(Adds four banks declining to comment in paragraph 3, adds law
professor in paragraphs 10-11)
By Alison Frankel
NEW YORK Nov 10 Wounded U.S. veterans and
family members of U.S. soldiers killed in Iraq sued five
European banks on Monday, seeking to hold them responsible for
shootings and roadside bombings because they allegedly processed
Iranian money that paid for the attacks.
The lawsuit filed in U.S. District Court in Brooklyn, New
York, named Barclays Plc, Credit Suisse Group AG
, HSBC Holdings Plc, Royal Bank of Scotland
Group Plc and Standard Chartered.
Barclays, Credit Suisse, RBS and Standard Chartered declined
to comment. HSBC did not respond to requests for comment.
The lawsuit was brought under the U.S. Anti-Terrorism Act, a
1992 law that permits victims to bring private suits against
alleged financiers of militant operations.
The lawsuit alleges the banks conspired with Iranian banks
to mask wire transactions in order to evade U.S. sanctions. The
Iranian banks then funneled more than $100 million to militant
groups that operated in Iraq at Iran's direction, according to
The militant groups included a Shi'ite militia in Iraq,
Kataib Hezbollah, as well as Quds Force, the overseas arm of
Iran's Islamic Revolutionary Guard Corps, the suit says.
Since 2009, the five banks have agreed to pay about $3.2
billion to the U.S. government to resolve allegations that they
handled money in violation of sanctions against nations such as
Iran, Libya and Cuba. All the banks signed deferred prosecution
agreements with the U.S. Justice Department in addition to
settlements with U.S. banking regulators.
The agreements did not allege a link between the
transactions, which the U.S. government viewed as unlawful, and
Patrick Farr, a California-based plaintiff whose son Clay
was killed by a roadside bomb in February 2006, said the lawsuit
has given him "a sense that I was able to do something, hold
someone accountable for his death."
The case faces major obstacles, said Jimmy Gurule, a Notre
Dame University law professor. The Anti-Terrorism Act does not
specifically permit conspiracy claims, and federal courts in New
York have previously refused to permit cases to proceed unless
they allege a direct link between banks and militant attacks.
The law also bars claims for wartime injuries. "The law was
not intended to give a private right of action to soldiers in a
military conflict," Gurule said.
UNIQUE USE OF 1992 LAW
The suit is the first case under the Anti-Terrorism Act in
which former U.S. soldiers seek damages against international
banks. It is also one of the first to be crafted as a conspiracy
The lawyers who filed the suit, Gary Osen and Tab Turner,
were part of a team that tried an Anti-Terrorism Act case
against Arab Bank earlier this year in Brooklyn.
Jurors found Arab Bank liable for financing 24 Hamas attacks in
Israel and the Palestinian Territories between 2001 and 2004.
That case linked Arab Bank specifically to wire transfers to
alleged Hamas leaders and payments to Palestinians killed,
injured and imprisoned in the anti-Israel uprising.
The new lawsuit does not assert a direct connection between
the European banks and the allegedly Iran-directed attacks
carried out in Iraq. Instead, the complaint claims that the
banks indirectly facilitated the attacks by entering into
agreements with Iranian banks to mask U.S. dollar wire
transactions sent through the United States.
"Each defendant understood that their conduct was part of a
larger scheme engineered by Iran," Osen said in an interview. At
a minimum, he said, the banks were "deliberately indifferent"
about the transactions they processed for Iran.
Osen said that through press accounts, declassified U.S.
military reports and documents posted by WikiLeaks, he built a
file on attacks on U.S. forces that were traceable to Iran. One
of the boldest attacks took place in January 2007, when
attackers dressed as American soldiers infiltrated a compound in
Kerbala, Iraq, and killed five U.S. military personnel.
Charlotte Freeman, whose husband Brian was one of the
soldiers killed in Kerbala, said she and her mother-in-law
decided to join the case to make a statement. "I never suspected
these big banks would turn a blind eye," she said. "Even if the
case doesn't get that far, at least the story is told. It needs
to be exposed."
(Reporting by Alison Frankel; Editing by David Ingram and Ross