Iranian Assets Unfrozen by Judge for Terror Victims' Kin

A U.S. judge agreed to unblock more than $1.9 billion held in a Citibank NA omnibus account to establish a fund for victims of terrorist attacks, including the 1983 bombing of a Marine barrack in Lebanon.

U.S. District Judge Katherine Forrest in Manhattan yesterday issued an order allowing the fund to use assets being held in a Citibank account for Clearstream Banking SA, in which Forrest said Iran is alleged to have an interest.

The case stems from a suit brought by Deborah Peterson, the sister of a James Knipple, a captain killed when terrorists bombed the U.S. Marine barracks in Beirut in October 1983.

U.S. District Judge Royce Lamberth in Washington ordered Iran in 2007 to pay $2.6 billion to relatives of 241 servicemen killed in the attack.

When Lamberth issued his ruling, he said that the award, one of the largest against any country, was intended to deter terrorists and help families and survivors cope. Iranian officials didn’t contest the case, and the country has ignored similar orders.

Sharon Schneier, a partner at Davis Wright Tremaine LLP who represents Citibank, declined to comment. Shannon Bell, a spokeswoman for New York-based Citigroup Inc. (C), didn’t immediately reply to voice-mail and e-mail requests for comment on Forrest’s ruling. Liviu Vogel, a lawyer representing Peterson, didn’t immediately respond to a voice-mail message seeking comment.

The case is Peterson v. Islamic Republic of Iran, 10-cv-4518, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in federal court in New York at pathurtado@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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