Alison Frankel

Why the Arab Bank terror-finance trial matters

Alison Frankel
Sep 19, 2014 18:47 UTC

Last week, on the evening of Sept. 11, a lawyer named Mark Werbner stood outside his hotel in Brooklyn and looked across the East River at the blue lights commemorating the collapse of the World Trade Center in 2001. Werbner, who is from Dallas, was in New York because he represents American victims of Hamas bombings and shootings during the second Palestinian Intifada. Since early August, he and his co-counsel have been trying the victims’ claims against Jordan’s Arab Bank, which they accuse of financing the Hamas terror operations. As he looked at the blue lights, Werbner told jurors Thursday during closing arguments in the Arab Bank trial, he stepped back and asked himself whether the 10 years of work he’d put into the case had accomplished anything.

“What am I doing here? What difference will it make?” he told jurors. “You know what’s going on in the world since then. It’s not any better. You know what we’re facing.”

I’ve asked myself the same question, after watching portions of the Arab Bank trial over the past six weeks. For all of the dogged investigation, numbing research and considerable expense that the victims’ lawyers have devoted to their case against Arab Bank, militants – including those from Hamas – are still finding ways to finance operations targeting civilians. Even as lawyers in this case argued in whispered sidebars in an air-conditioned courtroom in Brooklyn over the admission of pieces of evidence from an uprising that ended a decade ago, the Islamic State was putting out videos of its merciless beheadings of American journalists and a British aid worker. The 11 jurors who’ve endured long weeks of a multilingual, document-intensive trial must also have wondered: Can private litigation against a bank prevent terrorism?

The four lawyers who spoke Thursday for the plaintiffs in the Arab Bank case assured them that it can – that the message they send with their verdict will force international banks to do more than check wire transfers against terrorism blacklists. If jurors find Arab Bank liable for processing about $73 million that allegedly propped up Hamas operations in the Second Intifada, the lawyers said, banks around the world will be on notice that they’re responsible for actively policing against financing terror.

“We all have a role to play, to prevent terrorism, every one of us,” said Michael Elsner of Motley Rice. “We are interlinked, interdependent. We need to be together to stop this. It just can’t be that we can only act when a government says, ‘You have to act now.’ It can’t be that we only do it when the computer gives us an alert.”

Gupta appeal will be ‘very difficult,’ Holwell says

Alison Frankel
Jun 16, 2012 02:38 UTC

Without former U.S. District Judge Richard Holwell, there probably would not have been any prosecution of Rajat Gupta, the former Goldman Sachs director and McKinsey chief convicted Friday of insider trading and conspiracy. In 2010, Holwell ruled that prosecutors could use wiretap evidence in their case against Galleon Group hedge fund founder Raj Rajaratnam, rejecting defense arguments that the government is not authorized to use wiretaps to investigate insider trading. If prosecutors hadn’t been able to use those Rajaratnam wiretaps – in which Rajaratnam obliquely referred to tips from a Goldman insider – it’s unlikely the government would have gone to trial against Gupta, since the tapes were the only link between Gupta’s alleged tips and Rajaratnam’s trades.

Holwell, who is now in private practice at Holwell, Shuster & Goldberg, told me Friday that wiretaps have forever changed the way the government investigates insider trading. “Prior to the Rajaratnam case, you look at insider trading rings, and they’re very small. Prosecutors would wind up getting one, two, three people.” The Rajaratnam case showed that with wiretaps, you can sweep in rings of tippers, leading to “a vast array of prosecutions,” Holwell said.

It’s also unlikely, he said, that prosecutors would have uncovered Gupta’s role in Rajaratnam’s insider trading ring if they had not been authorized to tape the Galleon founder. The classic evidence in insider trading prosecutions is trading and telephone records, but since Gupta didn’t profit directly from Rajaratnam’s trades, he probably wouldn’t have come to the government’s attention if it hadn’t been for those taped references.