A federal appeals court in New York has blocked efforts by the US government to seize a 36-story Manhattan office tower jointly owned by a non-profit organisation and an entity owned by Bank Melli, the state-owned Iranian bank sanctioned for opening letters of credit (L/Cs) for and maintaining the accounts of Iranian front companies.

The non-profit Alavi Foundation owns a 60 per cent portion of the premises while the entity under the control of Bank Melli, Assa Corporation, owns the remaining 40 per cent.

Court ruling

In 2014, prosecutors secured the building, said to be worth up to US$700 million, through a terrorism-related forfeiture agreement.

But now a panel of three judges has ruled that there is insufficient evidence that the non-profit Alavi Foundation was aware that its partner Assa Corporation was under the control of Bank Melli.

L/Cs breached sanctions

Prosecutors originally filed a complaint in 2008 to effect forfeiture only of Assa Corporation's stake in the premises, but the complaint was subsequently revised to target the Alavi Foundation's assets as well.

In a 2008 statement justifying the US government's claim on the premises, the state department asserted that Bank Melli provided "financial services, including opening L/Cs and maintaining accounts, for Iranian front companies and entities engaged in nuclear proliferation activities."

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