BofA & Wells Fargo Must Turn Over Iranian Funds

     (CN) – Two U.S. banks must turn over $364,500 to benefit terrorist victims trying to collect on a $591 million judgment against Iran, a federal judge ruled.
     Before the judgment holders can collect, however, the court in Washington said it will first consider third-party interpleader claims so that the banks can protect themselves from multiple claims on the same funds.
     “This court is under no illusions that the path ahead will be much easier for victims than it has been in the past,” Chief U.S. District Judge Royce Lamberth wrote.
     He noted that the relatively small assets at stake represent less than one-tenth of 1 percent of the funds to which the plaintiffs are entitled under the Foreign Sovereign Immunities Act (FSIA).
     “This tiny sum is dwarfed by even greater magnitudes when compared to the endless suffering of these victims,” Lamberth wrote.
     Iran owes this group more than half a billion dollars for the 1996 bombing of Khobar Towers, a U.S. Air Force housing complex in Dhahran, Saudi Arabia. Hundreds died in the Hezbollah attack, which Iran had sponsored, and 19 military personnel were killed.
     The current case against Bank of America and Wells Fargo represents the plaintiffs’ second phase of “the often-frustrating and always-arduous path shared by countless victims of state-sponsored terrorism attempting to enforce FSIA judgments,” Lamberth wrote.
     Just over a year ago, Lamberth ordered Sprint Communications to turn over $613,587 from its assets tied to the Telecommunication Infrastructure Company of Iran.
     Like the latest win against the banks, the Sprint attachment order was also bittersweet in light of the relatively small figure at stake and the rigor of litigation.
     “Though providing a workable framework in theory, the past decade of litigation under the act has proved, for victims of state-sponsored terrorism, to be a journey down a never-ending road littered with barriers and often obstructed entirely,” Lamberth wrote.
     The $364,500 judgment against Bank of America and Wells Fargo includes another setback for the plaintiffs, who had been angling for accounts worth more than $717,500.
     Though the banks agreed to turn over eight accounts that hold the proceeds of various Iranian-related transactions, they contested turnover of 11 electronic funds transfer (ETF) accounts containing roughly $353,000.
     All of these funds have been frozen pursuant to regulations from the Office of Frozen Assets Control.
     Citing precedent, however, the court explained that an EFT is just “an instruction to transfer funds from one account to another.”
     In this case, since the originator and the beneficiary had accounts in different banks in different wire transfer consortia, the banks used Bank of America and Wells Fargo as intermediaries.
     U.S. blocking regulations ultimately kept the Iranian banks from ever obtaining legal title to these EFT accounts, and they never accepted the intermediary banks’ payment orders.
     “Plaintiffs here are creditors of the beneficiary’s bank,” Lamberth wrote. “Therefore, the issue is whether a creditor of a beneficiary’s bank may attach a midstream ETF held at an intermediary bank. Clearly, a creditor may do no such thing.” (Emphasis in original.)
     About a week before Lamberth’s ruling, the judgment holders filed yet another petition for turnover against MasterCard.

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