New York skyscraper secretly owned by Iran raises terror fears

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The United States is set seize control of a midtown Manhattan skyscraper prosecutors claim is secretly owned by Iran, the justice department said Tuesday, though the ruling is to be appealed.

The seizure and sale of the 36-story building, in the heart of New York City on Fifth Avenue, would bethe largest-ever terrorism-related forfeiture,the statement added.

A federal judge ruled in favor of the governments suit this week, saying the buildings owners had violated Iran sanctions and money laundering laws.

Manhattan Federal Prosecutor Preet Bharara said the decision upholds the justice department claims the owner of the building was (and is) a front for Bank Melli, and thus a front for the Government of Iran.

Bharara said the funds from selling the building would provide a means of compensating victims of Iranian-sponsored terrorism.”

Prosecutors allege the buildings owners, the Alavi Foundation and Assa Corporation, transferred rental income and other funds to Irans state-owned Bank Melli.

Alavi also ran a charitable organization for Iran and managed the building for the Iranian government, the statement said.

Built in the 1970s by a non-profit operated by the Shah of Iran - and financed with a Bank Melli loan - the building was expropriated by the new Iranian government after the 1979 revolution, prosecutors allege.

They said the Shahs non-profit, the Pahlavi Foundation, was renamed the Mostazafan Foundation of New York and then the Alavi Foundation.

A former president of the Alavi foundation pleaded guilty in 2009 to obstructing justice in destroying evidence related to the case, which was first filed in 2008.

The Alavi foundation said it planned to appeal, saying in a statement on its website it was disappointed with the ruling and that it did not have the opportunity to rebut the Government evidence before a jury.

The U.S. Treasury Department has instituted tight sanctions against Iran, blacklisting a number of Iranian companies and organizations and putting very tight controls on the ability of any group or business to transfer funds into Iran.

The restrictions seek to pressure Tehran into giving up what the West says is a program to develop nuclear weapons.

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