- DOJ hasn’t allocated $629 million penalty
- Legal dispute drives inaction
American victims of terror attacks and other violence abroad are frustrated the Justice Department hasn’t committed to directing the proceeds of a $629 million settlement to a fund designed to compensate them for their suffering.
How DOJ’s record-high North Korean sanctions penalty against British American Tobacco Plc gets divvied up is being closely watched by many of the 15,000 eligible claimants, including victims of the 1998 East Africa embassy bombings, a 1968 North Korean capture of a US spy ship, and 9/11. Their lawyers say the law demands all the settlement proceeds be paid to survivors or families of those killed.
At issue is whether the 2015 law that created the US Victims of State Sponsored Terrorism Fund allows the Justice Department to exclude penalties tied to a nine-year period—covering much of the tobacco giant’s scheme of disguising sales to avoid sanctions—when North Korea was removed from the list of state terror sponsors. Those proceeds could be used to fund other DOJ programs, such as subsidizing state and local police equipment.
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Language of the Law
BAT, the manufacturer of Lucky Strike and Dunhill, reached a deal to defer prosecution by having a subsidiary plead guilty to a sanctions evasion scheme that stretched from at least August 2007 through at least June 2017, court documents said.
Complicating the matter is that the US government removed North Korea from the state sponsors of terrorism list in October 2008, before reinstating it in November 2017.
That means that under the reading of the law DOJ presented to victims’ attorneys, only the share of the settlement stemming from tobacco sales to North Korea during the initial 14 months of violations would qualify for the fund.
Robert Braun, a Cohen Milstein partner representing victims of the 1983 Beirut Marine barracks bombing and their families, said “whether or when North Korea was designated a state sponsor of terrorism was irrelevant” under the language of the statute establishing the victims’ fund.
The statutory language is silent on fund eligibility when individuals or companies illegally sell products to a country for a period that straddles when the nation was both on and off the terrorism list.
The law orders the transfer to the victims’ account of “all funds” from criminal penalties or fines from violations of the 1977 international sanctions law under which BAT was charged “or any related criminal conspiracy” or “other Federal offense arising from” conducting business with a “state sponsor of terrorism.”
Braun and other victims’ attorneys take the position that “state sponsor of terrorism” doesn’t modify the clause referencing the 1977 law, meaning North Korea’s classification at the time of the violations shouldn’t impact the BAT penalty’s eligibility.