Queens, Maryland, and Texas properties that is traceable to the tainted funds expended on those four proceeds.
Contrary to Alavi's argument, the Government has met its burden to show the proportion of appreciation in the four properties that is traceable to Alavi's violations. First, the Government adds together the undisputed purchase price for each of the four properties in question, the undisputed quantity of pre-1995 expenditures, and the undisputed quantity of post-1995 expenditures, to determine the "total basis" for each property—the purchase price together with all of Alavi's investments. (Reply Mem. of L. in Further Supp. of Gov't's Mot. for Summ. J. 5-6, ECF No. 998.) For each property, the Government then calculates the amount of post-1995 expenditures as a percentage of the property's total basis, which equals the proportion of Alavi's expenditures on the property after its conduct became illegal. (
The Government's formula meets its burden to show the amount of appreciation that is "traceable to a violation" as required by 18 U.S.C. § 981(a)(1)(C). In response to the Government's showing, Alavi proffers not facts, as required to defeat summary judgment, but a barebones argument: it is not necessarily true that, simply because Alavi invested a certain percentage of its expenditures in a given property, those expenditures caused that same percentage of the property's appreciation. However, Alavi could have proffered facts regarding actual rates of appreciation or an expert opinion regarding the relationship between its expenditures invested in each property and the consequent appreciation. Alavi did not, and mere argument cannot defeat summary judgment.
Alavi does not contest the Government's argument that it is not an innocent owner of the seven properties. (
As the Court has previously explained, "Alavi has failed to raise a triable issue" on the question of innocent ownership, because the "evidentiary record is entirely one-sided on this point: Alavi knew that it was interacting with Bank Melli through Assa, and therefore Iran through Assa."
Finally, Alavi's three Sterling Bank accounts, which contain $899,890.62, $448,564.35, and $76,745.35, for a total of $1,425,200.32 (Van Driessche Decl. ¶ 28, ECF No. 1076), are forfeitable both because they are proceeds of IEEPA violations and property traceable to IEEPA violations, and because they are property traceable to and involved in money laundering offenses.
As set forth above, 18 U.S.C. § 981(a)(1)(C) subjects to forfeiture any property that "constitutes or is derived from proceeds traceable to a violation of," among other provisions, the IEEPA. 18 U.S.C. §§ 981(a)(1)(C), 1956(c)(7). That provision encompasses violations of Executive Orders 12959 and 10359 as well as the ITRs.
18 U.S.C. § 981(a)(1)(A) subjects to forfeiture "[a]ny property, real or personal,
As set forth in the September 2013 Opinion, there is no triable issue of fact that the Building and the associated bank accounts were "involved in" money laundering transactions.
As set forth below, the Government is entitled to forfeit all three Sterling Bank accounts in their entirety pursuant to 18 U.S.C. §§ 984 and 981.
The relaxed tracing requirements of 18 U.S.C. § 984 enable the Government to seize funds in a bank account into which forfeitable assets have been transferred within one year. Pursuant to that provision, the Government need not "identify the specific property involved in the offense that is the basis for the forfeiture," even if "the property involved in such an offense has been removed and replaced by identical property," so long as the forfeitable assets themselves were transferred into the account within the past year. 18 U.S.C. § 984(a)-(b). "Section 984 does not relieve the Government of its obligation to show that funds derived from a criminal activity were deposited into the Account. Rather, once such a showing has been made, it frees the Government from having to prove that the dollars in the Account are the same ones that are traceable to the criminal activity giving rise to the forfeiture."
Pursuant to § 984, the Sterling accounts are forfeitable in their entirety. In the fiscal years 2008 and 2009, which cover the year prior to the filing of the amended complaint on November 16, 2009, more than 96% of all of Alavi's declared income was derived directly from the 650 Fifth Ave. Co. partnership—96.9% in 2008 and 99.7% in 2009. (Van Driessche Decl. ¶ 21.) Only 0.21% of Alavi's income in 2008 and 0.02% in 2009 was derived from contributions, gifts, and grants. (
(Van Driessche Decl. ¶¶ 25-28.) Thus, each account contained funds at the time of seizure that were less than the distributions into that account from the partnership. Pursuant to § 984's relaxed tracing requirements, which allow for funds in a bank account to be forfeited even when they have been replaced with identical property due to the fungibility of money, the Government may therefore forfeit the entirety of each account. See 18 U.S.C. § 984.
Alavi first disputes the Government's allegedly "erroneous determination that 90% of the Foundation's income from 1996 to 2009 was derived from the Fifth Avenue Company." (Alavi's Mem. of L. in Opp. to Gov't's Mot. for Summ. J. Concerning Alavi Bank Accounts ("Alavi Bank Accounts Opp.") 5, ECF No. 1086.) Specifically, Alavi argues that, based on its 60% partnership interest in Fifth Ave. Co., Alavi was require to report 60% of the partnership's income as its own income, regardless of whether Alavi in fact received that amount from the partnership.
Alavi also argues that the Government fails to meet its burden on summary judgment because the evidence only shows $392,308.34 of
For these reasons, the Government is entitled to forfeit the Sterling Bank accounts pursuant to 18 U.S.C. § 984.
Although the Government's analysis under § 984 is sufficient for purposes of this motion, the Government is also entitled to forfeit Alavi's bank accounts as "property, real or person, which constitutes or is derived from proceeds traceable to" an IEEPA or money laundering violation pursuant to 18 U.S.C. § 981(a)(1)(C). While § 981 does not require the Government to show that illicit funds were transferred within the past year, the Government must show that each forfeited account actually possessed unlawful proceeds at the time of seizure.
In
Alavi argues that the Government fails to meet its burden under § 981 because it cannot show that deposits after a low intermediate balance in each account were made using unlawful proceeds. For example, Sterling Account 1 had a low intermediate balance of $258,540.52 on July 15, 2009, such that any forfeiture should be capped at that amount, rather than the larger balance of $899,890.62 at the time of the account's seizure. (Alavi Bank Accounts Opp. 6.) Additionally, Alavi proffers evidence that it received at least one lawful deposit for $1,500,000 from John Hancock Life Insurance on July 28, 2009. (Van Driessche Decl. Ex. F, at SDNY-0654160.)
However, as set forth above, the Government has demonstrated millions of dollars of distributions from the partnership into the three Sterling accounts, and Alavi has not proffered specific facts to dispute those amounts. (Van Driessche Decl. ¶¶ 25-28.) The lowest intermediate balance rule therefore is no object to forfeiture, because the Government has shown actual illicit proceeds added to the accounts in an amount greater than the amounts currently present in the accounts. The Government's tracing overrides the presumption that tainted money is the last money withdrawn and that untainted money is the last money added to a given account.
For these reasons, the Government is entitled to forfeit Alavi's three Sterling Bank accounts in their entirety pursuant to 18 U.S.C. § 984 and 18 U.S.C. § 981.
Alavi has also petitioned the Court for a determination pursuant to 18 U.S.C. § 983(g) that the forfeiture of the entire building at 650 Fifth Avenue is grossly disproportionate to the offenses at issue. ("§ 983(g) Petition," ECF No. 1019.) Pursuant to the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA"), in civil forfeiture proceedings where "the forfeiture is grossly disproportional to the offense," the Court "shall reduce or eliminate the forfeiture as necessary to avoid a violation of the Excessive Fines Clause of the Eighth Amendment of the Constitution." 18 U.S.C. § 983(g). "The touchstone of the constitutional inquiry . . . is the principle of proportionality: The amount of the forfeiture must bear some relationship to the gravity of the offense that it is designed to punish."
Alavi argues that forfeiture of the Foundation's 60% interest in 650 Fifth Avenue Co. and therefore in the Building—assets worth more than $500 million—is grossly disproportionate to its offenses of (1) providing services to Assa (and therefore to Bank Melli and to Iran) in violation of the IEEPA and ITRs and (2) engaging in money laundering in violation of 18 U.S.C. § 1956. (§ 983(g) Petition 2.) Alavi argues that its "criminal behavior represents only a small portion of the Foundation's forty-year history, involved the transfer of funds far less than the total value of the Foundation's assets, and represent only a small part of the Foundation's activities (the overwhelming majority of which were focused on its charitable mission)." (
The Government first argues that the Eighth Amendment does not apply to the forfeiture of unlawful proceeds or that the forfeiture of unlawful proceeds is
As discussed above and in the Court's September 2013 Opinion, there is no triable issue as to whether Alavi acted as the general partner of 650 Fifth Ave. Co. while knowing that Assa was controlled by Bank Melli and by the Government of Iran.
Alavi argues that the Building cannot be viewed as a "proceed" of an underlying IEEPA violation, because it owned the Building before any allegedly unlawful activity, and—contrary to the Court's ruling in its September 2013 Opinion—"there is no way of knowing what would have happened if the Foundation had disclosed Assa's identity at an earlier date." (Alavi & 650 Fifth Ave. Co's Reply Mem. of L. in Supp. of § 983(g) Petition ("§ 983(g) Reply") 4-5, ECF No. 1055.) However, no rational juror could find, as Alavi claims, that Alavi's partnership interest would likely "have remained intact" if it had not provided its concealment service to Iran. (
In any event, the Court need not resolve definitively whether the Eighth Amendment applies to the proceeds at issue here, because forfeiture of the Building is proportional under the
Even assuming that proceeds of an offense are subject to an Eighth Amendment analysis, the forfeiture of the Building is not grossly excessive in light of Alavi's conduct. Three factors are relevant to this inquiry: (1) a comparison of the harshness of the forfeiture in comparison with the gravity of the offense; (2) the nexus between the property and the criminal offense; and (3) the culpability of the claimant.
First, forfeiture of the Building would not be harsh in comparison with the gravity of Alavi's offense. As the Court previously found, Alavi knew that Assa was a front company for Bank Melli and therefore for Iran, and made affirmative efforts to hide Bank Melli's ownership interest in Assa and 650 Fifth Ave. Co. and its ownership of the Building.
Alavi argues that, at most, forfeiture would be proper of $996,650 that Alavi earned in management fees from 1995 to 2009, because the Building generated revenue from legitimate tenants, and Alavi reinvested funds in the Building for operational expenses and building upkeep. (
Second, an examination of the nexus between the Building and the criminal offense reveals that the Building was integral to Alavi's violations. As the Court explained in the September 2013 Opinion, there is no triable issue of material fact that 650 Fifth Ave. Co. was created to benefit Iran, and that Assa, and therefore Bank Melli, received distribution payments thanks to the partnership.
Third, the extent of Alavi's culpability is sufficient for full forfeiture of the Building. There is no triable issue of fact as to whether "Alavi was present at the creation and birth of Assa," and whether, "along with Bank Melli, it directly participated in the plan to create Assa as a company . . . to act on behalf of Bank Melli."
For these reasons, forfeiture of the entire Building at 650 Fifth Avenue is not grossly excessive.
For these reasons, the judgment creditors' motion for summary judgment as to Alavi and 650 Fifth Ave. Co.'s interests in the Building and the associated bank accounts is GRANTED; the judgment creditors' motion for summary judgment as to Alavi's seven properties and three bank accounts is GRANTED; the Government's motion for summary judgment as to Alavi's seven properties is GRANTED; the Government's motion for summary judgment as to Alavi's three bank accounts is GRANTED; and Alavi's § 983(g) petition is DENIED.
The Clerk of Court is directed to close the motions at ECF Nos. 869, 950, 956, and 1075.
SO ORDERED.
1332(c)and (e) of this title, nor created under the laws of any third country. 28 U.S.C. § 1603(b).