STRAUSS v. CRÉDIT LYONNAIS, S.A.
Osen LLC (together with co-counsel) represents 40 families who were victims of terrorist attacks committed by the Palestinian terrorist organization known as Hamas. The Complaint in Strauss v. Crédit Lyonnais, S.A. alleges that Crédit Lyonnais, a multinational French bank, and a prominent subsidiary of France’s largest financial institution, Crédit Agricole, knowingly provided banking services and maintained accounts for CBSP, a French entity designated a Specially Designated Global Terrorist by the United States Government in August 2003.
The United States Treasury Department issued a statement in connection with its August 2003 designation of CBSP in which it proclaimed:
CBSP and ASP are primary fundraisers for HAMAS in France and Switzerland, respectively. Founded in France in the late 80s/early 90s, CBSP acts in collaboration with more than a dozen humanitarian organizations based in different towns in the West Bank and Gaza and in Palestinian refugee camps in Jordan and Lebanon. ASP, a subsidiary of CBSP, was founded in Switzerland in 1994. The group has collected large amounts of money from mosques and Islamic centers, which it then transfers to sub-organizations of HAMAS. Khalid Al-Shuli is the president of CBSP and ASP.
The Strauss lawsuit alleges that as a result of CBSP’s financial support to Hamas institutions, the State of Israel outlawed CBSP in 1997, and designated it a terrorist organization in 1998.
As detailed in the Strauss Fifth Amended Complaint, from 1990 until 2003 Crédit Lyonnais maintained accounts for CBSP and transferred funds at CBSP’s behest to Hamas-controlled organizations in the West Bank and Gaza Strip. The Strauss Plaintiffs further allege that as far back as 2000, Crédit Lyonnais knew that its customer CBSP was transferring money to Hamas-controlled entities.
On October 5, 2006, in largely denying Defendant’s motion to dismiss the Complaint, United States District Judge Charles P. Sifton of the Eastern District of New York noted:
[D]efendant has pointed to no case law, nor can this Court find any, which holds that an American Court must decline to apply the laws of this country to a defendant over which the court has jurisdiction because the laws of the defendant's own country are more lenient.
Plaintiffs believe that no person or corporation that chooses to conduct business in the United States should be allowed to knowingly provide material support to Specially Designated Global Terrorists.
On February 28, 2013, United States District Judge Dora L. Irizarry of the Eastern District of New York largely denied Crédit Lyonnais’ motion for summary judgment noting:
Defendant also asserts that it could not have known that CBSP was funding a terrorist organization because neither France nor the European Union have ever sanctioned CBSP or charged it with supporting terrorists, and French authorities cleared CBSP of any crimes after Defendant filed its two declarations with TRACFIN. (See Def.’s Mem. 4-5.) However, just because the French government and the European Union have decided that they have insufficient evidence to sanction CBSP under their own governing law, does not mean that CBSP was not supporting a terrorist organization for purposes of the ATA. While a reasonable jury could conclude that France and the European Union essentially are correct, and that there is not sufficient evidence that CBSP was sending money to terrorists, it would be perfectly reasonable for a jury to disagree and side with the United States government’s assessments. Thus, when viewing the record in the light most favorable to Plaintiffs, there is a genuine issue of material fact as to whether Defendant knowingly provided material support to a terrorist organization. (Emphasis added.)
In March 2014, Crédit Lyonnais brought a renewed motion to dismiss the case on the grounds that the Court lacked personal jurisdiction over the Bank in light of a recent Supreme Court decision, Daimler AG v. Bauman. Judge Irizarry denied the Bank’s motion on March 31, 2016, noting in particular Defendant’s purposeful availment of New York to effect transactions at the heart of the case:
Defendant had a New York Branch through which it continuously and systematically conducted business in New York, utilizing that branch to execute U.S. Dollar transfers requested by its customers. Whatever efficiency and cost savings Defendant gained as a result allowed Defendant to retain relationships with customers that had a need to deal in U.S. currency, a contingent that from time to time included CBSP. Most importantly, Defendant executed the five New York Transfers through the New York Branch, repeatedly and deliberately using New York’s banking system to effect the alleged financial support of Hamas that is the basis for Plaintiffs’ claims. Given the quality of those contacts and their close connection to New York, the Court concludes that § 302(a)(1) permits the exercise of jurisdiction over Defendant. (Decision at 24.)
In October 2015, Crédit Lyonnais’s sister company, Crédit Agricole Corporate and Investment Bank, entered into a settlement agreement with the U.S. government in which it admitted that Crédit Lyonnais, among others:
[P]rocessed thousands of transactions to or through U.S. financial institutions that involved countries and/or persons (individuals and entities) subject to the sanctions regulations administered by OFAC. Personnel (including managers) from various business units within [Crédit Lyonnais and other subsidiaries] were aware of U.S. economic sanctions programs and understood that U.S. financial institutions were required to block or reject transactions involving an OFAC-sanctioned country or person. Despite this knowledge, the above-referenced banks used cover payments and/or implemented special payment practices in a manner that omitted references to U.S.-sanctioned parties in U.S. Dollar…payment messages sent to the United States.
The New York State Department of Financial Services determined that “the Bank processed 280 transactions totaling approximately $50 million involving SDNs” i.e. persons and entities on the U.S. government terrorism blacklist. This, of course, did not include any funds transferred by Crédit Lyonnais on behalf of CBSP.
In September 2016, Crédit Lyonnais brought two additional motions. In the first, Defendant sought partial reconsideration of Judge Irizarry’s February 28, 2013 Order largely denying Defendant’s motion for summary judgment. In the second, Defendant asked Judge Irizarry to grant Crédit Lyonnais’s motion for summary judgment as to four of the 15 attacks in the case. Both of these motions are fully briefed, awaiting Judge Irizarry’s rulings. On September 30, 2017, Judge Irizarry largely denied both motions.
No trial date has yet been set for the Strauss case.