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In re 650 Fifth Avenue and Related Properties

United States Court of Appeals, Second Circuit

July 20, 2016

In re 650 Fifth Avenue and Related Properties United States of America, Plaintiff-Appellee Fiona Havlish, individually and on behalf of the Estate of Donald J. Havlish, Jr., Donald Havlish, Sr., Susan Conklin, William Havlish, Tara Bane, individually and on behalf of the Estate of Michael A. Bane, Donald Bane, Christina Bane-Hayes, Krystyna Boryczewski, individually and on behalf of the Estate of Martin Boryczewski, Estate of Michael Boryczewski, Julia Boryczewski, Michele Boryczewski, Grace Kneski, individually and on behalf of the Estate of Steven Cafiero, Richard A. Caproni, individually and on behalf of the Estate of Richard M. Caproni, Dolores Caproni, Christopher Caproni, Michael Caproni, Lisa Caproni-Brown, Clara Chirchirillo, individually and on behalf of the Estate of Peter Chirchirillo, Livia Chirchirillo, Catherine Deblieck, William Coale, individually and on behalf of the Estate of Jeffrey Coale, Frances Coffey, individually and on behalf of the Estates of Daniel M. Coffey and Jason Coffey, Daniel D. Coffey, M.D., Kevin M. Coffey, The Estate of Jeffrey Collman, Dwayne W. Collman, Brian Collman, Charles Collman, Brenda Sorenson, Loisanne Diehl, individually and on behalf of the Estate of Michael Diehl, Morris Dorf, individually and on behalf of the Estate of Stephen Dorf, MICHELLE DORF, ANNE MARIE DORF, ROBERT DORF, JOSEPH DORF, LINDA SAMMUT, CORAZON FERNANDEZ, individually and on behalf of the Estate of Judy Fernandez, MARIA REGINA MERWIN, individually and on behalf of the Estate of Ronald Gamboa, GRACE PARKINSON-GODSHALK, individually and on behalf of the Estate of William R. Godshalk, TINA GRAZIOSO, individually and on behalf of the Estate of John Grazioso, JIN LIU, individually and on behalf of the Estate of Liming Gu, ALAN GU, MAUREEN HALVORSON, individually and on behalf of the Estate of James D. Halvorson, MARIE ANN PAPROCKI, individually and on behalf of the Estate of Dennis Lavelle, RONI LEVINE, individually and on behalf of the Estate of Robert Levine, TERESANNE LOSTRANGIO, individually and on behalf of the Estate of Joseph Lostrangio, MARGARET MAURO, individually and on behalf of the Estate of Dorothy Mauro, RAMON MELENDEZ, individually and on behalf of the Estate of Mary Melendez, PATRICIA MILANO, individually and on behalf of the Estate of Peter T. Milano, IVY MORENO, individually and on behalf of the Estate of Yvette Nichole Moreno, JOANNE LOVETT, individually and on behalf of the Estate of Brian Nunez, ESTATE OF VINCENT A. OGNIBENE, individually and on behalf of the Estate of Philip Paul Ognibene, CHRISTINE PAPASSO, individually and on behalf of the Estate of Salvatore T. Papasso, PATRICIA J. PERRY, individually and on behalf of the Estate of John William Perry, RODNEY RATCHFORD, individually and on behalf of the Estate of Marsha Dianah Ratchford, RODNEY M. RATCHFORD, MARSHEE R. RATCHFORD, RODNEY RATCHFORD for the Benefit of Maranda C. Ratchford, JUDITH REISS, individually and on behalf of the Estate of Joshua Scott Reiss, JOYCE ANN RODAK, individually and on behalf of the Estate of John M. Rodak, CHELSEA NICOLE RODAK, JOYCE ANN RODAK for the Benefit of Devon Marie Rodak, JOHN RODAK, REGINA RODAK, JOANNE GORI, DIANE ROMERO, individually and on behalf of the Estate of Elvin Romero, LOREN ROSENTHAL, individually and on behalf of the Estate of Richard Rosenthal, EXPEDITO SANTILLIAN, individually and on behalf of the Estate of Maria Theresa Santillian, ESTER SANTILLIAN, ELLEN SARACINI, individually and on behalf of the Estate of Victor Saracini, Guardian of Anne C. Saracini, JOANNE RENZI, PAUL SCHERTZER, individually and on behalf of the Estate of Scott Schertzer, RONALD S. SLOAN, individually and on behalf of the Estate of Paul K. Sloan, ESTATE OF GEORGE ERIC SMITH, RAYMOND SMITH, KATHERINE SOULAS, individually and on behalf of the Estate of Timothy P. Soulas, RUSSA STEINER, individually and on behalf of the Estate of William R. Steiner, ANGELA S. STERGIOPOULOS, individually and on behalf of the Estate of Andrew Stergiopoulos, GEORGE STERGIOPOULOS, individually and on behalf of the Estate of Andrew Stergiopoulos, SANDRA STRAUB, individually and on behalf of the Estate of Edward W. Straub, JOAN E. TINO, individually and on behalf of the Estate of Jennifer Tino, PAMELA SCHIELE, CHRISTINE BARTON-PENCE, individually and on behalf of the Estate of Jeanmarie Wallendorf, ESTATE OF META WALLER, DOYLE RAYMOND WARD, individually and on behalf of the Estate of Timothy Raymond Ward, GERALD BINGHAM, ALICE CARPENETO, STEPHEN L. CARTLEDGE, MICHELLE WRIGHT, HAOMIN JIAN, FUMEI CHIEN, HUICHUN JIAN, HUI-CHUAN JIAN, HUI-CHIEN CHEN, HUI-ZON JIAN, MICHAEL LOGUIDICE, RALPH S. MAERZ, MARTIN PANIK, ESTATE OF LINDA ELLEN PANIK, MARY LYNN-ANNA PANIK STANLEY, HELEN ROSENTHAL, ALEXANDER ROWE, ED RUSSIN, GLORIA RUSSIN, BARRY RUSSIN, LEONARD ZEPLIN, LEONA ZEPLIN, JOSLIN ZEPLIN, Claimants-Appellees, JASON KIRSCHENBAUM, ISABELLE KIRSCHENBAUM, on her own behalf and as Executrix of the Estate of Martin Kirschenbaum, JOSHUA KIRSCHENBAUM, DAVID KIRSCHENBAUM, DANIELLE LYNN TEITLEBAUM, Claimants-Appellees, ANNA BEER, HARRY BEER, on his own behalf and as Administrator of the Estate of Alan Beer, ESTELLE CARROLL, PHYLLIS MAISEL, Claimants-Appellees, STEVEN M. GREENBAUM, in his personal capacity and as administrator of the Estate of Judith Greenbaum, ALAN HAYMAN, SHIRLEE HAYMAN, Claimants-Appellees, CARLOS ACOSTA, MARIA ACOSTA, IRVING FRANKLIN, in his personal capacity and as personal representative of the estate of Irma Franklin, LIBBY KAHANE, in her personal capacity and as Administratrix of the Estate of Meir Kahane, NORMAN KAHANE, in his personal capacity and as Executor of the Estate of Sonia Kahane, TOVA ETTINGER, BARUCH KAHANE, CIPORAH KAPLAN, ETHEL J. GRIFFIN, as Public Administrator of the County of New York and Administratrix of the Estate of Binyamin Kahane, Claimants-Appellees, EDWENA R. HEGNA, Executrix of the Estate of Charles Hegna, STEVEN A. HEGNA, LYNN MARIE HEGNA MOORE, CRAIG M. HEGNA, PAUL B. HEGNA, Claimants-Appellees, DEBORAH D. PETERSON, personal representative of the Estate of James C. Knipple, Claimants-Appellees, THE ESTATE OF MICHAEL HEISER, THE ESTATE OF GARY HEISER, FRANCIS HEISER, THE ESTATE OF LELAND TIMOTHY HAUN, IBIS S. HAUN, MILAGRITOS PEREZ-DALIS, SENATOR HAUN, THE ESTATE OF JUSTIN R. WOOD, RICHARD W. WOOD, KATHLEEN M. WOOD, SHAWN M. WOOD, THE ESTATE OF EARL F. CARTRETTE, JR., DENISE M. EICHSTAEDT, ANTHONY W. CARTRETTE, LEWIS W. CARTRETTE, THE ESTATE OF BRIAN MCVEIGH, THE ESTATE OF SANDRA M. WETMORE, JAMES V. WETMORE, THE ESTATE OF MILLARD D. CAMPBELL, MARIE R. CAMPBELL, BESSIE A. CAMPBELL, THE ESTATE OF KEVIN J. JOHNSON, SHYRL L. JOHNSON, CHE G. COLSON, KEVIN JOHNSON, JR., NICHOLAS A. JOHNSON, THE ESTATE OF LAURA E. JOHNSON, BRUCE JOHNSON, THE ESTATE OF JOSEPH E. RIMKUS, BRIDGET BROOKS, JAMES R. RIMKUS, ANNE M. RIMKUS, THE ESTATE OF BRENT E. MARTHALER, KATIE L. MARTHALER, THE ESTATE OF SHARON MARTHALER, HERMAN C. MARTHALER III, MATHEW MARTHALER, KIRK MARTHALER, THE ESTATE OF THANH VAN NGUYEN, CHRISTOPHER R. NGUYEN, THE ESTATE OF JOSHUA E. WOODY, DAWN WOODY, BERNADINE R. BEEKMAN, GEORGE M. BEEKMAN, TRACY M. SMITH, JONICA L. WOODY, TIMOTHY WOODY, THE ESTATE OF PETER J. MORGERA, MICHAEL MORGERA, THOMAS MORGERA, THE ESTATE OF KENDALL KITSON, JR., THE ESTATE OF KENDALL K. KITSON, SR., THE ESTATE OF NANCY R. KITSON, STEVEN K. KITSON, NANCY A. KITSON, THE ESTATE OF CHRISTOPHER ADAMS, CATHERINE ADAMS, JOHN E. ADAMS, PATRICK D. ADAMS, MICHAEL T. ADAMS, MARY YOUNG, ELIZABETH WOLF, WILLIAM ADAMS, THE ESTATE OF CHRISTOPHER LESTER, CECIL H. LESTER, JESSICA F. LESTER, JUDY LESTER, CECIL H. LESTER, JR., THE ESTATE OF JEREMY A. TAYLOR, LAWRENCE E. TAYLOR, VICKI L. TAYLOR, STARLINA D. TAYLOR, THE ESTATE OF PATRICK P. FENNIG, THADDEUS C. FENNIG, CATHERINE FENNIG, PAUL D. FENNING, MARK FENNING, Claimants-Appellees, THE ESTATE OF WILLIAM R. HIGGINS, ROBIN L. HIGGINS, Claimants-Appellees, FATEMEH BAYANI, in her personal capacity and as representative of the Estate of Siavash Bayani, BANAFSHEH BAYANI, BABAK BAYANI, Claimants-Appellees, THE ESTATE OF DONNA HOLLAND, JAMES HOLLAND, CHAD HOLLAND, Claimants-Appellees, ESTATE OF KENNETH V. WELCH, LINDA WELCH, BRIAN WELCH, CHRISTOPHER WELCH, BETTY WELCH, GERARD WELCH, MICHAEL WELCH, Claimants-Appellees, CIELITO VALENCIA, Claimant-Appellee, RICHARD PAUL BREWER, JOYCE LOUIS LEYDET Claimant-Appellee PAUL BLAIS, CURTIS A. TAYLOR, MARIA TAYLOR, Claimant-Appellee, DIANA CAMPUZANO, AVI ELISHIS, GREGG SALZMAN, Claimants-Appellees, ALAVI FOUNDATION, 650 FIFTH AVENUE COMPANY, Claimants-Appellants, ASSA COMPANY LIMITED, ASSA CORPORATION, Claimants ALL RIGHT, TITLE, AND INTEREST OF ASSA CORPORATION, ASSA COMPANY LIMITED, BANK MELLI IRAN, AND THE ALAVI FOUNDATION IN 650 FIFTH AVENUE COMPANY, including but not limited to the real property and appurtenances located at 650 Fifth Avenue, New York, New York, with all improvements and attachments thereon, and all property traceable thereto, ALL RIGHT, TITLE, AND INTEREST IN THE REAL PROPERTY AND APPURTENANCES LOCATED AT 650 FIFTH AVENUE, NEW YORK, NEW YORK, with all improvements and attachments thereon, ALL RIGHT, TITLE, AND INTEREST IN THE REAL PROPERTY AND APPURTENANCES LOCATED AT 2313 SOUTH VOSS ROAD, HOUSTON, TEXAS 77057, with all improvements and attachments thereon, ALL RIGHT, TITLE, AND INTEREST IN THE REAL PROPERTY AND APPURTENANCES LOCATED AT 55-11 QUEENS BOULEVARD, QUEENS, NEW YORK 11377, BLOCK 1325 LOTS 1, 6, 7, AND 8, with all improvements and attachments thereon, ALL RIGHT, TITLE, AND INTEREST IN THE REAL PROPERTY AND APPURTENANCES LOCATED AT 4836 MARCONI AVENUE, CARMICHAEL, CALIFORNIA 95608, with all improvements and attachments thereon, ALL RIGHT, TITLE, AND INTEREST IN THE REAL PROPERTY AND APPURTENANCES LOCATED AT 4204 ALDIE ROAD, CATHARPIN, VIRGINIA 20143-1133, with all improvements and attachments thereon, ALL RIGHT, TITLE, AND INTEREST IN THE REAL PROPERTY AND APPURTENANCES LOCATED AT 4300 ALDIE ROAD, CATHARPIN, VIRGINIA 20143-1133, with all improvements and attachments thereon, ALL RIGHT, TITLE, AND INTEREST IN THE REAL PROPERTY AND APPURTENANCES LOCATED AT 7917 MONTROSE ROAD, ROCKVILLE, MARYLAND 20854, with all improvements and attachments thereon, ALL RIGHT, TITLE, AND INTEREST IN THE REAL PROPERTY AND APPURTENANCES LOCATED AT 8100 JEB STUART ROAD, ROCKVILLE, MARYLAND 20854, with all improvements and attachments thereon, ALL FUNDS FORMERLY ON DEPOSIT IN ACCOUNT NUMBER 78429712, AT CITIBANK, N.A., NEW YORK, NEW YORK, ALL FUNDS FORMERLY ON DEPOSIT IN ACCOUNT NUMBER 8881654552, AT CITIBANK, N.A., NEW YORK, NEW YORK, ALL FUNDS FORMERLY ON DEPOSIT IN ACCOUNT NUMBER 2724409590, AT JPMORGAN CHASE BANK, N.A., BATON ROUGE, LOUISIANA, ALL FUNDS FORMERLY ON DEPOSIT IN ACCOUNT NUMBER 725700280, AT JPMORGAN CHASE BANK, N.A., BATON ROUGE, LOUISIANA, ALL FUNDS ON DEPOSIT AT JPMORGAN CHASE BANK, N.A., IN ACCOUNT NUMBER 230484468, held in the name of 650 Fifth Avenue Company, and all funds traceable thereto, ALL FUNDS ON DEPOSIT AT JPMORGAN CHASE BANK, N.A., IN ACCOUNT NUMBER 230484476, held in the name of 650 Fifth Avenue Company, ALL FUNDS TRACEABLE THERETO, ALL FUNDS ON DEPOSIT AT STERLING NATIONAL BANK IN ACCOUNT NUMBER 3802032201, held in the name of Alavi Foundation, all funds traceable thereto, ALL FUNDS ON DEPOSIT AT STERLING NATIONAL BANK IN ACCOUNT NUMBER 3802032216, held in the name of Alavi Foundation, All funds traceable thereto, ALL FUNDS ON DEPOSIT AT STERLING NATIONAL BANK IN ACCOUNT NUMBER 3852524414, held in the name of Alavi Foundation, and all funds traceable thereto, Defendants-in-rem

          Argued: November 18, 2015

         Appeal from an award of summary judgment by the United States District Court for the Southern District of New York (Forrest, J.), forfeiting Claimants’ properties to the United States on two grounds: (1) as proceeds traceable to violations of the International Emergency Economic Powers Act and certain Iranian Transactions Regulations issued by the Department of the Treasury forfeitable under 18 U.S.C. § 981(a)(1)(C), and (2) as property involved in money laundering transactions forfeitable under 18 U.S.C. § 981(a)(1)(A). Because we identify questions of fact as to whether Claimants Alavi Foundation and 650 Fifth Avenue Company acted with the knowledge necessary to support forfeiture on these grounds, we conclude that forfeiture as to these Claimants could not be decided as a matter of law. We further conclude that the District Court erred in sua sponte considering and rejecting Claimants’ statute of limitations defense, and in denying Claimants’ motion to suppress evidence seized pursuant to a defective warrant on the ground of inevitable discovery without making the particularized findings required by that exception. We therefore vacate the judgment and remand for further proceedings consistent with this order.

          DANIEL S. RUZUMNA, (Krista D. Adler, Adam Blumenkrantz, Melissa R. Ginsberg, on the brief), Patterson Belknap Webb & Tyler LLP, New York, NY, for Claimants-Appellants.

          MICHAEL D. LOCKARD, Assistant United States Attorney for the Southern District of New York (Martin S. Bell, Carolina A. Fornos, Brian A. Jacobs, Assistant United States Attorneys, on the brief), for Preet Bharara, United States Attorney for the Southern District of New York, New York, NY, for Plaintiff- Appellee.

          Before Kearse, Raggi, and Wesley, Circuit Judges.

          Wesley, Circuit Judge

         On this appeal, we consider challenges to an award of summary judgment entered in the United States District Court for the Southern District of New York (Forrest, J.), which forfeited to the United States various claimants' interests in multiple properties, including a 36-story office building located at 650 Fifth Avenue in Manhattan ("the Building"), real properties in Maryland, Texas, California, Virginia, and New York, and the contents of several bank accounts, (collectively, "Defendant Properties"). We also consider challenges to the September 9, 2013 order denying a motion to suppress evidence seized from the Alavi Foundation's and the 650 Fifth Avenue Company's office. Three concerns prompt us to vacate the judgment as to Claimants Alavi Foundation ("Alavi" or "the Foundation") and the 650 Fifth Avenue Company ("650 Fifth Ave. Co." or "the Partnership"), of which Alavi is a 60% owner.[1]

         First, we identify material issues of fact as to whether the Alavi Foundation knew that Assa Corporation, its partner in the 650 Fifth Ave. Co. Partnership, continued after 1995, to be owned or controlled by Bank Melli Iran, which is itself owned or controlled by the Government of Iran, a designated threat to this nation's national security. See Exec. Order No. 12, 957, 60 Fed. Reg. 14615 (Mar. 15, 1995). Accordingly, we vacate summary judgment and remand the case for trial as to the Alavi Foundation and 650 Fifth Ave. Co.[2]

         Second, we conclude that the District Court erred in sua sponte considering and rejecting the Claimants' possible statute of limitations defense without affording notice and a reasonable time to respond. Thus, we vacate that part of the judgment without prejudice for reconsideration on proper notice and hearing.

         Third, in rejecting the Claimants' motion to suppress evidence seized pursuant to a challenged warrant, the District Court erred in ruling that the Claimants' civil discovery obligations "obviate the need for any Fourth Amendment analysis." In re 650 Fifth Avenue and Related Properties, 970 F.Supp.2d 204, 211 (S.D.N.Y. 2013) ("In re 650 Fifth Ave. Suppression Decision"). The Fourth Amendment's exclusionary rule applies in civil forfeiture cases, and a party's civil discovery obligations do not automatically render Fourth Amendment rights and remedies inapplicable. We likewise identify error in the District Court's alternative ruling that every item of unlawfully seized evidence would have been inevitably discovered. While discovery obligations might shield unlawfully seized items from suppression under the inevitable discovery doctrine, see United States v. Eng, 971 F.2d 854, 861 (2d Cir. 1992), such a conclusion requires a district court, "for each particular piece of evidence, specifically [to] analyze and explain how, if at all, discovery of that piece of evidence would have been more likely than not inevitable absent the [challenged search], " id. at 862 (internal quotation marks omitted). Because the record fails to demonstrate that particularized review, we remand to allow the District Court to conduct the requisite analysis. On remand, the Government may also pursue its argument-raised before the District Court and on appeal-that the good-faith exception to suppression applies in this case. See United States v. Leon, 468 U.S. 897 (1984).

         Accordingly, we vacate the District Court's challenged judgment and remand the case for further proceedings consistent with this opinion.

         BACKGROUND

         "We of course view the record in the light most favorable to [the Claimants], who [are] appealing from an adverse grant of summary judgment." Lombard v. Booz-Allen & Hamilton, Inc., 280 F.3d 209, 211 (2d Cir. 2002); accord Cortes v. MTA New York City Transit, 802 F.3d 226, 228 (2d Cir. 2015).[3]

         I. The Alavi Foundation

         The Alavi Foundation traces its origins to 1973, when the Shah of Iran, Mohammad Reza Pahlavi, incorporated the eponymous Pahlavi Foundation as a New York not-for-profit corporation, and endowed it with several million dollars. The Pahlavi Foundation's stated mission was, inter alia, "[t]o render support and assistance for the study and promotion of the arts and sciences" and to support "established charitable, philanthropic, educational and civic endeavors." App'x 5971–72. In 1974, the Pahlavi Foundation acquired property at 650 Fifth Avenue in New York City ("the Property"). In 1975, at the direction of the Shah, Bank Melli-a bank wholly owned by the Iranian government- loaned the Pahlavi Foundation $42 million, thus providing the Foundation with funds to construct a 36-story office tower on the Property, i.e., the Building, and Bank Melli with two mortgages on that Property.[4]

         Following the 1979 Iranian Revolution, which deposed the Shah, Iran's new Supreme Leader, Ayatollah Ruhollah Khomeini, ordered the formation of the Bonyad Mostazafan, an entity charged with managing property expropriated by the revolutionary government, including that at 650 Fifth Avenue. In 1980, the Pahlavi Foundation was renamed the Mostazafan Foundation of New York. The Foundation took on its present name in 1992.[5]

         Since its inception, Alavi has purchased and maintained several properties in the United States. In addition to the Building, Alavi acquired seven real properties in the 1980s and 1990s, including two parcels of land in Rockville, Maryland, one property in Houston, Texas, one property in Carmichael, California, two parcels of land in Prince William County, Virginia, and one block of lots in Queens, New York (collectively, "Alavi Real Properties").

         Alavi's bylaws state that its Board controls the organization's affairs and property and appoints corporate officers and directors, while its President supervises operations and reports to the Board. The bylaws make Alavi's Board and President responsible for, inter alia, operational decisions such as charitable efforts, personnel decisions, and program management. Consistent with New York not-for-profit law, see N.Y. Not-For-Profit Corp. Law §§ 501, 601 (McKinney 2016), Alavi has never had formal owners, members, or shareholders. The record reflects that Alavi remains a not-for-profit corporation in "good standing, " and New York regulatory authorities have never sought to dissolve or remove the organization's corporate status, or taken any action against Alavi, its directors, officers, or employees.

         II. The 650 Fifth Avenue Company

         650 Fifth Ave. Co. is a partnership created under New York law in 1989 as part of a plan to relieve Alavi of certain tax obligations. Although Alavi has always been a tax-exempt not-for-profit organization, as a result of Bank Melli's 1975 mortgages on the Property, rental income from the Building was taxable as debt-financed unrelated business income. As explained by the Iranian Deputy Prime Minister (and then-head of the Bonyad Mostazafan) in a July 25, 1987 letter to the Prime Minister, "one of the major problems of the New York Mostazafan Foundation stem[med] from the debt it owe[d] to the New York branch of Melli Bank" because the resulting tax obligations left insufficient funds for the Foundation to provide $1.5 million in services as required by its articles of association. Supp. App'x 285. Thus, Alavi, together with the Government of Iran, the Bonyad Mostazafan, and, ultimately, Bank Melli, sought to eliminate the tax obligation.

         In his July 25, 1987 letter, the Deputy Prime Minister proposed a series of transactions that would allow Alavi to pay off the Bank Melli debt using money from the Government of Iran. First, he proposed creating "Company A" in New York and transferring to it both ownership of the Building and the Bank Melli loan. Second, he proposed establishing "Company B" in Europe "with anonymous shares." Supp. App'x. 287. Third, he proposed allocating $45 million to the Bonyad Mostazafan, which would then loan the sum to Company B to purchase 40% of Company A's stock from Alavi. These transactions would thereby permit permitting Alavi to pay off the Bank Melli loans. This plan was to be executed in 1988 but when that failed to occur, apparently due to Bank Melli's failure timely to "resolv[e] the issue of a partnership in the Foundation's building, " App'x 6907, Alavi and the Bonyad Mostazafan began considering alternatives.

         In May 1989, Seyed Mohammad Badr Taleh ("Badr"), then Alavi's Managing Director, met with representatives of the Bonyad Mostazafan and Bank Melli. Meeting minutes reveal that the participants agreed substantially to carry out the 1987 plan by forming a company "[o]n behalf of Bank Melli" that would "make partnership with" Alavi in order to alleviate Alavi's tax obligations. App'x 6913; see also App'x 8694 (minutes from 1992 meeting between Alavi and Bank Melli explaining that Melli entered into 1989 Partnership with Alavi "to save the Foundation and prevent it from paying $3 million in annual taxes"). To accomplish this partnership, Bank Melli would "establish a Company in Jersey Island, " and "the established company via other Company will participate with the NY Foundation." App'x 6913.

         In light of these tax concerns and the agreed solution, the "Company in Jersey Island" was formed as Assa Company Limited ("Assa Limited") in 1989, which then and to this day wholly owns the "other Company" incorporated in New York, Assa Corporation (together, "Assa"). The understanding, as evident from a 1989 letter in which an Assistant Director of the Bonyad Mostazafan explained the Assa-Alavi partnership, was that "Assa . . . belong[ed] to Bank Melli." App'x 6918–19. Indeed, Assa was the vehicle by which Bank Melli carried out the series of circular transactions that effectively relieved Alavi of its tax obligations without surrendering Melli's interests in Alavi income. As explained in Bank Melli correspondence, Bank Melli financed Assa Limited, Assa Corporation purchased a 35% share in the 650 Fifth Ave. Co. Partnership from Alavi, and Alavi used the funds to pay off the Bank Melli mortgages. See App'x 6923–24. Pursuant to the 1989 partnership agreement, Alavi contributed the Building, then valued at approximately $128 million, to the newly formed 650 Fifth Ave. Co., while Assa contributed $44.8 million in cash, which Assa had received from Bank Melli and which Alavi returned to Bank Melli as payment for its mortgage debt.[6]

         In October 1989, Alavi and Assa formed a partnership under New York law known as the 650 Fifth Ave. Co. In securing the requisite leave of the New York Supreme Court for a transaction divesting all, or substantially all, assets of a non-profit organization, see N.Y. Not-For-Profit Corp. Law §§ 510(a)(3), 511 (McKinney 1989), Alavi's then-president Badr stated in a verified petition that Assa Corporation was owned by Assa Limited, which was in turn "beneficially owned by two individuals, Mr. Mohammad Behdadfar and Mr. Mohsen Kakavand, " and that the formation of the Alavi-Assa partnership "represent[ed] an arms-length transaction." App'x 6152. The filing explained that the 650 Fifth Ave. Co. partnership was formed to resolve Alavi's tax liability arising from the Building's rental income, which had been taxable as unrelated business income. App'x 6152–52. No mention was made of Bank Melli's relationship to Assa.

         Based on their initial contributions, Alavi received a 65% interest and Assa received a 35% interest in 650 Fifth Ave. Co. Alavi later sold a further 5% to Assa; Alavi now holds 60% of the interest in the Partnership, while Assa holds 40%. Based on their ownership interests, Alavi and Assa received pro rata distributions of 650 Fifth Ave. Co.'s income from the Building. Between 2002 and 2004, the Building generated approximately $17 million in annual revenues. Between 2006 and 2009, the Building generated between $19 million and $21 million in annual revenues. Thus, through the circular transactions just discussed, instead of Alavi owing a mortgage debt of approximately $45 million to Bank Melli, Bank Melli owned 35% (and, later, 40%) of the Building, initially valued at $44.8 million, and received a commensurate share of that Building's substantial-and now tax-free-rental income. Since the Partnership's founding and until commencement of these forfeiture proceedings, Alavi served as 650 Fifth Ave. Co.'s managing partner, administering the day-to-day affairs of the Partnership, including management of the Building.

         III. Iran's Involvement with Alavi, Assa, and 650 Fifth Ave. Co. Before 1995

         As the preceding section shows, there is ample evidence of Bank Melli's involvement with Alavi, Assa, and 650 Fifth Ave. Co. before 1995. See, e.g., App'x 6918 (Bonyad Mostazafan correspondence explaining that the partnership between Alavi and Assa "is based on prior agreements between the Ministry of Finance, Bank Melli Iran, and" Bonyad Mostazafan); App'x 6923–24 (Bank Melli correspondence explaining that structure of Assa entities was based on "ample study at the New York Foundation, the Central Office of the Foundation, and Bank Melli in Tehran"). Record evidence further shows that after Assa's formation and prior to 1995, Bank Melli and Assa maintained a close-and at times inseparable-relationship. Indeed, Bank Melli had a substantial ownership interest in Assa from its founding through 1995. From 1990 until 1992, two Bank Melli officials indirectly held approximately 96% of Assa's total shares through another straw entity, Harter Holdings Ltd. ("Harter Holdings"), split equally. In 1993, the officials' shares were transferred to Bank Melli Iran, which then held the 96% indirect interest in Assa until 1995.[7]

         Record evidence indicates that Bank Melli sought to conceal its ownership of Assa through these arrangements. See App'x 7094 (Bank Melli correspondence dated December 29, 1993 explaining that Bank Melli took over ownership of Assa Limited and Harter Holdings because, with Channel Islands incorporation, "accessing the ownership backgrounds of the companies behind the captioned corporation is not an easy task for investigators, " and questioning "whether Mr. Naghshineh – the Assa Corp New York Director whose affiliation with the Bank could be easily proven – could be replaced with another individual whose affiliation with the Bank could not be easily proven"); App'x 7103 (Bank Melli correspondence dated June 25, 1994 discussing risk of seizure of "elements connected to the Islamic Republic of Iran's assets in the United States, " and asking its New York office to estimate "percentage of risk of the seizure of . . . properties in case of the revelation of the ownership by Assa Corporation").

         Several letters between Alavi and Bank Melli officials also indicate that they viewed Assa as interchangeable with Bank Melli before 1995. Moreover, in 1992, representatives for Alavi and Bank Melli met in Tehran to discuss 650 Fifth Ave. Co.'s need for a $1.7 million loan. Meeting minutes reflect that Bank Melli's representative confirmed Bank Melli's commitment to stand by Alavi and to approve the loan if Alavi adopted a specific plan to pay the debt it owed to Assa.

         Record evidence also indicates that, in addition to Bank Melli, other Iranian government officials exercised some control over Alavi and 650 Fifth Ave. Co.'s affairs before 1995. From approximately 1982 to 1991, a Bonyad Mostazafan employee, Seyed Mojtaba Hesami-Kiche, sat on Alavi's Board and, every three months, provided reports about Alavi to the Prime Minister of Iran or the head of the Bonyad Mostazafan.[8] Moreover, minutes from a 1991 meeting in Zurich, Switzerland indicate that Alavi's Board of Directors made changes in the Board's composition "as directed by the Supreme Leader" of Iran, ostensibly referring to the Ayatollah. App'x 8647. In a subsequent 1991 letter to the Ayatollah, Alavi's Managing Director, Badr, expressed concern that Iran's Ambassador to the United Nations would exercise a "position of responsibility connected to [Alavi's] affairs" going forward. App'x 8674. In a subsequent letter to an individual named Sobhani, Badr stated that, as a result of "inadvisable actions" taken by former executive directors of Alavi and Iran's Ambassador, "both the Foundation and the assets of Bank Melli will face obliteration." App'x 8663. That letter further explained that if the connection between Alavi and the Government of Iran were discovered, board members, including Hesami-Kiche, could "be culpable of a heavy offence." App'x 8662–64.

         IV. Sanctions Against Iran

         In March 1995-six years after 650 Fifth Ave. Co.'s formation-President Clinton issued a series of Executive Orders pursuant to the International Emergency Economic Powers Act ("IEEPA"), formally declaring the Government of Iran a threat to national security and imposing broad financial sanctions. See Exec. Order No. 12, 957, 60 Fed. Reg. 14615 (Mar. 15, 1995); Exec. Order No. 12, 959, 60 Fed. Reg. 24757 (May 6, 1995). Those Executive Orders authorized the Secretary of the Treasury, in consultation with the Secretary of State, to promulgate rules and regulations to implement the financial sanctions.

         Pursuant to that authority, the Treasury Department's Office of Foreign Assets Control ("OFAC") determined that Bank Melli was owned or controlled by the Government of Iran, thus subjecting it to, among other things, limitations on the receipt of services from U.S. financial institutions beginning June 6, 1995, except as authorized by an OFAC license. See Implementation of Executive Order No. 12959 With Respect to Iran, 60 Fed. Reg. 40881-02 (Aug. 10, 1995). OFAC also subsequently promulgated a series of Iranian Transactions Regulations ("ITRs") relevant to this action, which took effect on August 20, 1997, and which generally prohibit United States entities from conducting business with or providing services to the "Government of Iran." The "Government of Iran" is defined in the ITRs as "[t]he state and the Government of Iran, as well as any political subdivision, agency, or instrumentality thereof, " "[a]ny person owned or controlled, directly or indirectly, by the foregoing, " and "[a]ny person . . . acting or purporting to act, directly or indirectly, for or on behalf of the foregoing." 31 C.F.R. § 560.304 (2012); see id. §§ 560.203, 560.204, 560.207, 560.208, 560.301. Alavi and 650 Fifth Ave. Co. are United States entities subject to these orders and regulations and prohibited thereby from conducting business with or providing services to Bank Melli or any other instrumentality owned or controlled by, or acting on behalf of, the Government of Iran.[9]

         V. Bank Melli's Relationship with 650 Fifth Ave. Co. After 1995

         In 1995, after the first of the relevant Executive Orders imposing sanctions on Iran was issued, Bank Melli formally divested its ownership of Assa. Bank Melli's Harter Holdings shares were acquired by two individuals, Davood Shakeri and Fatemeh Aghamiri. Together, Shakeri and Aghamiri indirectly held 100% of Assa's shares until 1999, when they directly acquired 100% of Assa's 100 shares.[10] Proffered records indicate that Shakeri and Aghamiri acquired their shares in Harter Holdings and in Assa for £1/share.[11] App'x 10319, 10325, 10361. Shakeri and Aghamiri directly held 100% of Assa's shares until 2008.[12]

         In support of its claim that Bank Melli nevertheless continued to exercise control over Assa after 1995, the Government primarily relied on two categories of evidence: (1) emails from Hassan Dehghani Tafti ("Tafti"), Assa's sole representative in the United States ("Tafti emails") and (2) notes purportedly from a 2007 meeting between Alavi's new President, Farshid Jahedi ("Jahedi"), and Iran's Ambassador to the United Nations, Mohammad Khazaee ("Khazaee") ("Khazaee–Jahedi meeting").

         A. Tafti Emails

         In 2005, Tafti sent three emails to Mohsen Ghadimipour, then head of Bank Melli's Overseas Network Supervisory Department ("ONSD"). First, in February 2005, Tafti requested, inter alia, that ONSD provide him with "the signature of the [Assa] share holders, Mrs. Aghamiri and Mr. Shakeri." App'x 7156. Second, in July 2005, Tafti advised Ghadimipour that the "share holders are forbidden from having residences [in Iran], and as per the view of the legal experts, [the United States] may freeze the capital of the share holders." App'x 7129. Tafti requested that ONSD make "some arrangement that the residence location of the share holders of Assa, Mr. Davood Shakeri and Mrs. Aghamiri be changed to another country." App'x 7129. Finally, also in July 2005, Tafti wrote Ghadimipour that "[c]hanging the share holder of Assa Ltd. is possible, but the share holder should reside in a [tax free country]. . . . Otherwise, the country of residence will collect a tax from the income of the share holder." App'x 7134. The Government argues that these communications show that Assa's post-1995 record owners were only fronts for Bank Melli, which continued to control Assa's holdings in 650 Fifth Ave. Co. The August 2005 response Tafti received is further evidence of Bank Melli's control: "With reference to the email of 7/7/2005, regarding the location of residence of the shareholders, this is to inform you that, as per the orders of the Bank Manager, until the appointment of the qualified individuals, act as before." App'x 7143 (emphasis added). Although this email and three others in the record indicate that they were sent by (or, in some, from Tafti to) the "shareholders of Assa, " each bore the same email address- "ONSD_ir@yahoo.com"-used on several of the Ghadimipour emails, see, e.g., App'x 7134, 7143, 7152, 10401, 10404.

         B. KhazaeeJahedi Meeting

         In 2007, certain Alavi board members and President Jahedi met with Ambassador Khazaee at the Ambassador's residence. The record does not indicate the purpose of the meeting, how it was arranged, or what, if any, action was taken as a result of the meeting. The Government nevertheless maintains that two sets of meeting notes support its contention that Khazaee instructed Jahedi with respect to the management of Alavi.

         The first set of notes, dated October 5, 2007, bears the heading "Board Meeting, " references "Khazaee" and "Jahedi, " and includes, inter alia, the following statements: "[s]hould only allocate to Shiites, " App'x 8720; "ASSA: Daily expenses? Payments? Investment policy?, " App'x 8711, 8721; "The composition of the Board of Trustees = Whatever I decide should be approved and it should not be otherwise, " App'x 8722; and "I have to definitely see the proposed allocations before a final decision is reached. I have to be kept informed and I have to be able to state my opinion in order for you to make a decision, " App'x 8724 (emphasis in original). Although the authorship of these notes is unknown, the Government submits that their content supports an inference that they were taken by Alavi's President Jahedi and that the speaker referenced therein is Khazaee.

         The second set of notes is from the journal of Alavi's secretary, Alireza Ebrahimi ("Ebrahimi") and references dates that do not match the purported October 2007 meeting: shortly after the heading "Mr. Alireza Ebrahimi's Journal, Summer 2003" are three other dates, Friday, July 25, Sunday, July 27, and Sunday, August 10. App'x 7109. These notes contain stray statements that may indicate a desire to sell Bank Melli's share in Assa. One statement reads, "Dr. Kharrazi → Assa share → Sell it, " App'x 7109, and another reads, "Mr. Zarif → Assa → Bank Melli 40% share → I cannot sleep at night → The issue of Board of Trustees will be solved, When? → Transfer, " App'x 7110.

         VI. Procedural History

         A. The Initial Civil Forfeiture Complaint

         On December 17, 2008, the United States filed this civil action in the Southern District of New York seeking forfeiture of property owned by Assa and Bank Melli based on violations of the IEEPA, 50 U.S.C. § 1701 et seq., and 18 U.S.C. §§ 1956, 1957. Simultaneously, the Treasury Department added Assa to the Specially Designated Nationals ("SDN") list based on its determination that Assa is a front company for Bank Melli.[13] Although the initial complaint recounted the history of Alavi and 650 Fifth Ave. Co., it did not seek forfeiture of either entity's property. That same day, however, District Judge Holwell entered a protective order prohibiting, inter alia, "[a]ll persons and entities having actual knowledge" of the order, which included Alavi and 650 Fifth Ave. Co., from "destroy[ing] any documents relating in any manner or part to the allegations in the Complaint, including but not limited to the books and records of the Fifth Avenue Company, the Pahlavi Foundation, the Mostazafan Foundation, the Alavi Foundation, Assa Corporation, Assa Company Ltd., and/or Bank Melli." App'x 5185. In addition to the preservation requirements, the order required 650 Fifth Ave. Co.-but not Alavi-to make its "books and records" "available for inspection to the United States." App'x 5186.

         B. The Separate Criminal Investigation

         Also on December 17, 2008, the Government served a grand jury subpoena on Alavi, seeking evidence of IEEPA violations and money laundering. The Government sought "any and all documents relating or referring to" the 650 Fifth Ave. Co., Assa, and Bank Melli Iran, "from January 1, 1989 to the present." App'x 5192–93. The subpoena was served on Alavi President Jahedi. The following day, agents of the Federal Bureau of Investigation ("FBI") observed Jahedi throwing papers responsive to the subpoena into a public trash bin. Jahedi subsequently pled guilty to obstruction of justice for these actions and was sentenced to three months' imprisonment. Judgment, United States v. Jahedi, No. 1:09-cr-00460-SAS (S.D.N.Y. Apr. 30, 2010), ECF No. 52; see also United States v. Jahedi, 681 F.Supp.2d 430 (S.D.N.Y. 2009). The FBI ultimately retrieved the documents discarded by Jahedi. Although the Government submitted photographs of the torn documents in connection with its opposition to Claimants' motion to suppress, the documents themselves were not submitted by the Government in support of its motion for summary judgment as to the forfeitability of the Defendant Properties.

         C. The Criminal Search Warrant

         On December 19, 2008, the day after Jahedi's attempted destruction of documents, the FBI sought, obtained, and executed a criminal search warrant for the offices of Alavi and 650 Fifth Ave. Co. Magistrate Judge Theodore Katz issued the two-page warrant, which referenced supporting "[a]ffidavit(s) . . . made before me by Special Agent George Ennis that he has reason to believe that [listed property] is now being concealed" at the addresses specified to be searched. App'x 5140. In boilerplate language, the warrant stated that the magistrate judge was "satisfied that there is probable cause to believe that the property so described is being concealed" on the premises and that "the grounds for application for issuance of the search warrant exist as stated in the supporting affidavit(s)." App'x 5140. It then authorized the FBI to search and seize:

1. Any and all . . . documents or records concerning or relating to the ownership of, rental of, mortgaging of, or investing in [Assa, 650 Fifth Ave. Co., or Bank Melli Iran.]
2. Any and all documents concerning or relating to financial books and records, bank accounts, disbursements, money transfers or employment records of [Assa, 650 Fifth Ave. Co., Alavi, or Bank Melli Iran] or any of the officers and employees of these entities.
3. Any and all computers; central processing units; external and internal drives; external and internal storage equipment or media; computerized data storage devices; hard disks or floppy disks; CD-ROMs[;] . . . and related or connected computer or data storage equipment.

App'x 5141. The warrant does not identify the crimes for which agents were authorized to search or seize the listed property. Nor does the warrant place any temporal limit on the property to be seized.

         The twelve-paragraph Ennis affidavit supporting the warrant described the history of Alavi, including the tax issue that led to the formation of 650 Fifth Ave. Co. Moreover, unlike the search warrant, the Ennis affidavit stated that the property sought constituted evidence of, among other crimes, violations of the IEEPA, the ITRs, and 18 U.S.C. §§ 1956, 1957. It explained as follows:

In 1999, [OFAC] identified Bank Melli and its offices worldwide as entities "owned or controlled by the Government of Iran." 31 C.F.R. Part 560, App. A. Accordingly, Bank Melli is subject to the Iranian Transactions Regulations ("ITR"), Title 31 United States Code of Federal Regulations, Part 560, and Assa Co.'s interest in the Building and its rents is subject to civil forfeiture, as fully set forth in [the attached December 17, 2008 civil Complaint] . . . .
[A]lthough the property and funds which are subject to forfeiture belong to Bank Melli and its related entities, the transactions underlying Bank Melli's acquisition of its interest in the Building [were] not an arms-length transaction with Alavi, but rather [were] structure[d] both to evade Alavi's tax liability and to conceal Bank Melli's interest in the Building. Accordingly, I submit that there is probable cause to believe that Alavi committed the same crimes alleged as a basis for the forfeiture sought in [the original Complaint], and that Alavi and its ...

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