Can U.S. Lawyers Make Iran Pay for 1983 Bombing?
With a temporary freeze in place, Vogel flew to Rome, where he convinced a judge to compel UBAE to turn over documents providing details on how the Iranian assets had flowed into and remained in New York. In late 2011, other claimants began to assert rival claims on the account, including those holding judgments against Iran related to kidnappings during Lebanon’s Civil War; the assassination of Rabbi Meir Kahane in New York by Islamists; the deaths of Americans in Hamas bombings in Israel; and the Khobar Towers bombing. In a court appearance, Bank Markazi finally conceded that it owned the account; via its lawyers at Chaffetz Lindsay, it asserted that it was immune because FSIA exempted central bank funds from seizure.
But that immunity was undermined in February 2012, when President Barack Obama ordered a block on all Iranian government assets, including those held by the central bank, which hadn’t previously been designated for sanctions. Under the Terrorism Risk Insurance Act, the Citi account could now be used to satisfy terror-related judgments. “It really took away all the fact issues that Clearstream had been presenting for three years,” Vogel says.
Vogel filed for summary judgment in April 2012. Two months later, the claimants—now including the new groups as well as the original Peterson plaintiffs—presented the judge with an agreement to share the proceeds. “We wanted to show the judge that we were playing nice in the sandbox,” says Vogel. That, in turn, boosted efforts to get additional help on Capitol Hill. A Peterson lobbyist, working with DLA Piper’s government relations team on behalf of the Khobar victims, pressed lawmakers to add a provision to a new Iran sanctions bill. Drafted by Vogel and passed in August 2012, it named the Citi assets as funds available to terror claimants holding judgments, preempting Uniform Commercial Code provisions that insulate indirectly held assets from judgment creditors.
In a decision unsealed in March, U.S. District Judge Katherine Forrest ruled that the court had jurisdiction over both UBAE and Clearstream, and that assets could be used to satisfy the judgment under FSIA, TRIA, and the new Iran sanctions law. On July 9 she ordered Citi to turn over the cash to a trust.
On September 9, Clearstream announced a settlement with the Peterson claimants. Iran and UBAE have appealed. The appeals delay yet again a recovery for surviving family members of the 1983 victims, 166 of whom have died since the filing.
Meanwhile, at press time there was good news for Iran claimants in another turnover action spearheaded by Stroock & Stroock & Lavan’s James Bernard, who represents the family of Kahane and others. In September, a federal district judge ruled on summary judgment that the U.S. government could seize a Manhattan office tower that prosecutors claim is partly owned by another Iranian bank via a shell company. The claimants, including many of the same groups as in Peterson, plan to ask the judge to rule on their summary judgment motion seeking a turnover of the building under FSIA and TRIA.