Federal prosecutors in Anchorage issued a final order of forfeiture totaling more than $8 million in cash, real estate and vehicles in a civil case tied to former local businessman Kenneth Zong, who stood accused of laundering money for the Iranian government.
The decree of forfeiture filed July 21 ends the government's case filed against Zong and his family about two years ago.
Most of the property belonged to Zong's children, prosecutors said. Through lengthy negotiations, the Zongs were able to keep some items and cash, but the majority of property allegedly tied to Iran will be handed over, according to the decree.
The lawsuit asserted Zong violated the International Emergency Economic Powers Act, which authorizes sanctions against foreign countries the government deems a threat, like Iran. Court documents say he created "numerous and fictitious shell companies" in South Korea and worked with Iranian contacts to transfer $1 billion from the government of Iran to businesses worldwide after converting the funds to U.S. dollars.
Family homes and condos in Anchorage were allegedly purchased with $10 million Zong received as compensation for helping the Iranians funnel the cash. He laundered the proceeds with the help of family back in America, according to a federal affidavit prepared by U.S. Treasury Department.
"This whole case was predicated upon the fact that approximately $1 billion of Iranian funds … were deposited into Korean banks, and $10 million of that ended up in the hands of the children of Kenneth Zong," said Assistant U.S. Attorney Jim Barkeley.
Prosecutors have not charged Zong or his family since filing suit back in April 2014. Zong was convicted in Korea a year before for breaking that country's foreign exchange and customs laws by filing false import and export documents.
The U.S. Attorney's Office in Anchorage says Zong is likely in South Korea. It is unknown if he is incarcerated there. Zong was represented in the civil forfeiture case by Robert Mahler, a defense lawyer based in Seattle.
Family members and banks that had a stake in property the government seized responded to the case either formally or informally, entering into negotiations with the government, Barkeley explained.
"Everyone agreed as a matter of practical fact not to make us go through more and more litigation to get the final decree of forfeiture," he said.
In addition to the forfeiture of two homes here and another in Eugene, Oregon, the government now owns 23 condominiums previously managed by Mitchell Zong, one of Kenneth's sons, through MLS Gulf Trading One Inc. That company is one of at least four the Zongs used to shuffle money among accounts in the United States and Korea, according to federal court documents.
Gulf Trading One originally bought the condos and a residence in Eagle River for $4.2 million, the federal documents say.
During the past two years, a government contractor has managed the condos in lieu of Mitchell Zong. Despite the new landlord, nothing changed for the tenants, officials said. The properties were kept in shape, and rent was collected and forwarded to the Treasury Department to be kept in a fund until the case ended, said Ryan Thompson, a special agent with the IRS.
Federal authorities will auction off one to three condos at a time, Thompson said.
But the process of selling all of the forfeited property may take extra time.
"It may take months or a year to liquidate the real property," Barkeley said. "It hasn't been disposed of yet, so that's why there is this feeling of it isn't over until it's over."
A Subaru, a Porsche, a Toyota pickup, a Mercedes-Benz and a Yamaha motorcycle were sold off last year to retain value. Funds taken from multiple bank accounts tied to the case range from as little as $8,300 to $1.3 million, according to the decree.
Prosecutors have said they can't comment on whether there was a criminal investigation and potential criminal charges.