Trump administration favors terror victims over Boeing Iran deal

Judge Castillo’s ruling

opens up a legal mine field for Boeing, and for any other U.S. corporation seeking to do business with the Islamic regime in Iran.

The Trump administration pointedly put national security over trade when it told an Illinois District Court this week that it “does not take a position” on whether the Court should shield aerospace giant Boeing Corp from a lawsuit filed by victims of Iranian state terrorism.

As I wrote at Frontpagemag today:

The family of Shlomo Leibovitch is seeking to collect on a $67 million judgment against Iran for a 2003 terror attack that killed their seven-year old daughter, and sued Boeing to gain access to what it believed were Iranian assets in Boeing’s possession.

Boeing signed a $16 billion deal in 2016 to sell civilian airliners to the state-owned Iran Air, a defendant in numerous lawsuits by victims of Iranian state-sponsored terrorism. In any airplane deal of that size, the purchaser will make advance payments while the aircraft are being produced.

It was those payments the Leibovitch family was seeking to attach and that Boeing was seeking to conceal.

Chief Judge Ruben Castillo ruled on Tuesday that Boeing must produce the contractual documents to the terror victims, to include financial documents relating to advance payments as well as Boeing’s communications with the Treasury Department Office of Foreign Assets Control, which licensed the sale during the final weeks of the Obama administration.

Judge Castillo’s ruling is worth reading in full.

When Boeing argued that disclosure of its contract with Iran would “risk destabilizing the purpose of the JCPOA to provide for regional and international peace and security” – a dubious claim at best – Judge Castillo decided to ask the U.S. government for its opinion.

In response, the Justice Department filed a statement of interest, noting that its opinion represented that of the entire Executive Branch.

DoJ said that “the United States does not take a position on whether the Court should order the requested discovery.”

That in itself was a slap in the face to Boeing, and arguably a master step by the Trump White House, since it effectively puts the kibosh on the Boeing Iran deal without explicitly banning it.

Boeing cannot sell aircraft if the deposits its clients make during production are attached by victims of terrorism in the courts.

In his ruling, Judge Castillo examined Boeing’s arguments and found them wanting.

Boeing first argues that Plaintiffs’ motion to compel should be denied because “enforcing Plaintiffs’ [discovery] requests would require the Court to resolve nonjusticiable political questions. (p8)

… [T]he Court agrees with Plaintiffs that Boeing’s reliance on the political question doctrine in misplaced. This Court is being called to decide a discovery dispute, plain and simple. Although the discover sought certainly has “political overtones,” Japan Whaling Ass’n, 478 U.S. at 230, the Court is not deciding any issue at this juncture that is committed to some other branch of the government or for which there are no judicially manageable standards for resolving. [p10-11]

Boeing next argues that the Court should “abstain” from deciding the discovery motion under principles of international comity. But as Judge Castillo points out,

Boeing’s argument on this point is somewhat unclear, but as best as can be discerned, Boeing believes that adjudicating this discovery dispute will “frustrate the purpose” of the Iran Nuclear Deal and offend the other sovereign-nation signatories to the agreement by potentially hindering the airplane deal. [p13]

Judge Castillo finds that argument wanting as well.

In resolving this dispute, the Court will be applying well-settled American law governing discovery disputes, not the law of some other nation. [p14]

Boeing then argues that the discovery requests are “irrelevant” to [Plaintiff’s] efforts to satisfy their judgment” because at present it is unclear if the contract will result in any Iranian assets being located in the United States where they could be attached.

At bottom, Boeing’s argument appears to be that, because it will be difficult or impossible for Plaintiffs to actually collect any money as a result of these discovery requests, the Court should simply deny them as futile.

Boeing misunderstands the nature of this proceeding… Plaintiffs are not actually attaching any assets at present; they are only seeking to discover information about potential assets of Iran that may be attachable. [p16-17]

Going back to my FrontPagemag column from today, Judge Castillo’s ruling

opens up a legal mine field for Boeing, and for any other U.S. corporation seeking to do business with the Islamic regime in Iran.

U.S. courts have awarded victims of Iranian state terrorism 99 separate judgments worth more than $53 billion, nearly half of which are compensatory damages that can be collected against Iranian assets held outside the United States.

…With the Boeing sale now potentially in jeopardy, other corporations are sure to wonder if they, too, could be made to pay the price for the terrorist actions of the Iranian regime.

March 2, 2018

Supreme Court Awards Huge Victory to Iran Terror Victims

In a 6-2 decision released today, authored by Justice Ruth Bader Ginsburg, the U.S. Supreme Court affirmed lower court rulings that awarded nearly $2 billion in frozen Iranian government assets to victims of terrorism.

The money, frozen in 2008 in New York accounts controlled by Clearstream Banking S.A. of Luxembourg, ultimately belonged to Bank Markazi Iran, the Central Bank of Iran.

The chain of ownership was somewhat complicated.

As part of its foreign currency reserves, Bank Markazi held $1.75 billion in security entitlements in foreign government and supranational bonds at Banca UBAE S.p.A., an Italian bank. App., infra, 2a; C.A. App. 1329-1332, 1779. UBAE, in turn, held corresponding security entitlements in an account with another intermediary, Clearstream Banking, S.A., in Luxembourg. App., infra, 2a,57a-59a. Clearstream then held corresponding security entitlements in an omnibus account at Citibank, N.A., in New York. Id. at 2a.

At issue at the Supreme Court was not this chain of ownership, which the lower courts affirmed, but simply whether Congress had overstepped its bounds in singling out the case in a provision of the Iran Threat Reduction and Syria Human Rights Act of 2012, 22 U.S.C. §8772 intended to facilitate the collection of these assets on behalf of the 16 groups of terror victim plaintiffs.

In her Opinion, Justice Ginsberg found that Section 8772 was not a “one-case-only regime,” that applied to just one case and just one asset.

Rather, it covers a category of postjudgment execution claims filed by numerous plaintiffs who, in multiple civil actions, obtained evidence-based judgments against Iran together amounting to billions of dollars. Section 8772 subjects the designated assets to execution “to satisfy any judgment” against Iran for damages caused by specified acts of terrorism. §8772(a)(1) (emphasis added).

In this potentially far-reaching opinion, the Court today affirmed the authority of Congress and the President to exercise “control over claims against foreign governments, as well as foreign-government-owned property in the United States.”


American terror victims to collect $9.4 million from Iran

In a landmark victory after years of litigation, U.S. victims of Iranian state-sponsored terror attacks have won the right to collect $9.4 million from a long-frozen asset in California belonging to the Iranian regime.

The case, known as Ministry of Defense v. Frym, involves several groups of plaintiffs, including the daughter of former Iranian Prime Minister Shahpour Bakhtiar, who was murdered by an Iranian hit team in his residence in France in 1991, and the Rubin plaintiffs, who sued Iran following a 1997 suicide bombing in Jerusalem.

Adam Kredo of the Free Beacon commented:

The case is also being viewed as a potential shot at Obama administration efforts to rebuild diplomatic ties with Tehran. The administration has given Iran more than $150 billion in economic sanctions relief despite efforts by U.S. lawmakers to block the release until Iran pays U.S. victims of terrorism.

The $9.4 million stems from a pre-revolution contract between the Iranian Defense Ministry and Cubic Systems in California. I first identified the Cubic Systems contract on behalf of another group of plaintiffs in 1997, but they and other subsequent claimants lost their turnover cases on appeal.

Since those cases, the federal laws governing foreign sovereign immunity and the ability of terror victims to sue state sponsors of terrorism have been strengthened significantly in favor of the victims.

Last week’s decision by the Ninth Circuit found that:

the Algiers Accords, by which the United States and Iran resolved the Iranian Hostage Crisis, did not prevent the lien claimants from attaching the Cubic Judgment.

The Free Beacon has posted the full decision here.

Party-line Vote on Justice for Victims of Iranian Terrorism Act

The House split along party lines on Thursday to pass HR 3457, the Justice for Victims of Iranian Terrorism Act, with just 10 Democrats joining 241 Republicans and five members from each party not voting.

For Republican Ed Royce, chairman of the Foreign Affairs committee who managed the floor debate, Congress has

“ a moral obligation to ensure that these judgments, for these victims, which represent Iran’s legal debt, the victims of its official policy of terrorism, are paid. There have been 90 such attacks on Americans.”

New York Democrat Eliot Engel, the ranking member of the House Foreign Affairs committee, regretted the partisan nature of the bill, which he and others saw as an effort to revote on the Iran nuclear agreement.

“I don’t want the dispute on Iran to turn into the Affordable Healthcare Act, where we try to kill it 60 different ways.  We should not be using this for political purposes.

“We should be passing legislation which I know we can get out of the Foreign Affairs Committee in a collaborative way that would really do something to help these victims.  That would really do something to hold Iran accountable for all its reprehensible acts,” Engel said on the floor today.

Several members cited family members of victims of Iranian terror attacks they had met with recently, including the widow of Chief Warrant officer Kenneth Welch, who died during a truck-bomb attack on the U.S. embassy annex in Beirut on Sept. 20, 1984; former U.S. Navy Seal Ken Stethem, brother of U.S. Navy diver Robbie Stethem, who was murdered on board TWA 847 in Beirut by Imad Mugniyeh in 1985, and Anne Dammarell, a U.S. AID worker who was injured during the bombing on the U.S. Embassy in Beirut on April 18, 1983.

(I happened to be one of the first foreign reporters on scene to witness the immediate aftermath of the 1983 bombing, and wrote several stories on it at the time for USA Today.)

In response to criticism from Democrats that Iran doesn’t have $45 billion in cash to pay the terror claims, the bill’s sponsor, Pennsylvania Republican Pat Meehan, reminded Members that Iran had just found $21 billion to buy new fighter jets from Russia.

 “$21 billion for Russian jets but not a penny for victims of their own terror… The President can negotiate an installment plan.”

The Senate will now take up a companion bill, S.2086, sponsored by Republican Senator Pat Toomey of Pennsylvania. The White House has maintained its threat to veto the legislation.


Congress to vote on Justice for Victims of Iranian Terrorism bill

The House is expected to vote tomorrow, Oct. 1, on a bill that would require the Islamic Republic of Iran to pay an estimated $43 billion to victims of terrorism before the U.S. government would unfreeze Iranian government assets under the Joint Comprehensive Plan of Action (JCPOA), otherwise known as the Iran nuclear deal.

The bill, the Justice for Victims of Iranian Terrorism Act, was incorporated into the National Defense authorization Act for 2016.

In presenting the bill on the floor of the House, Pennsylvania Republican Patrick Meehan released a video highlighting U.S. Navy diver Robbie Stethem and other Iranian victims.

“We’re putting our victims to the side if we enable these dollars to be returned to Iran without any attachment to them,” Meehan said.

“Look, these are Marines who died protecting our barracks, these are American citizens who were sitting in cafes in Israel, these are people who were hijacked in planes and murdered in cold blood after being tortured. It’s some small measure of accountability that [Iran] should be required to pay [these families] before the very money we now have some influence over is returned.”

Meehan has proposed the Twitter hashtag #NotOneCent for his effort.

Senators Pat Toomey (R, Pa) andMark Kirk (R, Ill) introduced companion legislation in the Senate today, S2086.

“Families of Americans killed by Iranian-backed terrorism have used U.S. laws to take Iran to court and lawfully win approximately $43.5 billion in unsatisfied damages, so if the United States fails to ensure Iran fully pays these judgments before Iranian terror financiers get over $100 billion in sanctions relief, we risk emboldening Iran and other state sponsors of terror to continue targeting and killing more Americans,” Kirk said.

Complete text of the Meehan bill, H.R. 3457, is here.

The Office of Management and Budget today issued a statement that it “strongly opposes” making Iran pay the terrorism claims, arguing that “obstructing implementation of the JCPOA would greatly undermine our national security interests.

President Obama will veto the bill if it makes it through to his desk, the OMB promised.

What will the Iran deal mean for judgment creditors?

At first blush, there’s nothing in the Iran deal that specifically relates to the scores of judgments against the Islamic Republic of Iran for its terrorist actions. Nor were there any leaks during the negotiation process that this was a subject of discussion.

However, after taking a deeper dive into the text of the agreement, a few troubling hints emerge.

First is the inclusion of Assa Corp and Assa Corp Ltd in Attachment 3, the list of individuals and entities scheduled for immediate sanction relief on “Implementation Day” (roughly 2-6 months from now).

Graph 7 on page 70 makes clear that the immediate sanctions relief offered these entities includes

 “unblocking of property and interests in property within U.S. jurisdiction for individuals set out in Attachment 3 of this Annex.”

Does that mean the 40% share in the 650 Fifth Avenue property owned by Assa Corp beneficially for Bank Melli, and currently the subject of federal foreiture proceedings, will be unblocked and released to Assa Corp and transferred back to Iran? If the law is any measure, probably not. But as Secretary Kerry pointed out in presenting this agreement, we are entering a world of new policies.

For example, in several places the agreement commits the United States government to intervening not only with Congress to repeal a broad array of sanctions laws, but also with state and local governments that have passed divestment laws.

Graph 25 of the main agreement states unequivocally:

 If a law at the state or local level in the United States is preventing the implementation of the sanctions lifting as specified in this JCPOA, the United States will take appropriate steps, taking into account all available authorities, with a view to achieving such implementation. The United States will actively encourage officials at the state or local level to take into account the changes in the U.S. policy reflected in the lifting of sanctions under this JCPOA and to refrain from actions inconsistent with this change in policy.

The agreement calls for the normalization of trade and economic relations with Iran, and spells out in great detail how and when specific sanctions will be lifted and specific laws mooted through presidential waivers pending legislative repeal.

Here’s where it gets tricky. In §29, the parties commit to:

refrain from any policy specifically intended to directly and adversely affect the normalisation of trade and economic relations with Iran…

Will Iran make a case, as allowed under the JCPOA, that monetary judgments against it under the Foreign Sovereign Immunity Act and/or TRIA “adversely affect the normalization of trade and economic relations?” If so, the agreement gives them the possibility of convening the Joint Commission, where Iran sits along with Russia and China, to seek to impose their will on the United States.

This could spell big potential trouble for judgment creditors.

Congress set to compensate victims of Iranian state terror

The Senate Foreign Relations Committee is finalizing legislation that would compensate U.S. diplomats taken hostage in 1979 and their families, using money paid in fines and forfeiture to the US government from businesses that have violated U.S. sanctions on Iran.

“This is a major breakthrough,” attorney Tom Lankford says of a proposal that has been carefully negotiated with the U.S. State Department. “We’ve got many people who are elderly and ailing and very, very ill, and we’re hopeful something is done very, very promptly.”

Under the agreement, surviving hostages would receive about $3 million each, and their spouses $600,000, under a deal brokered with the State Department by Georgia Republican Senator Johnny Isakson and Maryland Democrat Senator Ben Cardin.

The U.S. diplomats taken hostage by revolutionary “students” loyal to Ayatollah Khomeini have faced a legal barrier that has prevented them from getting a judgment against the Iranian regime in U.S. courts.

The U.S. agreement with Iran that led to the captives’ 1981 release, known as the Algiers Accords, prohibits the former hostages from seeking damages from Iran. Against that backdrop, they have lost their court battles, as administrations under different presidents have stood by the terms of that agreement.

The Department of Justice announced last month that it would set aside a portion of the $15.5 billion in sanctions violation fines, penalties and forfeited assets paid by banks, to compensate individuals who have been “harmed” by the actions of Iran, Sudan, and Cuba. These three are the last remaining state sponsors of international terrorism.

In information released in May, DoJ said their first priority would be to compensate individuals “harmed” by the state sponsors between 2004-2012, roughly the period of the sanctions violations committed by the banks assessed with the largest penalties.

But they held the door open to victims of state actions that occurred before or after those years. Last week’s bipartisan agreement at the Senate Foreign Relations committee appears to be aimed at pushing the DoJ to open the window wider.

Will U.S. use BNP Paribas settlement to compensate terror victims?

That’s the key question that came out of Friday’s court hearing in New York, where BNP Paribas was formally sentenced to forfeit $8.9 billion to the feds.

The U.S. government announced a system Friday to compensate people harmed by Sudan, Iran and Cuba using some of the $8.9 billion forfeited by France’s largest bank for violating U.S. economic sanctions by processing transactions for clients in blacklisted countries.

Assistant U.S. Attorney Andrew Goldstein revealed the plan after U.S. District Judge Lorna G. Schofield formally sentenced BNP Paribas consistent with the bank’s guilty plea last year. She said the bank must turn over the forfeiture and pay a $140 million fine. It also pleaded guilty to state charges.

Source: US seeks to compensate victims of Sudan, Iran and Cuba – The Washington Post

But any of the money actually reach terror victims?

Maybe not.

From the same article:

New York Mayor Bill de Blasio noted in a release that $448 million of the BNP forfeiture will go to the Manhattan district attorney’s office and $447 million to the city, some of which will be used to equip all police officers with smartphones.

And for more than a dozen victims of the 1998 U.S. embassy bombings in Africa who showed up in court, the announcement that the feds wanted them to file a claim on the funds at was a let down.

“Total disappointment,” said Marina Kirima, a Seattle resident who worked at the embassy in Kenya when it was bombed. “It’s like starting all over again.”

Justice for Victims of Terrorism

This is the new blog of the Fleming Timmerman Law Group, pllc. We are located in Washington, DC and have been working to help victims of Iranian regime state-sponsored terrorism for the past 18 years.Tim and Ken

Ken Timmerman began working to identify Islamic regime assets on behalf of victims of terrorism in 1997. Tim Fleming joined a consortium of lawyers representing victims of the 9/11 attacks in 2003.

In the picture above, Ken is on the right and Tim is on the left. That’s how we are in real life, as well – a political odd-couple in the fight for justice on behalf of the victims of the Islamic Republic of Iran.