Iran has hanged a man who was sentenced to death for the 2010 killing of a nuclear physicist, state TV reported Tuesday.
Two men originally from Iran - one a naturalised US citizen - have been charged with counts of conspiracy, Attorney General Eric Holder said.
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The plot was "conceived" in Iran by the Quds force, part of Iran's Revolutionary Guard Corps, he added.
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The state department has listed Iran as a "state sponsor" of terror since 1984.
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Mr Holder said the alleged plot was a "flagrant violation of US and international law" that had been "conceived, sponsored and directed by Iran".
'Comedy show'
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Iran's official Islamic Republic News Agency called the charges a "propaganda campaign" by the US government against Tehran.
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The allegations were "a comedy show fabricated by America", Iranian foreign ministry spokesman Ramin Mehmanparast told the semi-official Iranian news agency, Fars.
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The Saudi embassy in Washington DC said the alleged plot was "a despicable violation of international norms, standards and conventions and is not in accord with the principles of humanity".
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The two accused were named as Manssor Arbabsiar, a 56-year-old naturalised US citizen with dual Iranian and US passports, and Gholam Shakuri, based in Iran and said to be a member of Iran's Quds Force.
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Mr Arbabsiar, who was arrested at New York's John F Kennedy airport on 29 September, has confessed to his involvement in the alleged plot, Mr Holder said.
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Mr Shakuri was said to be in Iran.
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US officials said that on 24 May 2011, Mr Arbabsiar made contact with an informant for the US Drug Enforcement Agency, who was posing as a Mexican drug cartel member.
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Over a series of meetings, it is said that details emerged of a conspiracy involving members of the Iranian government paying $1.5m (£960,000) for the assassination of Saudi ambassador Adel al-Jubeir on US soil.
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Justice department officials said the initial envisaged target was the Saudi embassy.
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But in conversations secretly recorded for the US authorities, Mr Arbabsiar also allegedly considered having the ambassador killed at a purported favourite restaurant, despite the possibility of mass casualties.
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The plot would have been carried out with explosives, Mr Holder said. But he added that no explosives were ever put in place and the public was not in danger.
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Mr Holder said Mr Arbabsiar, with approval from Mr Shakuri, wired $100,000 to a US bank account for the informant as a downpayment.
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Mr Arbabsiar and Mr Shakuri have been charged with conspiracy to murder a foreign official, weapons conspiracy, and conspiracy to commit international terrorism charges.
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President Barack Obama is said to have been informed of the alleged plot in June 2011 and was kept up to date with developments.
'Hollywood script'
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White House spokesman Tommy Vietor said: "The disruption of this plot is a significant achievement by our intelligence and law enforcement agencies, and the president is enormously grateful for their exceptional work."
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The treasury department later announced sanctions against five people - including Mr Arbabsiar and Mr Shakuri - whom it linked to the alleged plot.
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FBI Director Robert Mueller told reporters: "Though it reads like the pages of a Hollywood script, the impact would have been very real and many lives would have been lost."
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Secretary of State Hillary Clinton later told a news conference the US would consult with its international partners to send a "very strong message" over the alleged plot.

Mr Arbabsiar appeared briefly at a New York City court on Tuesday. He did not enter a plea and was held without bail.
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He could face a life prison sentence if convicted on all charges, the Department of Justice said.
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Criminal charges were brought in the southern district of New York because the alleged $100,000 downpayment was wired through a bank in the area, officials said.