Opinion ID: 4017397
Heading Depth: 2
Heading Rank: 1

Heading: The Government’s Forfeiture Claims

Text: We review a district court’s grant of summary judgment de novo, and will affirm only when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Vincent v. Money Store, 736 F.3d 88, 96 (2d Cir. 2013). In determining whether there is a genuine dispute as to a material fact, we “resolve all ambiguities and draw all reasonable inferences in favor of the non‐moving party.” Mhany Mgmt., Inc. v. Cty. of Nassau, 819 F.3d 581, 620 (2d Cir. 2016). In civil forfeiture proceedings, the Government bears the burden of showing by a preponderance of the evidence that the property at issue is subject to forfeiture. 18 U.S.C. § 983(c); accord United States v. Sum of $185,336.07 United States Currency, 731 F.3d 189, 196 (2d Cir. 2013). To carry this burden it must show that the property is more likely than not forfeitable. See United States v. Funds in the Amount of One Hundred Thousand One Hundred and Twenty Dollars ($100,120.00), 730 F.3d 711, 716 n.5 (7th Cir. 2013) (explaining in civil forfeiture action that preponderance standard requires showing that property is more likely than not subject to forfeiture); cf. United States v. Coppola, 671 F.3d 220, 250 37 (2d Cir. 2012) (stating that “preponderance finding satisfied if fact’s existence was ‘more likely than not’” (quoting United States v. Hertular, 562 F.3d 433, 447 (2d Cir. 2009)). Upon such a showing, the burden then shifts to the claimant to show a triable issue as to whether it was an “innocent owner”—i.e., that the claimant had no knowledge of the predicate illegal activity. See United States v. Funds Held in the Name or for the Benefit of Wetterer, 210 F.3d 96, 104 (2d Cir. 2000).
The Government’s first civil forfeiture claim arises under the IEEPA, a federal statute that empowers the President of the United States to employ economic sanctions and other measures to deal with threats to this nation’s security, foreign policy, or economy, which have their source “in whole or substantial part outside the United States,” and for which he has declared a national emergency. 50 U.S.C. §§ 1701–1702. The relevant civil forfeiture statute states: (a)(1) The following property is subject to forfeiture to the United States: . . . (C) Any property, real or personal, which constitutes or is derived from proceeds traceable to . . . any offense constituting “specified unlawful activity” (as defined in section 1956(c)(7) of this title), or a conspiracy to commit such offense. 38 18 U.S.C. § 981(a)(1)(C). Section 1956(c)(7) defines “specified unlawful activity” to include offenses under “section 206 (relating to penalties) of the International Emergency Economic Powers Act.” Id. § 1956(c)(7)(D). Section 206 of the IEEPA makes it “unlawful for a person to violate, attempt to violate, conspire to violate, or cause a violation of any license, order, regulation, or prohibition issued under this chapter,” 50 U.S.C. § 1705(a), and provides for both civil and criminal penalties, see id. § 1705(b) (providing civil fine of $250,000 or amount twice transaction on which violation is based); id. § 1705(c) (providing for up to 20 years’ imprisonment and criminal fine up to $1,000,000). The orders, regulations, and prohibitions referenced in section 206 are set forth in several Executive Orders and related ITRs promulgated by OFAC. This chain of interlocking statutes can thus be summarized as follows: property that “constitutes or is derived from proceeds traceable to” violations of executive orders and ITRs promulgated pursuant to the IEEPA is subject to forfeiture. See 18 U.S.C. § 981(a)(1)(C); id. § 1956(c)(7)(D); 50 U.S.C. § 1705. In 1995, President Clinton, acting pursuant to his authority under the IEEPA, issued two executive orders relevant to the present action. Executive Order 12,957 found that “the actions and policies of the Government of Iran 39 constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States,” and declared “a national emergency to deal with that threat.” Exec. Order No. 12,957, 60 Fed. Reg. 14615, 14615 (Mar. 15, 1995). Executive Order 12,959 imposed broad financial sanctions on Iran, including a prohibition on “the exportation from the United States to Iran, the Government of Iran, or to any entity owned or controlled by the Government of Iran, or the financing of such exportation, of any goods, technology . . . or services.” Exec. Order No. 12,959, 60 Fed. Reg. 24757, 24757 (May 6, 1995).18 Pursuant to the IEEPA and Executive Orders 12,957 and 12,959, in September 1995, OFAC promulgated the five ITRs that the Government alleges Alavi and 650 Fifth Ave. Co violated in this case, thereby rendering the Defendant Properties forfeitable under 18 U.S.C. § 981(a)(1)(C) as proceeds traceable to IEEPA violations. In relevant part, the five ITRs state: 18 Prior to President Clinton’s 1995 Orders, President Reagan, acting pursuant to his authority under the International Security and Development Cooperation Act, see 22 U.S.C. § 2349aa‐9, issued Executive Order 12,613, which stated that “that the Government of Iran is actively supporting terrorism as an instrument of state policy.” See Exec. Order No. 12,613, 52 Fed Reg. 41940, 41940 (Oct. 29, 1987). That Executive Order, along with ITRs promulgated by OFAC, prohibited the importation of certain Iranian goods and services into the United States. See id.; 52 Fed. Reg. 44076, 44077 (Nov. 17, 1987). Because the allegations here charge Claimants with violating only the 1995 Orders and ITRs, we need not discuss these 1987 sanctions further. 40 (1) (a) Any transaction on or after [October 22, 2012] that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this part is prohibited. (b) Any conspiracy formed to violate any of the prohibitions set forth in this part is prohibited. [31 C.F.R. § 560.203 (2012).19] (2) [T]he exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any goods, technology, or services to Iran or the Government of Iran is prohibited, including the exportation, reexportation, sale, or supply of any goods, technology, or services to a person in a third country undertaken with knowledge or reason to know that: (a) Such goods, technology, or services are intended specifically for supply, transshipment, or reexportation, directly or indirectly, to Iran or the Government of Iran . . . [Id. § 560.204 (2012).] (3) [N]o United States person, wherever located, may engage in any transaction or dealing in or related to:
controlled by the Government of Iran; (b) Goods, technology, or services for exportation, reexportation, sale or supply, directly or indirectly, to Iran or the Government of Iran. [Id. § 560.206.] 31 C.F.R. § 560.203, which was originally issued in 1995, was amended in 2012. As the 19 District Court appropriately found, the revised language does not make a material difference in this case. 41 (4) [A]ny new investment by a United States person in Iran or in property (including entities) owned or controlled by the Government of Iran is prohibited. [Id. § 560.207.] (5) [N]o United States person, wherever located, may approve, finance, facilitate, or guarantee any transaction by a foreign person where the transaction by that foreign person would be prohibited by this part if performed by a United States person or within the United States. [Id. § 560.208.] With respect to these ITRs, OFAC has defined the “Government of Iran” to include “[a]ny person owned or controlled, directly or indirectly” by “[t]he state and the Government of Iran, as well as any political subdivision, agency, or instrumentality thereof.” Id. § 560.304. OFAC has further stated that the “term entity owned or controlled by the Government of Iran includes any corporation, partnership, association, or other entity in which the Government of Iran owns a 50 percent or greater interest or a controlling interest, and any entity which is otherwise controlled by that government.” Id. § 560.313 (2012). It is undisputed that Bank Melli, a bank owned by the Iranian government, is the “Government of Iran” under the ITRs. See id.; see also Implementation of Executive Order No. 12959 with Respect to Iran, 60 Fed. Reg. 40881‐02, 40883 (Aug. 10, 1995) (determining Bank Melli “to be owned or controlled by the Government of Iran”). 42 For the Government to succeed on summary judgment on its forfeiture claim against the Defendant Properties as proceeds of IEEPA violations under the civil forfeiture statute, 18 U.S.C. § 981(a)(1)(C), it must show there is no triable issue that the Defendant Properties (1) either “constitute[] . . . proceeds” or are “derived from proceeds” that are (2) traceable to (3) a violation or a conspiracy to violate the relevant Executive Orders and implementing ITRs. Id. § 981(a)(1)(C). The Government’s IEEPA theory of forfeiture can be summarized as follows: the Defendant Properties are forfeitable as proceeds traceable to Alavi’s provision of services to its 650 Fifth Ave. Co. partner Assa, which violates the ITRs because Assa is a front for Bank Melli, which is an instrumentality of the Government of Iran.20 To demonstrate a violation of any one of the implementing ITRs on this theory, and hence to satisfy step three of the civil forfeiture statute, the Government had to show that no triable issue exists as to whether (1) Assa was owned or controlled by the Government of Iran after 1995, see 31 C.F.R. § 560.304; see also id. §§ 560.203, 560.204, 560.206, 560.207, 560.208; 20 The Government does not here argue that the Government of Iran’s control of Alavi renders Alavi’s property subject to IEEPA forfeiture. Nor did the Government advance such an argument before the District Court. Thus, we express no view on that subject. 43 and (2) Alavi provided services to Assa after 1995 knowing it was so owned or controlled.21 For the reasons set forth herein, we conclude that the Government carried its burden as to the first requirement, but that triable issues of fact as to the second preclude an award of summary judgment in its favor.22 Therefore, 21 Only one of the implementing ITRs contains an explicit knowledge requirement. See 31 C.F.R. § 560.204 (prohibiting, inter alia, the supply of any “services to a person in a third country undertaken with knowledge or reason to know that . . . [s]uch . . . services are intended specifically for supply . . . directly or indirectly, to Iran or the Government of Iran”). Further, although the IEEPA prescribes criminal penalties for the “willful[]” violation of an IEEPA‐promulgated regulation, 50 U.S.C. § 1705(c), the civil penalties provision specifies no similar mens rea requirement, see id. § 1705(b); Humanitarian Law Project v. U.S. Treasury Dep’t, 578 F.3d 1133, 1150 (9th Cir. 2009) (explaining that IEEPA’s civil penalty provision does not have a mens rea requirement). Nevertheless, the District Court determined that knowledge was an element of an IEEPA or ITR violation. In re 650 Fifth Ave. Summary Judgment Decision, 2013 WL 5178677, at  (noting that “determining if there is a triable issue of fact as to whether Claimants have violated, attempted to violate, or conspired to violate the IEEPA (and its implementing ITRs) requires inquiry into . . . whether there is a triable issue as to knowledge”). Likewise, on appeal, the Claimants argue, and the Government does not dispute, that to secure forfeiture based on Claimants’ violation of IEEPA or the ITRs, the Government had to show that Claimants provided services to Assa after 1995 knowing that the entity continued to be owned and controlled by Bank Melli and, therefore, by Iran. Thus, we assume without deciding that the challenged summary judgment can be affirmed only if no material questions of fact exist as to Claimants’ knowing violation of IEEPA‐ promulgated ITRs. See New York ex rel. Schneiderman v. Actavis PLC, 787 F.3d 638, 662 (2d Cir. 2015) (explaining that arguments not raised before district court are forfeited on appeal). 22 In addition to 31 C.F.R. §§ 560.204, 560.206, the District Court determined that Alavi and 650 Fifth Ave. Co. violated 31 C.F.R. § 560.208, which states that no United States person “may approve, finance, facilitate, or guarantee any transaction by a foreign person where the transaction by that foreign person would be prohibited by this part if performed by a United States person or within the United States.” Because we do not 44 because we identify material questions of disputed fact at the third step of analysis as to Claimants’ mens rea, we vacate the summary judgment award forfeiting their interests in the Defendant Properties and remand for further proceedings.
Claimants argue that the District Court erred in concluding, as a matter of law, that Bank Melli owned Assa after 1995. In so arguing, they rely on (1) corporate records showing that Bank Melli sold its interest in Assa to Shakeri and Aghamiri in 1995, (2) testimony from a former Bank Melli employee who stated that he understood that Melli was required by U.S. law to divest its ownership in Assa after five years, and (3) testimony from another former Bank Melli employee that he was unaware of any relationship between Melli and Assa after 1995. The argument fails because the records do not show a bona fide transfer in that they report only trivial consideration for an entity worth tens of millions of dollars. Further belying a bona fide transfer is Bank Melli’s strong motive to conceal its continued ownership of Assa after 1995 changes in U.S. law, previous use of straw entities to conceal its ownership interests, and documented identify any underlying violation of 31 C.F.R. § 560.208 on the record before us, summary judgment cannot be affirmed on this ground. 45 continued involvement with Assa after 1995, while evading inquiries about the straw owners. On this record, even “draw[ing] all reasonable inferences” in Claimants’ favor, Mhany Mgmt., Inc., 819 F.3d at 620, the evidence on which they rely is insufficient to raise a genuine issue of material fact as to Bank Melli’s post‐ 1995 ownership and control of Assa. First, assuming the admissibility of the proffered corporate records showing that Bank Melli divested its ownership interest in Assa in 1995, those records do not raise a question of fact precluding summary judgment because they fail to indicate a bona fide transaction.23 Rather, they show that Shakeri and Aghamiri each acquired 50 shares first in Harter Holdings and then in Assa for a total of £50 (£1/share). Given that Assa had assets worth approximately $40 million, that consideration is so trivial as to belie a bona fide transfer. See United 23 The only corporate records of the 1995 sale were attached as exhibits to (1) a declaration of Shakeri, and (2) a declaration of Claimants’ attorney. The first declaration was stricken from the record when Shakeri failed to appear for deposition as ordered by the District Court, see Fed. R. Civ. P. 37, and that sanction is not challenged on appeal. As to the second declaration, it is not apparent that Claimants’ attorney is competent to authenticate these records. Because the Government did not question authenticity before the District Court, we assume, without deciding, the admissibility of these records at trial. See Porter v. Quarantillo, 722 F.3d 94, 97 (2d Cir. 2013) (explaining that “[o]nly admissible evidence need be considered by the trial court in ruling on a motion for summary judgment”); H. Sand & Co. v. Airtemp Corp., 934 F.2d 450, 454 (2d Cir. 1991) (observing that parties are not required to authenticate documents at summary judgment stage where no challenge to authenticity raised). 46 States v. Premises and Real Property with Buildings, Appurtenance and Improvements at 500 Delaware Street, Tonawanda, New York, 113 F.3d 310, 312 (2d Cir. 1997) (“500 Delaware Street”) (upholding finding that a father was straw owner of home transferred to him by arrested son for $1 to avoid forfeiture); United States v. Reckmeyer, 836 F.2d 200, 208 (4th Cir. 1987) (explaining that third party can avoid forfeiture of property under 21 U.S.C. § 853 by establishing that he is “bona fide purchaser for value,” i.e., he gave “value to the defendant in an arms’‐length transaction with the expectation that [he] would receive equivalent value in return” (emphasis added)).24 Even if it is possible that the corporate records do not reflect the true price Shakeri and Aghamiri paid for Assa, such a possibility is necessarily speculative in the absence of any other record evidence of the transfer price. See, e.g., DiStiso v. Cook, 691 F.3d 226, 229–30 (2d Cir. 2012) (explaining that court reviewing motion for summary judgment “cannot credit a [nonmovant’s] merely speculative or conclusory assertions”). Assa Corporation’s 1993 tax return indicates over $44 million in assets and, although 24 the record does not appear to contain Assa’s 1994 or 1995 returns, those for 2000 and 2001, similarly indicate assets over $40 million, supporting an inference that Assa’s 1995 assets totaled over $40 million. See App’x 10869–71. Indeed, the conclusion is reinforced by the fact that Assa held a 40% interest in 650 Fifth Ave. Co., whose principal asset, the Building, was valued at $128 million in 1989 and which generated annual rental income of $17 million at that time. 47 Second, the record shows that Bank Melli had a strong motive in 1995 for concealing its continuing ownership and control of Assa behind straw purchasers. President Clinton’s 1995 Executive Orders and related ITRs prohibited United States entities, such as Alavi, from providing services to instrumentalities of the Government of Iran, such as Melli, or entities fronting for it, as Assa had from its creation. 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); Iranian Transactions Regulations: Implementation of Executive Orders 12957 and 12959, 60 Fed. Reg. 47061‐01 (Sept. 11, 1995). Indeed, soon after the 1995 Orders, OFAC formally identified Bank Melli as owned or controlled by the Government of Iran, see Implementation of Executive Order No. 12959, 60 Fed. Reg. 40881‐02 (Aug. 10, 1995), thereby making it illegal for Melli to own an interest in 650 Fifth Ave. Co. Third, even if the 1995 sanctions could admit an inference of true divestiture in order to comply with U.S. law, such an inference is not reasonable here. Not only did the recorded consideration for Bank Melli’s Assa holdings not reflect a bona fide sale, but record evidence demonstrates that, well before 1995, Bank Melli had concealed its ownership and control of Assa while still profiting 48 from Building‐generated income. In 1989, Bank Melli (on behalf of Iran), created a chain of straw entities stretching from the Jersey Islands to the United States (e.g., Assa Corporation, Assa Limited, Harter Holdings, 650 Fifth Ave. Co.) that it used to effect circular money transfers that allowed Alavi to discharge its mortgage debt to Melli (and thereby avoid tax obligations on Building income), while effectively transferring a 35%—subsequently 40%—interest in that Property and its income to Bank Melli (and thereby to Iran). Thus, even though Bank Melli’s ownership and control of Assa prior to 1995 appears undisputed, corporate records show that from 1989 to 1993, Assa’s shares were held not directly by Bank Melli but, through Harter Holdings, by straw owners, Mohammad Behdadfar, a member of Melli’s Board, and Mohsen Kakavand, a regional manager of Melli’s London office. See App’x 6918 (Bonyad Mostazafan correspondence from 1989 explaining that “Assa . . . belong[ed] to Bank Melli”); App’x 9888 (Bank Melli correspondence explaining that “transfer of the Assa Channel Island shares of the mother company to the bank” was not a problem because “understanding has always been that the ownership of the mother company was with Bank Melli”); App’x 10346–53 (corporate records documenting ownership of Assa’s shares from 1989 to 1993). Moreover, Alavi, in 49 its verified petition seeking leave of the New York Supreme Court to transfer ownership of the Building to 650 Fifth Ave. Co., concealed Bank Melli’s true ownership of Assa by identifying Behdadfar and Kakavand as owners, misrepresenting that the Assa‐Alavi partnership was an “arms‐length transaction.” App’x 6152. Record evidence from before 1995 also shows that even after Bank Melli became the record owner of Harter Holdings (and, through it, of Assa), Bank Melli intended to conceal its involvement with these straw entities. See App’x 7094 (1993 letter from Bank Melli department stating that ownership of Harter and Assa Limited was transferred to Melli in part because, with their Channel Islands registration, “accessing the ownership backgrounds of the companies behind the captioned corporation is not an easy task for investigators,” and asking “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 (1994 letter from Bank Melli department to director of Bank Melli New York asking him to “estimate the percentage of risk of the seizure of [U.S. properties] in case of the revelation of the ownership by Assa Corporation”). Such evidence 50 of Bank Melli’s pre‐1995 intent to conceal its ownership of Assa behind straw entities and purchasers is probative, though not determinative, of Bank Melli’s similar intent in seeming to transfer Assa ownership for trivial consideration to even more remote straw purchasers in 1995. See, e.g., Fed. R. Evid. 403, 404(b)(2). Fourth, after 1995, Assa’s sole United States representative, Tafti, continued to communicate on management matters with ONSD, which had been involved in Assa’s affairs since its creation, see, e.g., App’x 6923–24, 7094, 7103, 9885. Notably, Tafti communicated with ONSD head Ghadimipour about structuring Assa’s record ownership to avoid running afoul of sanctions on Iran. Tafti requested that Ghadimipour supply him with copies of Aghamiri’s and Shakeri’s signatures, and that he instruct Aghamiri and Shakeri to drop Iran as their residence to avoid the risk of capital in their names being frozen by the United States. See App’x 7129, 7156. Tafti further advised Ghadimipour that if a new Assa shareholder were selected, it should be someone who resided in a tax free country. See App’x 7134. Implicit in these communications is Bank Melli’s control of Assa shareholder selection to conceal its own prohibited interest in U.S. property. Communications purportedly from the “Assa shareholders” to 51 Tafti warrant no different conclusion because each is sent to, or from, an ONSD email address, thus further demonstrating Bank Melli’s control. In urging otherwise, Claimants suggest that Bank Melli was merely an intermediary between Assa and the record shareholders. But that hypothesis is a speculative one given the lack of evidence that Shakeri and Aghamiri ever exercised any control over Assa, participated in any of its decisions, or received any income therefrom. See DiStiso v. Cook, 691 F.3d at 229–30 (explaining that court reviewing motion for summary judgment “cannot credit a [nonmovant’s] merely speculative or conclusory assertions”). Such speculation is further undermined by Tafti’s failure to identify Assa’s shareholders or to arrange a meeting with them despite repeated requests from Alavi’s attorneys and representatives in the United States. See, e.g., App’x 10691, 10694, 10697, 10709, 10713. Indeed, record evidence indicates that Tafti planned to address the “absence of Mr. Shakeri” at a meeting with Citibank either by explaining that Shakeri was on a vacation or that he had resigned as director and that Tafti and Assa’s lawyer had become Assa’s directors. App’x 7152. The record only bolsters the conclusion that Shakeri and Aghamiri were not bona fide owners of, and never exercised control over, Assa. 52 Despite the totality of evidence demonstrating Bank Melli’s continued control over Assa after 1995, Claimants contend a genuine issue of material fact on that point is raised by the testimony of two former bank employees. Mohammad Karjooravy, the director of Bank Melli’s New York office from 1986 to 1994 who was closely involved in the formation of Assa and 650 Fifth Ave. Co., testified that Bank Melli intended to be involved in the partnership “for a short time,” and that he understood U.S. regulation to require Melli to divest its ownership interest within five years. App’x 10375, 10382–83. At best, this evidence demonstrates only Bank Melli’s intent to divest its record ownership in Assa. It does not undermine, much less refute, record evidence showing that Melli did not intend to divest itself of actual ownership or control of Assa, or showing that the 1995 sale of Assa was not a bona fide transfer of control. Gholamreza Rahi, an Assistant Director for Bank Melli’s ONSD at the time of the formation of Assa and 650 Fifth Ave. Co., and the director of Bank Melli’s New York office from 1994 to 2003, testified that he did not know who owned Assa after Bank Melli divested its indirect interest in 1995. Claimants contend that Rahi’s “lack of knowledge . . . strongly suggests . . . that there was no ownership relationship between Bank Melli and Assa after 1995.” Claimants Br. 53 46. Rahi’s ignorance, however, is not probative of Bank Melli’s post‐1995 relationship with Assa because the record evidence does not indicate that the New York office was involved in Assa’s affairs after 1995. Indeed, as discussed supra, after 1995, Bank Melli’s ONSD was involved with Assa’s affairs, and the record is devoid of testimony from a then‐employee of that department regarding post‐1995 ownership or control of Assa. In sum, the record evidence convincingly demonstrates that Bank Melli, and therefore the Government of Iran, continued to control Assa after 1995, and admits no genuine issue of triable fact on that question. 25 25 While we agree with the District Court that the record evidence shows that there is no triable issue of fact as to the Government of Iran’s continued control of Assa after 1995, we take exception to its suggestion that it could draw adverse inferences at summary judgment based on individuals’ invocation of their Fifth Amendment privilege, see In re 650 Fifth Ave. Summary Judgment Decision, 2013 WL 5178677, at  n.28 (stating that court “may, but need not, draw an adverse inference based on a witness’s assertion of his Fifth Amendment privilege” at summary judgment stage). The District Court also suggested that it could impose Rule 37 sanctions on two of these persons for failing to appear for court‐ordered depositions, by “assum[ing]” that their testimony would have “further supported the Government’s case.” Id. at . As we have previously held, a court may not draw negative inferences against a nonmoving party on a summary judgment motion. See Stichting Ter Behartiging Van de Belangen v. Schreiber, 407 F.3d 34, 55 (2d Cir. 2005). We need not pursue the error further in this case, however, because, ultimately, the lack of testimony from those witnesses meant that there was no record evidence to dispute the overwhelming evidence of Bank Melli’s post‐1995 control of Assa. See In re 650 Fifth Ave. Summary Judgment Decision, 2013 WL 5178677, at . 54 2. Alavi’s Knowledge of Bank Melli’s Post‐1995 Ownership and Control of Assa While the record admits no factual dispute as to Bank Melli’s ownership and control of Assa after 1995, there is a genuine dispute of fact as to whether Claimant Alavi knew of that ownership.26 The Claimants offered several post‐ 1995 letters from Alavi employees and attorneys to Assa representatives inquiring about the identity of Assa’s “owners” or “stockholders.” For example, in 1995, Alavi’s counsel asked Assa’s counsel to identify Assa’s new owners. Also in 1995, Mohammad Geramian (“Geramian”), the President of Alavi from 1991 to 2007, inquired as to Assa’s new owners. In 2003 and in 2007, new counsel at Alavi sent letters to Assa’s counsel inquiring about Assa’s owners and 26 We here refer only to Alavi’s knowledge because, as the 60% owner of 650 Fifth Ave. Co., its knowledge would be imputed to the Partnership. See N.Y. Partnership Law § 23 (“Notice to any partner of any matter relating to partnership affairs, and the knowledge of the partner acting in the particular matter, acquired while a partner or then present to his mind, and the knowledge of any other partner who reasonably could and should have communicated it to the acting partner, operate as notice to or knowledge of the partnership, except in the case of a fraud on the partnership committed by or with the consent of that partner.”). Relying on this same principle, the Government argues that, regardless of Alavi’s knowledge, Assa’s knowledge of its true ownership and control can be imputed to 650 Fifth Ave. Co. The District Court, however, did not reach this question, and, in light of Claimants’ argument that Assa’s knowledge cannot be imputed to the Partnership because Assa defrauded both the Partnership and Alavi—a matter that may require further factual development—we leave it to the District Court to consider this question in the first instance. 55 directors and requesting a meeting with them. Moreover, Abbas Mirakhor (“Mirakhor”), a member of Alavi’s Board of Directors from approximately 1991– 2005, provided deposition testimony that he did not know who the actual owners of Assa were, despite Alavi’s “good faith efforts” to identify them. App’x 5721. Mirakhor testified that he had no reason to believe that the other members of the Board knew either. This evidence, viewed most favorably to Alavi, could allow a reasonable jury to find that the Government failed to carry its burden on the issue of Alavi’s knowledge of Bank Melli’s (and, therefore, Iran’s) continuing ownership and control of Assa after 1995. In concluding otherwise, the District Court relied almost exclusively on pre‐1995 evidence, observing that “Alavi’s own documents [from this time period] are replete with references to board members’ awareness of the decision‐ making authority of the Ayatollah over the composition of the Foundation’s board, of the role that the Iranian Ambassador was to play in the Foundation’s business with respect both to the Building and its charitable activities.” In re 650 Fifth Ave. Summary Judgment Decision, 2013 WL 5178677, at . A court cannot conclude, as a matter of law, that pre‐1995 knowledge demonstrates post‐1995 knowledge. 56 Nor can such a conclusion be reached based on notes in Ebrahimi’s journal, specifically the note inscribing “Assa → Bank Melli 40% share.” App’x 7109–10. Even if this note, together with the totality of evidence, might permit a factfinder to conclude that Alavi knew of Bank Melli’s post‐1995 control of Assa, they do not compel that conclusion as a matter of law. A reasonable juror could conclude that the note reflects only the pre‐1995 assignment of a 40% share of 650 Fifth Ave. Co. to Bank Melli (through Assa) in return for Melli’s 1989 financing of tax‐avoidance transactions. Notes from the Khazaee–Jahedi meeting are no more conclusive as to Alavi’s knowledge of Bank Melli’s or the Government of Iran’s post‐1995 control over Assa. In sum, because testimonial and documentary evidence raises a genuine dispute as to whether Alavi was aware of Bank Melli’s continuing ownership and control of Assa after 1995, this issue cannot be resolved by summary judgment. Further, because a triable issue exists as to Alavi’s knowledge of Bank Melli’s ongoing ownership or control, it necessarily follows that a triable issue exists as to whether the Claimants “intended specifically” to provide services to the Government of Iran, by way of Bank Melli, in providing services to Assa after 1995. 31 C.F.R. § 560.204. The Government may ultimately prove these disputed 57 issues of knowledge and intent at trial, but the question cannot be answered as a matter of law so as to support summary judgment on the Government’s claim that these Claimants committed a forfeitable offense under IEEPA and the ITRs. We therefore vacate the summary judgment award on these claims as to these Claimants and remand for further proceedings, including trial.
The Government’s second civil forfeiture claim arises under the money laundering statutes. In relevant part, the civil forfeiture statute states: (a)(1) The following property is subject to forfeiture to the United States: (A) Any property, real or personal, involved in a transaction or attempted transaction in violation of section 1956, 1957 or 1960 of this title, or any property traceable to such property. 18 U.S.C. § 981(a)(1)(A). To show that the property was “involved in” such a transaction, the Government has the burden of proving that “there was a substantial connection between the property and the offense.” Id. § 983(c)(3). The Government claims that Alavi and 650 Fifth Ave. Co. committed a forfeitable offense by committing three types of money laundering violations prohibited by 58 § 1956: promotion money laundering, concealment money laundering, and international money laundering. In relevant part, § 1956 states: (a)(1) Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity— (A) [Promotion] (i) with the intent to promote the carrying on of specified unlawful activity; or (ii) with intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986; or (B) [Concealment] knowing that the transaction is designed in whole or in part—(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity [shall be guilty of an offense] . . . . (a)(2) [International] Whoever transports, transmits, or transfers, or attempts to transport, transmit, or transfer a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States— (A) with the intent to promote the carrying on of specified unlawful activity; or (B) knowing that the monetary instrument or funds involved in the transportation, transmission, or transfer represent the proceeds of some form of unlawful activity and knowing that such transportation, 59 transmission, or transfer is designed in whole or in part—(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or (ii) to avoid a transaction reporting requirement under State or Federal law, shall be [guilty of an offense]. Id. § 1956(a)(1)(A)–(B), (a)(2). Knowledge of unlawful activity—or intent to carry out an unlawful activity—is an element of every one of the three money laundering offenses. To secure summary judgment based on promotion or concealment money laundering, the Government must show, inter alia, that there is no genuine dispute that the Claimants knew that “property involved in a financial transaction represents the proceeds of some form of unlawful activity.” Id. § 1956(a)(1). To secure summary judgment based on international money laundering, the Government must show, inter alia, no genuine dispute that the Claimants either (1) intended to promote the carrying on of a specified unlawful activity, or (2) knew that the funds being transferred were proceeds of specified unlawful activity. Id. § 1956(a)(2); accord United States v. Ness, 565 F.3d 73, 77 (2d Cir. 2009). 60 Here, the Government alleges that the Claimants engaged in proscribed money laundering by committing IEEPA violations. As discussed above, however, whether Claimants violated the IEEPA depends on the disputed question of Claimant Alavi’s knowledge of Bank Melli’s post‐1995 control of Assa, which gives rise to a triable issue as to its culpable intent in providing services to Assa pursuant to their partnership in 650 Fifth Ave. Co. These material issues preclude determining Claimants’ involvement in money laundering violations as a matter of law and, thus, require us to vacate the award of summary judgment on this claim for forfeiture and to remand the case for further proceedings.27