In re: 650 Fifth Avenue and Related Properties

Background

The Government sought forfeiture of interests connected to 650 Fifth Avenue and other property. Its amended complaint alleged that Bank Melli Iran, through Assa, held a concealed 40% partnership interest in the 650 Fifth Avenue Company and received rental income through that arrangement. The Government pursued forfeiture under federal sanctions and money-laundering statutes.

Assa Corp., the former owner of that 40% partnership interest, and Assa Co. Ltd., its parent company, filed claims asserting ownership interests in the property. Assa also asserted an innocent-owner defense, which is a claim that property should not be forfeited because the claimant lacked knowledge of or involvement in the conduct supporting forfeiture.

Earlier rulings had granted summary judgment for the Government on Bank Melli’s ownership and control of Assa and on the forfeitability of Assa’s interests. A separate turnover judgment later stated that all right, title, and interest of Assa Corp. and Assa Co. Ltd. in the relevant property were extinguished. The Court of Appeals affirmed the determination concerning Bank Melli’s ownership and control of Assa.

The Motion and Oppositions

The Government argued that Assa no longer had an interest in the property and therefore lacked standing—the required legal connection to property that allows a claimant to contest its forfeiture. The Government asked the court to dismiss Assa’s claims and enter a judgment of forfeiture. Assa did not oppose the motion.

The Hegnas opposed the motion, asserting that they had priority rights and arguing that certain rental proceeds were not forfeitable or had not been specifically identified in the Government’s complaint. The Levins argued that their pending claims under the Terrorism Risk Insurance Act took priority over the Government’s forfeiture claim and that their execution writ gave them priority over other claims.

Court’s Analysis

The court first ruled that the Hegnas’ settlement agreement barred their opposition. Under that agreement, they had agreed to be bound by its terms, including an agreement not to take a position adverse to the Government’s position in the litigation. The court also rejected the Hegnas’ arguments independently, concluding that the amended complaint covered property traceable to Assa’s partnership interest, including distributions of income, and that the court had previously rejected their argument concerning post-seizure rents.

The court denied the Levins’ opposition as well. It relied on the earlier turnover judgment, which extinguished Assa’s interests in the property, and on the Court of Appeals’ rejection of the Levins’ interpretation of the Terrorism Risk Insurance Act’s language concerning execution against blocked assets. The court also noted that the Levins held claims they were pursuing under that statute, rather than a judgment under it.

As to Assa, the court held that the turnover judgment and the Court of Appeals’ decision left Assa without a legal interest in the property. Because an ownership or possessory interest is generally required to contest forfeiture, the court found that Assa lacked standing. The court therefore dismissed Assa’s forfeiture claim and answer, including its innocent-owner claim.

Disposition

Judge Loretta A. Preska granted the Government’s motion to dismiss Assa Corp. and Assa Co. Ltd.’s claims. The court denied the Hegnas’ opposition and denied the Levins’ opposition. It directed the Government, after conferring with the other parties, to submit a proposed form of final judgment. The opinion does not state that the final judgment was entered on that date.