Last week, federal prosecutors won what is considered to be largest civil forfeiture in history against companies with ties to the Iranian government. But the real winners in the case may end up being the victims of Iran-sponsored terror plots who have won judgments against the country.

Stroock & Stroock & Lavan partner James Bernard led a team representing a group of judgment creditors that Southern District of New York Judge Katherine Forrest said last week are entitled to more than $1 billion in assets from two entities that are controlled by the Iranian government.

“We are very pleased to have brought our clients one step closer to obtaining the recovery to which they are entitled,” Bernard said. “This is a landmark ruling.”

The team from Stroock also included counsel Curtis Mechling; associates Patrick Petrocelli and Pamela Takefman; and former associates Nate Stopper, Ben Weathers-Lowin, Monica Hanna, Jeremy Rosof and Judy Goodwin.

Stroock represented four of 11 groups of creditors who have obtained favorable rulings from district courts around the country for losses suffered in Iran-backed attacks including the 1983 bombing of a Marines barracks in Beirut, the 1996 bombing of the Khobar Towers in Saudi Arabia and numerous attacks in Israel.

In addition to ensuring that the various groups of judgment creditors were organized and on the same page in terms of new developments in the case, the Stroock team also had to fend off a formidable defense from attorneys from Debevoise & Plimpton and Patterson Belknap Webb & Tyler.

“Addressing the various arguments was, candidly, also very challenging,” Bernard said.

Forrest found that the creditors are entitled to attachment and turnover of properties held by the Alavi Foundation, a charity formed by the last shah of Iran. Following the 1979 revolution that resulted in the overthrow of the shah, Alavi came under control of Iran's new theocratic government.

The centerpiece of Alavi's property holdings is the 36-story building at 650 Fifth Ave. in Manhattan, which was built in the 1970s and is valued at more than $500 million. Construction was financed by a $42 million loan from Bank Melli, which is owned and controlled by the Iranian government.

In 1995, the U.S. enacted tough sanctions against Iran that included an embargo on all trade and investment with the country. The government began seeking forfeiture of 650 Fifth in 2008. Alavi's other holdings include the Razi School in Woodside, Queens, as well as properties in Houston; Carmichael, California; Catharpin, Virginia; and Rockville, Maryland.

In two orders handed down in 2013 and 2014 granting summary judgment for the government and the creditors, Forrest said that Alavi and the Assa Corp., a partner entity with an ownership stake in the building, were fronts for Bank Melli, and thus fronts for the Iranian government.

Last year, the U.S. Court of Appeals for the Second Circuit reversed Forrest as to Alavi, saying the record was not as clear on Alavi's ties to the Iranian government.

The case went back to Forrest, and a bench trial for the judgment creditors was held simultaneously with the jury trial for the government's civil forfeiture bid. The combined trials lasted about five weeks.

While the government was charged with proving that money was laundered on Iran's behalf, the judgment creditors had to show that the entities were agents or “alter egos” of Iran.

Finding for both the government and the creditors on June 29, Forrest called Alavi a “useful concealment device” for the Iranian government.

Typically the spoils collected by the government would be routed to a general government fund, but Bernard and his team managed to work out an agreement under which any recovered assets are given directly to the creditors.

While the Stroock team and their clients can chalk up a win, it doesn't appear that the battle will be over any time soon. Alavi still has some fight left in it and, even if the creditors win on appeal, they would still need to await the sale of the properties to collect on their judgments.

John Gleeson, a partner at Debevoise & Plimpton, said on Thursday that his clients plan to file notices of appeal after judgments in the case have been entered.

“We will just take what comes next one step at a time,” Bernard said.

Last week, federal prosecutors won what is considered to be largest civil forfeiture in history against companies with ties to the Iranian government. But the real winners in the case may end up being the victims of Iran-sponsored terror plots who have won judgments against the country.

Stroock & Stroock & Lavan partner James Bernard led a team representing a group of judgment creditors that Southern District of New York Judge Katherine Forrest said last week are entitled to more than $1 billion in assets from two entities that are controlled by the Iranian government.

“We are very pleased to have brought our clients one step closer to obtaining the recovery to which they are entitled,” Bernard said. “This is a landmark ruling.”

The team from Stroock also included counsel Curtis Mechling; associates Patrick Petrocelli and Pamela Takefman; and former associates Nate Stopper, Ben Weathers-Lowin, Monica Hanna, Jeremy Rosof and Judy Goodwin.

Stroock represented four of 11 groups of creditors who have obtained favorable rulings from district courts around the country for losses suffered in Iran-backed attacks including the 1983 bombing of a Marines barracks in Beirut, the 1996 bombing of the Khobar Towers in Saudi Arabia and numerous attacks in Israel.

In addition to ensuring that the various groups of judgment creditors were organized and on the same page in terms of new developments in the case, the Stroock team also had to fend off a formidable defense from attorneys from Debevoise & Plimpton and Patterson Belknap Webb & Tyler.

“Addressing the various arguments was, candidly, also very challenging,” Bernard said.

Forrest found that the creditors are entitled to attachment and turnover of properties held by the Alavi Foundation, a charity formed by the last shah of Iran. Following the 1979 revolution that resulted in the overthrow of the shah, Alavi came under control of Iran's new theocratic government.

The centerpiece of Alavi's property holdings is the 36-story building at 650 Fifth Ave. in Manhattan, which was built in the 1970s and is valued at more than $500 million. Construction was financed by a $42 million loan from Bank Melli, which is owned and controlled by the Iranian government.

In 1995, the U.S. enacted tough sanctions against Iran that included an embargo on all trade and investment with the country. The government began seeking forfeiture of 650 Fifth in 2008. Alavi's other holdings include the Razi School in Woodside, Queens, as well as properties in Houston; Carmichael, California; Catharpin, Virginia; and Rockville, Maryland.

In two orders handed down in 2013 and 2014 granting summary judgment for the government and the creditors, Forrest said that Alavi and the Assa Corp., a partner entity with an ownership stake in the building, were fronts for Bank Melli, and thus fronts for the Iranian government.

Last year, the U.S. Court of Appeals for the Second Circuit reversed Forrest as to Alavi, saying the record was not as clear on Alavi's ties to the Iranian government.