Saturday, January 8, 2011
Miami lawyer: Blocked Cuban assets are dwindling
Families whose loved ones have been killed fighting the socialist government have recovered millions of dollars since 2000, tapping into Cuban assets frozen in the United States.
But there’s not much money left to pursue, said Joseph DeMaria, a Miami lawyer who helped recover $47 million in 2006.
“I believe there’s very little left,” DeMaria told Along the Malecon. “I don’t think there’s much upside to chasing these assets anymore. Most of the money has been drained and I think any new money is being created and handled in a way that it’s kept offshore and out of the reach of the United States.”
DeMaria, shown above, is a trial attorney at the Tew Cardenas law firm, which represented the family of Howard F. Anderson, an American businessman executed by firing squad in Cuba in 1961.
DeMaria went after Cuban assets for the Anderson family under a provision of the Terrorism Risk Insurance Act of 2002, which was passed after the Sept. 11 terrorist attacks in New York.
The act allows people with judgments against “terrorist” parties to pursue the assets of ''any agency or instrumentality of that terrorist party.'' The law also says these assets can be used to satisfy judgments for compensatory damages.
Cuba is considered a terrorist party because it’s on the State Department’s annual list of terrorism sponsors.
The U.S. Office of Foreign Assets Control, or OFAC, issues regular reports on blocked assets. Its 2009 report linked $223.7 million to Cuba. But it’s not a simple matter of pursuing that money because the Cuban government doesn’t necessarily own it, DeMaria said.
“You have a lot of money that goes back and forth between Cuba and the rest of the world,” he said. “And most of that money, because it’s going through the Western Hemisphere, if it’s a wire transfer, it’s going to go through New York at some point.
So what happens is, the banks will spot the word Cuba or Havana and they’ll just automatically freeze the transfer.
So when you see these blocked assets, and people think there’s all this money to grab, a lot of it is blocked under the regulations, but is not available for a victim of terrorism because it’s not Cuban assets. It might be the asset of somebody in London sending money to somebody in Cuba, but it’s caught up in the freeze.
“So you have to take the universe of blocked assets, which could be a few hundred million dollars, and you have to then focus and say, how much of that are Cuban assets? And I believe there’s very little left.”
Much of the Cuban money secured over the past decade began to pile up in the 1960s in New York banks, DeMaria said.
“It had been money that AT&T owed to the Cuban telephone company,” DeMaria said. “The Cuban telephone company, once Castro took over, was part of the Ministry of Communications and, therefore, part of the Cuban government. And so the argument was, hey, that’s money of Cuba we can get that sat there frozen for maybe 20 years and earned a lot of interest.”
But it wasn’t clear how lawyers were going to obtain the money until the Clinton administration agreed to a law that allowed them to use frozen bank accounts to pay victims of the Brothers to the Rescue shootdown.
Brothers to the Rescue is an anti-Castro, pro-democracy group based in Miami. In 1994, Cuban fighter jets shot down two of the group’s planes, killing four people.
The victims’ relatives later won a $187.6 million judgment and wanted money from the frozen accounts.
“The Clinton administration actually was fighting the Brothers to the Rescue, saying, no, no, no, and we want the State Department to control this money, so maybe someday we’ll use it for political reasons if we’re trying to make peace with Cuba,” DeMaria said.
But in 2000, Republicans in Congress passed a law forcing President Bill Clinton to make a deal and allow the victims’ relatives to tap into the blocked funds.
“So out of that money that was always in there, the first big chunk went to the Brothers to the Rescue, about $90 million,” DeMaria said. “Now fast forward and everybody is out there trying to sue Cuba.
Cuba defaults on all these lawsuits. So if it gets sued in state court or federal court, they get a default.
And these elected judges impose these enormous judgments, hundreds of millions of dollars. And now you got to go and try to collect. And that’s where we come in. So we were hired by the Andersons to come in and
we knew from reading the Brothers to the Rescue file that there was more money leftover.”
DeMaria took his case to New York to pursue Cuban assets that JP Morgan Chase had frozen.
“That’s where we had to fight,” he said. “And then another family actually showed up, the Weininger family, that had a claim of about $20-some-odd million. We had a claim of about $60 million. And to make a long story short, we eventually made a deal to split it and they got their $20-something-million and we got our $40-something-million.”
Janet Weininger fought for the money on behalf of her father, Thomas “Pete” Ray, a CIA pilot whose plane was shot down in Cuba during the Bay of Pigs invasion in 1961.
Weininger was six years old when she last saw her father alive. As a teen-ager, she began investigating his death. She eventually learned that her father’s plane had been shot down in Cuba and his body was reportedly kept in a freezer in Havana for 18 years.
“Eyewitness testimony established that high ranking officials of the Cuban government would routinely remove Pete Ray’s body from the freezer to mock it and to place their feet on top of his face,” a 2004 court document said.
A Cuban named Enrique Rivero testified that he saw Pete Ray’s body removed “on many occasions in 1961 and 1962… On numerous occasions I saw government officials in uniform spit on the body of Pete Ray and kick the body…”
Officials also swore at the body and one Army commander allegedly urinated on it, Rivero said.
DeMaria said Anderson’s body was also abused.
A revolutionary tribunal had convicted Anderson of conspiring to smuggle weapons to anti-Castro forces in 1961.
“It was awful,” DeMaria said. “They accused him of being a spy…They drained all the blood out of him before they shot him. And then they desecrated his remains. It was very bad, bad stuff.”
The families of Ray and Anderson both obtained multimillion-dollar judgments for damages. Eventually their lawyers started working together to try to collect the money.
“We had to fight the banks,” DeMaria said. “Then we even had to fight a company called the Cuban Electric Co., which is actually a company owned by an American company that said they had a claim. They tried to knock us out. And we fought through all that in the federal court.”
U.S. District Court Judge Victor Marrero ruled in favor of the families on Nov. 17, 2006.
“I'll never forget the day,” DeMaria said. “It was a Friday.”
Marrero’s 104-page order “said we win. We get our money. A month later, we got our money.”
The Brothers to the Rescue victims and the Ray and Anderson families wound up with more than $170 million.
“That took most of the money that was left,” DeMaria said. “There was a third stage of litigation because there was some money owed based upon current monies that AT&T pays to the Cuban telephone company. You can't get the actual money itself because Cuba got smart and they set up their new telephone company to be owned by Italians and Spaniards and others, so therefore it's not the government of Cuba per se, but there's taxes owed on that money to Cuba and you can get the taxes, and then there's interest owed on the taxes.
“But since we grabbed most of the money that was in the accounts, there's not much that's growing anymore. There might be a few million dollars here or there. In any event we had a third lawsuit in New York. We actually made a deal with them. AT&T paid, I don't know, a million, a couple million dollars, and we got a piece of that. I think that pretty much drained almost all the money.”
Some critics question whether victims should be awarded blocked Cuban assets.
For starters, these critics contend, Cuba shouldn’t even be on the State Department’s terrorism list. They cite a leaked February 2009 U.S. embassy cable that said terrorist actions were unlikely to originate in Cuba. And if Cuba is not a terrorist threat, they say, then victims shouldn’t collect assets under the Terrorism Risk Insurance Law.
DeMaria said the Anderson family saw their judgment as justified.
“They saw the money as an inheritance,” he said. “Their father, Mr. Anderson, owned gas stations in Cuba. He had gone down there in the pre-Castro era and he had made investments. He owned gas stations and businesses. And so they saw this money as their inheritance, something that their father worked hard for - for the kids. Their father worked very hard, built up these businesses that basically got expropriated.
“Also, I think part of it was it felt good to have some retribution, you know. In tort law, if somebody gets killed, you can't bring them back. But you can get money for it…some sense of justice or recovery.”
DeMaria had other victories in the race for Cuban assets.
In 2005, he and his law firm recovered $200,000 for Ana Martinez, the former wife of Cuban agent Juan Pablo Roque, who infiltrated Brothers to the Rescue, then fled to Cuba after the shootdown. Martinez accused Roque of marrying her under false pretenses while he was spying on Brothers to the Rescue without her knowledge.
Others in Florida have also also won judgments. Brothers Gustavo and Alfredo Villoldo, for instance, were awarded $1.179 billion in the wrongful death case of their father, who killed himself after the Cuban government took his General Motors dealership and other businesses.
But collecting the money hasn’t been easy for anyone.
DeMaria said he spent about three years working on the Anderson case.
“I'm proud of the work that we did,” he said. “I was working it for contingency. We didn't know if we'd ever succeed. We could have just as easily lost.
“That's the nature of the American torts system. Lawyers are willing to take a chance if they think there's value in it. Sometimes they win, sometimes they lose.
That's what contingency practices are all about.”
He expects the fight for Cuban assets to continue.
“You still have hundreds of millions of dollars in judgments out there. Where it needs to go, if the Cuban government in the post-Castro era wants to get into the good graces of the United States, I think it'll be back to the federal government and the State Department, in particular, to say, hey, why don't you guys set up some kind of a claims tribunal, you know, the way the Iranians had to do it, in the way other countries have done it. Libya has done it. I think that's probably the better way to do it.
“You say to Cuba, hey, if you want to open up commerce and have relations with the United States, you're going to pay off these claims.”