THE FEDS have the right to seize a 36-story midtown office tower worth an estimated $500 million to $700 million because its owners have used the building’s rent rolls to funnel money to Iran, a judge ruled Monday.
Prosecutors told the Daily News they believe the stunning move to be “the largest real property forfeiture” in U.S. history.
They intend to hand over the bulk of any proceeds derived from the forfeiture to relatives of people who died in Iran-aided terror attacks, including 9/11 and the 1993 bombing of Marine Corps barracks in Beirut.
The decision by Manhattan Federal Judge Katherine Forrest is subject to a potential appeal. But if the forfeiture moves forward soon, the timing could hardly be better, an expert told The News.
The value of 650 Fifth Ave. has skyrocketed since prosecutors sued for control of the building, in 2008 and 2009.
“This is the best time to sell — it’s such a hot market,” said commercial real estate appraiser Dan Fasulo. “You know the government. They’ll drag their feet and probably miss their chance to make a boatload.”
He said the relatively innocuous office tower could fetch up to $2,000 a foot, as much as the nearby General Motors Building.
The Iran-linked building, at prime Fifth Ave. and 52nd St., boasts 380,000 square feet and leases retail space to Juicy Couture and Godiva.
The Manhattan U.S. attorney’s office already leads the nation in seizing assets associated with criminal activity.
It snared $2.98 billion last year — 68% of the total for federal prosecutors nationwide — and now may have a towering, steel feather to put in its cap.
“The court has found that, based on the incontrovertible record evidence,” the owners of the building funneled rent money to a state-run Iranian bank, making it “a front for the government of Iran,” Forrest said in her 82-page written opinion, made public Monday.
“The assets at issue . . . are subject to forfeiture,” she concluded.
The ruling came just days before the case and a related action were set to reach trial.
Family members of terror victims are suing to seize the same property as compensation from Iran.
It was not immediately clear how the court will deal with that case in light of the Forrest decision. But prosecutors said they intend the private plaintiffs to benefit from the forfeiture if it goes through.
Built in 1979 by a nonprofit connected to the Shah of Iran, 650 Fifth Ave. generates millions in rent for its owners, including the Alavi Foundation and the Assa Corp.
dbeekman@nydailynews.com
