Summary
The United States Court of Appeals for the District of Columbia Circuit holds that the Justice for United States Victims of State Sponsored Terrorism Act requires all proceeds from covered violations of IEEPA or the Trading with the Enemy Act to be deposited into the United States Victims of State Sponsored Terrorism Fund, regardless of whether those violations involved a state sponsor of terrorism. The court further holds that proceeds from a related bank-fraud conspiracy must be deposited into the Fund when the conspiracy as a whole arose from doing business with a state sponsor of terrorism, rather than only to the extent of transactions occurring during the state's designation period. The court reverses the district court and remands with instructions to enter summary judgment for the plaintiffs.
Topics
Practice areas
Questions Presented
- Whether the state-sponsor-of-terrorism qualifier in 34 U.S.C. § 20144(e)(2)(A)(i) applies to proceeds from IEEPA and TWEA violations or only to proceeds from related criminal conspiracies, schemes, or other federal offenses.
- Whether all proceeds from BAT's IEEPA conspiracy had to be deposited into the Fund.
- Whether all proceeds from BAT's bank-fraud conspiracy had to be deposited into the Fund when the conspiracy began while North Korea was designated a state sponsor of terrorism but continued after that designation was rescinded.
Holdings
- The qualifier requiring an offense to arise from the actions of, or doing business with or acting on behalf of, a state sponsor of terrorism applies to the second category of offenses—related criminal conspiracies, schemes, and other federal offenses—but not to the first category of violations of licenses, orders, regulations, or prohibitions issued under IEEPA or TWEA.
- All proceeds from BAT's conspiracy to violate IEEPA sanctions had to be deposited into the Fund because the conspiracy was charged under 50 U.S.C. § 1705(a) as a violation of an order issued under IEEPA.
- All proceeds from BAT's bank-fraud conspiracy had to be deposited into the Fund because the single conspiracy originated with BAT's business relationship with North Korean entities while North Korea was designated a state sponsor of terrorism; the later rescission of that designation did not divide the conspiracy into separate transactions or offenses.
Key quotations
“We hold that the Department erred in its allocation and that the Justice for United States Victims of State Sponsored Terrorism Act requires that these criminal proceeds be deposited into the Fund.” (2)
“Proceeds from IEEPA and TWEA violations must be deposited into the Fund, irrespective of whether those violations have a nexus to a state sponsor of terrorism.” (14)
“When a conspiracy originates with a state sponsor of terrorism, the entire conspiracy “arises from” doing business with a state sponsor of terrorism and all of its proceeds must go into the Fund.” (17-18)
Factual background
British American Tobacco and its subsidiary agreed to pay approximately $653 million, including criminal penalties and forfeitures, arising from an IEEPA sanctions conspiracy and a bank-fraud conspiracy involving North Korean entities. The Department deposited none of the IEEPA-conspiracy proceeds and only approximately 8.6 percent of the bank-fraud-conspiracy proceeds into the United States Victims of State Sponsored Terrorism Fund, based on the period during which North Korea was designated a state sponsor of terrorism. Englehardt and Wade, victims of Hezbollah attacks against the U.S. Embassy and Embassy Annex in Beirut who held eligible claims against the Fund, challenged that allocation.
Procedural history
The Department determined that only a small portion of proceeds from British American Tobacco's criminal penalties and forfeitures had to be deposited into the Fund. Englehardt and Wade sued under the APA, asserting that all proceeds from the relevant IEEPA and bank-fraud conspiracies belonged in the Fund. The district court upheld the Department's interpretation and allocation and entered summary judgment for the Department. The D.C. Circuit reviewed the summary judgment ruling de novo, reversed, and remanded with instructions to enter summary judgment for the plaintiffs.
Remand instructions
Reverse the district court's judgment and enter summary judgment for Joseph Paul Englehardt and Yvonne Dora Wade.