Judge: First Amendment protects U.S. distributor of Iranian newspaper

Monday, March 2, 1998

A federal judge ruled Feb. 27 that the First Amendment rights of a U.S. distributor of an Iranian newspaper were violated when the company's bank account was frozen and its subscriber list was sought.

In Nasher Ltd. v. Crestar Bank, federal district court Judge Leonie Brinkema ordered the Department of Treasury's Office of Foreign Asset Control and Crestar Bank to unfreeze the accounts of Nasher Ltd., a Virginia company that distributes the weekly newspaper of the People's Mojahedin of Iran, called Mojahed.

The judge also prohibited the government and the bank from releasing certain bank records that would identify the paper's 110 U.S. subscribers.

The incident began when Crestar Bank received an anonymous e-mail saying that Nasher Ltd. was being used to solicit money for the People's Mojahedin, a group the State Department has designated as a terrorist organization.

Crestar apparently froze Nasher's account in order to comply with the banking provisions of the 1996 Antiterrorism and Effective Death Penalty Act.

The anti-terrorism law requires financial institutions to block terrorists' accounts and turn over records to the Treasury Department.

Jay Fredman, lead attorney for Nasher, said: “This is the first judicial test of the Antiterrorism and Effective Death Penalty Act. That's why the case is so important. But the case also is an important First Amendment case.”

Fredman said that “Nasher's free-press and subscribers' free-association rights were violated. Nasher is a distributor and the law overwhelmingly states that a distributor stands as a publisher with respect to First Amendment rights.”

Philip Gagner, attorney for Nasher and a partner in the Washington law firm Shaughnessy & Gagner, said: “If the government had to imagine its worst nightmare for a case determining whether the Office of Foreign Asset Control had the power to do under the Constitution what it is chartered to do, this case would be their nightmare.”

Gagner said the case was the government's “nightmare” for several reasons: “because it involves a newspaper; because it involves political speech; because it deals with the identify of newspaper subscribers; because the release of the subscribers' names would endanger the lives of the subscribers' relatives in Iran; and because OFAC was unable to come up with any credible reason for wanting the information.”

Glenn Silver, attorney for Crestar Bank, told said: “Crestar is merely a stakeholder with no interest in the underlying litigation. Crestar Bank just wants to comply with the federal regulations and the court's order.”

An attorney with OFAC said: “We cannot comment beyond the public record.”