A federal appeals court said on Wednesday the U.S. government cannot seize a midtown Manhattan office tower originally built by the Shah of Iran, whose owners it claimed were fronts for the Iranian government.
The 2nd U.S. Circuit Court of Appeals also said hundreds of victims of “terrorist acts” linked to Iran could not force the owners of 650 Fifth Avenue to pay unsatisfied money judgments they had won against that country, finding no proof that the owners and Iran were legally one and the same.
Both decisions were written by Circuit Judge Richard Wesley for a unanimous three-judge panel, and totaled 145 pages.
They overturned rulings by U.S. District Judge Katherine Forrest against the nonprofit Alavi Foundation, which promotes Islamic culture and the Persian language, and 650 Fifth Avenue Co, of which Alavi is a 60 percent owner.
The owners had claimed they were given no chance to show why they should not be held liable. Iran was not a defendant in the lawsuits, which were returned to Forrest’s courtroom, including for a possible trial in the government’s forfeiture case.
“We are very pleased,” Daniel Ruzumna, a lawyer for the owners, said in an email. “We look forward to vindicating our clients’ rights and interests at trial.”
Lawyers for the victims and the office of U.S. Attorney Preet Bharara in Manhattan did not immediately respond to requests for comment.
The 36-story building in question is located near Rockefeller Center and St. Patrick’s Cathedral, and would likely fetch hundreds of millions of dollars in a sale.
In seeking the forfeiture of that building, several other properties and various bank accounts, authorities accused Alavi of engaging in money laundering that violated U.S. sanctions against Iran, and knowing that the building’s minority owner Assa Corp was backed by state-controlled Bank Melli.
But Wesley said Forrest failed to properly review evidence that demonstrated a “genuine dispute” as to whether Alavi knew of Bank Melli’s control over Assa.
He also said Forrest did not properly consider whether authorities had waited too long to seek a forfeiture, and that the judge was too quick to admit evidence they obtained by search warrant.
In the victims’ case, Wesley said Forrest erred in finding that the building’s owners could under the federal Foreign Sovereign Immunities Act qualify as Iran itself, or be deemed its agents or instrumentalities.
The appeals directed Forrest to examine whether the victims could seek to enforce their money judgments under another law, the Terrorism Risk Insurance Act.
The cases are In re: 650 Fifth Avenue and Related Properties, 2nd U.S. Circuit Court of Appeals, No. 14-2027; and Kirschenbaum et al v. 650 Fifth Avenue and Related Properties in the same court, No. 14-1963.