Wednesday, May 6, 2009

Foundation President Indicted In Iran Banking Probe

Farshid Jahedi, the president of the Alavi Foundation, has been indicted for allegedly destroying documents subpoenaed by a grand jury investigating the Alavi Foundation’s relationship with Bank Melli Iran and the ownership of a Manhattan office building.

The indictment is the result of the issuance of a grand jury subpoena that was served on the Alavi Foundation in December. It directed the foundation to provide to the grand jury documents that might reveal the relationship of the foundation, the Assa Corporation, Assa Company Ltd and a building at 650 5th Avenue in Manhattan to Bank Melli. Federal agents serving the subpoena advised Jahedi it was unlawful to destroy any of the documents the grand jury was seeking.

According to the indictment, the very next day FBI agents spotted Jahedi tossing torn documents into a public trash can. They retrieved the rash and found that the documents were among those demanded by the grand jury.

The Alavi Foundation is a 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 the office tower at 650 5th Avenue, funded in large measure by a substantial loan from Bank Melli, which is a state-owned bank in Iran. According to the indictment, in 1989, the Alavi Foundation, in partnership with Bank Melli, formed 650 Fifth Avenue Company. To disguise Bank Melli’s ownership interest, the parties agreed to transfer 35% of 650 Fifth Avenue Company to Assa Corporation. Assa Company Ltd, Assa Corporation's parent company, is a Jersey, Channel Islands, entity owned by Iranian citizens who represent the interests of Bank Melli.

After the interest was transferred, the indictment charges, Bank Melli cancelled its loan on the Building. Today, the Alavi Foundation owns 60% of 650 Fifth Avenue Company, and Bank Melli, through Assa Corporation and Assa Company Limited, owns 40% of 650 Fifth Avenue Company.

In 1995, the federal government instituted regulations prohibiting the exporting of technology or services from the United States to Iran without the permission of the Treasury Department. The indictment alleges that Assa Corporation and Assa Company Ltd 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 violation of the regulations.

The federal government filed a forfeiture complaint against the project in December and also went after any money in the bank accounts that, it alleges, was laundered.

Jahedi is charged in the indictment with two felony offenses. One charges him with destroying a document, with the intent to impair that document’s availability for use in an official proceeding. If convicted on that charge he could be sentenced to 20 years in prison. The second, an obstruction of justice charges, carries a 10 year maximum penalty.

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