Real Estate and OFAC Compliance

The tale of 650 Fifth Avenue is one that should be closely watched by compliance professionals dealing with real estate. Last year, the Department of Justice filed a forfeiture proceeding against a 40% interest in the property held by the Assa Corporation. They recently filed a forfeiture proceeding against the other 60% held by the Alavi Foundation.

The Amended Complaint alleges that the Alavi Foundation has been providing numerous services to the Iranian Government and transferring funds from 650 Fifth Avenue Company to Bank Melli, a bank wholly owned and controlled by the Government of Iran. The Amended Complaint alleges that the properties are forfeitable as the proceeds of violations of the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., together with Executive Orders and United States Department of Treasury regulations, and as property involved in and the proceeds of money laundering offenses.

Now the tenants are in the position of having been making rent payments to the Iranian government. This may not result in any criminal or civil sanctions, but the names of those tenants are being dragged through the muck. The same is true for the property management company.

References:

• Amended Complaint filed by the US DOJ – hosted on JD Supra
• Press Release from the US Attorney for the Southern District of New York: Manhattan U.S. Attorney Files Civil Action Seeking Forfeiture of Alavi Foundation’s Interest in Fifth Avenue Office Tower Controlled by Iran. (.pdf)
• Piaget Building Could Go to Auction By Cody Lyon for GlobeSt.com
• US Seeks Alavi’s Stake In Piaget Building By Chad Bray for the Wall Street Journal
• Alavi Foundation Is Iran Front, U.S. Says in Seizure Lawsuit By David Glovin for Bloomberg
• Inside Iran’s Fifth Avenue Skyscraper By Dana Rubinstein for the New York Observer
• What’s known about Iran-linked Alavi Foundation? by Michael B. Farrell for the Christian Science Monitor
• Government Seizes 650 Park Avenue -prior post