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9/11 families denied frozen Iraqi funds

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NEW YORK (CNN) -- An appeals court ruled that families of those killed on September 11, 2001, who sought access to Iraqi funds frozen by the United States "must look elsewhere" to collect damages.

In a 16-page ruling, the 2nd U.S. Court of Appeals on Friday upheld a U.S. District Court decision last month denying the families any part of the $1.7 billion in funds frozen at the start of the first Gulf War.

On September 11, 2003, U.S. District Judge Harold Baer ruled that families of the victims of the World Trade Center attacks cannot have access to Iraqi funds seized by the United States in 1990 because the money is "needed to rebuild Iraq."

Family members sought the funds to satisfy an earlier court ruling saying Iraq owed the families $63.5 million.

The lawsuit was brought by the estates of George Eric Smith and Timothy Soulas, who were killed in the attacks two years ago.

Baer said Iraq's frozen assets became property of the United States when President Bush signed an executive order to that effect in March, indicating that the money was earmarked for Iraq reconstruction.

The judge ruled in May that the plaintiffs did show there was a link between Iraq and al Qaeda leader Osama bin Laden in the World Trade Center attacks and that damages must be paid by bin Laden, Saddam Hussein and the Iraqi government.

"I conclude that plaintiffs have shown, albeit barely, 'by evidence satisfactory to the court' that Iraq provided material support to bin Laden and al Qaeda," Baer wrote in his May 7 decision.

George Eric Smith, 38, was a senior business analyst for SunGard Asset Management Systems/Global Plus, and Timothy Soulas, 35, was a managing director of foreign currencies for Cantor Fitzgerald.

Smith was not married and had no children. Soulas is survived by his wife, Katy, and six children.

The families' attorney, James Beasley Jr., vowed to appeal the case to the Supreme Court.

In a telephone interview, Beasley said Bush had taken away all the money Congress had intended for September 11 victims, in this case allocating it for Iraqi reconstruction and humanitarian needs.

"I represent a widow with six children. Another family lost a significant member of their family, " Beasley said. "How about the humanitarian needs of the people in this country?"

The September 11, 2001 attacks killed 3,016 people at the World Trade Center, the Pentagon and a those aboard a jetliner that crashed in a field in Shanksville, Pennsylvania.

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