LawFuel.com –
PREET BHARARA, the United States Attorney for the
Southern District of New York, announced that FARSHID JAHEDI, the
former president of the Alavi Foundation, pleaded guilty today to
two felony counts of obstruction of justice. The charges arose
from his December 18, 2008, destruction of documents responsive
to a grand jury subpoena, from the United States Attorney’s
Office for the Southern District of New York, concerning the
Alavi Foundation’s relationship with Bank Melli Iran and the
ownership of an office tower at 650 Fifth Avenue in Manhattan.
According to the Indictment to which JAHEDI pleaded
guilty, other documents filed in this and related cases, and
statements made today during the guilty plea proceeding before
United States District Judge SHIRA A. SCHEINDLIN in Manhattan
federal court:
Background
The Alavi Foundation is the successor organization of
the Pahlavi Foundation, a non-profit organization originally
operated by the Shah of Iran to pursue Iran’s charitable
interests in the United States. In the 1970s, the Pahlavi
Foundation constructed an office tower at 650 Fifth Avenue, New
York, New York (the “Building”). The Building’s construction was
financed by a substantial loan from Bank Melli Iran (“Bank
Melli”), a state-owned bank in Iran.
The Pahlavi Foundation was later renamed the Mostazafan
Foundation of New York, and later renamed the Alavi Foundation.
In 1989, the Alavi Foundation formed 650 Fifth Avenue Company in
partnership with Bank Melli. Bank Melli’s ownership interest
was, however, disguised. Specifically, the Alavi Foundation
transferred 35% of 650 Fifth Avenue Company to Assa Corporation,
an entity wholly owned by Assa Company Limited; Assa Company
Limited is a Jersey, Channel Islands, United Kingdom, entity,
which was and has since been wholly owned by Iranian citizens who
represent the interests of Bank Melli. In conjunction with the
transfer of the 35% interest in 650 Fifth Avenue to Assa
Corporation, Bank Melli canceled its loan on the Building.
Today, the Alavi Foundation owns 60% of 650 Fifth Avenue Company,
and Bank Melli owns 40% of 650 Fifth Avenue Company, through Assa
Corporation and Assa Company Limited.
In 1995, in order to implement a series of executive
orders issued pursuant to the International Emergency Economic
Powers Act (“IEEPA”), the Department of Treasury promulgated the
Iranian Transaction Regulations (“ITRs”), Title 31, United States
Code of Federal Regulations, Part 560. In general, the ITRs
prohibit any person from exporting or causing to be exported from
the United States to Iran or the Government of Iran, any goods,
technology, or services without having first obtained a valid
export license from the United States Department of Treasury,
Office of Foreign Assets Control (“OFAC”).
Following issuance of the ITRs, but without an OFAC
license to do so, Assa Corporation and Assa Company Limited
continued to provide services to Bank Melli by maintaining Bank
Melli’s interest in 650 Fifth Avenue Company and transferring
income from 650 Fifth Avenue Company to Bank Melli. In 1999,
OFAC identified Bank Melli, and all of its offices worldwide, as
entities owned or controlled by the Government of Iran.
On December 17, 2008, the United States Attorney’s
Office for the Southern District of New York filed a forfeiture
Complaint which sought to forfeit all right, title and interest
of Assa Corporation, Assa Company Limited, and Bank Melli in 650
Fifth Avenue Company, including 650 Fifth Avenue’s interest in
the Building. The United States also sought to forfeit funds
that were seized, pursuant to federal seizure warrants, from Assa
Corporation’s bank accounts. The forfeiture Complaint alleged
that the funds in the bank accounts are forfeitable as proceeds
of IEEPA violations, and that Assa Corporation’s interest in 650
Fifth Avenue Company was forfeitable as property involved in
money laundering and a conspiracy to commit money laundering.
On November 12, 2009, the United States Attorney’s
Office for the Southern District of New York filed an amended
forfeiture Complaint which sought to forfeit all right, title and
interest of the Alavi Foundation in 650 Fifth Avenue Company,
including 650 Fifth Avenue’s interest in the building. The
amended forfeiture Complaint also sought forfeiture of all other
assets of the Alavi Foundation, and Assa Corporation, as well as
bank accounts owned by 650 Fifth Avenue Company, the Alavi
Foundation and Assa Corporation; and real properties owned by the
Alavi Foundation in New York, Maryland, Virginia, Texas and
California. The amended forfeiture Complaint alleged that these
properties were forfeitable as the proceeds of IEEPA violations,
together with Executive Orders and the ITRs, and as property
involved in and the proceeds of money laundering offenses.
Jahedi’s Destruction of Documents and Obstruction of Justice
On December 17, 2008, the same day that the initial
forfeiture Complaint against Assa Corporation was filed, JAHEDI
was served, as president of the Alavi Foundation, with a grand
jury subpoena. The subpoena was directed to the Alavi Foundation
and requested the production to the federal grand jury of
financial documents concerning the Alavi Foundation, Assa
Corporation, Assa Company Limited, and 650 Fifth Avenue Company.
JAHEDI was explicitly cautioned by law enforcement agents not to
destroy any documents called for by the subpoena.
The next day, December 18, 2008, Federal Bureau of
Investigation (“FBI”) personnel observed JAHEDI discarding torn
documents into a public trash can, near his then-residence in
Ardsley, New York. Upon reassembling certain of the torn
documents, the FBI determined that the documents referred to Assa
Limited, Assa Company, and 650 Fifth Avenue Company, and thus
were responsive to the grand jury subpoena. JAHEDI was arrested
on December 19, 2008, and charged on May 5, 2009 with the twocount
Indictment to which he pleaded guilty.
As a result of his guilty plea today, JAHEDI, 55, faces
a maximum penalty of 20 years in prison and a fine of $250,000 or
twice the gross gain or loss from the offense on the charge of
destroying a document with the intent to impair that document’s
availability for use in an official proceeding (Count One). He
also faces 10 years in prison and a fine of $250,000 or twice the
gross gain or loss from the offense on the obstruction of justice
charge (Count Two). Judge SCHEINDLIN has scheduled JAHEDI’s
sentencing for April 2, 2010.
Mr. BHARARA said: “Today Farshid Jahedi admitted that
when faced with a grand jury subpoena, he chose to obstruct
justice by shredding and trashing important records sought in a
criminal investigation. If you deliberately throw a wrench into
the wheels of justice, you are not saving yourself but risking
your freedom.”
Mr. BHARARA praised the investigative work of the New
York Joint Terrorism Task Force – which principally consists of
agents of the FBI and detectives of the New York City Police
Department – and the New York Field Office of the Internal
Revenue Service, Criminal Investigation Division.
Assistant United States Attorneys HARRY A. CHERNOFF and
JOHN P. CRONAN are in charge of the prosecution.
09-435 ###
