Midtown Tower Tied to Iran Shifts to New Control

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After nearly two decades of litigation, a Midtown office tower illegally owned by the Iranian government is under new control.

The nonprofit Amir Kabir Foundation took over the 36-story building at 650 Fifth Avenue as part of a settlement between the U.S. and a partnership of Iran-backed companies reached last month. Under the agreement, the new foundation — which agreed to be monitored by the U.S. government — will distribute $318 million to victims of terrorist attacks linked to Iran.

Details of the settlement were announced by the Southern District of New York in late March, though records of the property’s transfer landed in the city register Monday. An initial $129 million payment was disbursed to victims’ groups last month, with the remaining $189 million to be issued over the next three years.

“For nearly two decades, we pursued hidden Iranian government assets tied to a Manhattan skyscraper to ensure those funds would ultimately compensate victims of Iran-sponsored terrorism rather than terrorists and their enablers,” U.S. Attorney for the SDNY, Jay Clayton, said in a statement.

The agreement ties up an years-long battle over the tower, which federal authorities first tried to seize in 2008 over allegations that its owners concealed a connection to an Iran-controlled bank under sanctions from the U.S. government and steered millions in income to the Islamic Republic.

The property at 650 Fifth Avenue was purchased in 1974 by the Pahlavi Foundation, which was controlled by the former Shah of Iran, Mohammad Reza Pahlavi. The organization completed construction on the building in 1978 with $42 million in financing from the state-controlled Bank Melli.

After the revolution the following year, Iran’s new regime took over the foundation, which changed its name to the Alavi Foundation, as well as Bank Melli. Alavi had a 60 percent ownership stake in the building, while the remaining 40 percent belonged to Assa Corp, a front for Bank Melli, which was sanctioned by the U.S. in 1995 for its ties to Iran’s nuclear weapons programs.

Since the first lawsuit was levied, the U.S. has alleged that the owners were shell companies representing Iranian government interests, though some courts have disagreed. Federal authorities got the green light to seize the building in 2014, though two years later, a U.S. appeals court blocked the takeover, arguing the government had “insufficient evidence” proving the tower was owned by Iran and that Alavi knew of the government’s link to the minority owner.

In 2016, a jury found that Alavi did know about Assa’s ties to the bank, in violation of U.S. sanctions, though that decision was overturned on appeal in 2019.

Last January, the U.S. entered into a final settlement with victim groups and the building’s former ownership, which included the $318 million payout and the dissolution of the partnership.