Bloomberg News

Lawyer Suing Bank of China Brings ‘Private CIA’ to Boies

December 10, 2013

Bank of China

Pedestrians walk past a branch of the Bank of China Ltd. in Beijing. Photographer: Nelson Ching/Bloomberg

Fresh off a stint as a counter-terrorism adviser on Bill Clinton’s National Security Council, attorney Lee Wolosky was hoping to return to law. Most firms, he says, saw a guy with a two-year experience gap who’d need to start near the bottom.

Law firm chief David Boies pounced.

A dozen years after he hired Wolosky, Boies is poised to make good on his gamble. Wolosky, now a partner at Boies, Schiller & Flexner LLP, is suing Chiquita Brands International Inc. (CQB:US) in a $1 billion terror finance class action for Colombian plaintiffs. He’s also suing Bank of China Ltd. for allegedly funneling money from Iran to a Palestinian terrorist group that staged an attack claiming the life of an American teenager in Israel.

The Bank of China case typifies the international-tinged caseload that Wolosky, 45, has carved out at Boies Schiller. If it goes to trial, the $100 million lawsuit could be groundbreaking: While the U.S. government has pressured banks and other governments to clamp down on money flowing to terrorist groups, Wolosky’s lawsuit could be the first by U.S. citizens against an alleged conduit to go to trial in federal court, says Gary Osen, whose six-person firm focuses on terrorism-financing lawsuits.

“These cases impact the thought process and behavior of global institutions that do business in the U.S.,” says Osen, who has reached confidential settlements in similar cases and has two more awaiting trial.

Boies, Gore

Wolosky represents one of several winning plays that Boies, a self-professed craps player who defended Al Gore in the 2000 presidential recount, has made since breaking from Cravath, Swaine & Moore LLP in 1997 to form his own firm. While most high-end corporate firms pay their bills defending deep-pocketed institutional clients, Boies Schiller takes on plaintiffs’ cases for which it gets paid little or nothing unless it wins.

One example: The $4.05 billion settlement the firm secured in 2007 and 2008 for an American Express Co. (AXP:US) unit in its antitrust suit against Visa Inc. (V:US), MasterCard Inc. (MA:US) and several banks.

Graphic: Six Degrees of Democratic Party Separation

Wolosky brings counter-terrorism experience and government contacts the firm is leveraging to build business and establish a foothold abroad. Boies Schiller is opening its first foreign office in London next month -- Wolosky’s connections came in handy during a summer client-scouting trip there, Boies says -- and is considering another in Asia.

’Private CIA’

“Having the right contacts in the local countries -- knowing people in Israel or Russia or wherever” is a major advantage to the firm, Boies says. “He has developed an increasingly significant part of our practice.”

Before taking on a new international matter, Wolosky says he meets with government friends to make sure his work won’t hurt U.S. foreign-policy interests. His latest case involves representing a Malawian presidential candidate accused of treason. Little wonder he’s been the target of jabs at work.

“You seem to run a private CIA at Boies Schiller,” he recalls a fellow partner saying.

Wolosky is close to several internationally focused Democrats who are working into increasingly high-profile roles in the Obama government. That group -- which includes U.S. Trade Representative Mike Froman and Deputy National Security Adviser Tony Blinken -- came together a decade ago when Leslie Gelb, then president of the Council on Foreign Relations, handpicked several young Democrats for weekends of foreign-policy talks at a Florida plantation they shared with giraffes and rhinos. Wolosky served as a counter-terrorism adviser on John Kerry’s presidential campaign.

’Revolving Door’

Wolosky exemplifies a version of “revolving door networking,” law-firm-style, says Craig Holman, the government affairs lobbyist for Public Citizen, a public interest advocacy group. Wolosky says he has no current plans to return to government but hasn’t ruled it out, either.

“It’s not any form of corruption,” says Jack Walker, a law firm consultant at Zeughauser Group and former managing partner of Latham & Watkins LLP. “It’s just a matter of getting through to the right decision-maker, or to a person who has a certain kind of understanding of a situation, which you can’t get out of getting down to the law library and looking up cases.”

Lately, Wolosky has deployed his connections in the Bank of China case, which hits several hot buttons of U.S. foreign policy -- including Iran’s links to terrorists and a money-trail investigation that threatens to rattle China and Israel.

American Killed

The plaintiffs allege the Bank of China knowingly facilitated money transfers to the militant group Palestine Islamic Jihad from sources in Iran and other Middle Eastern countries. The group, designated a foreign terrorist organization by the U.S. State Department, then claimed responsibility for a 2006 suicide bombing in Tel Aviv that injured American Yekutiel Wultz and killed his 16-year-old son, Daniel.

The Wultz family seeks compensation that could total about $100 million, based on damages awarded last year in a related lawsuit that found the Iranian and Syrian governments guilty of supporting Islamic Jihad. Wolosky wouldn’t comment on the firm’s financial stake in the case. He says Boies Schiller often takes one-third of the amount won in trial or settlement and that the cost of such cases ranges from $5 million to $15 million.

The key witness in the case is Uzi Shaya, a former Israeli intelligence officer. The plaintiffs allege Shaya was at an April 2005 meeting at which Israeli counter-terrorism officials told their Chinese counterparts that certain Bank of China accounts had terrorist ties.

Bank Denial

The bank, majority owned by the Chinese government, “was never told by any domestic or foreign governmental entity” that specific accounts had terrorist connections, it said through one of its lawyers, Mitch Berger of Patton Boggs LLP.

In March, Shaya declared his willingness to testify, provided the deposition take place in Israel with an Israeli government legal adviser.

That voluntary deposition never happened. Israeli Prime Minister Benjamin Netanyahu succumbed to pressure from the Chinese government to prevent Shaya’s testimony to avoid jeopardizing his state visit to China in May, according to allegations in Israeli media and by Nitsana Darshan-Leitner, a Tel Aviv-based lawyer who has filed five similar cases against the Bank of China on behalf of other families. Mark Regev, Netanyahu’s spokesman, declined to comment on the case.

Wolosky got his man anyway. In September, Shaya traveled to Washington on unrelated business -- and was served with a subpoena to appear for a deposition at Boies Schiller.

Surprise Subpoena

Wolosky says he learned of Shaya’s trip in advance and coordinated the delivery of the subpoena. The Israeli newspaper Yedioth Ahronoth said two people -- one of them a lawyer -- knocked on Shaya’s hotel room door and shoved the subpoena into his hand, likening the surprise to a scene from a Hollywood thriller. Wolosky declined to elaborate on those details.

“It’s what people pay us to do,” Wolosky says.

On Nov. 15, the Israeli government filed a motion to quash the subpoena, claiming Shaya’s deposition, scheduled for later that month, would compromise Israeli national security. The deadline for Wolosky to file a response is Dec. 17. Shaya couldn’t be reached for comment.

When consulting his government contacts before taking on politically sensitive cases, Wolosky says he usually gets a go-ahead. The one time he didn’t get the nod, he says, came a few years ago when he floated the possibility of representing a wealthy financier who believed the U.S. government had unjustly blacklisted him as a terrorist. Wolosky turned away what he says was a seven-figure retainer in exchange for maintaining his credibility with the U.S. government.

It’s Personal

“A lot of this is personal,” Wolosky says of his connections. “They know that when I call them up to ask for a meeting on something, I’m going to come and not waste their time, and that I won’t be there representing some person or cause that I don’t believe in.”

Wolosky began moving in Democratic circles in his twenties.

Born in Manhattan and raised in the Bronx, he studied history and literature at Harvard University and graduated from Harvard Law School in 1995. He joined Paul, Weiss, Rifkind, Wharton & Garrison LLP, where he found a guide in Ted Sorensen, the late former speech writer for John F. Kennedy. Sorensen had built a legal practice traveling the globe to advise the likes of Nelson Mandela and Anwar Sadat. Wolosky says he “dreamed of having” a career like that -- one in which he “just went around trying to solve international problems.”

Arctic Circle

Under Sorensen, Wolosky says he spent about a third of his time traveling in Russia on behalf of Kenneth Dart of Dart Container Corp., the world’s largest foam-cup maker. Dart had made personal investments in privatized Russian companies that turned out to be defrauding minority stakeholders in part by diluting shares. Equipped with some Russian -- he studied the language before law school while working on a Harvard democracy-building project in Russia -- Wolosky began appearing in courts from Moscow to the Arctic Circle to push for basic norms of corporate governance.

In 1999, Wolosky left private practice to start a fellowship at the Council on Foreign Relations, which was led by Gelb, a former senior official in the Carter administration.

With Gelb’s support, Wolosky joined Clinton’s National Security Council, where he spent about a year and a half tracking transnational threats linked to illicit international finance. He started collecting evidence against alleged arms dealer Viktor Bout, who U.S. officials believed had ties to the Taliban and was fueling civil wars throughout Africa by supplying arms to both sides of conflicts.

Pursuing Bout

He left the NSC during the Clinton-Bush handover. When terrorists attacked the World Trade Center in New York and the Pentagon in Virginia on Sept. 11, 2001, Bout fell down the priority lists of the countries Wolosky had engaged to put him out of business. Bout was convicted in 2011 and sentenced last year to 25 years in prison for conspiring to kill U.S. citizens, among other charges.

A few months after the Sept. 11 attacks, Wolosky took the Boies Schiller job.

Wolosky helped woo to the firm Maurice “Hank” Greenberg, the former chief executive officer and chairman of American International Group (AIG:US) Inc. and a friend he met through the Council on Foreign Relations. That relationship has spawned almost 10 years of legal work.

While starting out at Boies Schiller, Wolosky also attended a few conferences at White Oak Plantation, a retreat in Yulee, Florida. The couple dozen foreign-affairs buffs assembled by Gelb debated policy questions during the day and dined together at night, Wolosky says.

“It was very important for Lee’s generation not to have the same internal feuding my generation had,” Gelb says.

’Floating Around’

Wolosky’s contacts from that era also include U.S. Ambassador to Sweden Mark Brzezinski, the son of Zbigniew Brzezinski, Carter’s national-security adviser.

“That was the classic, next-generation democratic foreign policy group,” says Mona Sutphen, a White Oak alumna and President Barack Obama’s former deputy chief of staff for policy. Sutphen is now a managing director at UBS AG (UBSN), Switzerland’s largest bank. “Everybody is all floating around, we all worked together at some point or another.”

Kerry Campaign

In March 2003, Rand Beers -- presently the acting Secretary of Homeland Security -- recruited Wolosky to Kerry’s presidential campaign as co-director of its counter-terrorism task force. For more than a year and a half, Wolosky says he worked part-time for Kerry out of his Boies Schiller office without taking an official hiatus.

A month after Kerry lost the election, Wolosky made partner at the firm.

Surrounding Wolosky on two walls of his office are photos of himself embracing and shaking hands with Obama, Vice President Joe Biden and Bill and Hillary Clinton.

“I’ve certainly had conversations about going back to government,” Wolosky says. “But it really has to be the right job for me to ever think about it because I’m based in New York and my family is here.”

He quickly adds: “And I’m very happy at my current law firm -- be sure to include that in the article.”

To contact the reporter on this story: Patrick G. Lee in New York at plee315@bloomberg.net

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


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