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Landmark Arab Bank’s verdict overturned by court in Manhattan

The 2014 jury verdict in favor of dozens of Mideast terror victims, including some from Long Island, marked the first time a financial institution was found liable under a federal anti-terrorism law.

A Manhattan federal appeals court on Friday overturned a landmark civil terrorism verdict against Jordan’s Arab Bank, ruling that faulty jury instructions required a reversal of the finding that financial services provided to Hamas made the bank liable for a series of Mideast attacks.

The 2014 verdict by a Brooklyn federal court jury in favor of dozens of American victims of overseas terrorism, including some from Long Island, had marked the first time a financial institution was found liable under the federal Anti-Terrorism Act.

The Second U.S. Circuit Court of Appeals said U.S. District Judge Brian Cogan improperly short-circuited that law’s requirement that a jury find Arab Bank engaged in an act of “international terrorism” involving “violence” and an effort to intimidate civilians by instructing that providing “material support” to Hamas was enough.

“Providing routine financial services to members and associates of terrorist organizations is not so akin to providing a loaded gun to a child as to compel a finding that . . . the services were violent or life endangering acts that appeared intended to intimidate or coerce civilians,” the court said.

Although the ruling marked a setback for the legal theories behind efforts to expand the reach of anti-terror laws, the 597 plaintiffs in the case will still recover damages.

After the 2014 verdict holding Arab Bank liable, the two sides avoided a new trial on damages by reaching a confidential settlement with high, low and midrange dollar values that would apply based on whether the Second Circuit affirmed, reversed, or — as it did Friday — ordered a new trial.

Instead of a new trial actually occurring, a midrange settlement figure will now kick in. Arab Bank reportedly set aside $1 billion to cover its liabilities. Although the parties stipulated to a $100 million settlement figure to allow the appeal to go forward, lawyers said that number was a legal fiction.

Both sides said they were happy with the outcome.

“We would have liked a sweeping victory, but we’re still very satisfied with the result,” said Gary Osen, one of the lead lawyers in a plaintiffs’ consortium. “The plaintiffs will receive meaningful and very substantial compensation for their injuries.”

“Arab Bank is pleased with the Court’s decision,” a spokesman said, “and continues to believe that the district court’s errors at trial all but dictated an adverse outcome. The Bank is pleased to put this case behind it.”

The plaintiffs in the case — including Gene and Lorraine Goldstein, formerly of Plainview, who were wounded during a 2003 attack in Israel in which their son was killed — argued at trial that the bank was willfully blind to the effects of its financial dealings with Hamas.

The bank said it had never supported terrorism, had no knowledge of or involvement in any attacks, and had instead been a force for moderation in the Mideast.

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