After Iran Kidnapped US Troops, A Scrappy New Jersey Law Firm Went After The Banks It Says Helped Them Do It
A few years back, Osen LLC, a boutique law firm operating out of a nondescript office park in Hackensack, New...
A few years back, Osen LLC, a boutique law firm operating out of a nondescript office park in Hackensack, New Jersey, adopted the phrase “It seemed like a good idea at the time!” as its company motto.
Not to be confused with the official tagline that adorns Osen’s website (“Taking Justice Global”), it’s more of a staff joke, the kind that arises from late nights sitting around a conference table staring blearily at complex financial documents and picking at cold takeout meals. At one point, they even made t-shirts bearing the slogan, a nod to the company’s penchant for longshot, absurdly complicated, slow-moving civil cases — the kind that only pay when you win. If you win.
It also points to the droll humor of the firm’s managing partner, Gary Osen, and to the scrappy, underdog attitude the company brings to its work. Although he never served in the armed forces — and in fact has never fired a gun — the 49-year-old attorney has nonetheless turned his firm, employing just nine full-time lawyers, into a formidable player in the Global War on Terror. What Osen does, arguably better than anyone else, is identify the invisible ties linking powerful institutions to barbaric acts of terrorism committed by their clients and hold them to account. Which isn’t to say Osen is the only game in town — a consortium of trial lawyers called the Iraq War Fund has filed a number of similar suits.
Attorney Gary Osen in his Hackensack, New Jersey, offices.Task & Purpose photo
For Osen, it’s a family business. His father, Max, who fled the Nazis as a child and returned to Germany in 1945 as a soldier with the U.S. Army, later became a lawyer specializing in Holocaust compensation cases. Following the fall of the Berlin Wall in 1989, Max took advantage of a brief window of opportunity to dig through East Germany’s wartime records. Gary, then fresh out of law school, was pressed into service doing legal research. Eventually, the son wound up taking taking the baton on a number of significant cases, some of which took decades to wind through the legal system. “I'm finishing a German case now that we started in 1990,” Osen told Task & Purpose. “The good news is we won. The bad news is that if you amortize that over 27 years, we could have just worked at Kentucky Fried Chicken instead.”
Osen is soft-spoken and affable. A film fan, he peppers his conversation with references to favorite movies and TV shows, name-checking everything from The Godfather and Game of Thrones to Animal House during our 90-minute interview, and he punctuated one email exchange with a clip from Almost Famous. “Every now and then we'll watch A Civil Action with John Travolta to remind ourselves that we shouldn't finance cases with a credit card,” he told me.
The hard thing about bringing civil suits against terrorist groups isn’t swaying juries but collecting damages. At the heart of Osen’s approach, which has also been employed by other firms, is that such organizations have meaningful financial ties to deep-pocketed state sponsors and corporate entities that are more easily made accountable to U.S. law. (Similar suits have been filed against major drug companies, alleged to have paid off the Mahdi Army for access to the Iraqi healthcare market, and against Twitter for allowing ISIS a platform.) Still, it’s a high-risk strategy that prevails upon juries to make a number of logical leaps — highly tenuous leaps, in the eyes of Osen’s opponents.
Nearly a decade ago, with the help of co-counsels Kohn Swift & Graf and Preti Flaherty, the firm went after Chiquita Brands for allegedly providing material support to the FARC guerrillas in Colombia, aiming to hold the banana conglomerate responsible for the murders of five missionaries in the early ‘90s. The case was settled for undisclosed terms on Feb. 5, just a day before it was set to go to trial. The firm sued North Korea for helping the Japanese Red Army plan and execute the 1972 Lod Airport terror attack that killed 20 Christian pilgrims and other travelers. (Though a jury awarded the plaintiffs $378 million in damages, North Korea has yet to pay up.) And in Karcher v. Iran, Osen sued the Islamic Republic of Iran on behalf of U.S. service members injured or killed due to the country’s actions, in particular attacks involving explosively formed penetrators. In the last year, Osen filed two related suits to accommodate more than 200new plaintiffs, and more arrive regularly through the firm’s website.
Co-counsel Tab Turner presents closing arguments in the landmark Arab Bank case.Courtesy Elizabeth Williams
Osen’s most successful terror-related litigation to date is the landmark suit Linde v. Arab Bank, the first civil case in which a jury held a financial institution liable for its support of terrorism. The argument advanced by Osen’s colleague, well-known product-liability litigator Tab Turner, was that because it knowingly helped Hamas and Hezbollah transfer money to the families of suicide bombers, moved tens of millions of dollars for Hamas and maintained numerous accounts for senior Hamas leaders, in violation of U.S. law, the Jordan-based bank bore some responsibility for the deaths of some 300 civilians. Damages are still being determined, but following the trial, Arab Bank said it had earmarked $1 billion to cover “expected obligations.”
And then, there’s Freeman v. HSBC.
On Jan. 17, 2007, a handful of Iraqi militants belonging to the Shiite group Asaib ahl al-Haq (AAH), or the League of the Righteous, met in a safehouse in central Iraq. On their agenda was a plot to kidnap American soldiers. Attendees included an experienced fighter named Azhar al-Dulaimi, who would command the raid. Maintaining a careful record of the meeting was Ali Mussa Daqduq, an aide-de-camp to AAH leader Qais al-Khazali.
The site of the planned attack was far from the typical “soft target” terror groups typically favored. Instead, it was a fortified military base in an area of the country thought to be relatively hospitable to U.S. forces: the Coalition Provincial Joint Security Station in Karbala, which was set up within the Iraqi police compound. The goal was not only to capture American troops but to put Washington on notice that even in Karbala, a Shiite holy city that had largely escaped the worst of the fighting, the U.S. was unwelcome on Iraqi soil. Additionally, the insurgents hoped a successful operation would intensify the Americans’ mistrust of their Iraqi partners, striking a blow to the fragile coalition.
An Iraqi policeman provides security from a guard tower at the Karbala Provincial Compound in Karbala, Iraq, April 24, 2007.Defense Department
The attack was set for a Friday at 2 p.m. An operative walked the group through a checklist. More than 50 insurgents, many from outside the area, had been drilled on their individual roles — down to who would throw what explosive into which room — and briefed on how to handle various contingencies. As many as 140 additional militants would provide security for the operation without knowing its purpose. Nine SUVs, including GMC Suburbans and Yukons and Toyota Land Cruisers, had been procured and outfitted with tinted windows, fake antennas, and window placards (“Stay Back 100m”) to resemble the vehicles used to ferry high-level U.S. military officials. The compound had been under surveillance for weeks. An array of explosives had been set aside, along with the necessary charges and cellular phones to detonate them. A rooftop overlooking the scene had been secured for use by a sniper. And for the occupants of the three lead vehicles, the ones that would have to get past the checkpoints first, there were brand-new U.S. Army combat uniforms, complete with Advanced Combat Helmets.
The stress level was high. For all the careful planning, issues kept cropping up.
For one thing, nobody had thought about where attackers would change into their American-style camo. And the weapons still hadn’t been prepared, or even unloaded from the truck. When was that happening? Who was doing it? Sharp words were exchanged. Someone suggested they call off the attack altogether. The tactical commander took some heat and vowed to get things under control. As tempers flared, Daqduq counseled patience, reminding the leadership team that the outcome of the operation would be God’s will.
On the appointed day, 2 p.m. came and went. Nothing happened.
A promotional banner for Asaib ahl al-Haq shows the shrine of Imam Husayn in Karbala.Ahlualhaq website
The operational failures were almost too numerous to count: The uniforms didn’t get distributed. Nobody thought to fill up the SUVs’ gas tanks, and two of them never turned up at all. Some fighters waited in vain for a ride to the staging area, and those who made it couldn’t figure out which vehicles they’d been assigned to. Minutes before the planned execution time, militants began grumbling among themselves, openly expressing their reluctance to take part.
The commanders scrubbed the mission. They’d regroup, handle the issues, and give it another try.
The internet signal was good at the joint provincial headquarters in Karbala, especially in the command-and-control room, the “commo room,” where Staff Sgt. Billy Wallace bunked with four other soldiers amid racks of humming computer servers. Although Wallace and his men were members of an artillery platoon, they were routinely dispatched to the Karbala compound. They’d arrived on Jan. 14 for a weeklong mission, helping to train Iraqi police to provide security for the city, a major Shiite pilgrimage site. In 2004, in one of the deadliest days of the U.S. occupation, more than 100 visitors to the local shrine, mostly Iranians, were killed and as many as 500 wounded in a series of coordinated explosions.
Despite that spectacular attack, Karbala was considered relatively safe by American troops. Located well outside the so-called Triangle of Death where the worst fighting was taking place, it offered Wallace and his troops something of a respite. And that precious internet signal meant that he could still stay in touch with his wife, Stephanie, and three sons back home in Anchorage.
Of course, there were downsides to that as well. Sometimes the calls turned argumentative. The couple had their long-distance marital dustups down to an art form. They didn’t yell and scream. Instead, each would calmly state their piece, then they’d sign off in a huff. Before long, the stress would dissipate and everyone would move on. This time, Wallace knew the minute he’d clicked the Yahoo window closed that he was in the wrong. He swallowed his pride and called her back. “Hey I’m really sorry about that,” he said, promising they’d talk again soon. Then he lay down to grab a quick nap.
Staff Sgt. Billy Wallace in Iraq.Courtesy Billy Wallace
Later that night, lying in a hospital bed in Baghdad, his body riddled with shrapnel, Wallace would be glad he’d made that apology.
The attack was a surprise, but not entirely. The day before had had an eerie vibe to it. Local vendors who operated on the base had taken the afternoon off, an unusual occurrence. A team of carpenters working on one of the buildings never even showed up. The Iraqi commando unit that had earned the wary respect of Wallace and his fellow soldiers on their previous visits to the compound had suddenly and inexplicably redeployed outside the city. And there was another thing — Yahoo was working fine, but the radios were acting up. The 30 or so U.S. troops who rotated into Karbala regularly from FOB Iskan two hours away had had no communication with command all day.
In the aftermath, Wallace would hear about an Iraqi policeman who’d made an ominous comment to U.S. troops. “Tomorrow,” he’d said, glowering. “Tomorrow.”
Arriving at the compound around 6 p.m. the following day, Jan. 20, the AAH assault force, appearing to any casual observer like a U.S. military convoy, convinced the Iraqi police who were guarding the outer perimeter to surrender their weapons and allow the SUVs to enter the facility. (American investigators later theorized that the police had already agreed to cooperate, as they were unusually scarce that evening and reportedly left the compound’s back gate open and unguarded.) Five guerrillas dressed in U.S. military camouflage and carrying weapons resembling M16s and M4s approached a gun truck, where Pfc. Shawn Patrick Falter stepped forward and asked their business. Taking note of their uniforms and command of English, he allowed them to head toward the entrance. Seconds later, an insurgent spun around and shot him in the back; another shot Spc. Jonathan Bryan Chism. Both men were immediately taken hostage.
An inside passageway at the Karbala provincial headquarters.Courtesy Billy Wallace
Awakening from a nap to the crack of small-arms fire, Wallace jumped from bed to find a militant in the doorway, aiming an AK-47 into the room. He and Sgt. 1st Class Sean Bennett slammed the door shut, but the barrel of the weapon remained wedged between the doorframe and the door. The insurgent sprayed the room with gunfire — Wallace can’t say how many rounds — and managed to toss a concussion grenade inside before withdrawing. A moment later, a massive explosion rocked the room next door, which was occupied by commanding officers 1st Lt. Jacob Fritz and Capt. Brian Freeman. The militant returned a moment later, and again managed to wedge his gun into the doorway and open fire. “You can’t imagine the sound cause it’s right there by your head,” Wallace remembered in a phone call with Task & Purpose.
Seconds later, a fragmentation grenade detonated in the hallway as the attackers withdrew, taking Fritz and Freeman with them. The blast blew the door blew off its hinges, and Wallace found himself lying beneath it, his neck and face sticky with blood. It wasn’t until he’d been medevaced out and was convalescing in Baghdad the following day that Wallace would learn the attack’s grim toll in full. Pfc. Johnathon Millican, who’d also been in the commo room, was dead (it's widely thought he was killed after diving onto a grenade, an action for which he was awarded a Silver Star). And Fritz and Freeman had been captured, along with Falter and Chism.
Not a single Iraqi — police, insurgent, or civilian — was harmed in the raid. Investigators determined that the attackers had known where U.S. troops could be found in the base and demonstrated prior knowledge of their defensive plans, which were routinely practiced in view of Iraqi partners. Later, when an extensive planning document for the attack was discovered during a U.S. raid, the portion dealing with the initial approach to the compound read simply, “Pass the first and the second barriers” — one more hint that the betrayal of the Iraqi police units on the scene had been arranged well in advance. Witnesses even recalled seeing a senior leader of the Iraqi police on his cell phone after the attack, laughing.
It is generally believed that the raid had come in response to the American capture, nine days before, of five operatives from the elite Quds Force, an Iranian Revolutionary Guard special operations unit. In its investigation report, the Department of Defense called the Karbala raid, “a well-coordinated and synchronized attack … well beyond the caliber associated with local insurgent or militia capabilities.” In the end, though, AAH had failed in its primary mission. While transporting the four U.S. servicemen, the militants were detected by Iraqi police forces. Opting to take a back road, they ditched the hostages and most of their equipment.
The view inside a Humvee following the attack.Courtesy Billy Wallace
First, though, they executed the defenseless American servicemen one at a time, leaving them handcuffed together in pairs in the backs of two SUVs. Freeman was still alive when Iraqi army units came upon the scene, but he died shortly thereafter in a nearby hospital. Later, investigators would dust the SUV for fingerprints and find a match for the tactical commander Azhar al-Dulaimi.
Some two months after the attack on the Karbala provincial headquarters, U.S. officials received intelligence pinpointing the location of a senior AAH operative, Laith al-Khazali, in Basra. On the night of March 20, 2007, special operations forces raided the safe house, capturing Laith without incident, along with his brother, Qais, the group’s leader; and a third man they were not immediately able to identify. One big obstacle: The thickset, middle-aged gentleman spoke not a word for weeks after his arrest. His American captors nicknamed him Hamid the Mute. The operation also turned up a cache of documents, including ID cards belonging to the murdered soldiers and a 22-page planning memo containing minutes for AAH meetings and outlining the preparation for the raid in painstaking detail.
Weeks later, the mystery man started talking, and what he had to say confirmed the worst suspicions of U.S. military strategists and political leaders: That the war in Iraq had quickly morphed from a counterinsurgency into a shadowy and highly complex proxy war — and that our enemies were not quite who we thought they were.
As it turned out, “Hamid” was Ali Mussa Daqduq, the author of the planning memo, and not only did he speak Arabic perfectly well, he did so with an unexpected accent. Daqduq was not Iraqi; he was Lebanese. A longtime senior member of Iran-backed terror group Hezbollah, who had once handled personal security for the group’s leader Hassan Nasrallah, he was working under the command of the Quds Force, run by the formidable commander Qasem Soleimani. Daqduq’s job, he told investigators, was to organize Iran’s proxy militias operating in Iraq, known as Special Groups, into tightly knit cells based on the command structure developed by Hezbollah. He’d even ferried units to Iran for specialized training. Just how specialized would become clear a few months later, when American spy satellites managed to pinpoint a training facility across the border in Iran that duplicated the precise layout of the Karbala compound.
In this July 2, 2007, file photo U.S. military spokesman Brig. Gen. Kevin J. Bergner speaks during a press conference in Baghdad, Iraq, near a poster of a senior Lebanese Hezbollah operative Ali Mussa Daqduq.AP Photo/Wathiq Khuzaie, Pool
Within days of Daqduq’s decision to unburden himself, Gen. David Petraeus, commanding general of the multinational forces in Iraq, publicly accused Iran of assisting, funding, and even directing militant groups in their efforts against coalition troops. The purpose of Daqduq’s 22-page memo, Petraeus suggested, had been to reassure AAH’s backers in Tehran that their financial contributions were showing a positive return on investment. “Our sense is that these records were kept so that they could be handed in to whoever it is that is financing them,” he said. “And there's no question that Iranian financing is taking place through the Quds force.”
In other words, Wallace and his men may have thought they were in a relatively friendly environment, working with their Iraqi counterparts to develop a security plan for the Karbala shrine. In fact, they were sitting ducks, surrounded by unseen enemies controlled by a foreign power with whom they never even knew they were at war.
“They thought they were fighting the main enemy,” as Osen put it. “It turns out they were fighting the sideshow.”
The Karbala raid wasn’t the intelligence community’s first inkling of what the Islamic Republic was up to. (“If we know so much about what Iran is doing in Iraq,” Defense Secretary Donald Rumsfeld had written to Joint Chiefs of Staff chairman Gen. Peter Pace some two months prior, “why don’t we do something about it?”). But the brazen, well-executed attack on a seemingly secure compound certainly brought the issue home. The planning memo was a “smoking gun,” as Gen. Stanley McChrystal put it in his 2014 book My Share of the Task. “We had long suspected Iranian involvement,” he wrote, “but never had it been laid in such bare, unmistakable terms.”
“It was such an extraordinary attack and so successful, and it happened with a snap of the fingers,” Phillip Smyth, a fellow at the Washington Institute for Near East Policy specializing in Shiite armed groups, said in an interview. “It demonstrated the force potential that these groups can bring to table and showed they mean business.”
For Petraeus, the raid “marked an escalation in the sheer boldness and creativity of Shia militia elements — and the conduct of an operation in what previously had been a reasonably secure Shia area,” as he put it in an email to Task & Purpose. “The apparent murder in cold blood of the kidnapped Americans represented a level of barbarity seldom previously exhibited by Shia militia forces.”
Gen. David Petraeus briefs the press on Iraq in 2007.Screengrab C-SPAN
While the Karbala attack was a relatively small chapter in the Iraq War, it provided a rare window into a complex dynamic that had been largely invisible to U.S. troops and even military planners: Iran’s ambitious and remarkably effective strategic effort to extend its influence throughout the region. Making shrewd use of an ever-widening array of political allies and proxy militias, Iran has exploited opportunities created by American involvement in the Middle East to carve out what King Abdullah II of Jordan once called a “Shia crescent” — a sphere of influence stretching from Tehran, across Iraq and Syria to Lebanon (and increasingly eastward into parts of Afghanistan and Pakistan). In Iraq, Iran aggressively backed Shiite militias battling to rout the Islamic State, emerging as a major power broker in the country. It did the same thing in Syria, simultaneously making sure Syrian president Bashar al-Assad survived in office, and again cementing its influence. Tehran’s longtime client, Hezbollah, remains a dominant force in Lebanese politics, despite Saudi Arabia’s extraordinary campaign against it. Meanwhile, Iran is also backing the Houthis against the Saudis in Yemen, and has supported Sunni groups Islamic Jihad and Hamas in Gaza.
And then there’s Afghanistan, where Tehran has been actively supporting the Taliban, putting aside denominational differences with the group in order to further extend its power base and to deny America a meaningful victory in the country after 17 years of war.
It’s an impressive record of accomplishment, largely credited to Qasem Soleimani, the same man who oversaw Daqduq’s efforts to organize Iraq’s Shiite militias and presumably signed off on the plan to kidnap American soldiers in Karbala.
Tehran’s considerable influence in Iraq would be amply demonstrated several years after the raid when Daqduq finally went on trial for his role in it. He’d remained under arrest in the Green Zone until 2011, when the Status of Forces Agreement governing the U.S. withdrawal stipulated that all such detainees were to be transferred to Iraqi custody. He was the last one the United States let go.
Daqduq stood trial in an Iraqi court in 2012. The evidence, including the materials obtained in the Basra raid and the militant leader’s own disclosures to U.S. investigators, appeared ironclad. But the case posed a political test for the Shiite-dominated government of Prime Minister Nouri al-Maliki. Though his government depended on the support of the United States, it also had close ties the Islamic Republic of Iran and shared ideological and strategic goals with the Shiite Special Groups Daqduq had organized. Moreover, according to The New Yorker, Maliki had been hand-picked and promoted as leader of Iraq by Soleimani himself, in exchange for a promise that the Americans would be denied a continuing military presence in the country. When he honored that commitment, many observers argued that he did so with Obama’s acquiescence.
A memorial service for the five service members murdered in the Karbala attack.Courtesy Charlotte Freeman
A group of senators called the transfer of Daqduq to Iraqi custody “disgraceful.” Some floated the idea of simply spiriting him out of Iraq to face a military tribunal in Guantanamo Bay or a civilian trial in New York. Sgt. Billy Wallace wasn’t so sure. When he was initially approached by American investigators about testifying against the terror commander, he wondered if a war crime had really been committed. Was the insurgent attack really so different from what he and other American soldiers did in Iraq every day — raiding a target, taking prisoners, killing enemy fighters? At this point Wallace was struggling with post-traumatic stress disorder. He had a tendency to be blunt with people. “Why are you even trying this guy as a war criminal?” he asked one agent. “To me, yeah, it sucks, but it’s a war. Why are they trying him for it when we've done the same thing?”
The difference, the agent told him, was that Daqduq and the militants who’d attacked the Karbala provincial compound weren’t legal combatants. They were working for Iran, a country with which America was not at war. At least not openly.
Despite, Wallace’s testimony, delivered via videoconference from Fort Bragg, the Iraqi court cleared Daqduq of all charges. His release was stalled due to the objections of the Obama administration, which pushed for extradition. But on Nov. 15, 2012, he was freed. Daqduq’s attorney later claimed that Iraq had waited until after the American election so as not to embarrass the president.
The failure to punish the mastermind of the Karbala attack was a stinging rebuke to U.S. authorities — not to mention, one more piece of evidence for Obama’s detractors that his foreign policy in the region was naive or worse. But to a team of lawyers whose job is connecting dots, Ali Mussa Daqduq was more than a terrorist. He was a dot at the dead center of a much bigger picture.
One afternoon not long ago, in the conference room of his modest New Jersey office suite, Osen sat with one of his law partners, Ari Ungar, and explained the process by which he’d come to believe that Daqduq’s strike team and their Iranian backers were not the only culpable parties in the Karbala raid. Far from it.
“It's like a jigsaw puzzle where you don't have the box to look at,” Osen explained. “I didn't understand immediately just what the nature of the larger game was. I didn't understand what the Iranians were doing. I didn't understand the U.S. government’s feeble attempts to counter it, and I didn't understand the role of the banks, or that it was a systemic problem. That's the product of 10 years of looking at it.”
The key to Osen’s legal attack, developed with his colleague, longtime George Washington University law professor Peter Raven-Hansen, lay in the array of economic sanctions originally imposed on Iran after a group of students stormed the U.S. embassy during the 1979 revolution. The sanctions were loosened as part of the 2015 Iran nuclear deal, officially known as the Joint Comprehensive Plan of Action, and the Trump administration has so far declined to reimpose them. But Osen’s case hinges on the much stricter financial regulations that were in place in 2007, when the Karbala attack occurred. Though the sanctions at the time left the country little financial wiggle room, Iran remained devoted to two expensive projects. “One was to acquire nuclear weapons, and the other was to foment violence and bloodshed, particularly American bloodshed in Iraq and Afghanistan,” Osen said. “Both of these ambitions required substantial amounts of capital.” The problem was that the country’s only major source of funds was U.S. dollars obtained through the sale of oil and natural gas.
Due to the particulars of the international banking system, in which the almighty dollar remains the coin of the realm, the United States has “a unique power to hold Iran by its royal family jewels,” as Osen put it. According to Jonathan Schanzer, senior vice president of the Foundation for Defense of Democracies and former terrorism finance analyst at the Treasury Department, “What has made the U.S. effective in its sanctions regime has traditionally been the fact that it controls the primary channels of money flows — that if you’re dealing in dollars and processing transactions through American banks, then America does have jurisdiction.”
Cap. Brian Freeman with a group of Iraqi children.Courtesy Charlotte Freeman
Nonetheless, the Iranians managed to slip billions of dollars through, and they had plenty of help doing it. This fact that came to light over the course of several years, as one by one, a handful of major banks — HSBC, Standard Chartered Bank, Barclays, Commerzbank, Credit Suisse, and the Royal Bank of Scotland — admitted they’d conspired to conceal Iranian bank transactions from regulators in the United States. In some ways, holding these institutions accountable ran counter to the policy goals of the Obama administration, which was eager to cultivate a relationship with Iran’s moderates and to prop up major banks in the wake of financial collapse. That may explain why the federal government mostly hung back while the Manhattan district attorney’s office did the heavy lifting. Eventually, though, the feds got on board, and the banks cut deals, known as deferred prosecution arrangements, to avoid further action.
The civil suit, known as Freeman v. HSBC, was filed in November 2014. Asked to comment on the allegations, five of the banks either declined to comment or did not respond to emails. However, a spokesperson for HSBC affirmed the company’s “utmost respect for American service personnel and their families,” adding that the bank has “taken strict steps to help keep terrorists and other bad actors out of the global financial system” and would “defend ourselves vigorously against these legal claims.”
The legal complaint cites numerous internal corporate documents made public as the cases unfolded. One in particular illustrates the contempt with which some international financial institutions appear to have viewed U.S. sanctions law. In October 2006 — just a few months before the Jan. 20 attack on the Karbala base — Standard Chartered’s CEO for U.S. operations sent an email to an executive in London pointing out that the company’s illegal efforts on behalf of Iran could have significant consequences, including “catastrophic reputational damage” for the company and “serious criminal liability” for the two men.
“You fucking Americans!” the bank’s head of London operations fired back. “Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.”
Schanzer declined to estimate how much the various banks may have profited from their dealings with Iran, but the upside appears to have been considerable. “Iran’s oil production is significant, and that’s what had banks seeing dollar signs,” he said. “And there’s often premium attached, given the risks. Because of the toxic nature of the regime during this time period, they were looking at windfalls.”
The challenge for Osen will be convincing a jury that the banks’ actions actually facilitated operations, such as the attack on Karbala. Nobody claims the banks had knowledge of specific attacks, but for Schanzer, the connection is obvious. “When you have banks knowingly facilitate financial transactions on behalf of a state sponsor of terrorism, they have to know that what they’re doing is contributing to bloodshed,” he said. “Choosing to ignore it is unethical and immoral.”
Having retired from the military in 2014, Billy Wallace now works as a police officer in Indiana and is pursuing a master’s of divinity from Liberty Baptist University. He hopes to become a healthcare chaplain. “My goal is to get in there and help these soldiers, men and women veterans, that are struggling,” he said.
Osen would be thrilled if a positive legal outcome gave the Wallaces, along with the families of the men killed in Karbala, a financial cushion. But his real objective, he said, is striking a blow against the banks he believes have brazenly enabled Iran, and by extension, maybe make life a little harder for an enemy we’ve underestimated for years. “The real instigators of destabilization and killing of American troops in Iraq wasn’t the Sunni insurgency but Iran and its proxies,” Osen contended. “But we weren't at war with the Iranians — they were at war with us. They got a freebie.”
Standard Chartered Bank in London.Wikimedia Commons
As for the banks, Osen knows they have him outgunned. The defendants are represented by the largest, most powerful law firms in the country. But he’s counting on at least one key competitive advantage — dogged obsession. “Many of them on the other side, by any objective measure, are just better lawyers,” he admitted. “But they're probably not very emotionally invested in protecting a foreign financial institution. They don't really care. I care.” And it does appear that suits like Osen’s, along with the efforts of the Manhattan district attorney’s office and others, have had a deterrent effect. Petraeus called lawsuits like Freeman v. HSBC “a commendable initiative.”
“The Department of Treasury knows who the bad guys are, and that’s a serious issue for the Iranians,” Phillip Smyth pointed out. “If you’re trying to transition from being a pariah state to being part of the international community, you need foreign investment and connections with major banks.”
Because of such suits, Schanzer said, “Iran is still toxic.” In 2016, HSBC’s chief legal officer declared that “HSBC has no intention of doing any new business involving Iran,” explaining that despite the lifting of certain sanctions, “the private sector is still responsible for managing its own risk and no doubt will be held accountable if it falls short.”
Meanwhile, although Azhar al-Dulaimi, the tactical commander of the Karbala raid, was killed by U.S. troops in May 2007, Asaib ahl al-Haq not only escaped punishment for the incident (just one of its 6,000 claimed attacks on U.S. troops between 2006 and 2011) but is thriving. In November 2016, the Iraqi government granted official status to the group, along with several other militias operating in the country, as thanks for its help taking on the Islamic State. AAH played a key role in that effort, offering limited cooperation with U.S. forces and reportedly making use of American M113 armored personnel carriers.
Its contribution to ISIS’ defeat has earned AAH substantial popular support. Following the Hezbollah model, the group has worked to rebrand itself as a political organization (it removed the rifle from its logo, for instance) while nonetheless maintaining its paramilitary activities. As it has done before, AAH intends to field candidates in the upcoming May elections as part of a bloc with other militant Shiite groups. “These guys fought in Syria,” Smyth points out. “The average Iraqi will say, ‘I’m willing to give them more of a political voice because maybe they earned a place at the table.’” As such groups gain influence, Iran is liable to solidify its control over Iraq — not long ago, its greatest geo-political rival — for years to come. As Smyth put it, “The Iranians are dug in. It will be very hard to push them out.” And they owe their success in large part to the efforts of the United States.
— Elijah J. Magnier (@ejmalrai) September 3, 2014
In the final days of 2017, widespread demonstrations swept Iran. The Revolutionary Guard Corps was tasked with implementing the government’s response, and at least 22 Iranians were killed. Protesters chanted, “Leave Syria, think about us!” and a video showed Iranians tearing down a poster of Qasem Soleimani, who is said to be the target of an Israeli assassination plot recently “greenlit” by U.S. officials.
For now, the Iran nuclear deal still stands. President Donald Trump regularly threatens to scuttle the agreement and impose new sanctions, but to make a real difference, he’d have to convince other countries to join him, something they may be disinclined to do. Without an international consensus — to say nothing of the compliance of major banks like the Freeman defendants — the Islamic Republic could wind up with even more access to capital, even as Tehran fires up the old centrifuges.
In which case, America may well find itself going to war in the Middle East yet again.