Families of servicemen killed in attack to get Iran money

NEW YORK (Reuters) - The families of 17 U.S. servicemen killed in a 1996 bombing in Saudi Arabia linked to Iran can collect damages from Iran-funded accounts at the Bank of Tokyo-Mitsubishi UFJ, a federal judge ruled on Tuesday.

U.S. District Judge P. Kevin Castel in Manhattan ordered the bank, which did not oppose the motion, to hand over more than $260,000 in various accounts linked to Tehran, still a far cry from the full amount to which the families are entitled.

In June 1996, a truck bomb destroyed the Khobar Towers, a housing complex in Saudi Arabia, killing 19 U.S. servicemen. The FBI would later conclude that Iran provided training and support for the attack.

The families won a default judgment in U.S. District Court in Washington, D.C. against the Iranian government in 2006 for more than $250 million, an amount that was later increased to $337 million. Iran refused to defend the lawsuit in court, claiming it had sovereign immunity.

Billions of dollars in default judgments have been issued against Iran over the years, but plaintiffs have had little luck in collecting the money.

The accounts at the Bank of Tokyo's New York branch had been frozen pursuant to U.S. presidential executive orders and directives issued by the Treasury Department as assets controlled by companies linked to Iran.

In court papers, the bank described itself as a "disinterested stakeholder" and did not fight the request.

The bank is a unit of Mitsubishi UFJ Financial Group.

The case is Estate of Michael Heiser et al. v. Bank of Tokyo Mitsubishi UFJ, U.S. District Court for the Southern District of New York, No. 11-cv-01601.

(Reporting by Joseph Ax; Editing by Lisa Shumaker)