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Family members of a man killed in a Jerusalem bus bombing cannot satisfy part of their $183 million judgment against the Islamic Republic of Iran by pursuing the assets of three Iranian banks held in accounts at the Bank of New York, a federal judge has ruled. Eastern District Judge Leonard D. Wexler determined that money in the accounts was not subject to attachment as a “blocked asset” under the Terrorism Risk Insurance Act (TRIA). The law, enacted in 2002, generally allows those who have a judgment arising from an act of terrorism to attach the assets of the responsible terrorist party. Wexler’s decision in Bank of New York v. Weinstein, Misc. 02-237, means that the wife of Ira Weinstein, killed in 1996 along with 23 others from a bombing orchestrated by the militant group Hamas, are not entitled to the $229,000 held in three accounts at the Bank of New York. Weinstein, who died in an Israeli hospital about seven weeks after the blast, suffered two amputated legs and fourth-degree burns over 40 percent of his body. The ruling stems from a petition filed in the Eastern District by the Bank of New York, which sought a determination of the Iranian banks’ rights and those of the plaintiffs. The U.S. Department of Justice filed its own statement of interest in the matter, which included declarations from the Office of Foreign Assets Control of the U.S. Treasury Department. Those declarations asserted that the assets in the accounts were not subject to attachment under TRIA. The individual Iranian banks with Bank of New York accounts are Bank Melli, Bank Saderat and Bank Sepah. Stock in all of the banks, which have thousands of branches in Iran, are owned by the Iranian government. Wexler’s decision is the result of a wrongful-death judgment the plaintiffs received in 2002, which totaled $33.2 million in compensatory damages and $150 million in punitive damages. Weinstein’s wife, Susan Weinstein, filed the lawsuit under the Foreign Sovereign Immunities Act in the U.S. District Court for the District of Columbia against the Islamic Republic of Iran, the Iranian Ministry of Information and three senior Iranian defendants. The Washington, D.C., court determined in Weinstein v. Islamic Republic of Iran, 184 F.Supp.2d 13, that the defendants had provided tens of millions of dollars to Hamas to carry out terrorist acts and had trained Hamas terrorists in bomb-making and other tactics. EVOLVING REGULATIONS The 27-page Eastern District decision signed last month analyzed the evolving federal regulations, beginning with the Carter administration, related to sanctions and restrictions against countries supporting terrorist activities. The judge also considered a proposed amendment to TRIA, passed by the Senate in July, which seeks to clarify the definition of blocked assets, though he concluded that the proposed changes did not support the plaintiffs’ position. Generally under TRIA, plaintiffs with money judgments are entitled to the blocked assets of terrorist parties or their agencies for any compensatory damages. The language of TRIA defines a blocked asset as “any asset seized or frozen” by the United States pursuant to the Trading with the Enemy Act or the International Emergency Economic Powers Act (IEEPA). Relevant to the case before Wexler, the IEEPA enables the president of the United States to investigate, regulate or prohibit banking activity of foreign countries under certain circumstances. Wexler noted that accounts at issue were subject to the IEEPA due to sanctions and restrictions that President Jimmy Carter imposed during the Iran hostage situation in 1979 on Iranian-held accounts. But the question remained for Judge Wexler as to whether the accounts were “blocked assets” for purposes of the Terrorism Risk Insurance Act. As such he relied, in part, on the statement of interest submitted in the case before him by the Office of Foreign Assets Control. The office asserted that although the banks were subject to current U.S. sanctions programs, their assets in the Bank of New York accounts technically were not “blocked assets” under TRIA. The Office of Foreign Assets Control’s position was that the banks were licensed to maintain a “skeletal presence” here under federal regulations, and that many blocking prohibitions against Iranian property initiated under the Carter administration subsequently had been modified. SEIZED OR FROZEN With that information in mind, the judge then considered whether the accounts were “seized or frozen,” as TRIA requires in order for assets to become “blocked.” The plaintiffs urged that the legislative history demonstrated that “blocked assets” was an “omnibus term encompassing all Iranian assets” blocked, frozen, seized, restricted or regulated by any regulation under the IEEPA. The plaintiffs supported their argument with reference to statement made by Sen. Tom Harkin, D-Iowa, co-author of the relevant portions of TRIA. Senator Harkin, according to the decision, stated that “blocked assets” include “any asset with respect to which financial transactions are prohibited or regulated by the U.S. Treasury under any blocking order with … the International Emergency Economic Powers Act…” But Wexler apparently was not convinced. “Given that not every type of action authorized by the IEEPA necessarily involves a seizing or freezing or property, it follows that not every action regarding property under the authority of the IEEPA, including assets that may be ‘regulated’ or ‘licensed,’ results in the property being ‘blocked’ under the TRIA,” he wrote. The judge added that although TRIA’s legislative history indicated that a blocked asset included any asset regulated by the Treasury Department, the “seemingly clear statutory text” of TRIA precluded a broader interpretation. As such, he held that the Iranian banks’ assets in the New York accounts were not subject to attachment under TRIA. Leo T. Crowley and Daniel Z. Mollin, with Pillsbury Winthrop in New York, represented the Bank of New York. Jeffrey A. Miller and Philip J. Campisi, with Westerman Ball Ederer Miller & Sharfstein, in New York, represented Weinstein. John D. Winter, with Patterson Belknap Webb & Tyler, in New York, represented Bank Melli. The Law Offices of Steven W. Kerekes, in Beverly Hills, Calif., represented Bank Saderat. Anthony J. Coppolino, senior trial counsel, civil division, U.S. Department of Justice, represented the United States.

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