In re: 650 Fifth Avenue and Related Properties

Background

The United States brought a civil forfeiture action involving 650 Fifth Avenue in New York and other real property and bank accounts. The amended complaint identified interests associated with Assa Corporation, Assa Company Limited, Bank Melli Iran, the Alavi Foundation, and the 650 Fifth Avenue Company. Multiple groups of judgment creditors also asserted claims to some of the properties based on judgments against, among others, the Government of Iran.

The opinion states that the court previously entered rulings concerning forfeiture and turnover of the properties. In 2017, the court entered a forfeiture judgment for the United States and a turnover judgment for judgment creditors. The Second Circuit later vacated the forfeiture judgment and remanded for further proceedings. It also vacated the turnover judgment as to the Alavi Foundation and the 650 Fifth Avenue Company, while affirming that judgment as to Assa Corporation and Assa Company Limited.

Kathleen A. Roberts had served as monitor and trustee under earlier protective orders. The court found that another order was necessary to secure, maintain, and preserve the defendant properties while the related proceedings continued.

Order

The court ordered all persons and entities with actual knowledge of the order not to transfer, sell, assign, pledge, encumber, or otherwise dispose of the defendant properties, or take actions that would depreciate, damage, or diminish their value.

The court appointed Kathleen A. Roberts trustee of the building and the other defendant properties. The trustee was directed to review and approve disbursements, agreements, and other activities of the 650 Fifth Avenue Company; review and approve actions by the Alavi Foundation under the partnership agreement; approve maintenance and upkeep expenses; approve certain Alavi Foundation disbursements; and take other actions needed to preserve the properties’ value.

The trustee was authorized to use rental income from the building to approve necessary expenses, including payroll, taxes, tenant distributions, broker commissions, capital expenses, and improvements. The trustee could review, approve, and execute proposed leases, subleases, modifications to existing agreements, and agreements between the 650 Fifth Avenue Company and third parties. The trustee could also employ personnel, with approval from the United States Attorney’s Office for the Southern District of New York, and authorize maintenance expenses for properties other than the building.

The trustee was required to report quarterly to the district court. The trustee could not interfere with ongoing judicial or administrative proceedings. Trustee costs, fees, and expenses were to be paid from building rental income through applications to the district court. Creditors and claimants of the Alavi Foundation or the 650 Fifth Avenue Company were barred from interfering with the trustee’s duties. The trustee was also required to possess and maintain the 650 Fifth Avenue Company’s books and records and make them available for inspection by the United States or its designee.

The order prohibited distributions from the building’s rental income to the Alavi Foundation. It also prohibited distributions to Assa Corporation and required income or other payments due to the partnership interest formerly held by Assa Corporation to be transferred to the Seized Assets Deposit Fund maintained by the United States Marshals Service. The order stated that it did not prohibit debtors, creditors, or tenants from complying with their agreements with the 650 Fifth Avenue Company and did not affect any party’s rights under Section 201 of the Terrorism Risk Insurance Act of 2002.

Classification

This is a procedural order because it addressed preservation and management of property during related litigation rather than deciding the underlying forfeiture claims on the merits.