Foreign Relations of the United States, 1964–1968, Volume XXII, Iran

57. Telegram From the Embassy in Iran to the Department of State¹

Tehran, November 5, 1964, 1 p.m.

515. Deptel 359.² ForMinister spoke to me at some length yesterday about Prince Mahmud Reza’s difficulties with Gudarzian. He said Shah and Prince are incensed about this matter and cannot understand how things could have developed to point that Prince’s account was about to be sequestered, obviously on basis falsified documents since no check given Gudarzian and Prince not in US at time papers allegedly served upon him, and furthermore how this could have been going on without Prince knowing anything about it until very last moment. Aram said did not see how this kind of development could fail have adverse effect on reputation US banks here, since news bound get around. Amb Foroughi had just cabled recommending that Princess Fatimeh withdraw any funds she might have in US banks lest these be put in danger of blocking. (Aram didn’t think she had any deposited in U.S.)

At same time Aram showed me article from New York Daily News of Oct. 29 reporting this whole matter in manner highly unfavorable to Royal Family here, which he said had angered Shah very much. He added both Shah and he convinced that such article would not have appeared, and Gudarzian would not have undertaken this legal action, had USG taken steps to warn Gudarzian of consequences of any further activity against good relations between Iran and US. After it had been so clearly shown that Gudarzian’s assertions to McClellan Committee were nothing but falsehoods, why had USG done nothing to prevent Gudarzian from taking further action based on same falsehoods, or at least to make sure that his moves were ineffective?

How did it happen that bank had so easily disclosed amount of Prince’s account? Shah and Aram were at loss understand how a crook like Gudarzian should be able get away with all this, apparently so easily. He was even reported as having said that some people in State Dept were not displeased that he was embarrassing Iranian Royal Family. All this having very unfortunate effect on Shah, said Aram.

I made usual points that a Chief of State should not permit himself be disturbed by attacks of man like this, since such developments are part of penalties of being in public life; US political and legal system unfortunately offers opportunities for abuse; courts must take cognizance of complaints brought before them and cannot evaluate substance until these heard; I understood steps to deport Gudarzian underway and perhaps he seeking delay deportation by undertaking new legal action; as Aram knew, Dept had offered provide Prince’s lawyer with info concerning Gudarzian’s past record. It was clear from Aram’s reception of all this that it did not impress him and that he did not believe it would impress Shah.

I do not myself understand how Gudarzian was able to get so far with the New York Court, assuming truth of Prince’s statement that he not in US at time papers reportedly served upon him. I would welcome any info Dept can send me which may be helpful in counteracting highly unfavorable impression this matter has created here. Could not Dept take stronger action to warn Iranian troublemakers of this kind against abusing hospitality of US to create trouble for govt with which US maintains friendly relations?³

Rockwell

1. Source: Department of State, Central Files, POL 15–1 IRAN. Confidential.
2. Telegram 359 to Tehran, October 27, instructed the Embassy to inform the Foreign Ministry that Khaibar Gudarzian had obtained a New York court default judgment against Prince Mahmud Reza for an amount in excess of $1 million, based on Gudarzian’s claim that the Prince had given a check for this amount to the World Sport Federation, which was not honored upon presentation. Court records indicated that the Prince had been personally served with papers at Kennedy Airport in New York on August 8, 1963, and had so far presented no defense. Thus, the court was prepared to issue a default judgment against the Prince’s Morgan Guaranty Bank account unless he took some effective legal action without delay. (Ibid.)
3. Telegram 399 to Tehran, November 10, informed the Embassy that the court had granted a continuation of the case until November 20 and that the Department was actively pursuing with the Department of Justice and INS all possible means of moving against Gudarzian and his associates. (Ibid.)