Jay Solomon of the Wall Street Journal has the fascinating story of international financial skulduggery, Citibank, and the families of the victims of the Marine barracks bombing in Lebanon back in 1983.

Apparently, Citibank has been holding the money without knowledge that it belongs to Tehran. It is part of an account held by a Luxembourg bank which, due to that country's banking secrecy laws, has been able to hide the true depositors.

About 18 months ago, the Treasury Department figured it out and got a judge to secretly freeze the money.

Citibank, Clearstream and the Iranian government all declined to comment on the case, and Tehran hasn't made any filings in the matter. The outlines of the dispute, however, appear in judicial filings and in the federal court's docket sheets.

Those documents show that Clearstream has denied it is holding funds for the Iranian government and that the European firm has been fighting to release the $2 billion.

The court initially ordered Citibank in June 2008 to freeze $2.25 billion of Clearstream's accounts, but the company's lawyers were able to get $250 million released the following month, according to court records. Clearstream is represented in the U.S. by White & Case LLP, which declined to comment.

The legal battle over the funds could lead to a trial. A victory for the plaintiffs would mark the largest seizure of Iranian funds since Islamist parties seized power in Tehran from the U.S.-backed Shah in 1979.

That year, the U.S. government froze around $12 billion of Iranian assets in retaliation for the kidnapping of American diplomats and military personnel. While a portion of the funds was returned after the hostages' release, a United Nations body in the Netherlands continues to try and arbitrate the return of the remaining assets, which include bank deposits, gold and real estate.

The legal case concerning Citibank in New York comes as the U.S. government is intensifying efforts to use the global financial system to pressure Iran into giving up its nuclear program and support for international terrorism.