Are Banks Responsible for Funding Hamas — and Enabling Terror?

Victims May Have To Relive Wrenching Attacks in Twin Suits

Terror in Tel Aviv: In 2003 two suicide bombers entered Mike’s Place, a popular ex-pat hangout in Tel Aviv. Three people were killed and 50 were injured.
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Terror in Tel Aviv: In 2003 two suicide bombers entered Mike’s Place, a popular ex-pat hangout in Tel Aviv. Three people were killed and 50 were injured.

By Nathan Guttman

Published July 19, 2013, issue of July 26, 2013.
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Joshua Faudem was having drinks with friends at Mike’s Place, a favorite of the English-speaking community on Tel Aviv’s beach, when two suicide bombers entered and added the popular hangout to the list of Israeli venues that had fallen victim to second intifada terror attacks.

A decade later, Faudem, a dual citizen of Israel and the United States, is preparing to go back to those moments of April 2003, as he could soon be called to testify in a New York court about the horrors of that night and the psychological price he is still paying.

“This is the last cloud hanging over me,” he said. “I’m looking for it to be done.”

Faudem, a documentary filmmaker whose 2004 movie “Blues by the Beach” tells the story of Mike’s Place, is one of hundreds of plaintiffs listed in the largest Palestinian terrorism lawsuit ever filed in the United States. The civil case is aimed at the Jordan-based Arab Bank, one of the Middle East’s largest financial institutions, which, during the bloody period of 2001 to 2004, was allegedly the key conduit for funding families of Hamas suicide bombers that carried out attacks against Israelis.

It is one of two major suits against international banking institutions that allegedly provided Hamas with a financial lifeline and thereby enabled the group to carry out attacks in Israel.

The second case involves the Bank of China, which allegedly allowed Iran to use it for passing funds to Hamas. The family of Daniel Wultz, an American citizen who was murdered in a terror attack in Tel Aviv in 2006, brought forward that lawsuit. His parents are suing the Bank of China in a New York court. The case is reaching its final stages this summer, but the plaintiffs have recently learned that a former Israeli intelligence official who was supposed to be a key witness in the case has not been permitted by his government to testify. The reason: Israel’s fear that his testimony could harm its growing relations with China.

The scope, the complexity and the precedent of such lawsuits have made for a decade of delays and lengthy legal procedures that plaintiffs hope could now be nearing an end. In April, a New York judge ruled that the Arab Bank case will go to a jury trial. Plaintiffs expect the trial to take place this fall. But a recent petition by the Arab Bank to the Supreme Court could add yet another delay to the process.

In the nine years that have passed since victims first organized to sue the Arab Bank, much has happened. The intifada died out, Palestinian leadership changed, and while the victims and families still bear the daily pain, Israelis and Americans have moved on. Terrorism in Israel no longer occupies news headlines.

The case itself has also seen setbacks. Recently, a federal court dismissed a separate but similar suit filed by an Israeli injured in Gaza. And a Supreme Court ruling has effectively denied foreign nationals the right to sue non-American entities in the United States. This ruling could significantly downsize the case by excluding all non-American citizens from the suit. The issue will be settled in coming months.

“What I tell our clients is: ‘Continue to have faith in the judicial system. I’m very hopeful that we can begin the trial in the fall and get a verdict this year,” said Michael Elsner, an attorney with the South Carolina-based Motley Rice law firm, one of the practices representing the terror victims. “We’re almost there.”

For the Wultz family, suing the Bank of China, patience may not necessarily pay off. Their hope to summon a former Israeli intelligence official to testify about how he personally warned the Chinese about transferring funds to Hamas has hit a snag: The Netanyahu government has reneged on its initial promise to allow the official to take the stand — reportedly after China threatened to call off a scheduled state visit to Beijing last May by Israeli Prime Minister Benjamin Netanyahu if he allowed the official to testify.

But Tully and Sheryl Wultz have yet to give up. She is a first cousin of House Majority Leader Eric Cantor, and the couple has also enlisted Florida Reps. Debbie Wasserman Schultz and Ileana Ros-Lehtinen to call on Netanyahu to allow the testimony. ”If they withdraw support for this case, it would be another tragedy on top of a tragedy,” Sheryl Wultz told The Wall Street Journal on June 21.

Ynet, an English-language Israeli news website, reported on July 15 that Michael Oren, Israel’s outgoing envoy to Washington, held an emergency meeting with Netanyahu the day before in which he conveyed the “shock” of American officials at the Israeli leader’s stand. Netanyahu is known for his adamant counsel in books and speeches over many years against ever giving in to terrorism.

According to the report, Netanyahu now feels torn between American pleas and Chinese pressure and has been told that the court could subpoena Israeli officials to testify if they do not come on their own.

Lawsuits against the Chinese and Jordanian banks are based on the claim that financial support for Hamas enabled it to carry out terror attacks. In Linde v. Arab Bank, at the U.S. District Court, Eastern District of New York (Brooklyn), plaintiffs claim that the Arab Bank was responsible for allowing funds to be transferred to families of terrorists, thus providing the bombers with the peace of mind that their relatives would be taken care of after they carried out the suicide attacks.

Officials from the Arab Bank declined to respond on-the-record to the suit’s allegations. But speaking on background, an official for the bank voiced confidence that the financial institution would not be found liable for its handling of the money that allegedly ended up with Hamas.

At trial, the key question will be whether the Arab Bank knowingly provided its services in a way that helped terrorists or, as the bank has argued, whether the relevant transactions were routine and lawful.

The New York court’s April 24 decision to send the case to trial, which rejected most of the bank’s arguments for dismissal, was seen as a victory for the terror victim plaintiffs. But in a separate case, another New York federal judge gave the Arab Bank a boost last November when he dismissed a suit by an Israeli who had been injured in a terror attack. In that ruling, Judge Jack Weinstein said the evidence presented “does not prove that the Bank acted with an improper state of mind or proximately caused plaintiff’s injury.”

It’s a point the Arab Bank hopes will be repeated in the current case.

“Terrorists are energized by the support they receive,” argued David Rubin, one of the victims suing the bank. Rubin was on his way home in December 2001 when terrorists ambushed his car on a West Bank road. Rubin was shot in his leg, and his young son, strapped to a car seat in the back, was hit in his skull by a bullet. Father and son underwent surgery and lengthy hospitalizations. Rubin’s son also required therapy to overcome mental trauma.

“We could very easily be dead,” said Rubin, who moved to Israel from the United States 21 years ago. In joining the lawsuit against the Arab Bank, Rubin said, he hopes justice will be served. “Those who are involved in aiding and abetting terror attacks should be held accountable,” he said.

The trial will be held in two separate phases. The first will deal with American plaintiffs, such as Rubin, Faudem and more than 500 other citizens of the United States who were killed or injured in 24 terror attacks. This part of the trial will determine whether the Arab Bank provided material support to Hamas, thus allegedly breaking the Anti-Terrorism Act of 1996. If the court rules in favor of the plaintiffs, a separate discussion will determine the process of awarding them damages.

The second phase, which now seems somewhat shakier than the first, will involve 6,000 Israelis and other foreign nationals who are not American citizens. The evidence is expected to be similar and will be based on testimonies of the victims and documents demonstrating the Arab Bank’s transactions. But the legal basis for the non-American plaintiffs’ claim will be different. This case will go after the Arab Bank based on the Alien Tort Statute, which allows, under certain circumstances, for foreigners to sue non-American entities in American courts. This statute, dating back to 1789, has become an important tool in going after human rights abusers and war criminals. It was also used as part of Holocaust restitution lawsuits.

But in April, the Supreme Court ruled that only foreign entities linked to American territory could be sued under the Alien Tort Statute. This closed the door on attempts to use American courts as a venue for pursuing human rights cases between non-American parties.

Citing this ruling, the Arab Bank petitioned the Supreme Court on June 24, asking it to dismiss the portion of the lawsuit based on the Alien Tort Statute.

The record of similar lawsuits against alleged funders of terrorists, most notably a lawsuit against Saudi Arabia filed by families of 9/11 victims, indicates that the legal road is long and that success is far from guaranteed. “I know these things take a very long time, but I want to see justice done,” Rubin said. “I’m not in this for the money.”

Contact Nathan Guttman at guttman@forward.com or on Twitter, @nathanguttman


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