Also This Week: IberiaBank Takes Over Florida's Orion Bank; and TierOne and Horizon Financial in Violation of Nasdaq Regulations;
The United States Attorney for the Southern District of New York is looking to take over control of the 36-story, 336,000-square-foot 650 Fifth Ave. high-rise in Midtown Manhattan, as well as other properties across the country, together totaling hundreds of millions of dollars. The properties are all deemed to be controlled by the government of Iran through its bank, Bank Melli
Preet Bharara, the U.S. Attorney, filed an amended civil complaint seeking forfeiture of the Alavi Foundation's interest in the Midtown Manhattan office building and other properties, (primarily mosques). 650 Fifth is owned by 650 Fifth Avenue Co., a partnership between the Alavi Foundation and Assa Corp. The original complaint, which was filed in December 2008, sought forfeiture of just Assa Corp.'s interest in the building. The amended complaint alleges that the Alavi Foundation has been providing numerous services to the Iranian government and transferring funds from 650 Fifth Avenue Co. to Bank Melli, a bank wholly owned and controlled by the government of Iran.
Bank Melli has been designated as a proliferator by the United States and the European Union for its role in Iran's nuclear and ballistic missile programs. In addition, Bank Melli provides banking services to Iran's military vanguard, the Iranian Revolutionary Guards Corps and the Qods Force, which is a branch of the IRGC that has been designated by the United States as providing support to terrorist groups, including the Taliban, Hizballah, Hamas, Palestinian Islamic Jihad, and the Popular Front for the Liberation of Palestine - General Command.
In addition to the building, the amended complaint seeks forfeiture of all other assets of the Alavi Foundation and Assa Corp., including bank accounts owned by 650 Fifth Avenue Co., the Alavi Foundation, and Assa; and real properties owned by the Alavi Foundation in New York, Maryland, Virginia, Texas and California. The other properties include the following.
- 2313 S. Voss Road, Houston, TX;
- 55-11 Queens Blvd., Queens, NY;
- 4836 Marconi Ave., Carmichael, CA;
- 4204 and 4300 Aldie Road, Catharpin, VA;
- 7917 Montrose Road, Rockville, MD; and
- 8100 Jeb Stuart Road, Rockville.
The amended complaint alleges that the properties are forfeitable as the proceeds of violations of money laundering offenses.
650 Fifth Ave. was constructed in the 1970s by the Pahlavi Foundation, a non-profit organization operated by the Shah of Iran to pursue Iran's charitable interests in the United States. The building's construction was financed by a substantial loan from Bank Melli.
Last December, Farshid Jahedi, who at the time was the president of the Alavi Foundation, was arrested for obstruction of justice for allegedly destroying documents required to be produced under a grand jury subpoena concerning the Alavi Foundation's relationship with Bank Melli Iran and the ownership of the building. He has not yet been tried in connection with that arrest.
Since last December, when the Attorney's office filed its initial complaint and the Alavi Foundation president arrested, vacancy in 650 Fifth Ave. has jumped from 14.1% to 24.2%. The building has 81,000 vacant square feet and another 40,000 square feet of leased space being marketed for release or sublease.
IberiaBank Takes Over Florida's Orion Bank
The Florida Office of Financial Regulation closed Orion Bank in Naples, FL, and appointed the Federal Deposit Insurance Corp. (FDIC) as receiver. The FDIC then entered into a purchase and assumption agreement with IberiaBank in Lafayette, LA, to assume all of the deposits of Orion's 23 branches.
As of Oct. 31, Orion Bank had total assets of $2.7 billion and total deposits of approximately $2.1 billion. The FDIC accepted a 1.5% discount from IberiaBank on the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, IberiaBank agreed to purchase $2.4 billion of the failed bank's assets. The FDIC retained the remaining assets for later disposition.
The FDIC and IberiaBank entered into a loss-share transaction on approximately $1.9 billion of Orion Bank's assets. IberiaBank will share in the losses on the asset pools covered under the loss-share agreement.
As of Sept. 30, Orion Bank held $29.9 million in foreclosed residential construction loans and $4.3 million in 1- to 4-family houses. In addition, it listed $573,000 in nonperforming multifamily assets and $2.5 million in nonperforming commercial income producing assets.
TierOne and Horizon Financial in Violation of Nasdaq Regulations
TierOne Corp. the Lincoln, NE-based holding company for TierOne Bank received an expected letter from The Nasdaq Stock Market advising that, because the company did not file its form 10-Q for the fiscal quarter ended Sept. 30, 2009 by the due date, it is not in compliance with the filing requirements.
The company said it would make all necessary filings to become current as soon as practicable. It has until Jan. 11, 2010, to submit a plan.
TierOne Bank, a $3.1 billion federally chartered savings bank, has 69 banking offices in Nebraska, Iowa and Kansas. It has a deal pending to sell deposits, selected loans and other assets associated with 32 of its branches to Great Western Bank, a South Dakota-based subsidiary of National Australia Bank. The transaction is expected to be completed late this year.
TierOne Corp. reported a net loss of $16.1 million for the second quarter. During the 12 months ended June 30, the bank reduced its net residential construction portfolio by 46.2% to $143.6 million, which is its lowest level since 2003.
Nonperforming assets, including nonperforming loans (90 days or more past due) and other real estate owned and repossessed assets, totaled $275.9 million. These nonperforming loans primarily consisted of a condominium project in suburban Las Vegas and a 220-unit, multi-phase condominium development in the suburbs of Kansas City, MO. Its OREO properties included five land development projects, three in Las Vegas and one each in South Carolina and Nebraska.
Separately, Bellingham, WA-base Horizon Financial Corp., parent company for Horizon Bank, was contacted by the Nasdaq because its securities have not maintained a minimum bid price of $1 per share for 30 consecutive business days. If the company does not regain compliance by May 5, 2010, Nasdaq can delist its stock.
Horizon Bank, a $1.3 billion bank, operates 18 full-service offices, four commercial loan centers and four real estate loan centers throughout Whatcom, Skagit, Snohomish and Pierce counties in Washington.
For the quarter ended Sept. 30, Horizon Bank reported a loss of $106 million. It reported holding $40 million in foreclosed properties, including $7.1 million in commercial income producing properties. In addition, it listed $13.9 million of loan assets backed by owner-occupied commercial properties as nonperforming.
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