The Associated Press State & Local Wire

April 18, 2005:

Court reinstates Holocaust case against Vatican Bank

By DAVID KRAVETS, AP Legal Affairs Writer

SAN FRANCISCO

A federal appeals court on Monday reinstated a lawsuit brought by survivors of the Holocaust in Croatia, the Ukraine and Yugoslavia who allege the Vatican Bank accepted millions of dollars of their valuables stolen by Nazi sympathizers.

The Vatican Bank, the financial arm of the Roman Catholic Church, denies allegations that during World War II it stored the looted assets from thousands of gypsies, Jews, Serbs and others who were killed or captured by the Nazi-backed Ustasha regime that controlled Croatia.

A federal judge had dismissed the 1999 case, but the 9th U.S. Circuit Court of Appeals said the survivors should have their day in court in an effort to be compensated for their monetary losses, and to be given an accounting of what money, if any, the bank received from the Nazi-backed Ustasha regime.

An attorney for the survivors and their beneficiaries said the decision, combined with a new pope expected to be named any day, could spark an out-of-court settlement.

"A new pope might be more energetic than the old pope in these matters," attorney Jonathan Levy said. "The Vatican has been very hesitant on this."

Church officials were not immediately available for comment. The bank's attorney, Jeffrey Lena of Berkeley, did not answer repeated phone calls, but told the court in October that the allegations were "particularly tenuous."

Cardinals began meeting in Vatican City on Monday to pick the successor to Pope John Paul II, who died April 2.

In 1998, Swiss banks agreed to pay as much as $1.25 billion to Nazi victims and their families who accused the banks of stealing, concealing or sending to the Nazis hundreds of millions of dollars worth of Jewish holdings and destroying bank records to cover the paper trail.

In reinstating the monetary claims against the Vatican Bank, the San Francisco-based appeals court overruled a lower court judge who said the lawsuit was barred because it could upset a "governmental negotiations and diplomacy" toward resolving claims originating from World War II.

"No ongoing government negotiations, agreements or settlements are on the horizon," Judge Margaret McKeown ruled for the three-judge panel. McKeown added that the victims "face an uphill battle in pursuing their claims" because, among other things, the allegations are decades old and ultimately could be dismissed because of other "procedural and jurisdictional hurdles."

In dissent, Judge Stephen Trott said only Congress and the president, not the judicial branch, have the authority to deal with the fallout of World War II.

"This opinion, albeit well-meaning and well-intentioned, extends the concept of judicial authority into unknown territory and mistakenly exercises power and competence that plainly belongs to the president and Congress," Trott wrote.

Trott added that the majority's opinion will open up the floodgates of U.S. courts to litigate claims regarding the "horrors from Haiti, Cuba, Rwanda, South African, the Soviet Union, Bosnia, Sudan, Somalia, North Korea, Iraq, and who knows where?"

All three judges voted to reject human rights violations charging the bank assisted in genocide. The lawsuit includes World War II survivors and their relatives - many living in the United States.

The case is Alperin v. Vatican Bank, 03-15208.

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Editors: David Kravets has been covering state and federal courts for more than a decade.