The United States is set to seize control of a midtown Manhattan skyscraper prosecutors claim is secretly owned by Iran, the US justice department said, though the ruling is to be appealed.

The seizure and sale of the 36-storey building, in the heart of New York City on Fifth Avenue, would be "the largest-ever terrorism-related forfeiture," the statement added.

A federal judge ruled in favour of the government's legal case this week, saying The Piaget Building's owners had violated Iran sanctions and money laundering laws.

Manhattan Federal Prosecutor Preet Bharara said the decision upheld the justice department claims that the owner of the building "was (and is) a front for Bank Melli, and thus a front for the Government of Iran".

Bharara said the funds from selling the building would provide "a means of compensating victims of Iranian-sponsored terrorism".

Prosecutors allege that the building's owners, the Alavi Foundation and Assa Corporation, transferred rental income and other funds to Iran's state-owned Bank Melli.

Alavi also ran a charitable organisation for Iran and managed the building for the Iranian government, the statement said.

Built in the 1970s by a non-profit organisation operated by the Shah of Iran - and financed with a Bank Melli loan - the building was expropriated by the new Iranian government after the 1979 revolution, prosecutors allege.

The US Treasury Department has instituted tight sanctions against Iran, blacklisting a number of Iranian companies and organisations and putting very tight controls on the ability of any group or business to transfer funds into Iran.

The restrictions seek to pressure Tehran into giving up what the West says is a programme to develop nuclear weapons.

Source: AFP