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Saturday, Nov 18, 2017
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Lawsuits block Cuba’s path to normalization

In the view of the United States, Cuba forfeited the sovereign immunity that protects it from civil suits in U.S. courts when it embraced terrorist groups in Latin America three decades ago.

Since then, the Cuban government has racked up a bill of more than $4 billion plus interest, accruing primarily to Floridians whose families — according to court rulings in this state and New York — have suffered from Cuba’s actions.

Now the legal stalemate threatens to stymie efforts by President Barack Obama to normalize relations between the two nations. Unless the judgments are paid or dismissed, discussions now underway in Cuba can only go so far. Cuban planes could not land in the United States. Goods produced by the government could not be sold here.

Progress hinges on a State Department review of whether Cuba belongs on the State Sponsors of Terrorism list. Obama wants an answer in the next six months.

The U.S. added Cuba to the list in 1982, primarily for its support of the Revolutionary Armed Forces of Colombia, known by its Spanish acronym, FARC.

State Department reports say Cuba has been hosting peace talks between FARC and the Colombian government and has worked to eliminate the financing of terrorist operations through its banks.

Many analysts say they expect Cuba’s efforts will carry the day, and sooner than six months — restoring its sovereign immunity in the eyes of the United States and protecting it from court judgments favoring people now seen as victims of terrorism.

“It is going to be very difficult for them to collect,” said Antonio C. Martinez II, a New York-lawyer specializing in Cuba assets.

“Once immunity is returned, (Cuba) is protected and can assert the immunity against the enforcement of those judgments.”

That may well be, says Andrew Hall, a Miami lawyer representing a South Florida man who is owed the lion’s share of the judgments — $3.2 billion. But Hall doesn’t think the Obama administration will send away his client, Gustavo Villoldo, empty-handed.

“The government of the U.S. could say they are taking the claims and settling from zero,” Hall said. “But politically that would be an extreme measure that would exceed anything the U.S. government has ever done.”

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Villoldo says in his lawsuit that his father was forced by Ernesto “Che” Guevera, a leader of the revolution that seized Cuba in 1959, to commit suicide to prevent the murder of his family. The family’s businesses, including a General Motors dealership, were nationalized.

Cuba chose not to defend itself in court against this or any of the lawsuits. Villoldo won by default.

Robert Muse, Washington lawyer specializing in legal issues arising from the U.S. embargo against Cuba, is lobbying the U.S. government to dismiss the cases for a lack of merit.

“Something went dreadfully wrong,” Muse said.

The Villoldo lawsuit faces a high legal bar, he argued, requiring proof that the Cuban government was a designated sponsor of terrorism at the time of the crime and that the victim was a U.S. citizen.

Villoldo was a Cuban citizen when he died, and the crime occurred more than 20 years before Cuba was placed on the terrorism list.

That’s not the whole story, though, said Hall, the Miami lawyer.

Money the Cuban government received from nationalizing his client’s property helped fund Cuba’s export of terrorism, and the Villoldo family was threatened by the Cuban government as recently as 2003, when they were U.S. citizens, Hall said.

A judge agreed, he said.

The civil judgments attached to Cuba’s terrorism designation are separate from property claims made by those who had their land or businesses nationalized by the Cuban government in the years after Fidel Castro’s rise to power. It was this confiscation that led the U.S. to impose the trade and travel embargo that remains in place today.

Those claims, Hall said, total as much as $7 billion.

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In the president’s State of the Union address Tuesday, he urged Congress to lift the embargo against Cuba.

Under U.S. law, that can only be done after the two nations settle the property claims.

Even then, though, the civil judgments remain a stumbling block. While the judgments are in force, any assets of the Cuban government that enter the U.S. could be subject to seizure.

That’s what happened in 2003 when a Cuban plane carrying people fleeing the Communist government was hijacked and flown to Key West.

Cuba demanded the plane’s return, but it was auctioned. The money was used to settle part of a $27 million judgment won by a Cuban-American woman who said she unwittingly had married a Cuban spy as part of his cover-up.

Villoldo’s attorney, Hall, attempted to seize a Cuba-owned airplane in 2013 that brought the president of Cuban ally Venezuela to New York for a meeting of the United Nations. But the pilot was tipped off, and the plane left the U.S.

So don’t expect airline travel anytime soon between the two nations, New York lawyer Martinez said.

For Cuba to welcome U.S. airlines, it may want reciprocation — and some form of protection against seizure.

“Sovereign immunity would do that,” Martinez said.

Dealing with the civil claims is on the radar of the White House as it begins negotiations with Cuba, a senior administration official said in an email to the Tribune: “Resolution of outstanding U.S. claims remains a priority for the U.S. government, but we are unable to provide a specific time frame or details at this time.”

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All claims against Cuba likely will be dealt with through a foreign claims settlement commission, the administration told reporters Monday.

Cuba may be allowed to bargain with the claimants as part of the commission’s negotiations, Hall said.

Cuba would have some ammunition in those talks, Martinez said.

First, there’s the merit argument, he said. Cuba could also bring up the $1 trillion and more it claims the embargo cost the country, as well as U.S. inaction as ally and former President Fulgencio Batista plundered Cuba’s treasury.

Some historians have estimated that Batista made off with $700 million before he was overthrown.

A more accurate estimate is $150 million to $300 million, said Frank Argote-Freyre, a Batista biographer and professor at Kean University in New Jersey.

The higher estimate is from Fidel Castro and has never been supported by independent sources.

Most of the looted money was placed in international banks, but some did make it into the U.S.

“There was never any thought by the U.S. to look for or freeze accounts,” Argote-Freyre said. “Or at least in none of the diplomatic correspondence I have seen have I seen that.”

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The civil judgments against Cuba were made possible by a 1996 U.S. law allowing victims of designated terrorist states to sue for damages and by a 2002 law allowing them to take the defendant’s assets frozen by the U.S. government.

At that time, more than $200 million in Cuban assets was frozen in the U.S., primarily money sitting in New York banks that was owed to Cuba by communications giant AT&T, said Joseph DeMaria, a Miami lawyer.

The first to tap into the millions was Brothers to the Rescue, a Miami organization that helped refugees fleeing Cuba by raft and supported nonviolent opposition in the island nation.

In 1996, two Brothers to the Rescue planes were shot down by a Cuban MiG, killing four.

The Cuban government claimed the planes had entered its airspace. Brothers to the Rescue said they were in international waters.

A judge awarded the families of the victims about $90 million from the AT&T assets.

Later, the family of Thomas “Peter” Ray was awarded about $90 million in compensation for his execution and the desecration of his body.

Ray was a U.S. pilot shot down during the failed Bay of Pigs invasion. Witnesses said Cuban officials executed him, kept his body in a freezer and occasionally pulled it out to kick and spit on it.

DeMaria also helped recover $47 million for the family of Howard F. Anderson, an American businessman executed by firing squad in Cuba in 1961. Cuba convicted Anderson of helping to smuggle weapons to an anti-Castro group on the island.

The lawsuit filed in the U.S. contended that his trial was a sham.

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The U.S. government does not keep a list of civil judgments against Cuba, so how much is still owed and to whom is not clear.

Besides the Villoldo family, Demaria said, those still trying to collect include the families of American Bobby Fuller and Cuban Aldo Vera. Vera was a high-ranking Cuban police official who attempted to organize an anti-Castro political group in Puerto Rico, where his family contends he was gunned down in 1976 by Cuban agents.

Vera’s family was awarded $49.3 million after Cuba defaulted at the civil trial.

Fuller was executed by Cuba in 1960 for “counterrevolutionary activity” in a trial his family contends was a sham.

Fuller’s family was awarded $454 million in a civil trial where Cuba also defaulted.

Villoldo was awarded $2.8 billion. The remaining $400 million he is owed is from interest.

Under Florida law, interest in these civil case awards is 11 percent a year, said Muse, the Washington lawyer.

In recent years, the plaintiffs have had trouble collecting because the AT&T money is gone.

The U.S. government still holds more than $200 million in Cuban assets, mostly wire transfers that passed through a U.S. bank. Those linked directly to the Cuban government or a state-owned entity can be seized, but not those of a Cuban national.

The U.S. does not reveal the source or location of these assets, so plaintiffs’ attorneys must go hunting for them.

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Complicating matters is that Cuban-owned assets cannot be seized in the U.S. if they are produced in a partnership with a third country.

One example is Cuba’s renowned cigars.

London-based Imperial Tobacco is the international partner of Cuba’s state-owned tobacco company, Habanos, and has exclusive rights to distribute Cuban cigars off the island.

DeMaria said such deals will blossom in the coming years to protect Cuba’s assets from U.S. seizure.

“Cuba is smart,” DeMaria said. “They have a sophisticated team of lawyers setting up businesses with other countries.”

The process of recovering assets is bound to change with normalization of relations between the two countries.

Still, Hall is determined to collect for his client Villoldo.

He has filed billion-dollar lawsuits against France-based BNP Paribas and Dutch-based ING Group.

Both banks have pleaded guilty in U.S. courts to knowingly omitting the names of sanctioned Cuban entities from financial transactions, a violation of U.S. laws.

Among a series of executive orders from Obama regarding Cuba is one saying U.S. banks no longer are required to freeze wire transfers and assets attached to Cuban nationals unless they involve so-called “specially designated persons.”

Such people may be directly linked to terrorism or involved in actions deemed counter to democracy.

Removing Cuba from the terrorism list will not free up the assets of these specially designated people.

What it would do is prevent future lawsuits against Cuba — a big step toward normalization, Martinez said.

“Normalization means that travel, trade and business are normal between us and Cuba,” he said. “These lawsuits and the trade embargo are among the remaining obstacles that need to be removed.”

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