By EVAN PEREZ

WASHINGTON -- The U.S. government is attempting to seize a piece of a storied Manhattan skyscraper, alleging it is owned by a front for the Iranian government.

In documents filed Wednesday in U.S. District Court in New York's Southern District, federal prosecutors said the building at 650 Fifth Ave., long known as the Piaget building, is 40% owned by a company that funnels money to Iranian state-owned Bank Melli. The bank is subject to Treasury Department sanctions for allegedly financing Iran's nuclear proliferation efforts.

The building, in a prime commercial section of midtown Manhattan just north of Rockefeller Center, was built in the late 1970s by a foundation set up by the former Shah Reza Pahlavi of Iran.

The Alavi Foundation, as it is now called, has been the subject of U.S.-Iranian tussles in the past, as some U.S. officials have tried to tie the foundation and its U.S. properties to the Islamic government that ousted the shah. The foundation continues to own 60% of the Fifth Avenue building.

Investigators from the Federal Bureau of Investigation and Internal Revenue Service allege that Bank Melli's interest in the building was disguised behind a company called Assa Corp. and associated entities incorporated in the offshore banking center of the Channel Islands.

Government documents filed in court cite emails and bank-account data to support the government's seizure of millions of dollars held in Assa accounts in U.S. banks. The government seized the money in a separate October proceeding.

Separately, the Bush administration added Assa and several affiliates to a Treasury Department sanctions list aimed at freezing assets of those implicated in proliferation of weapons of mass destruction.

"This scheme to use a front company set up by Bank Melli -- a known proliferator -- to funnel money from the United States to Iran is yet another example of Iran's duplicity," said Stuart Levey, undersecretary for terrorism and financial intelligence.

An attorney for the Alavi Foundation said the U.S. action doesn't affect the organization, which describes its mission as promoting Islamic culture and Persian language.

In response to accusations that Alavi is tied to the Iranian government, John Winter, the Alavi Foundation's attorney, said: "Every judge that has looked at this question, have concluded that those claims are without foundation or any merit."

Write to Evan Perez at evan.perez@wsj.com

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