On March 23, 2026, U.S. Attorney for the Southern District of New York Jay Clayton announced a settlement that ended 17 years of litigation and allowed the victims of what the attorney termed “Iranian state-sponsored terrorism” to receive more than $300 million in compensation.
At the center of that legal battle was 650 Fifth Avenue, a 36-story office tower in Midtown Manhattan, which federal prosecutors said concealed an Iranian government-owned bank’s interests.
Among the hundreds of victims and relatives set to benefit are family members of those killed in the 1983 Beirut bombings, in the Sept. 11 attacks, and in attacks by Iran’s proxies against civilians, including U.S. citizens, in Israel, Lebanon, and elsewhere. Also involved in the settlement are the family of a former Iranian military officer who was imprisoned, tortured, and executed by the Islamic Republic after being lured back to Iran and falsely accused of espionage.
For that family, the settlement closes a two-decade effort to clear the name of a husband and father whom the regime branded a spy. Their case was part of a wider legal battle over hidden Iranian assets in the United States, and over whether a prominent Manhattan skyscraper, held through charitable and corporate structures, was serving the interests of the Iranian state.
The lawyer who helped turn the case into a precedent-setting legal action was Zohreh Mizrahi, a respected immigration and human rights lawyer who succeeded in proving that the espionage allegations used to justify his arrest and execution were false. “The family wanted to clear the husband’s or the father’s name,” Mizrahi said. “For a military man to be accused of treason or espionage, it’s a heavy responsibility, a stigma.”
To do that, Mizrahi had to prove that the military officer was wrongfully imprisoned, tortured, and killed, and that he had not committed espionage. She built the case under the exceptions to the Foreign Sovereign Immunities Act (FSIA)—a U.S. law that aims to protect foreign states from being sued in U.S. courts—by invoking its terrorism-related exceptions, which allow U.S. civil actions against foreign states involved in terrorist acts.
“In this case, the client I was representing was a category in itself,” she said. “It’s what we call setting federal precedent. It’s a case of first impression.” Her team brought the case not only against the Islamic Republic of Iran, but also against the state entities which she said were directly responsible for the military officer’s arrest and abuse, including the Ministry of Information and Intelligence (MOIS) and the Islamic Revolutionary Guard Corps (IRGC).
The case became tied to a far larger, more politically charged fight: the effort to trace and recover hidden Iranian state assets in the United States. That effort centered on 650 Fifth Avenue, a 36-story office tower in Midtown Manhattan, located at 52nd Street, New York City.
Federal prosecutors said that Bank Melli Iran, a government-owned bank, had a secret interest in the property. They further revealed that the property had a deceptive ownership structure involving the Alavi Foundation and entities tied to Assa. What, on paper, looked like a charitable and cultural institution, Mizrahi argued, became a vehicle for the regime to propagate its radical ideology.
She pinpointed the origins of that entity to the 1970s, when the Shah’s government established the Pahlavi Foundation to support Iranian students and promote Iranian culture in the United States. Mizrahi noted that her great-uncle, Musa Sabi, served as the foundation’s attorney and handled its incorporation and registration.
After the 1979 revolution, she said, the new regime took control of that institutional legacy, transformed it, and eventually operated it under the name Alavi Foundation. What had previously presented itself as a cultural and charitable institution became, in Mizrahi’s telling, something different. “It was a deceptive act,” she said.
According to Mizrahi, the Islamic Republic and its affiliates used front companies tied to Assa to conceal the building’s true ownership and obscure Bank Melli’s role. Those shell entities allowed a politically sensitive, state-linked Iranian asset to remain embedded in the heart of Manhattan while retaining the appearance of a nonprofit.
But the documents also suggest that control over the Alavi Foundation went far beyond ordinary nonprofit governance, reaching into the highest levels of the Islamic Republic. A key turning point happened after Kamal Kharrazi became Iran’s ambassador to the United Nations in 1989.
According to the minutes of a May 16, 1991, board meeting in Zurich, the head of the Bonyad Mostazafan said that, at the direction of the Supreme Leader, several board members were to resign.
Soon afterward, the foundation’s president wrote that Kharrazi told him that the foundation was now “under the oversight of Haj Agha, not Mr. Rafighdoost,” and that the board and managing director would be reduced to a formality, although the ambassador would conduct the foundation’s affairs.
“These shell corporations took over,” Mizrahi said, “and under direct orders from the regime’s Mission to the United Nations, began funneling money into this so-called nonprofit.”
The 650 Fifth Avenue case focused on whether a terror-designated foreign government could shield strategic assets behind American nonprofit and corporate forms—testing the power of U.S. courts to access them. For years, that question proved difficult to answer. Victims had unsuccessfully tried to pursue claims against Alavi. But the federal forfeiture action—filed in 2009 and seizing assets connected to illegal activity—changed the legal situation.
“When the U.S. Attorney brought the forfeiture action, they pierced that immunity veil,” Mizrahi said. “We no longer saw Alavi Foundation as a nonprofit. It was rather a vessel, an outlet for the regime.”The forfeiture case allowed the government and victims’ lawyers to challenge what Mizrahi described as “subterfuge”: a prominent Manhattan property shielded by front companies and a charitable facade while serving, in effect, as an extension of the Islamic Republic.
From 2009 on, the case traversed multiple courts, resolving key legal issues and establishing that entities tied to the building hid Iranian state interests.That broader coalition of judgment creditors became crucial. The alliance came together to enforce judgments against Iranian state-owned assets. “It was the involvement of the U.S. Attorney’s Office in New York that gave us a huge platform,” said Mizrahi. “It offered us a great opportunity, especially after all the judgment creditors against the Islamic regime joined forces.”
For Mizrahi, the importance of the case lay in what it revealed about the Iranian regime’s reach and the U.S. courts’ willingness to act when presented with sufficient evidence. For all the legal and financial significance of the 650 Fifth Avenue settlement, Mizrahi insisted that the meaning of the case could not be measured in monetary terms.
“It was not about the dollars,” she said. “What mattered most was vindication.”
