Lawsuit looks to thwart funding for terror

On May 18, 2003, Steve Averbach boarded a commuter bus in Jerusalem and noticed an Arab man aboard dressed like a haredi Jew. When Averbach, an immigrant from West Long Branch, approached, the man detonated his explosives, killing seven people and wounding 20, including Averbach.

Hamas claimed responsibility for the bombing. Averbach was left paralyzed from the neck down. He was hailed as a hero for scaring the bomber into prematurely detonating his suicide vest and reducing the death toll.

Eleven years later, the Averbach family is taking part in a massive lawsuit against the Jordan-based Arab Bank, alleging that the bank facilitated fund-raising for Hamas and other terror groups, as well as payments to dead terrorists’ families. The case is set for an Aug. 11 trial in federal court in Brooklyn.

The lawsuit now includes approximately 100 families of American terror victims, about half of whom are represented by four law firms referred to in court records as “Linde counsel,” after the lead plaintiffs’ family. John Linde Jr. was a U.S. citizen working as a security contractor for the U.S. embassy in Tel Aviv when he and two other members of a security detail were killed by a remote-controlled bomb in Gaza in 2003. 

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According to court documents, groups like the Saudi Committee in Support of the Intifada al Quds allegedly used Arab Bank to transfer payments to families of so-called martyrs, including suicide bombers, prisoners, and those wounded in the second Intifada.

“We allege that this was a key channel to provide a form of indemnification to Palestinian terrorists and would-be terrorists who would be incentivized by knowing that their families would be financially cared for if they were killed, injured, or imprisoned as a result of their violent activities,” said Gary Osen of Hackensack’s Osen LLC, the Averbachs’ attorney, who is also representing about 235 other victims in the case.

Arab Bank denies liability, saying it had no intent to fund terrorism and lacked knowledge that the funds would be used for that purpose. 

In a statement sent to the Standard the beginning of August, Arab Bank argued that it “did not cause or provide material support for the acts of terrorism involved in this case.

“Arab Bank has great sympathy for all victims of terrorism but is not liable for the tragic acts described by Plaintiffs,” the statement read. The plaintiffs’ theory, it continued, “would undermine the automated compliance systems that regulators around the world require banks to employ, and create vast uncertainty and risk in the international finance system.”

The trial will begin by focusing on 24 Hamas attacks, as Hamas is responsible for about 60 percent of the attacks listed in the suit. (Other attacks cited in the suit are credited to Palestinian Islamic Jihad, the Popular Front for the Liberation of Palestine-General Command, Al Aqsa Martyrs Brigades, and other terror groups.) Hamas is not itself a defendant in the case, but a liability verdict would likely have a strong impact on the organization since it might make other banks think twice before transferring money into Gaza.

“There are only a limited number of financial institutions that operate in the Palestinian territories,” Osen said. “It’s one thing to move a million dollars through a courier through a tunnel. The kind of money needed to run a proto-government can only be done through formal banking channels.”

Arab Bank, for example, facilitates salary distribution for the Palestinian Authority. Since Hamas and Fatah signed a reconciliation agreement in April, the PA has refused to pay the salaries of Hamas’s civil servants in Gaza. Qatar recently offered to provide several million dollars to pay those salaries, but pressure from the United States blocked the transfer and Arab Bank refused to process the funds.

“We’ll actually have a trial and the public will hopefully gain a unique insight into how terrorist organizations like Hamas are funded and the mechanisms by which they create this larger culture of martyrdom that has taken hold in so much of the Middle East,” Osen said.

The August trial is to determine the bank’s liability. If Arab Bank is found liable for the terror attacks, then the judge will task another jury to assess the individual damages to the plaintiffs. The plaintiffs are not seeking a specific amount of damages, which would be determined by the court, Osen said.

A declaration of liability would hopefully create a deterrent for other financial institutions, he said.

Looking for accountability

Osen was contacted by a family friend of Averbach’s after he was injured. The Anti-Terrorism Act, passed in the aftermath of the 1985 murder of Leon Klinghoffer, opened the door for victims of 9/11 and other terror attacks to seek legal retribution against individuals and private organizations that sponsor terrorism.

Eagerly watching the Arab Bank case is Stephen Flatow of West Orange, whose daughter, Alisa, was murdered in a 1995 Palestinian Islamic Jihad attack on a public bus in Gaza. Flatow’s case against the terrorist group’s Iranian funders opened the doors for terror victims looking for legal retribution, and he believes the fact that the case against Arab Bank is a civil case against a corporate entity — as opposed to his own litigation against a country — makes the case easier and harder at the same time.

“Here it’s victim against bank. There should be no involvement by the American government in this type of case,” he said. The U.S. Department of Justice at the time intervened on behalf of Iran in Flatow’s litigation, in the interest of maintaining the principal of sovereign immunity.

“The message to institutions from this type of case is you are culpable when someone is killed because of your commercial activities,” Flatow said. “If we cut off the terror funding by making it difficult for a bank, then they’re going to be watching more closely where the money comes from and where it goes.”

After the Hamas attack left him paralyzed, Averbach became a voice for terror victims, speaking out in Israel and in the United States. After years of moving in and out of rehab facilities and speaking about his experiences, Averbach died in 2010.

“His revenge was demonstrating that, although physically paralyzed, Hamas would never succeed in extinguishing his spirit,” said his sister, Eileen Sapadin of Bergen County. “His life was filled with purpose and our collective resolve was strengthened.”

Sapadin said no amount of money can return what was taken from her, but “perhaps the monetary rewards for the so-called martyrs’ families will cease, and the funding for all the murder will end once and for all.”

“There’s no restitution that’s going to bring back any lives or cure injuries of victims really,” she said, “but I’d like to see it brought down. Whatever secrecy there’s been about this, I’d like brought to the public.”