Former LIers lead way in anti-terror suits

Eugene and Lorraine Goldstein, who are two of

Eugene and Lorraine Goldstein, who are two of the plaintiffs suing Arab Bank for allegedly providing financial services to terrorist groups in the West Bank, look at a photograph of their son Howard Goldstein who died in a terrorist attack in Israel in 2003. (April 19, 2011) (Credit: Newsday/Karen Wiles Stabile)

Eugene Goldstein went for a wedding and ended up at a funeral.

It was June 2003. Goldstein and his wife, Lorraine, lifelong residents of Merrick and Plainview, had gone to Israel for their grandson's wedding. But on the road to a wedding dinner in Jerusalem, two gunmen -- Hamas would later take credit -- opened fire with automatic weapons on their Volkswagen.

They were both badly wounded. But they were lucky. They survived. Their son, Howard, the father of the groom, was also in the car. He did not.

"It was a gruesome sight," remembers Goldstein. "He was laying slumped over. . . . Blood was all over. He was dead."

Eight years later, those emotional events have pushed Goldstein into a central role in a novel strategy for attacking terrorism. He is one of the original plaintiffs suing three international banks for allegedly providing financial services to Hamas and other groups responsible for violence in Israel and the West Bank.

The cases, filed in federal court in Brooklyn starting in 2004, now encompass hundreds of Americans seeking multimillion-dollar damages from Amman, Jordan-based Arab Bank, Britain's NatWest and France's Credit Lyonnais for the attacks. A key appeals court showdown in the Arab Bank case is scheduled for later this year, with a trial likely next year that could produce a precedent-setting verdict.

The banks all deny knowingly supporting terrorist acts, and the litigation has already produced a fierce legal struggle -- raising questions about how far liability for hundreds of deaths should extend among those who did not directly cause them, and sparking complaints from U.S. allies such as Jordan over intrusion on their bank-secrecy laws.

But to Goldstein, 82, a former sales executive whose family was one of five that began the effort, the logic of it all remains simple: If lawsuits help to stop medical malpractice and make cars safer, they can also make banks more leery of allegedly facilitating terrorism.

"It's like we say in business," he said. "The way to hurt a person is in the pocketbook."

 

Accusations in lawsuits

The first suit was filed in 2004 against Arab Bank, which has $51 billion in assets and more than 20 branches in the West Bank and the Gaza Strip. It focused on the bank's behavior during the Intifada, the violent Palestinian rebellion that broke out in 2000.

The claim: The bank allegedly maintained accounts for "fronts" affiliated with Hamas and other terror groups and helped a Saudi Arabian charity transfer money to assist the families of Palestinian "martyrs" killed, injured or captured during the Intifada -- including some payments directed to families of suicide bombers -- in a plan to encourage terrorism.

Goldstein later joined two new suits, developed by the same consortium of plaintiffs' lawyers, against NatWest and Credit Lyonnais. They are each accused of maintaining accounts for Hamas-linked groups that had been labeled as terror fronts by the United States or Israel -- but not by their own countries.

The cases in Brooklyn federal court, legal experts say, are the leading edge of an effort by private lawyers to mimic the government's increased emphasis since Sept. 11, 2001, on attacking the financial support networks of terrorism. "That has led to more extensive civil litigation," says Juan Zarate, a former Bush administration Treasury Department official.

All the banks have characterized their actions as routine banking activities, not intended to promote terrorism. Arab Bank admits transferring $90 million in humanitarian aid to Palestinians identified by the Saudi charity -- the Committee for the Support of the Intifada al Quds -- on instruction from its Saudi banks, but notes that the charity was never listed as a terror conduit by the United States.

Claims of a conspiracy to subsidize suicide bombers are "false and without merit," a bank spokesman says.

None of the cases claim a bank actively planned a particular terror act. But the plaintiffs -- relying on a 1990 law that lets Americans sue over acts of international terrorism and statutes banning "material support" for terrorism -- have argued that even without a direct link, liability can be based on banking services that aided terror groups.

 

Struggle to define intent

Terror-finance lawsuits are still rare, and some courts have struggled to define the causal links and degree of bad intent required. In a 2008 ruling on a victim's lawsuit against Hamas-linked charities, for example, a federal appeals court in Chicago split, with dissenters complaining that traditional rules were being relaxed for terrorism cases.

In the Arab Bank case, U.S. District Judge Nina Gershon ruled several years ago that the plaintiffs don't have to show any direct connection to an attack on a particular victim, or even intent to assist a specific attack, as long as the bank knowingly assisted a group involved in terrorism. The other Brooklyn cases also survived motions to dismiss.

Goldstein's lawyer Aitan Goelman -- one of a group of attorneys representing the plaintiffs -- says it's fair to cast a wide net of liability and accountability. "A terrorist is not just the person who pulls the trigger," he said. "There is a network of people behind the guy wearing the explosive vest."

But Arab Bank says the judge has erred in exposing it to major liability because a few "routine" transactions among thousands can be indirectly linked to terrorist violence that it condemns, and complains that it has been painted as evil, despite a long history as a respected institution in the Middle East.

"In a case where the subject matter is so tragic, they accuse carelessly, unconcerned with accuracy or explanation," the bank said in one court filing.

A second key ruling came last year, when Gershon rejected the bank's claim that Jordanian bank secrecy laws barred it from turning over account records. As punishment, she said jurors could infer from its withholding of records that the bank intended to further terrorist activity -- and limited the bank's ability to dispute that claim.

Arab Bank says the ruling virtually assures a huge damages award in an "emotionally charged" trial. Jordanian officials have complained that their laws are being disrespected and that a "ruinous" verdict could damage both economic and political stability in the region. In an unusual step, the Second U.S. Circuit Court of Appeals has agreed to hear that issue before trial, with oral arguments set for this month or next.

 

Experts' interpretation

With a possible trial on the horizon next year, legal experts have mixed views.

Although civil anti-terror suits can supplement government enforcement and force banks to be careful, they can also deter legitimate activity and assess huge damages for a low level of culpability, warns Zarate, who now works at Washington's Center for Strategic and International Studies.

He describes them as a "double-edged sword."

"At a certain point, it gets into the government's face," said the former National Security Council aide. "It doesn't allow for the nuance and choreography that financial diplomacy takes. It can be blunt and overreaching at the same time that it's useful."

As the lawyers wrangle, survivors like Eugene Goldstein and wife Lorraine, 80, wait and remember.

Their injuries were serious. He was hit by three bullets, and the shrapnel spread through his chest. His wife's jaw and septum were shattered. With extensive therapy they have recovered, he says, but not all their injuries were physical. "We don't carry our wounds on our sleeves, but a day doesn't go by when we don't talk about it," he said.

The Goldsteins' 46-year-old son Howard -- a computer technician who graduated from Kennedy High School in Bellmore and college at Stony Brook -- is buried in Israel. The parents, now living in Florida, don't want to ever leave the United States again, so they can't visit his grave. But they think of him often.

"He was just a good son," Goldstein says. "I don't think you ever get over losing your child. It's against the normal way for people. You're supposed to die before your children."

Attacks lead to lawsuits

 

Lawsuits filed in federal court against Arab Bank, NatWest and Credit Lyonnais seek damages for victims or their families over various violent episodes, including:

AUGUST 2001 -- The suicide bombing in Jerusalem of a Sbarro pizza restaurant. Fifteen were killed and 130 injured.

MARCH 2002 -- Passover attack at the Park Hotel in Netanya, Israel. A suicide bomber killed 30, including Hannah Rogen, a Holocaust survivor and American citizen whose family is part of the lawsuits.

MAY 2002 -- A suicide bombing at a social club in Rishon Letzion, Israel, killed 15, including Esther Bablar, an American mother of three whose family sued.

JULY 2002 -- A bomb attack at a cafeteria at Hebrew University's Mount Scopus campus in Jerusalem injured 85 and killed nine, including five Americans. Families of four of them are plaintiffs.

APRIL 2003 -- A suicide bombing at Mike's Place, a bar near the U.S. Embassy in Tel Aviv, wounded plaintiff Daniel Rozenstein.

MAY 13, 2003 -- A bus bombing in Jerusalem by a man dressed as a religious Jew killed seven and injured 20, including plaintiff Steven Averbach, who suffered spinal injuries.

JUNE 2003 -- A gunmen shot up a car on Route 60 in Israel, killing Howard Goldstein and wounding his father, mother and wife.

OCTOBER 2003 -- A bombing in northern Gaza blew up a car with U.S. security officers who were escorting American diplomats. The family of John Linde, one of the security officers, is a plaintiff.

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