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Judge allows 200+ US vets to sue six global banks over Iran terror-funding claims

Brooklyn Federal Court, Cadman Plaza, Brooklyn, NY. (Douglas Palmer/Flickr)
August 09, 2018

A judge has given the green light for a major lawsuit against global banks – and the plaintiffs are U.S. soldiers.

In Brooklyn, U.S. magistrate judge Cheryl Pollak decided that more than 200 U.S. veterans are permitted to continue their proceedings against six global banks for conspiring with Iran to support terrorism efforts against U.S. soldiers, according to a Reuters report on Monday.

The veterans allege that the banks provided materials to terrorist groups during the Iraq War, which were then used against U.S. soldiers.

The banks include: HSBC, Credit Suisse, Barclays, Standard Chartered, Royal Bank of Scotland and Commerzbank.

Pollak issued a 153-page report and recommendations, in which she determined the veterans proved two theories of liability.

The veterans allege that the banks violated the Antiterrorism Act by providing materials to bombings and other attacks carried out by Iran, and violated the 2016 Justice Against Sponsors of Terrorism Act by aiding and abetting Iran-sponsored terror operations.

The veterans alleged that the banks engaged in “stripping financial transactions, disguising payment sources, transferring funds to sanctioned entities and manually altering payment information.”

Judge Pollak said these allegations raise “serious questions” regarding “whether the conduct of the defendants in this case in working with the Iranian entities to develop sophisticated means to evade detection and avoid U.S. sanctions could be considered ‘routine banking services.’”

A trial court led by U.S. District Court Judge Dora Irizarry must review Judge Pollak’s report.

Last week, the banks submitted a letter requesting extra time to file objections to the report, indicating that they reject the allegations of liability and are continuing to argue for the case to be dismissed.

Lead counsel Gary Osen of the Osen firm also represented plaintiffs in a similar case against Arab Bank Plc. In 2014, a jury found Arab Bank liable for injuries and deaths after knowingly supporting terror groups connected to Hamas in attacks against Israel. Nearly a year later, Arab Bank settled with 597 victims from 22 attacks.

“Providing financial services to a known terrorist organization may afford material support to the organization even if the services do not involve violence or endanger life and do not manifest the apparent intent required by (the Antiterrorism Act),” the 2nd Circuit said of the case.

However, in early 2018, a U.S. appeals court overturned the verdict, deeming that providing financial services alone was not enough to hold the bank responsible for injuries or deaths resulting from terror attacks carried out by their client.

While Judge Pollak also agreed in her report that “the provision of routine financial services can never be sufficient to support a claim under the ATA,” she added that it is a question for the jury to decide.