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For years, victims of terrorism have searched for a way to make countries pay for sponsoring such violence. Yet even after winning court judgments, victims have found collecting from rogue governments to be next to impossible. Now, two victims’ families are taking a novel approach, arguing that they should be handed $5.4 million that the government of Iran won in a California civil suit against a U.S.-based defense contractor. The $5.4 million judgment represents the first U.S. commercial award in Iran’s favor since 1996, when terrorism victims were given the right to sue Iran and other countries that sponsor terrorism. And for the families of the late Alisa Flatow and Cyrus Elahi, it represents a chance to finally collect on some of the $500 million Iran still owes them from court awards. “We’re not likely to get anything out of it unless somehow we can take it out of Iranian assets,” says Thomas Fortune Fay, one of the attorneys for the Flatow family. Next week, U.S. District Judge Rudi Brewster of the Southern District of California will decide whether the Flatow family can proceed with its claim. Each family won cases against Iran in U.S. District Court for the District of Columbia following the deaths of Alisa and Cyrus. But the two families are fighting for the money independently. The Flatow family has collected $26 million in compensatory damages already. In the California case, the family is seeking payment toward the $220 million in unpaid punitive damages Judge Royce Lamberth awarded in 1998. On the other hand, Cyrus Elahi’s brother, Dariush Elahi, has not collected any of the $311 million Senior Judge Joyce Hens Green of the District of Columbia awarded him in 2000. Iranian intelligence operatives gunned Cyrus down outside his Paris apartment in 1990. A French court tried and convicted the gunmen that year. Alisa Flatow, a 20-year-old student, died when an Iranian-sponsored Palestine Islamic Jihad splinter group blew up a Gaza bus in 1995. Her father, Stephen Flatow, has been on the vanguard of plaintiffs’ efforts to collect judgments against sponsors of state terrorism. In fact, the 1997 law that allows plaintiffs to attach state assets is called the Flatow Amendment, and it opened the door for a handful of plaintiffs to be paid. Flatow still has not collected any punitive damages in his suit. In Flatow’s previous attempts to garnish Iranian assets not frozen by the U.S. government, the feds have blocked him. Fay estimates that he and Flatow’s other attorneys have filed garnishments on various nonfrozen assets about 40 times. They have never been successful. In 1998, when Flatow tried to attach three D.C. buildings owned by Iran, lawyers for the Justice, State and Treasury departments objected on the grounds that his move would interfere with U.S. diplomacy needs. When he tried to attach the proceeds of California property owned and then sold by a subsidiary of the Bank Saderat Iran, a nationalized bank, the government objected on the grounds that the assets didn’t belong to the Iranian state. Repeatedly, the U.S. government has argued that Flatow is ineligible to seek punitive damages. “The opposition to compensating victims of terrorism is paid for at taxpayer expense,” Fay complains. The United States has not given its position in the California proceedings. Iran, for its part, has filed a motion to get rid of Flatow’s lien on the judgment. “Mr. Flatow, in particular, is not entitled to this money,” says Mina Almassi, an associate in San Jose, Calif.’s Olimpia, Whelan, Lively & Ryan who represents Iran in the matter. “He’s already gotten $26 million,” she says. Iran’s motion to expunge Flatow’s lien includes portions of a brief the United States filed in his original suit against Iran stating that when Flatow accepted the $26 million, he “relinquished any right to execute against the vast majority of property in which Iran has an interest.” Neither Iran nor the defense contractor, the San Diego-based Cubic Corp., has filed an objection to Elahi’s lien. It’s not that Iran is willing to give its money to Elahi and not Flatow, but that Elahi’s lien is moot if Flatow is successful. Counsel for Cubic did not return three phone calls. “If the judgment in favor of Iran is affirmed, our position is that Cubic should pay us rather than Iran,” says Elahi’s attorney, Jonathan Mook of Alexandria, Va.’s DiMuro, Ginsberg & Mook. The civil suit between Iran and Cubic has its own strange genesis. In 1977, Cubic agreed to sell Iran a training package for its air force, including hardware and software as well as training for personnel. Iran had already made two payments totaling about $13 million when the Islamic Revolution erupted. When the American Embassy in Teheran was taken over in 1979, the United States severed ties with Iran and imposed an immediate trade embargo, meaning Cubic could no longer do business with Iran. Iran and Cubic agreed that Cubic would sell the training program to a third party and Iran would act as the broker. That was the last that Iran heard from Cubic, Almassi says. “Cubic sold [the training program] to Canada. We never saw the equipment or a refund of our deposit,” she says. In 1991, Iran filed for arbitration before the International Chamber of Commerce and, in 1997, the ICC awarded Iran a judgment of $2.8 million, plus interest and costs during the arbitration period. Cubic never paid, leaving Iran in much the same position the terrorism plaintiffs are in: They’ve had their day in court, but without recompense. Iran petitioned the U.S. District Court for the Southern District of California to confirm the ICC award in 1999. “We had to come here because they’re here,” Almassi says of Cubic. Almassi also represented Iran before the ICC. In 1999, U.S. District Judge Rudi Brewster confirmed the award. Cubic appealed to the 9th U.S. Circuit Court of Appeals and posted a $5.4 million bond to cover the judgment plus interest and costs during the appeal. Cubic and Iran are in court-ordered mediation while the appeal is pending.

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