Asset Forfeiture Case Filed Against Alavi Foundation, Grantees Not Accused

Updated Nov. 19, 2009 Citing a provision of the same law used to shut down U.S. charities accused of supporting terrorism, the U.S. Attorney for the Southern District of New York filed an action in federal court on Nov. 12, 2009 seeking forfeiture of more than $500 million in assets of the New York based Alavi Foundation, alleging it is a front for the Iranian government. The property in dispute includes land and buildings that house religious congregations, schools and community programs. However, no action is being taken against these local groups. The action against Alavi, which could result in transfer of title to its assets to the U.S. government, differs from shut down of charities of “blocking” or freezing funds indefinitely.

A Nov. 12 press release from the U.S. Attorney’s office says its complaint “alleges that the Alavi Foundation has been providing numerous services to the Iranian Government and transferring funds from 650 Fifth Avenue Company to Bank Melli, a bank wholly owned and controlled by the Government of Iran.” Bank Melli was designated by the Treasury Department in October 2007 “for Proliferation Activities and Support for Terrorism” and for providing “banking services to entities involved in Iran’s nuclear and ballistic missile programs, including entities listed by the U.N. for their involvement in those programs.”

The action is authorized by the International Emergency Economic Powers Act which is also used to freeze assets of charities. However, because asset freeze (or “blocking”) does not involve actual transfer of title to the property, the notice and due process rights available to Alavi have not been available to nine U.S. charities Treasury shut down as supporters of terrorism. There is no provision in law for the frozen assets ever to be released, and they have been in legal limbo for several years. (For details see our website.). In contrast, the asset forfeiture process is a court proceeding with due process and rules of evidence.

The complaint against Alavi traces a series of events and relationships it says establish Alavi’s ties to the Iranian government, including control of its board of directors by the Iranian Ambassador to the United Nations. The assets subject to the forfeiture claim include a 36-story office building in Manhattan and seven properties located in California, Maryland, New York City, Texas and Virginia. Most of these have mosques located in buildings owned by Alavi, but the U.S. Attorney’s office told the New York Times that “There are no allegations of any wrongdoing on the part of any of these tenants or occupants. No action has been taken against any tenants or occupants of those properties.”

However, the nonprofits operating out of Alavi buildings were surprised to find notices of forfeiture posted on their doors and media contacting them about the action. The local groups could be “collateral damage” in the case, according to the Miami Herald, which could suffer from loss of financial support from Alavi. On Nov. 13 the judge in the case signed an order (page 1 of order, page 2 of order) allowing seizure of Alavi’s bank accounts within ten days.

In a Nov. 13 statement the Council on American Islamic Relations National Communications Director Ibrahim Hooper said, “Whatever the details of the government’s case against the owners of the mosques, as a civil rights organization we are concerned that the seizure of American houses of worship could have a chilling effect on the religious freedom of citizens of all faiths and may send a negative message to Muslims worldwide.”

In a joint statement Muslim Advocates and the Islamic Society of North America (ISNA) said they “are concerned about the continued operations of the affected mosques and Muslim institutions in the event that forfeiture proceeds. Like other houses of worship in America, mosques serve communities and families whose lives would be deeply disrupted by their closure. …ISNA and Muslim Advocates ask that the government not deny communities the valuable services provided by mosques that authorities have publicly stated are blameless in the asset forfeiture case against the Alavi Foundation.”