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Media Alerts - USA v. Holy Land Foundation for Relief and Development - Fifth Circuit
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June 26, 2013
  USA v. Holy Land Foundation for Relief and Development - Fifth Circuit
Headline: Fifth Circuit Rules that Assets of Terrorist Organization Seized by the Government Under the Criminal Forfeiture Statute Are Not Available to Victims Seeking to Enforce a Judgment Against the Same Assets.

Area of Law: International Emergency Economic Powers Act, Terrorism Risk Insurance Act, criminal forfeiture.

Issue Presented: Whether the Terrorism Risk Insurance Act permits a judgment creditor to execute against assets restrained by the government in anticipation of forfeiture under 21 U.S.C. § 853.

Brief Summary: Appellees ("the Rubins") were victims of a Hamas terrorist attack. Defendant-Appellee Holy Land Foundation ("HLF") has been designated by the U.S. government as a terrorist organization that acts for or on behalf of Hamas. After obtaining a judgment against Hamas for damages resulting from the attack, the Rubins requested that a federal district court issue a writ of garnishment against the assets of Hamas and HLF. Although the court issued the writ, the Rubins could not execute against HLF's assets because those assets previously had been restrained under 21 U.S.C. § 853 to preserve their availability for criminal forfeiture proceedings pending in the Northern District of Texas. The Rubins filed a third-party petition under § 853(n) to assert their interests in the restrained assets and, in response, the government filed a motion to dismiss. The U.S. District Court for the Northern District of Texas denied the government's motion and vacated the preliminary order of forfeiture, holding that the Terrorism Risk Insurance Act of 2002 ("TRIA") allows the Rubins to execute against HLF's assets notwithstanding the government's forfeiture proceedings. The government appealed, and U.S. Court of Appeals for the Fifth Circuit held that the Rubins could not recover under either 21 U.S.C. § 853 or the TRIA.

Extended Summary: In 1997, the Rubins were victims of a Hamas terrorist attack. In 2002, the Rubins brought a lawsuit against Hamas, and they won a judgment in their favor in 2004.

In 2001, the Secretary of the Treasury determined that HLF acts for or on behalf of Hamas and designated it a "Specially Designated Terrorist" and a "Specially Designated Global Terrorist" under the International Emergency Economic Powers Act ("IEEPA"). By virtue of these designations, Hamas's and HLF's assets were "blocked." In 2004, shortly before the Rubins obtained their civil judgment, the government filed an indictment against HLF, which indicated the government's intent to seek forfeiture of "all property, real and personal, involved in the [alleged] money laundering or monetary transaction offenses, and all property traceable to such property." Four days prior to the Rubins' civil judgment, the government was issued a license by the Office of Foreign Assets Control authorizing it to pursue criminal forfeiture of HLF's assets, which had been blocked by the orders under the IEEPA in 2001. In 2009, after being found guilty of numerous crimes, HLF's assets were ordered forfeited to the government.

The Rubins filed a petition under 21 U.S.C. § 853(n), which permits third parties to assert an interest in forfeited property. They argued that they were entitled to enforce their civil judgment against HLF's assets under § 201 of the TRIA. The government moved to dismiss the Rubins' petition, the district court denied the government's motion on the ground that the TRIA trumped the criminal forfeiture laws, and the government appealed.

Under § 201(a) of the TRIA, assets are made available for attachment and execution if they are "blocked" under sections 202 and 203 of the IEEPA. The Rubins argued that the indictment and forfeiture demand had no legal effect on HLF's assets because they were blocked under the IEEPA. However, the applicable regulations provide an exception to the prohibition on transferring blocked property when that transfer is authorized by license. Here, the government obtained such a license, and the license further authorized the government to pursue "restraining orders" in order to preserve the assets for criminal forfeiture. The Fifth Circuit held that the government's restraining order became legally effective before the Rubins received a judgment in their favor. The Rubins could not execute against those assets under the TRIA because they were no longer blocked.

The Rubins further argued that the provisions of the TRIA trump the criminal forfeiture provisions of § 853 because § 201 of the TRIA requires its application "notwithstanding any other provision of law." The Fifth Circuit held that the "notwithstanding" clause can operate only to override conflicting statutes. As § 853 does not conflict with § 201 of the TRIA, the clause does not preclude the application of § 853. Also, since HLF's assets had already been restrained under § 853(e) at the time the Rubins received their judgment, the Rubins' right under the TRIA to execute against those funds never became effective and therefore did not create a conflict between the statutes.

Finally, the Rubins challenged the district court's jurisdiction to seize HLF's forfeitable assets. At the time the government initiated forfeiture proceedings against HLF's assets, many of those assets were in the custody of other federal courts because the Rubins had obtained writs of execution on the judgment against Hamas. The Fifth Circuit held that the Rubins were foreclosed from raising this argument because it is an impermissible third-party challenge to the forfeiture of HLF's assets under § 853(n). HLF is the only party that has standing to challenge the forfeitability of its assets. Even if HLF had brought a challenge to the forfeitability of its assets, that argument would be precluded by the terms of the criminal forfeiture statute.

For the full opinion, please see:

Panel: Circuit Judges Wiener, Clement, and Prado

Argument Date: 11/07/2012

Date of Issued Opinion: 06/25/2013

Docket Number: No. 11-10535

Decided: Reversed and remanded

Case Alert Author: Kirsty Davis

Counsel: Vijay Shanker, U.S. Department of Justice, for Plaintiff-Appellant U.S.A.; Ranjana Natarajan, University of Texas School of Law - Civil Rights Clinic, for Defendant-Appellee HLF; Nancy Hollander, Freedman Boyd Hollander Goldberg Ives & Duncan, for Defendant-Appellee Shukri Abu Baker; Linda Moreno for Defendant-Appellee Ghassan Elashi; Marlo Pfister Cadeddu, for Defendant-Appellee Mufid Abdulqader; Gregory Burke Westfall, Hill Gilstrap, P.C. for Defendant-Appellee Abdulrahman Odeh; David J. Strachman, McIntre, Tate & Lynch, L.L.P. for Appellees Jenny Rubin, Deborah Rubin, Daniel Miller, Abraham Mendelson, Stuart E. Hersch, Renay Frym, Noam Rozenman, Elena Rozenman, and Tzvi Rozenman.

Author of Opinion: Judge Clement

Case Alert Circuit Supervisor: Aaron-Andrew P. Bruhl

    Posted By: Aaron Bruhl @ 06/26/2013 09:56 PM     5th Circuit  

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