Skip to main content
Tags: Morgenthau | Iran | prosecute | sanctions

Iran Buster's Secret: Go After the Money

Wednesday, 16 June 2010 03:55 PM EDT

Robert M. Morgenthau, who retired in December at age 90 as Manhattan district attorney after 39 years in the elected office, is perhaps best known for having shut down the Bank of Credit and Commerce International, the notorious Pakistani institution that critics called the Bank of Crooks and Criminals International.

He was on the front pages of New York tabloids again this month after Mayor Michael Bloomberg demanded his resignation as special master in a class-action lawsuit seeking to resolve allegedly discriminatory hiring practices in the city’s fire department.

But when Newsmax caught up with Morgenthau for an exclusive interview recently, we discussed a very different set of cases he had prosecuted involving Iran, and his ongoing passion to seek justice for the underdogs in American society.

I was curious about how he became involved in investigating the Alavi Foundation, an arm of the Iranian government that Shah Mohammed Reza Pahlavi set up in New York in the 1970s to help Iranian students with scholarships to American universities.

Alavi was shut down in December 2009 after a joint investigation by Morgenthau’s office, the FBI, the IRS, and the Department of Justice that alleged multiple violations of the International Emergency Economic Powers Act, a broad statute that allows the feds to seize property and arrest individuals deemed to be associated with an “unusual and extraordinary threat . . . to the national security, foreign policy, or economy of the United States” emanating from overseas.

“I’ve always thought it was important to prosecute people who use foreign jurisdictions, foreign banks, foreign bank accounts, to evade U.S. laws. It’s a principle of mine,” Morgenthau told Newsmax.

“In law enforcement, you prosecute the person who goes into a candy store and steals a bar of candy, but somebody who moves the dollars offshore and doesn’t pay taxes, doesn’t get prosecuted. I believe that, if you want people to respect the rule of law, you have to be even-handed.

“We had been looking at Alavi for some time. Looking back, it didn’t take a genius to see a strong connection to Iran. But people weren’t looking.”

The indictment alleges that Alavi has been “providing numerous services to the Iranian government,” including sending money back to Iran that it earned from renting out a commercial skyscraper in midtown Manhattan.

Going after foreign entities is tricky business, Morgenthau acknowledged. “Policy on that kind of thing is set from the top. I’ve been to talk to four secretaries of the Treasury on this, and there wasn’t a great deal of interest. Not interference, just indifference.”

Morgenthau began looking into Alavi’s activities in the mid-1990s, when the Internal Revenue Service found serious irregularities during a review of the foundation’s tax situation.

The IRS report identified the foundation as an agency of the government of Iran, and that piqued Morgenthau’s interest. One thing led to another, as it always does in his business.

“We thought that the agencies of the Iranian banks were taking cash deposits and wiring them overseas in violation of New York and U.S. law, so I spoke with the regional director of the comptroller of the currency, and I said to him: Next time one of your inspectors goes in, why don’t you check the wire room?”

Morgenthau was surprised at the response. “He said, ‘Mr. Morgenthau, I couldn’t do that.’ I said, ‘Why not, it’s in your mandate.’ He said, ‘If I did that, within an hour my bosses in Washington would be on the phone and say what the hell do you think you’re doing.’ I said, ‘How would they know?’ He said, ‘The foreign bank would complain to the Central bank, and the Central bank would say, we don’t want our branches overseas to be inspected. Knock it off.’”

Morgenthau couldn’t understand the comptroller’s reluctance. “And then I learned that 95 percent of their budget comes the assessments they do of the banks. So they don’t want to bite the hand that feeds them.

“It’s a very bad system,” he said.

Last year, Morgenthau warned during dramatic testimony before Congress about Iran’s growing banking and intelligence ties to Venezuelan strongman Hugo Chavez, as reported in “U.S. May Face 9/11-Scale Threat from Venezuela.”

“We were monitoring Iran’s purchases and transactions, and came across a relationship to Venezuela. But of course, that wasn’t any secret. Top Iranian people had been to Venezuela; Chavez had been to Iran. You don’t have to be a genius to figure that out. Most of this stuff, you don’t have to be a genius.”

Sometimes, sleuthing the banks can be deceptively simple — so simple, that no one seems to think of it.

“We were looking at the credit cards issued by Caribbean banks and used here in New York. The largest issuer was the Leadenhall Bank in Bahamas. The question was, how did the money get down there? So we did something very sophisticated. We called up Leadenhall and said, ‘How do we get money to you?’”

Leadenhall officials told Morgenthau’s investigators that they used a company named Beacon Hill in New York. “They gave us a phone number and an address. Beacon Hill’s on the upper floor of a building on Third Avenue. They’ve got 40 accounts at the Chase Bank. So in a lot of these things, the investigation is truly simple, but nobody’s doing it,” he said.

Leadenhall had issued thousands of credit and debit cards to Americans who used them to access money socked away in illegal offshore accounts to avoid taxes, Morgenthau alleged. His investigation ultimately forced the bank into liquidation in 2005.

Morgenthau, who turns 91 on July 31, still attends conferences and gives public speeches. After leaving the Manhattan DA’s office, he joined the law firm of Wachtell, Lipton, Rosen & Katz.

I asked him what is next on his agenda.

“I’m keeping an eye on Iran,” he said. “And I’m trying to do something about immigration. I think the way we treat immigrants is a disgrace, both the law itself and the way it’s applied.”

One project is a pro bono effort to go after people he says are taking advantage of illegal immigrants’ fear of getting caught.

“Just before I left, I filed an indictment against a man for taking money from 16 undocumented — illegal — immigrants. All of them were holding good construction jobs. But he wasn’t satisfied with taking their money. He wanted to convict them as well.”

When the laborers complained to Morgenthau’s office that they were being paid unfair wages at their construction job, their boss wrote a letter on behalf of each of them to the immigration service, knowing that it would start deportation procedures.

“I told the immigration people, a lot of these people helped the prosecution, you ought to give them a break. But they said, the law’s the law. Frankly, it’s arbitrary and stupid,” Morgenthau said.

Just before leaving office in December, Morgenthau announced that he was turning over money to New York City and the state that he had received as part of a settlement agreement with Credit Suisse AG for having illegally cleared billions of dollars in banned wire payments on behalf of Iranian, Libyan, and Sudanese accounts.

The $536 million tally is one of the largest asset forfeitures in U.S. history.

As part of the scheme, Morgenthau revealed that the bank had produced a pamphlet titled, "How to transfer USD payments" and told Iranian clients that bank employees would check each message individually to make sure it would avoid detection.

“Now more than ever we need to be tough on Iran to deter and interdict their nuclear and ballistic missile aspirations,” Morgenthau said at the time. “The best way to be tough with Iran is to have tough sanctions. And sanctions only work if they are enforced and people realize there will be a price to pay for helping Iran.”

In all, Morgenthau said his office turned over about $320 million to the city and $255 million to the state in 2009 resulting from fines and penalties. “Not a bad year’s work, especially when tax revenues are down, and local and state agencies are scrambling for funds,” Morgenthau said.

© 2024 Newsmax. All rights reserved.

Robert M. Morgenthau, who retired in December at age 90 as Manhattan district attorney after 39 years in the elected office, is perhaps best known for having shut down the Bank of Credit and Commerce International, the notorious Pakistani institution that critics called the...
Wednesday, 16 June 2010 03:55 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.

Interest-Based Advertising | Do not sell or share my personal information

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
© Newsmax Media, Inc.
All Rights Reserved
Download the NewsmaxTV App
Get the NewsmaxTV App for iOS Get the NewsmaxTV App for Android Scan QR code to get the NewsmaxTV App
America's News Page
© Newsmax Media, Inc.
All Rights Reserved