Recently, American and Israeli plaintiffs filed suit against Iran and UNRWA. Read The Foundation for Defense of Democracies (FDD) report here: https://bit.ly/4iNqekY

FDD.org senior fellow Order Kittire stated, “The October 7 massacre is part of a long list of Iranian-sponsored terrorist attacks. U.S. federal courts have, over the last three decades, issued over 90 judgments finding the Iranian government and its officials liable for acts of terrorism that claimed American victims. As a result, these victims’ families hold over $50 billion in outstanding federal court judgments against Iranian government entities and officials, including over $1 billion in damages against Supreme Leader Ayatollah Ali Khamenei himself. The incoming U.S. administration could do more to help these American victims to use these judgments to seize Iranian assets in foreign countries. Doing so would both compensate the American victims and make it harder for the Iranian regime to continue sponsoring such atrocities.”

If previous lawsuits are any indication, whether the victims and their families will ever collect on their judgment is a different story.

Background

In December 2015, Otto Warmbier, a Jewish American college student, took a weeklong tour of North Korea. North Korean officials grabbed the young man while he was waiting in line to board a plane leaving North Korea.

After a month or so of silence, the North Korean government accused Warmbier of trying to steal a propaganda poster from his hotel. They even produced a blurry video of someone removing the poster. At a tribunal Warmbier “confessed” to his “crime” and was sentenced to 15 years in prison with hard labor.

In June 2017, an American official informed the Warmbier family that their son was in a coma. After American pressure and outrage, North Korea returned Otto Warmbier to America; he died shortly thereafter.

On December 24, 2018, a federal court in Washington D.C. entered a judgment against North Korea of $501.3 million for the torture, hostage taking, and extrajudicial killing of Otto Warmbier.

Where Is the Money?

One of the most famous questions in the Talmud is “from where do we know that according to Torah law one may use money (or a ring) to marry a wife in a wedding ceremony?” (“kesef mi’nalan?”)

That same question applies to anyone who won a court case. Say Reuven sued Shimon for a business deal gone bad. The judge ruled in Reuven’s favor and determined that Shimon owes Reuven $100,000. How can Reuven collect the judgment if Shimon refuses to pay?

Turnover Order and CPLR § 5225

The Civil Practice Law and Rules (CPLR) is a statute that governs civil litigation in New York State. It provides a comprehensive framework for the procedures that must be followed in civil cases filed in New York.

CPLR § 5225(a) describes the rules a judgment creditor (such as Reuven) must follow to collect money directly from a judgment debtor (such as Shimon). CPLR also contains §5225(b), which describes the rules of collecting property not in the possession of a judgment debtor. The statute provides that Reuven (the judgment creditor) can start a “special proceeding” against a third person, (Levi), who is holding onto Shimon’s money. The Court can order Levi (or, more likely, a bank holding Shimon’s bank account), to deliver money to Reuven. How would the Warmbiers collect against North Korea?

Sanctions Against North Korea

Since the 1950s America has introduced economic sanctions against North Korea. Recently, complex international banking systems have led to increased sanctions on North Korean banks and their co-conspirators.

Korea Kwangson Banking Corporation

In August 2009, the United States Treasury Department froze the U.S. assets of the Korea Kwangson Banking Corporation and prohibited United States citizens from doing business with the group, accusing it of aiding the purchase of weapons of mass destruction.

In a recent action against North Korea Banks, on April 25, 2023, the United States Treasury Department announced a $508 million settlement agreement with London-headquartered British American Tobacco to resolve its apparent violations of United States Sanctions on North Korea. The Treasury Department investigation found that British American Tobacco, one of the world’s largest tobacco companies, engaged in a seven-year conspiracy from 2009 to 2016 to send over $250 million in profits from a North Korean joint venture through United States financial institutions by relying on North Korean Banks and a variety of intermediaries.

British American Tobacco also exported tobacco to the North Korean Embassy in Singapore until 2017 using unwitting United States banks to receive or process these payments. These financial facilitators are linked to North Korea’s weapons of mass destruction proliferation network. (see https://home.treasury.gov/news/press-releases/jy1441)

State Comptroller Thomas DiNapoli

A comptroller is a position responsible for supervising the quality of accounting and financial reporting of an organization. The current New York State Comptroller is Thomas DiNapoli.

The Order: Partial Satisfaction

On January 13, 2022, Federal Judge Lawrence Kahn ordered Thomas DiNapoli to pay and turn over $240,336.41 plus any accrued interest to Otto’s parents, Cynthia and Frederick Warmbier (the “Judgment Creditors”), in partial satisfaction of the $500 million judgment against North Korea.

Judge Kahn wrote that the owner of the frozen Korean funds was “Korea Kwangson Banking Corporation, which constitutes an agency or instrumentality of the terrorist party North Korea.”

Since the United States Treasury blocked/froze the funds, they were in the control of New York State comptroller. Judge Kahn directed the Comptroller to hand over the funds to the Warmbiers, the judgment creditor.

Summary and Timeline

In or around January 2016, North Korea kidnapped, tortured and killed Otto Warmbier, a Jewish college student. On December 25, 2018, the D.C. District Court entered a judgment against North Korea under the Foreign Sovereign Immunities Act (FSIA) in the amount of $501,134,683.80. On April 9, 2019, the D.C. district court authorized the Judgment Creditors (the Warmbiers) to seek the funds (“attachment and execution”). On March 17, 2021, Judgment was registered in the United States District Court for the Northern District of New York. On January 13, 2022, Judge Lawrence Kahn, Senior U.S. District Judge, ordered Thomas DiNapoli, New York State Comptroller, to deliver $240,336.41 (plus interest) of seized North Korean funds to the Warmbiers in partial payment of their judgment.

Points to Ponder

First, often a “judgment creditor” must go through a post-litigation process to collect from a “judgment debtor” by “attachment and execution.” The Warmbiers collected $240,000 on a $500 million judgment. Second, pay attention to North Korea. In the Warmbier case, a senior United States District Court Judge referred to North Korea as a “terrorist party.” Third, despite U.S. sanctions, North Korea continues to utilize the United States financial system to fund its nuclear weapons and ballistic missiles. as North Korea cleared hundreds of millions of dollars through U.S. banks or foreign branches.

Eliyahu Asher Prero, Esq. is a certified mohel and practicing lawyer. He graduated magna cum laude from Seton Hall Law with a concentration in intellectual property law and served as a clerk for the Honorable Thomas A. Sarlo, in the Superior Court of New Jersey, Civil Division-Bergen County. He is currently an associate at the law firm Schenck, Price, Smith & King, where he focuses on constitutional law, commercial litigation and insurance defense.