April 17 (Bloomberg) -- A 36-story office tower in midtown Manhattan worth more than $500 million and six other properties will be sold to provide funds for terrorism-related judgments against the Iranian government under a settlement announced by the U.S.
The building at 650 Fifth Avenue is among assets owned by entities that were found to be serving as a front for Iran in violation of an American embargo and federal money-laundering laws. Proceeds from sales of those properties as well as holdings in bank accounts will be distributed among 20 creditors who have won judgments against Iran, Manhattan U.S. Attorney Preet Bharara said in a statement.
The U.S. sued Assa, based in the U.K.’s Channel Islands, and the Alavi Foundation, a successor to a foundation created by Shah Mohammed Reza Pahlavi, who was overthrown as Iran’s leader in 1979. The 650 Fifth Avenue building was constructed by the Pahlavi Foundation, a nonprofit set up by the Shah.
The U.S. claimed Bank Melli, Iran’s national bank, co-owned the building through Assa. U.S. District Judge Katherine Forrest in Manhattan agreed, ruling in September that Assa acted as a front for Bank Melli.
Forrest also ruled that six other properties in the Queens section of New York, as well as in Texas, California, Virginia and Maryland, should be forfeited because the foundation used funds generated by them and 650 Fifth Avenue for its activities. The Manhattan tower generated more than $228 million in gross rents it received from tenants, Forrest said.
The judge had previously ruled that the foundation had to forfeit the properties and funds in three bank accounts to satisfy judgments won by the U.S. and plaintiffs who include more than a dozen people who were victims of terrorist attacks linked to Iran, as well as their families and estates.
The attacks include the families and representatives of the estate of 241 servicemen killed in the bombing of a U.S. Marine barracks in Beirut as well as Americans killed in Iran-sponsored bombings in Lebanon and the attack on the Khobar Towers complex in Saudi Arabia.
The case is In re 650 Fifth Avenue and Related Properties, 08-cv-10934, U.S. District Court, Southern District of New York (Manhattan).
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