Peterson v. 650 Fifth Avenue Company et al

Filing 86

OPINION & ORDER re: (373 in 1:08-cv-10934-KBF, 108 in 1:09-cv-00166-KBF, 107 in 1:09-cv-00165-KBF) MOTION for Partial Summary Judgment Against the Assa Defendants filed by Abraham Mandelson, Stuart E. Hersh, Elena Rozenman, Abraham Mendelson, Deborah Rubin, Renay Fryn, Tzvi Rosenman, Elana Rozenman, Tzvi Rozenman, Noam Rozenman, Daniel Miller, Jenny Rubin, Noan Rozenman, Renay Frym. For the reasons set forth above, the Rubin, Beer, Kirschenbaum, Greenbaum, and Acosta plaintiffs' motion for partial summary judgment is GRANTED. Specifically, the Court finds that the Assa Defednants' assets are "blocked assets" as defined in § 201 of TRIA and that the Assa Defendants' assets constitute "blocked assets" o f Bank Melli, an instrumentality of Iran. As such, the Assa Defendants' interests in the 650 Properties are subject to execution by judgment creditors in possession of valid terrorism-based judgments against Iran. However, the Court does not mak e any factual findings as to the validity or priority of the various judgment creditors' private judgments. Nor does it make any findings of fact as regards the Assa Defendants for the purposes of the Government's civil forfeiture action; t he Court takes no position as to how, if at all, the Government's standard of proof as regards the Assa Defendants differs from that of the private plaintiffs. The Clerk of Court is directed to close the motions at ECF No. 373 in 08 Civ. 10934, ECF No. 107 in 09 Civ. 165, and ECF No. 108 in 09 Civ. 166. (Signed by Judge Katherine B. Forrest on 6/6/2013) (mro)

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:_ _ _ _ _ _:-::­

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------------------------------J(
IN RE 650 FIFTH AVENUE AND
RELA.TED PROPERTIES

DATE FILEDJUN

0 6 2013

08 Civ. 10934 (KBF)
~nd all member and
related cases
OPINION & ORDER

------------------------------------------------------------- J(
KATHERINE B. FORREST, District Judge:
Five groups of plaintiff-judgment creditors to this asset forfeiture and
turnover action - the Rubin, Greenbaum, Acosta, Beer, and Kirschenbaum
plaintiffs!

have moved for partial summary judgment against defendants Assa

Corp. and Assa Co., Ltd. (collectively, the "Assa Defendants"). The movant
plaintiffs seek a determination that the Assa Defendants' interests in various
properties, including the building at 650 Fifth Avenue in Manhattan (the "650
Properties"), are "blocked assets" pursuant to the Terrorism Risk Insurance Act of
2002 ("TRIA") and are thus subject to execution and turnover by terrorism victim
judgment creditors of the Islamic Republic of Iran ("Iran").2

1 The motion was filed originally by the Rubin plaintiffs and has since been joined by the
Greenbaum, Acosta, Beer, and Kirschenbaum judgment creditor groups. These creditors were the
plaintiffs in the following default judgment actions: (1) Greenbaum et al. v. Islamic Republic of Iran,
("Greenbaum action"), 02 Civ. 2148 (RCL)(D.D.C.); (2) Acosta, et al. v. Islamic Republic of Iran,
et a1. ("Acosta action"), 06 Civ. 745 (RCL)(D.D.C.); (3) Rubil11 et a1. v. Islamic Republic ofIran
("Rubin action"), 01 Civ. 1655 (RCL)(D.D.C.); (4)
("Beer
action"), 08 Civ. 1807 (RCL)(D.D.C.);(5) Kirschenbaum et a1. v. Islamic Republic of Iran et a1.
("Kirschenbaum action").
2 The claims against the Assa Defendants are only a portion of those at issue in this consolidated
litigation. The private plaintiffs also seek turnover from the co-owners of 650 Fifth Avenue and its

Plaintiffs' argument is straightforward: the U.S. Department of Treasury's
Office of Foreign Asset Control ("0 FAC") has declared the Assa Defendants to be
"front companies" for Bank Melli, undisputedly an instrumentality of Iran. TRIA
permits judgment creditors such as the movant plaintiffs to obtain turnover orders
against assets of "agencies or instrumentalities" of Iran. As OFAC has declared the
Assa Defendants to be alter egos of an instrumentality of Iran, their assets are thus
subject to turnover. The Assa Defendants dispute that the informal OFAC
determinations are either admissible or conclusive, and further claim that the
OFAC designation violated defendants' procedural due process rights.
For the reasons set forth below, the Court grants plaintiffs' motion for partial
summary judgment.

I. STATUTORY BACKGROUND
Several statutory and administrative provisions are relevant to the resolution
of the pending motion.
a. TRIA
First, the Terrorism Risk Insurance Act of 2002 ("TRIA"), codified in a note to
the Foreign Sovereign Immunities Act, permits a judgment creditor of a terrorist
state plaintiff to execute against "blocked" assets of a terrorist party. TRIA states,
in relevant part:
Notwithstanding any other provision of law ... , in every case in
related properties defendants Alavi Foundation and 650 Fifth Avenue Company (collectively, the
"Alavi Defendants"). In addition, the U.s. Government seeks forfeiture of the 650 Properties.
Neither the Government's civil forfeiture action, nor the private plaintiffs' claims with respect to the
Alavi Defendants, is at issue here.

2

which a person has obtained a judgment against a terrorist party
on a claim based upon an act of terrorism, or for which a terrorist
party is not immune under section 1605(a)(7) of title 28, United
States Code, the blocked assets of that terrorist party (including the
blocked assets of any agency or instrumentality of that terrorist
party) shall be subject to execution or attachment in aid of
execution in order to satisfy such judgment to the extent of any
compensatory damages for which such terrorist party has been
adjudged liable.

TRIA § 201(a), Pub. L. No. 107-297, Title II, 116 Stat. 2337 (2002)(emphasis
added).
TRIA defines the term "blocked asset" as "any asset seized or frozen by the
United States ... under sections 202 and 203 of the International Emergency
Economic Powers Act ["IEEPA"] (50 U.S.C. 1701; 1702)." TRIA § 201(d)(2).
Finally, the statute defines a "terrorist party" as "a terrorist, terrorist
organization .... , or a foreign state designated as a state sponsor of terrorism
under section 6(1) of the Export Administration Act of 1979 (50 U.S.C.App. 2405(1»
or section 620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371)." TRIA §
201(d)(4). Iran has been designated as a "state sponsor of terrorism" under section
6(1) of the Export Administration Act of 1979 since January 19, 1984. See State
Sponsors of Terrorism, U.S. Dep't of State, at
http://www.state.gov/j/ct/list/c14151.htm (last visited May 29, 2013). Bank Melli is
an instrumentality of Iran. See In re 650 FifthAve. andRelated Properties, 881 F.
Supp. 2d 533, 538 n.6 (S.D.N.Y. 2012)(citing Weinstein v. Islamic Republic of Iran,
609 F.3d 43, 48 (2d Cir. 2010»; Estate of Heiser, et al. v. Bank of Tokyo Mitsubishi
UFJ, NewYork Branch, No. 11 Civ. 1601 (PKC), 2013 WL 342684 (S.D.N.Y. Jan.

3

29, 2013).
b. Executive Order 13382
In 2005, President Bush delegated to the Department of Treasury the
authority to designate the entities whose assets are blocked under IEEPA, and any
entity "owned or controlled by, or acting or purporting to act on behalf of, directly or
indirectly," any such blocked party. See Exec. Order 13382, Blocking Property of
Weapons of Mass Destruction Proliferators and Their Supporters, 70 FR 38567
(June 28, 2005).
II. FACTUAL BACKGROUND
Only a few undisputed facts are material to the instant motion.
First, the United States Department of Treasury maintains a "Specially
Designated Nationals and Blocked Persons List" ("SDN list"). OFAC, the Treasury
office that administers the SDN list, describes the list as
[AJ reference tool providing actual notice of actions by OFAC with respect to
Specially Designated Nationals and other persons (which term includes both
individuals and entities) whose property is blocked, to assist the public in
complying with the various sanctions programs administered by OFAC.
See SDN List, May 23, 2013, available at
http://www.treasul'y.gov/ofac/downloads/t11sdn.pdf.
On October 25, 2007, OFAC designated Bank Melli - an instrumentality of
Iran - as a party whose property and interests in property are blocked pursuant to
E.O.13382. (See also Defs.' Local R. 56.1 Stmt. in Response to Pl.'s Local R. 56.1
Stmt. ("Defs.' 56.1 Reply"),r 1.1.) In light of that determination, OFAC added Bank
Melli to the SDN list. Bank Melli remains on the SDN list as of May 23, 2013.

4

Bank Melli was the legal owner of an indirect, 98% interest in the Assa
Defendants until the mid-1990s, but it currently has no legal ownership interest in
either of the Assa Defendants. (ld.

~~

3-4.) Defendant Assa Corp.

is a partial owner of the 650 Properties
Co. Ltd. (Id.

~

the entity that

is itself wholly owned by defendant Assa

1.) Assa Co. Ltd. is a Jersey Islands entity, fully owned by two

shareholders - Davood Shakeri and Fatemah Aghamiri. (Id.

'1'[ 1-2.)

Neither

Shakeri nor Aghamiri is currently employed by Iran. (Id.)
OFAC added the Assa Defendants to the SDN list on December 17, 2008, and
declared that the Assa Defendants' property and interests in property are "blocked"
pursuant to E.O. 13382. (Id.

,r,r 3-4.)

OFAC issued a press release:3 labeling the

Assa Defendants as "front companies" for Bank Melli and explained that they were
being designated under, "Executive Order 13382 for being controlled by, and for
acting for or on behalf of, Iran's Bank Melli, and for having provided financial
support for, or services in support of, Bank Melli." (See U.s. Dept. of Treasury,
Press Release, "Treasury Designates Bank Melli Front Company in New York City"
("OFAC Press Release"), Decl. of Aitan D. Goelman ("Goelman Decl.") Ex. B.,
available at http://www.treasury.gov/press-center/pressreleases/Pages/hp 1330.aspx.)

The Assa Defendants argue that the press release is inadmissible pursuant to the Federal Rules of
Evidence and Local R. 56. L The Court disagrees; Fed. R. Evid. 803(8) provides a hearsay exception
for certain public records. The Court finds that this press release is a "statement of a public office"
that sets out "factual findings from a legally authorized investigation", and neither the source of the
information - here OFAC nor other circumstances indicate a lack of trustworthiness. In fact, the
blocking notice referenced
adds to the press release's indicia of reliability.
3

5

OFAC also sent Assa Corp. a blocking notice, which states in relevant part
that
OFAC's action based on its determination that Assa Corporation is
controlled by, acts for or on behalf of, and had provided financial support for,
and services in support of Bank Melli, an entity previously designated
pursuant to E.O. 13382. This determination is based, in part, on information
demonstrating that Bank Melli created Assa as a vehicle to hold Bank Melli's
interest in a building located at 650 Fifth Avenue, New York, New York ....
Assa has regularly followed Bank Melli's instructions with regard to Assa's
affairs and its management of the investment, and has regularly reported
back to Bank Melli on its financial situation, including frequently responding
to Bank Melli requests for audits and information regarding company
expenses.

(OFAC Blocking Notice, Dec. 11, 2008, Goelman Reply Decl. Ex. A.)
The Assa Defendants have not formally challenged their SDN designations,
either before OFAC or in a court proceeding pursuant to the Administrative
Procedures Act.
III. STANDARD OF REVIEW
Summary judgment is warranted if the pleadings, admissible discovery
materials and declarations setting forth statements that would themselves be
admissible at trial (that is, not objectionable, such as hearsay, etc.), demonstrate
that there is no genuine issue of fact necessitating trial. Fed. R. Civ.P. 56(c); see
also Anderson v. Liberty Lobby, Inc., 477 U.S. 242,247 (1986); Celotex Corp. v.
Catrett, 477 U.S. 317, 322-323 (1986). A genuine fact issues exists when "the
evidence is such that a reasonable jury could return a verdict for the nonmoving
party." Fincher v. Depository Trust & Clearing Corp., 604 F.3d 712, 720 (2d Cir.
2010)(citing Roe v. City of Waterbury, 542 F.3d 31,35 (2d Cir. 2008». Where it is

6

clear that no rational trier of fact could find in favor of the non-moving party,
summary judgment is warranted. Gallo v. Prudential Residentigl Servs., Ltd., 22
F.3d 1219, 1223 (2d Cir. 1994).
Once a moving party has put forward facts showing that the non-movant's
claims cannot be sustained, the opposing party must come forward with specific
facts showing a genuine issue of material fact requiring trial. Wright v. Goord, 554
F.3d 255, 266 (2d Cir. 2009).
In addition, parties may not defeat summary judgment on the basis of
conclusory allegations or assertions; they must offer some hard evidence in support
of such factual assertions. See Hicks v. Baines, 593 F.3d 159, 166 (2d Cir, 2010);
Brink v. Union Carbide Corp., 210 F.3d 354 (2d Cir. 2000) ("Rule 56 provides that
any affidavits submitted in opposition to a properly supported motion for summary
judgment 'shall be made on personal knowledge, shall set forth such facts as would
be admissible in evidence, and shall show affirmatively that the affiant is
competent to testify to the matters stated therein.")
Accordingly, the evidence proffered by the party opposing summary judgment
must be of a type that would be admissible at trial. Id. ("Thus, 'hearsay testimony .
. . that would not be admissible if testified to at ... trial may not properly be set
forth in [a Rule 56] affidavit."')(citing Fed. R. Civ. P. 56(e); H. Sand & Co. v.
Airtemp Corp., 934 F.2d 450, 454-55 (2d Cir.1991); Burlington Coat Factory
War(?house Corp. v. Esprit De Corp., 769 F.2d 919,924 (2d Cir.1985) (a party

7

"cannot rely on inadmissible hearsay in opposing a motion for summary judgment ..
. absent a showing that admissible evidence will be available at trial."».
Ultimately, of course, a party must show that there is more than some
metaphysical doubt as to the material facts. See Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986).
IV. ANALYSIS
a. OFAC Determination
The movant plaintiffs request a determination that the Assa Defendants'
interests in the 650 Properties constitute "blocked assets" under TRIA § 201. To
merit partial summary judgment, plaintiffs must demonstrate that no material
issue of facts exist that the Assa interests in the 650 Properties are (1) "blocked
assets" (2) "of' (3) an "instrumentality" of (4) a "terrorist party". TRIA § 201(a).
There is no triable issue of fact as to these elements.
As an initial matter, the parties do not dispute that Iran is a "terrorist party"
for purposes of TRIA, nor do they dispute that Bank Melli is an instrumentality of
Iran, or that Assa Co. Ltd. owns Assa Corp., which, in turn, owns interests in the
650 Properties.
Next, OFAC has made a determination that the Assa Defendants are
instrumentalities of Iran. Specifically, the Blocking Notice sent to the Assa
Defendants declared that "OFAC's action is based on its determination that Assa
Corporation is controlled by, acts for or on behalf of, and had provided financial
support for, and services in support of Bank Melli."

8

Because of the OFAC determination, the Assa Defendants' assets are blocked
pursuant to OFAC-coordinated sanctions regimes. Plaintiffs correctly argue that
"blocking" for the purposes of the SDN list requires the Court to find that the assets
are "blocked" for the purposes of TRIA § 201 as well. This conclusion follows from
the fact that the blocking determinations in both the OFAC-SDN context and in
TRIA § 201(a) have the same statutory source

IEEPA. OFAC's blocking

determinations are made pursuant to E.O. 13382, which permits the President or
his designee to block assets for purposes of IEEPA. Likewise, TRIA defines a
"blocked asset" as "any asset seized or frozen by the United States under ...
[IEEPAl" TRIA § 201(d)(2)(A). The OFAC determination that an asset is blocked
is therefore conclusive for purposes of defining a "blocked asset" in TRIA.
Thus, though plaintiffs' sole evidentiary support consists of the OFAC
blocking determination and associated materials, that is sufficient. The OFAC
materials demonstrate that the Assa Defendants are instrumentalities of a terrorist
party, Iran, that their interests in the 650 Properties are "blocked assets," and that
those assets are "of' the instrumentality of Iran. Defendants have failed to raise a
triable issue as to any of these matters. Under TRIA § 201(a), then, a terrorism
judgment creditor possessing a valid judgment may execute upon those interests.
b. Assa's Response
The Assa Defendants make two - ultimately unpersuasive - statutory and
constitutional arguments in opposition to the instant motion. They do not dispute
that they are included on the SDN list, but rather they argue: (1) that the Court

9

must make an independent determination of what constitutes "ownership" of a §
201 blocked asset

and issues of material fact as to whether Bank Melli owns the

Assa Defendants preclude summary judgment, and (2) that, even if the SDN list is
sufficient to grant plaintiffs' partial summary judgment motion, the OFAC process
violated due process and must be rejected. Neither argument raises a triable issue
of fact.
1.

FSIA and TRIA Definitions of Instrumentality

The Assa Defendants' argument that plaintiffs must proffer evidence beyond
the OFAC designation to establish that an instrumentality of Iran owns the Assa
interest in the 650 Properties is legally incorrect.
They argue that the analysis differs when determining what is a "blocked"
asset for purposes of the SDN list versus defining an asset "of' a terrorist party
under TRIA § 201(a). In furtherance of this proposition, they first rely improperly
upon cases in this District regarding the ownership of mid-stream electronic funds
transfers (EFTs).

Calderon-Cardona v. JPMorgan Chase Bank, N.A., 867

F.Supp.2d 389, 404 (S.D.N.Y. 2011)(quoting U.s. Government statement in briefing
in another case that - with respect to EFTs

"[a]ny determination of whether

particular assets are not immune from execution under TRIA will require the Court
to determine whether the [defendant government] has a sufficient ownership
interest in the assets such that the assets are
terrorist party."')

10

in TRIA's language - assets 'of that

Cald~ron-Cardona

is inapposite, however. There, the court held that the

plaintiffs could not prove under principles of state property law 4 that the mid­
stream EFTs attached in the United States were owned by a terrorist party - there
North Korea - at the time of transfer.

id. at 400. The EFTs were described as

ephemeral interests that appeared in the United States only briefly, en route from a
transferor to a transferee - neither of whom "owned" the assets at the time of
transfer.
In contrast, here there is no dispute that the Assa Defendants own the titled
interest in the 650 Properties. 5 Plaintiffs need not draw a direct connection
between the 650 Properties and the Assa Defendants where those defendants admit
they are the title owners of the interest.
Nor are the Assa Defendants correct to argue that the Court must secondguess the OFAC determination that Assa Corp. and Assa Co. Ltd. are alter egos of
Bank Melli and thus are themselves instrumentalities of Iran. Defendants argue
that the Court must apply a three-factor test from FSIA to determine whether they
are instrumentalities of Iran. See 28 U.S.C. 1603(b).fi That test requires, inter
alia, that the instrumentality be an "organ" of a foreign state or that the foreign
This Court makes no determination here as to whether TRIA overrides state property law
principles as regards EFTs. Compare Calderon-Cardona, 867 F. Supp. 2d at 399-400 with Hausler v.
JPMorgan Chase Bank, N.A., 845 F. Supp. 2d 553, 566 (S.D.NY 2012).
5 This Court has previously distinguished Calderon-Car'dona in an opinion in a similar case brought
by many of the same judgment creditor plaintiffs. See Peterson v. Islamic Republic ofIran, 2013 WL
115576 (S.D.N.Y. Mar. 13, 2013).
6 That statute provides: "An "agency or instrumentality of a foreign state" means any entitY-weI)
which is a separate legal person, corporate or otherwise, and (2) which is an organ of a foreign state
or political subdivision thereof, tor a majority of whose shares or other ownership interest is owned
by a foreign state or political subdivision thereof, and (3) which is neither a citizen of a State of the
United States as defined in section 1332(c) and (e) of this title, nor created under the laws of any
third country." 28 U.S.C. 1603(b).
4

11

state owns a majority of its shares - Assa states that it is neither. Further,
defendants argue that OFAC's assertion that it is an alter ego of Bank Melli is
unsupported by admissible evidence.
Even if the Court accepts Assa's premise that plaintiffs must proffer evidence
to satisfy the definition in 28 U.S.C. § 1603(b)7, plaintiffs have done so. While the
SDN listing is not dispositive as a general matter,8 in this case the OFAC
determination, as presented by the SDN list, the OFAC press release, and the
Blocking Notice letter, is specific and entitled to deference. The Blocking Notice
states OFAC's findings that Assa Corp. was created by Bank Melli as a front
company to hold its interest in the 650 Properties, has transferred rental income via
Assa Co. Ltd. to Bank Melli, and has followed Bank Melli's instructions as regards
its affairs and the management of the 650 Properties. According to OFAC, the Assa
Defendants are nothing but alter egos of Bank Melli and thus instrumentalities of
Iran.

7 This proposition is doubtful. Section 1603(b) defines "agency or instrumentality of a foreign state"
for purposes of FSIA, not agencies or instrumentalities of "terrorist parties" the term used in TRIA
§ 201. While Iran qualifies as a "terrorist party" under TRIA, the language of § 1603(b) does not
mandate that Iran's alleged instrumentality must meet the 1603(b) requirements ~, that it is an
organ of the sovereign state or majority-owned by the sovereign state). Thus, Assa's invocation of
Filler v. Hanvit Bank, 378 F.3d 213,219 (2d Cir. 2004) is irrelevant.
held that a foreign bank
owned by an instrumentality of a sovereign state was not itself an instrumentality of that state
and thus could not benefit from sovereign immunity protection. Id. That case did not address the
definition of an "instrumentality" for the purposes of a "terrorist party" under TRIA.
S The Assa Defendants correctly point out that the SD:.J list is broader than the reach of TRIA §
201(a). SD:.Js are defined as "individuals and entities which are owned or controlled by, or acting for
or on behalf of, the governments of target countries or are associated with international ...
terrorism." See SDN List. Thus, some entities on the SDN list may be mere associates of
international terrorism and not subject to TRIA's blocking regime. As analyzed above, however, the
SDN listing of the Assa Defendants contains more specific OFAC findings in harmony with the TRIA
requirements.

12

These findings are entitled to deference. OFAC has been delegated the
authority to administer the SDN listing regime, and the Court must therefore give
effect to its informal adjudications, unless they are "plainly inconsistent" with the
relevant statutes and OFAC regulations.

Consarc Corp. v. Iraqi Ministry, 27

F.3d 695, 702 (D.C. Cir. 1994)(citing Chevron U$.A. Inc. v. NRDC, 467 U.S. 837,
844-45 (1984». Given OFAC's unique expertise in matters of terrorist finance and
the sensitive nature of the investigations upon which OFAC makes its
determinations, it is entitled to deference even greater than that afforded an
administrative agency statutory interpretation under Chevron.

id. (stating that

OFAC's interpretation of its "own regulations receives an even greater degree of
deference than the Chevron standard, and must prevail unless plainly inconsistent
with the regulation"); see also Holy Land found. for Relief & Dev. v. Ashcroft, 219
F. Supp. 2d 57, 68 (D.D.C. 2002) aff'd, 333 F.3d 156 (D.C. Cir. 2003)(OFAC
interpretation of "legally enforceable interest" entitled to deference). Even if the
OFAC press release cannot be viewed as an "informal adjudication", the Blocking
Notice sent to Assa Corp. has the requisite formality to merit this deference.
OFAC's factual findings explained in the Blocking Notice are neither unreasonable
nor do they contradict the express statutory language of FSIA, IEEPA, TRIA, or
E.O. 13382. As discussed below, to the extent that the Assa Defendants dispute the
factual findings made by OFAC, they should have filed an administrative challenge
to dispute those findings; they have not done so.

13

Finally, the Assa Defendants' evidence in opposition to the SDN designation
fails to raise a triable issue of fact. They put forward the declaration of Davood
Shakeri, president of both Assa entities, which avers that Bank Melli does not own
the Assa Defendants, and that neither Assa entity has any Iranian government
employees or owners.9 (Shakeri Decl.

~'r

1-4.) The legal ownership of the Assa

Defendants is not in issue, however. OFAC has determined that, despite the lack of
legal ownership, Bank Melli controls the activities of the Assa Defendants and
makes specific factual findings such as the remittance of rental payments by the
Assa Defendants to Bank Melli and control of Assa Corp.'s investment management
by Bank Melli. The Shakeri Declaration does not rebut any of these factual findings
or raise a triable issue of fact.
ii. Due Process
In addition to their statutory challenge, the Assa Defendants claim the SDN
designation denied them constitutional due process - and that the Court must
therefore disregard the designation. The Court finds that the Assa Defendants did
not exhaust the available remedies and cannot therefore assert a due process
objection here.
Defendants do not dispute that they have not filed a petition for
administrative reconsideration before OFAC, as is their right under 31 C.F.R. §
501.807 (setting out procedures by which "[a] person may seek administrative
reconsideration of ... its [SDN] designation ... as blocked, or assert that the

Shakeri admits, however, that until January 1, 1995, Bank Melli was a 98% owner of Harter
Holdings itself the 98% owner of Assa Ltd. (Id. '1~ 11-13.)

9

14

circumstances resulting in the designation no longer apply, and thus seek to have
the designation rescinded."). Nor have they filed a court challenge pursuant to the
Administrative Procedure Act. The Assa Defendants cannot attack the SDN listing
on due process grounds without first availing themselves of the processes they are
due. See. e.g., Milena Ship Management Co. Ltd. v. Newcomb, 804 F. Supp. 846,
852 (E.D. La. 1992)(finding OFAC exhaustion requirement); Global Relief Found.,
Inc. v. O'Neill, 207 F. Supp. 2d 779, 805 (N.D. Ill. 2002) affd, 315 F.3d 748 (7th Cir.
2002)(noting "the director of OFAC is an appropriate person to consider
administrative appeals" of blocking determinations). Even had they appropriately
challenged the OFAC designation, a due process challenge to a designation made
under emergency Presidential authority is a steep hill to climb. See Holy Land
Found. for Relief & Dev., 219 F. Supp. 2d at 76 (denying due process challenge to
OFAC designation and noting broad executive authority in this area).
CONCLUSION
For the reasons set forth above, the Rubin, Beer, Kirschenbaum, Greenbaum,
and Acosta plaintiffs' motion for partial summary judgment is GRANTED.
Specifically, the Court finds that the Assa Defednants' assets are "blocked assets" as
defined in § 201 of TRIA and that the Assa Defendants' assets constitute "blocked
assets" of Bank Melli, an instrumentality of Iran. As such, the Assa Defendants'
interests in the 650 Properties are subject to execution by judgment creditors in
possession of valid terrorism-based judgments against Iran.

15

However, the Court does not make any factual findings as to the validity or
priority of the various judgment creditors' private judgments.l o Nor does it make
any findings of fact as regards the Assa Defendants for the purposes of the
Government's civil forfeiture action; the Court takes no position as to how, if at all,
the Government's standard of proof as regards the Assa Defendants differs from
that of the private plaintiffs.
The Clerk of Court is directed to close the motions at ECF No. 373 in 08 Civ.
10934, ECF No. 107 in 09 Civ. 165, and ECF No. 108 in 09 Civ. 166.
SO ORDERED.
Dated:

New York, New York
June 6,2013

rs.­
KA, THERINE
FORREST

B.
United States District Judge

10 The Hegna judgment creditor group raised concerns that the movant plaintiffs' partial summary
judgment motion effectively requests an adjudication of the validity of their liens. (ECF No. 509.)
The movants insist - and the Court agrees, as stated above that no such determination is
necessary to grant partial summary judgment here. (ECF Ko. 510.) The Court reiterates that it
makes no findings as to the validity or priority of the private plaintiffs' judgments.

16