NEW YORK — The 36-story tower on Manhattan's Fifth Avenue has well-known neighbors, like Rockefeller Center and St. Patrick's Cathedral.
It has upscale tenants, including a Godiva chocolate store.
And its ownership is linked to Iran — which could now bring the 382,500-square-foot Midtown site a for-sale sign from the U.S. Marshals Service.
In the latest development of a years-long court battle, U.S. officials this week announced a forfeiture settlement that could force a sale of the building and other U.S. properties, mosques and bank accounts also linked to Iran.
Thursday's settlement is aimed at distributing sale proceeds to families victimized by terrorist attacks with suspected Iran ties, including the 1996 Khobar Towers bombing in Saudi Arabia that killed 19 U.S. Air Force service members. The agreement between the government and the families is subject to expected court appeals, however.
Manhattan U.S. Attorney Preet Bharara said his office pursued the forfeiture "to dismantle Iran's slice of Manhattan — an office tower on Fifth Avenue — both to end Iran's illegal sanctions-violation and money-laundering schemes, and to provide a means of compensating victims of Iranian-sponsored terrorism."
The Manhattan tower was built in the 1970s by the Pahlavi Foundation, a non-profit run by the then-shah of Iran. Federal court rulings concluded it's now owned by the Alavi Foundation and shell-company subsidiaries of Bank Melli, both controlled or owned by the Islamic government that's ruled Iran since the 1979 revolution that ousted the shah.
The building has long been the site of transactions that federal investigators said were designed to evade U.S. regulations prohibiting sale of sensitive equipment to Iran. For instance, Iran's Agriculture Ministry in 1992 allegedly tried to buy a $2 million IBM ES9000 mainframe computer through Al Makaaseb General Trading, a firm based in the Fifth Avenue tower.
U.S. Department of Commerce agents blocked the export, which had been scheduled to follow a clandestine route to Iran through California and France. The Department of State then placed Al Makaaseb on a list of suspect companies and rejected visa applications by the firm's officials.
The tower generated an estimated $228.2 million in rent payments between 1996 and 2008, court records show.
Manhattan federal prosecutors launched a civil forfeiture effort to take over the site in 2008. The court complaint alleged that the tower, mosques and other real estate were constituted or derived from proceeds traceable to violations of the law banning sensitive transactions with Iran.
U.S. District Court Judge Katherine Forrest issued a September 2013 ruling that approved the government's forfeiture action. But In March, she also ruled that families who had won U.S. court judgments over alleged terrorist harm were entitled to take control of the properties. Thursday's settlement gave the families priority.
Barring overturn on appeal, the settlement terms allow federal marshals to sell the properties. The government would recover legal and sales costs. The families would be compensated from the proceeds based on the varying amounts of uncompensated damages they were awarded in court judgments.