Muslim Charities and the War on Terror

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					Muslim Charities and the War on Terror
Top Ten Concerns and Status Update
Revised March 2006
S    ince the 9/11 terrorist attacks, U.S.-based charities have become targets
     in the government’s war on terror financing. This development makes
little sense. U.S. charities support efforts to stop the violence of terrorism,
and financing terror is contrary to the sector’s mission of promoting the
public good, providing humanitarian relief, protecting human rights and
assisting with conflict resolution around the world. Despite the sweeping
implications for all domestic nonprofit organizations, the lion’s share of the
burden of increased scrutiny, suspicion, and pre-emptive action has fallen
on Muslim groups. This imbalanced campaign raises significant legal and
ethical questions.

  This paper lists issues that the charitable sector and the public must
address in order to correct an unfair process and make the war on terror
most effective. Part 1 lists our top ten concerns about the way the war on
terror has impacted U.S. Muslim charities, and Part 2 provides an update
on charities that have been shut down by the Treasury Department or
made the target of official investigations.

  Kay Guinane, Counsel for the Nonprofit Advocacy Project, directed
the research, writing, and production of this project. She was assisted by
Amanda Horwitz. Anna Oman designed the report.

                                OMB Watch
                         1742 Connecticut Ave., NW
                         Washington, DC 20009-1171
                                (202) 234-8494
    Part 1: OMB Watch’s Top Ten Concerns About the
    Treatment of Muslim Charities in the War on Terror
                                                                                         or challenge evidence against it.
        1. Drastic sanctions in anti-terrorist financing laws are being used to shut     Indeed, appealing Treasury actions
        down entire organizations, resulting in the loss of badly needed humani-         to the federal courts is relatively
        tarian assistance around the world and creating a climate of fear in the         useless, as the court’s scope of
        nonprofit sector.                                                                review is very limited.

        . Despite sweeping post-9/11 investigative powers, authorities have                Although all charities need to
        failed to produce significant evidence of terror financing by U.S.-based         be concerned about the poten-
        charities.                                                                       tial for abuse of these powers, to
                                                                                         date the impact has mostly been
        3. Questionable evidence has been used to shut down the largest U.S.-
                                                                                         felt by Muslim charities. All five
        based Muslim charities.
                                                                                         U.S.-based charities shut down by
        4. Anti-terrorist financing policies deny charities fundamental due pro-         OFAC were led by Muslims and
        cess.                                                                            primarily served Muslim commu-
                                                                                         nities in the U.S. and abroad.
        5. There are no safe harbor procedures to protect charities acting in good
        faith or to eliminate the risk of giving to Muslim charities or charitable       2. Despite sweeping post-9/11
        programs working with Muslim populations.                                        investigatory powers, authorities
        6. Government action has created the perception of ethnic profiling and
                                                                                         have failed to produce significant
        negatively impacted Muslim giving.
                                                                                         evidence of terror financing by
                                                                                         U.S.-based charities.
        7. Organizations and individuals suspected of supporting terrorism are
        guilty until proven innocent.                                                       Although dozens of charitable
                                                                                         groups have been investigated,
        8. Charitable funds have been withheld from people in need of assistance         only one official criminal charge
        and diverted to help pay judgments in unrelated lawsuits, violating the          has been brought against a Muslim
        intentions of innocent Muslim donors.                                            organization for support of ter-
        9. There is unequal enforcement of anti-terrorist financing laws.                rorism, and that case has not yet
                                                                                         made it to trial. A report released
        10. Treatment of Muslim charities hurts, not helps, the war on terrorism.
                                                                                         in August 2004 by the 9/11 Com-
                                                                                         mission raised “substantial civil
                                                                                         liberty concerns” regarding the
    1. Drastic sanctions in anti-ter-           may be taken “pending an inves-          government’s shutdown of two
    rorist financing laws are being             tigation.” Criminal charges need         Chicago-area Islamic charities, the
    used to shut down entire organi-            not ever be filed in connection          Global Relief Foundation (GRF)
    zations, resulting in loss of badly         with this action. Instead, action        and the Benevolence International
    needed humanitarian assistance              is taken through the Treasury            Foundation (BIF). “Indeed,” the
    around the world and creating a             Department’s Office of Foreign As-       report points out, “despite un-
    climate of fear in the nonprofit            sets Control (OFAC).                     precedented access to the U.S. and
    sector.                                                                              foreign records of these organi-
                                                   Once all assets are seized and
       The USA PATRIOT Act gives                frozen, an organization may be           zations, one of the world’s most
    the executive branch largely un-            denied access to evidence (the           experienced and best terrorist
    checked power to designate any              organization’s computers, files,         prosecutors has not been able to
    group as a terrorist organization.          documents, etc.) that might prove        make any criminal case against
    Once designated as a supporter of           its innocence. Even if these materi-     GRF and resolved the investigation
    terrorism, all of a group’s materials       als were available, there is no fo-      of BIF without a conviction for
    and property may be seized and              rum where an affected charity can        support of terrorism.”
    its assets frozen. These same steps         present evidence on its own behalf

                                               Muslim Charities and the War on Terror
  This finding calls into question       using charities for these purposes,        investigation into the FBI’s han-
the government’s claims of suc-          rather than as a deliberate act by         dling of the case, alleging “materi-
cess in fighting terrorism through       the charity itself.                        ally misleading” evidence. HLF
such mechanisms and highlights                                                      said the FBI used a “distorted” and
                                         • None of the cases involved diver-
the continued infringements on                                                      erroneous translation of sensitive
                                         sion of funds by a U.S.-based grant
civil liberties in the name of the                                                  Israeli intelligence material as the
                                         maker to a foreign organization
war on terror. Since 2001, federal                                                  crux of its case. An independent
                                         “where the diversion would have
authorities have designated 41                                                      translating service in Oregon,
                                         been uncovered but for the lack of
charities worldwide, including five                                                 hired by the HLF to review the
                                         appropriate due diligence…”
US-based charities, supporters of                                                   evidence, cited 67 discrepancies or
terrorism, freezing their assets and     • Evidence of “links” to terrorist         errors in translation in a four-page
arresting or deporting staff mem-        organizations had not resulted in          FBI document used in the case. Yet
bers. The five U.S.-based organiza-      criminal convictions.                      the Inspector General declined to
tions were led by Muslims and fo-                                                   investigate the HLF accusations,
                                         3. Questionable evidence has
cused on providing relief to people                                                 saying the issue of the false trans-
                                         been used to shut down the larg-
in areas of international conflict.                                                 lations could be fully aired in the
                                         est U.S.-based Muslim charities.
Not one of these groups or their                                                    criminal case. John Boyd, attorney
staff members has been convicted            Federal action in cases involv-         for HLF, says “there is no guaran-
of any terrorism-related crime, and      ing the three largest U.S.-based           tee that the jury will ever have the
none of the groups has had a day         Muslim charities appears to be             opportunity to hear that the allega-
in court where they could chal-          based on questionable evidence.            tions against HLF are founded on
lenge the evidence against them          In December 2001, the Fed-                 falsified translations.” (Interview,
or present to a judge evidence on        eral Bureau of Investigation (FBI)         Dec. 20, 2005).
their own behalf.                        raided the Texas office of the Holy
                                                                                      “It’s open season on American
                                         Land Foundation for Relief and
  The government has also failed                                                    Muslims in this country,” Shkri
                                         Development (HLF), seizing more
to substantiate its claim that U.S.-                                                Ab Baker, former chief executive
                                         than $5 million in assets, along
based charities are a significant                                                   of the Holy Land Foundation, told
                                         with all organizational documents
source of terror financing, and                                                     The New York Times in July 2004.
                                         and property. OFAC alleged that
thus appropriate “targets” for new
                                         HLF funneled millions of dollars              In 2001 authorities also closed
anti-terror financing policy. In a
                                         to Hamas, which was designated             the Global Relief Foundation
2004 report, Terrorism and Money
                                         a terrorist organization in 1995           (GRF) and Benevolence Interna-
Laundering: Illegal Purposes and
                                         and provided funds to families of          tional Foundation (BIF) without
Activities, Jennifer Reynoso, Victo-
                                         suicide bombers. HLF denied the            disclosing any official finding that
ria Bjorklund and Abbey Hazlett
                                         charge, saying it only provided hu-        they were aiding terrorist orga-
of the law firm Simpson, Thacher
                                         manitarian relief, with a focus on         nizations. Both had been under
& Bartlett, LLP reviewed publicly
                                         Palestinian refugees and victims of        FBI scrutiny for years because of
available information on charities
                                         armed conflict in Bosnia, Kosovo,          apparent ties to terrorist organi-
that had been shut down by the
                                         and Turkey.                                zations. The independent com-
Treasury to determine what the
                                                                                    mission to investigate the 9/11
problem is and how diversion of            When the criminal indictment
                                                                                    attacks found that these concerns
funding to terrorists may have oc-       against HLF was released nearly
                                                                                    were “not baseless,” but went on to
curred. Their extensive documen-         three years later in July 2004, ques-
                                                                                    explain, “Despite these troubling
tation led them to conclude:             tions immediately arose regarding
                                                                                    links, the investigations of BIF and
                                         the basis of evidence used to shut
• Diversion of funding to terrorism                                                 GRF revealed little compelling evi-
                                         down the organization. HLF sent a
is most likely to occur when an in-                                                 dence that either of these charities
                                         letter to the Department of Justice
dividual acts out of ideological and                                                actually provided financial support
                                         Inspector General requesting an
criminal motivation, in some cases                                                  to al Qaeda - at least after al Qaeda

                                Part 1: ConcernsCharities and the War of Muslim Charities
                                         Muslim About the Treatment on Terror                                               3
    was designated a foreign terrorist     Foundation for Relief and Develop-       revoke the tax-exempt status of
    organization in 1999.”                 ment v. John Ashcroft,, 219 F.    any charity shut down by Treasury,
                                           Supp. 2d 67).                            but “bad actors could just form
      The report concludes that one of
                                                                                    a new charity,” limiting the real
    the fundamental issues raised by         What is “substantial evidence?”
                                                                                    effectiveness of these powers to
    the government’s new approach to       The legal definition of the rule, ac-
                                                                                    prevent terrorist financing.
    combating terror financing is “the     cording to Black’s Law Dictionary
    problem of defining the threshold      (8th ed. 2004), is, “The principle       5. There are no safe harbor proce-
    of information necessary to take       that a reviewing court should up-        dures to protect charities acting
    disruptive action.” One of the most    hold an administrative body’s rul-       in good faith or to eliminate the
    troubling aspects of the war on ter-   ing if it is supported by evidence       risk of giving to Muslim charities
    ror financing is thus the deteriora-   on which the administrative body         or charitable programs working
    tion of this “necessary threshold”     could reasonably base its deci-          with Muslim populations.
    from probable cause to mere suspi-     sion.” This is a very low threshold,
                                                                                       The Muslim faith requires fami-
    cion and innuendo. Instead, guilt      especially considering that, unlike
                                                                                    lies to give to charity. Known as
    by association is the new standard.    in normal administrative proceed-
                                                                                    “zakat,” these donations tradition-
    The 9/11 Commission report cites       ings, secret evidence is used. Add-
                                                                                    ally come at the end of Ramadan,
    the need to distinguish “the differ-   ing to this, the courts have found
                                                                                    the month of fasting, with a goal
    ence between seeing ‘links’ to ter-    that the government’s interest in
                                                                                    of giving 2.5 percent of a family’s
    rorists and providing the funding      preventing further terrorist attacks
                                                                                    savings. At the start of Ramadan
    for terrorists.”                       outweighs charities’ interests in
                                                                                    in 2004, after the closure of the
                                           due process protections.
    4. Anti-terrorist financing poli-                                               Islamic American Relief Agency,
    cies deny charities fundamental           Treasury has defended these           New Jersey Muslims asked the
    due process.                           procedures as reasonable. At a           federal government to draw up a
                                           2004 Pace Law School forum,              “white” list of Islamic charities to
       The use of secret evidence by the
                                           Chip Poncy, senior advisor to the        which they could donate without
    Treasury Department and lack of
                                           assistant secretary for Terrorist        being suspected of terrorist ties.
    due process for groups designated
                                           Financing and Financial Crime at         The Justice Department denied
    as supporters of terrorism has
                                           Treasury, highlighted the appeal         this request, claiming it was im-
    undermined the credibility of the
                                           procedures that exist for organiza-      possible to fulfill. “Our role is to
    government’s anti-terrorist financ-
                                           tions that are designated. How-          prosecute violations of criminal
    ing efforts. Although the courts
                                           ever, Harvey Dale, a professor of        law,” Justice Department spokes-
    have upheld Treasury’s actions
                                           philanthropy and law                     man Bryan Sierra said. “We’re not
    in each case, the scope of judicial
                                           at New York Univer-                      in a position to put out lists of any
    review on appeals of Treasury ac-
                                           sity School of Law,                                   kind, particularly of
    tion is extremely limited. Under
                                           noted that the Trea-                                  any organizations that
    the Administrative Procedure Act
                                           sury review process is                                are good or bad” (U.S.
    (5 U.S.C. 706(2) (A)) courts may
                                           ex parte, and the nonprofit                           Rejects Muslims’ Plea
    only overturn an agency action if it
                                           involved is denied the right                          for ‘Approved’ Chari-
    is arbitrary and capricious and not
                                           to learn of or confront the                           ties, AP Alert, Oct. 19,
    based on “substantial evidence”. In
                                           evidence against it. The                              2004).
    the HLF case the court noted that
                                           standard for freezing and
    “this standard does not allow the                                                  This request for an approved
                                           seizing assets is a “reasonable basis
    courts to undertake their own fact-                                             list of charities reveals the anxiety
                                           to suspect or believe,” which Dale
    finding, but to review the agency                                               shared by many Muslims over the
                                           said is the same standard rejected
    record to determine whether the                                                 lack of legal protection for donors
                                           by the Supreme Court in the
    agency’s decision was supported                                                 and legitimate charitable organi-
                                           Guantanamo Bay detention case.
    by a rational basis” (Holy Land                                                 zations. In spite of this, Treasury
                                           Dale also noted that the IRS can

4                                          Muslim Charities and the War on Terror
Secretary John Snow encouraged           terrorist financing,” said Mr. Salam       and international charities was
American Muslims to continue             Al-Marayati, whose group, the              “making an impact and serving
to give to charities and educate         Muslim Public Affairs Council, or-         as a valuable deterrent.” Speaking
themselves about the groups they         ganized the meeting along with the         before the House International Re-
donate to, in order to make sure         Islamic Society of North America           lations Subcommittee on Interna-
the funds are not being used to          (U.S. investigations into some             tional Terrorism and Nonprolifera-
support terrorism. Yet the U.S.          major Islamic charities scare many         tion and House Financial Services
organizations that have been shut        donors, American Muslim Perspec-           Subcommittee on Oversight and
down were not on any government          tive, Apr. 27, 2005). However, such        Investigations, he said that “an-
                                                                                    ecdotal evidence suggests that
  There are no legal steps that allow organizations to                              prospective donors are avoiding
  cure problems, and no sanctions Treasury imposes                                  suspicious international charities
  short of seizing and freezing assets.                                             altogether and are being far more
                                                                                    watchful with their donations in
watch list before their assets were      steps still fail to ensure official        general,” noting that “this is a ma-
frozen. As a result, Muslims have        legal protection against unwar-            jor success in its own right.”
no way of knowing which groups           ranted and disruptive scrutiny and
                                                                                      This “crackdown” on Muslim
the government suspects of ties to       legal sanctions.
                                                                                    charities has profoundly altered
                                         6. Government action has cre-              the emotional and financial
  Treasury has likewise refused          ated the perception of ethnic              process of Muslim giving in this
requests to develop safe harbor          profiling and negatively impacted          country. Many in the Muslim
procedures that charities and            Muslim giving.                             community fear that their dona-
foundations acting in good faith                                                    tions might land them on a list of
                                            While the government denies
can follow to avoid the danger of                                                   suspected terrorist sympathizers
                                         charges of ethnic profiling, many
being shut down for unintentional                                                   and supporters, even if they are
                                         in the Muslim community have
or minor infractions. There are no                                                  completely unaware of any wrong-
                                         come to feel that they are under
legal steps that allow organizations                                                doing or if the charity comes un-
                                         fire for their religious beliefs.
to cure problems, and no sanctions                                                  der suspicion years later. For their
                                         Arsalan Iftikhar, the national legal
Treasury imposes short of seizing                                                   part, some Muslim organizations
                                         director for the Council on Ameri-
and freezing assets. At the Pace                                                    have stopped giving money over-
                                         can-Islamic Relations, echoed this
Law School forum, Poncy main-                                                       seas or maintain their own inter-
                                         sentiment, charging that the recent
tained that these drastic sanctions                                                 national offices in an effort to di-
                                         Senate Finance Committee inves-
are the tools chosen by Congress,                                                   rectly oversee and safeguard their
                                         tigation into the Islamic Society
and any changes to them must,                                                       charitable work. In this climate of
                                         of North America “is indicative of
therefore, be made by Congress.                                                     fear and suspicion, donations to
                                         federal law enforcement’s dragnet
                                                                                    Muslim charities have declined
  In response to the fear and            against the American Muslim
                                                                                    significantly since last Ramadan.
frustration this lack of guidance        community” (Indiana-Based
                                                                                    Some Muslim donors are turn-
has created, a group of roughly 20       Islamic Society Cleared in Sen-
                                                                                    ing to nondenominational groups
Muslim international aid groups,         ate Investigation, The Indianapolis
                                                                                    and local causes, while others are
advocacy organizations, and other        Star, Nov. 15, 2005).
                                                                                    choosing to give anonymous cash
charities came together in March
                                           In congressional testimony               donations—a practice that ends up
2005 to form the National Council
                                         given in May 2005, Stuart Levey,           hindering the government’s ability
of American Muslim Non-Profits,
                                         Treasury Under Secretary for the           to prevent terrorist financing and
a body which will establish over-
                                         Office of Terrorism and Financial          demonstrates the extent to which
sight and governance guidelines
                                         Intelligence, reported that the            the right to give openly has been
for its members. The intent “is to
                                         government’s legal pursuit of U.S.         compromised.
really clear the name of Islam from

                                Part 1: ConcernsCharities and the War of Muslim Charities
                                         Muslim About the Treatment on Terror                                              5
    7. Organizations and individuals       8. Charitable funds have been            any direct ties between HLF and
    suspected of supporting ter-           withheld from people in need of          Hamas.
    rorism are guilty until proven         assistance and diverted to help
                                                                                       The “aiding and abetting”
    innocent.                              pay judgments in unrelated law-
                                                                                    finding was based on one-sided
                                           suits, violating the intentions of
       While the Treasury Department                                                evidence that was not subjected
                                           innocent Muslim donors.
    has allowed U.S.-based groups an                                                to the scrutiny afforded by stan-
    opportunity to submit information         The Treasury Department has           dard due process. It takes on new
    on their behalf after assets have      resisted efforts to release the fro-     credibility each time it is restated.
    been frozen “pending an investiga-     zen assets of charities it has shut      The court in the Boim case relied
    tion,” the groups cannot respond       down for charitable purposes. In         heavily on Treasury’s allegations in
    effectively, because they are put in   2002, BIF applied to Treasury for        designating HLF as a supporter of
    the position of having to prove a      a license to release funds raised        terrorism, going so far as to allow
    negative (i.e. that they do not sup-   from charitable contributions to         otherwise inadmissible hearsay
    port terrorism) without knowing        a children’s hospital in Tajikistan      evidence under the public records
    what secret information Treasury       and the Charity Women’s Hospi-           exception. However, to date HLF
    is using against them.                 tal in Dagestan, Chechnya. The           has never had an opportunity to
                                           application included safeguards to       confront the evidence against it
      This new standard of “guilty
                                           ensure the money arrived at the          or put the information in context.
    until proven innocent” is reflected
                                           proper destination. Treasury de-         The organization’s attorney, John
    in the recent actions of the Senate
                                           nied the request. Similarly, in April    Boyd, points out that HLF pro-
    Finance Committee. In November
                                           2004 HLF requested permission to         vided aid to thousands of orphans,
    2005, the Senate Finance Com-
                                           transfer $50,000 to the Palestine        and only less than half a dozen had
    mittee concluded a high-profile
                                           Children’s Relief Fund. Treasury         any relatives involved in terrorism,
    investigation into U.S. Muslim or-
                                           denied HLF’s request because             while a far greater number were
    ganizations and terrorism financ-
                                           of pending lawsuits on behalf of         orphans of fathers murdered by
    ing, saying it discovered nothing
                                           families of victims of terrorist at-     Hamas for being Israeli collabora-
    alarming enough to warrant new
                                           tacks. There is no mechanism to          tors. (Interview, Dec. 20, 2005)
    laws or other measures. The in-
                                           appeal the Treasury decisions.
    quiry, which took nearly two years                                                The case raises serious concerns
    to conduct, used financial records       Charitable assets of groups des-       for any organization providing
    given to the Internal Revenue Ser-     ignated by Treasury have become          aid in war-torn regions, where it
    vice, including donor lists of two     targets of lawsuits filed by families    would be difficult to find someone
    dozen Muslim charities belonging       of terrorism victims, regardless         with no relative associated with
    to the Islamic Society of North        of whether the charity had any           one side or the other of a conflict.
    America (ISNA). Yet despite a          direct connection to the incident        HLF has appealed the Boim deci-
    lack of any alarming evidence of       involved. The premier example is         sion. The upcoming criminal trial
    terror financing, Grassley’s com-      the tragic case of David Boim, a         may be the first chance HLF will
    mittee issued a statement on Dec.      U.S. citizen killed in a 1996 ter-       have to present its story.
    6, 2005 saying that “the fact that     rorist shooting in Israel. In May
                                                                                      The Boim case also raises a
    the committee has taken no public      2000, his parents filed suit against
                                                                                    number of serious questions for
    action based on the review of these    individuals and groups, including
                                                                                    all nonprofits. First, should the
    documents does not mean that           HLF, with alleged ties to Hamas,
                                                                                    charitable assets of groups desig-
    these groups have been ‘cleared’       which had been blamed for the
                                                                                    nated as supporters of terrorism
    by the committee,” and that they       shooting. In November 2004, the
                                                                                    be used exclusively for charitable
    will “continue to gather informa-      U.S. District Court for the North-
                                                                                    purposes, or should they be avail-
    tion and examine the operations of     ern District of Illinois found the
                                                                                    able to pay damages to victims
    the charities.” Perpetual suspicion    defendants liable for “aiding and
                                                                                    of terrorist acts? Must there be a
    seems to be the order of the day.      abetting” Hamas. It did not find

6                                          Muslim Charities and the War on Terror
factual link established under the         a lecture by someone with Irish            subpoena requesting documents
rules of evidence before liability is      Republican Army links could be             and the case was referred to the
imposed, or can liability be based         held liable for all IRA murders….          Justice Department. On Sept.
on allegations only?                       That theory of liability is just un-       22, 2005, the Progressive Caucus
                                           tenable and opens the door to ri-          in the House of Representatives
   Already the Boim case is being
                                           diculous numbers of suits, and that        wrote the president asking that
cited as an important precedent
                                           doesn’t accomplish anything” (US           Halliburton be suspended from
that could be used by victims of
                                           Islamic Charities Liable for Hamas         hurricane relief contracts for a host
9/11 and others. Many in the
                                           Terror Attack, The Jerusalem Post,         of reasons, including “dealing with
Muslim community oppose seiz-
                                           Nov. 14, 2004).                            nations that sponsor terrorism.”
ing a group’s funds for this pur-
pose, saying it violates the rights of     9. There is unequal enforcement              This case raises the following
individual donors, who are not on          of anti-terrorist financing laws.          questions:
trial. “The community’s worst fears
                                             A July 19, 2005 Halliburton-             1. If Halliburton were a charity
are being realized,” writes Laila Al-
                                  article notes that the           would its assets have been frozen
Marayati, a leader in the Muslim
                                           company has been under investi-            like the U.S.-based Muslim chari-
charitable community, in a report
                                           gation by OFAC and the Depart-             ties?
American Muslim Charities: Easy
Targets in the War on Terror (See
                                             Rather than seizing and freezing Halliburton’s assets...
                                             OFAC sent an inquiry to Halliburton requesting
                                             “information with regard to compliance.”
  Supporters of the Boim’s ap-
proach note that terrorist groups          ment of Justice since 2001 for
                                                                                      2. Even though little is known
can be marginalized by depleting           doing business with Iran, which
                                                                                      about the evidence OFAC relied
their assets. For example, in a May        is listed as a sponsor of terrorism.
                                                                                      on to freeze and seize assets of
24, 2000 article “The Boim Trial:          Rather than seizing and freez-
                                                                                      Muslim charities, it appears there
A New Way to Fight Terrorism,”             ing assets “pending an investiga-
                                                                                      is much stronger evidence against
Daniel Pipes of The Jerusalem Post         tion,” however, OFAC and Justice
                                                                                      Halliburton. What legal distinc-
pointed out that “the Southern             proceeded in a way the nonprofit
                                                                                      tion is OFAC making?
Poverty Law Center some years              world would envy. First, OFAC
ago won a comparable civil judg-           sent an inquiry to Halliburton             3. If U.S. charities formed Cay-
ment against the Ku Klux Klan,             requesting “information with re-           man Island subsidiaries could they
impoverishing that organization,           gard to compliance.” Halliburton           avoid the USA PATRIOT Act,
thereby severely reducing its reach        sent a written response explaining         IEEPA, and Executive Order re-
and appeal.” However, that case            why they felt they were in compli-         strictions on dealings with groups
was based on direct liability of the       ance with the law. Halliburton’s           or countries linked to terrorism?
KKK, not “aiding and abetting.”            defense seems to rest on the fact
                                                                                         This imbalanced enforcement
                                           that its dealings with Iran are done
  The potential reach of liability                                                    in the campaign against ter-
                                           through a Cayman Islands subsid-
based on indirect ties, rather than                                                   ror financing also appears in the
                                           iary, not its U.S.-based entity.
evidence of illegal intent, could be                                                  government’s treatment of domes-
enormous. Brendan Shiller, an at-            Over two years later, in January         tic and foreign nonprofit organiza-
torney for the Islamic Association         2004, OFAC sent a follow-up letter         tions. In response to questions at a
for Palestine, another defendant in        requesting additional information,         Pace Law School forum, Poncy de-
the Boim case, told The Jerusalem          to which Halliburton responded             scribed instances where Treasury
Post the case set a legal standard         that March. In July of that year,          has worked with Saudi charities
“in which a Catholic church which          the U.S. Attorney for the Southern         to help them restructure to avoid
donated space to the Sinn Fein for         District of Texas sent a grand jury        designation and freezing of assets.

                                  Part 1: ConcernsCharities and the War of Muslim Charities
                                           Muslim About the Treatment on Terror                                               7
    He did not offer any explanation of      not support terrorism is among           organizations. In its final report,
    why U.S.-based charities that have       the least effective law enforcement      the 9/11 Commission made strong
    been designated did not receive          mechanisms ever devised. What            recommendations about dealing
    similar treatment.                       exactly would stop a terrorist from      with the root causes of terrorism.
                                             signing such a letter? In fact, the      “A comprehensive U.S. strategy,”
    10. Treatment of Muslim chari-
                                             true targets of this misguided ap-       it said, “should include economic
    ties hurts, rather than helps, the
                                             proach are those organizations or        policies that encourage develop-
    war on terrorism.
                                             individuals that sign these letters      ment, more open societies, and
       While extreme steps have been         in good faith and face crushing          opportunities for people to im-
    taken by our government to “safe-        sanctions if they fall prey to bad       prove the lives of their families
    guard” domestic nonprofits, these        actors: the very groups we are           and to enhance prospects for their
    policies are not making us any           purportedly trying to protect from       children’s future.” To this end, the
    safer. Current anti-terrorist financ-    abuse.                                   government should be working to
    ing legislation prescribes onerous                                                better support legitimate charitable
                                                The costs of such policies greatly
    procedures for financial institu-                                                 organizations performing vital de-
                                             exceed the crippling administra-
    tions and nonprofits alike, yet do                                                velopment and peacemaking work
                                             tive burdens of compliance. In
    very little to target terror financing                                            throughout the world. Yet, these
                                             pursuing ineffective strategies, we
    networks. For example, compel-                                                    efforts by U.S. charities operating
                                             are actually diverting attention and
    ling grantees, employees, and                                                     globally are those most at risk un-
                                             resources away from more useful
    vendors working with a charity to                                                 der current anti-terrorist financing
                                             avenues. We are also undermin-
    sign letters certifying that they do                                              laws and regulations.
                                             ing the important work of these

    Part 2: Status of Charities Shut Down by Treasury
    I  n 2003, OMB Watch reported
       the forced closures of three
    of the largest, most high-profile
                                             Holy Land Foundation (HLF)
                                               In December 2001, the FBI raid-
                                                                                      armed conflict in Bosnia, Kosovo,
                                                                                      and Turkey.
                                             ed HLF’s Texas office, seizing more        In early 2002 HLF challenged
    Muslim groups in the country: The
                                             than $5 million in assets, along         the asset seizure in federal court,
    Holy Land Foundation for Relief
                                             with all documents and property.         seeking injunctive relief against
    and Development (HLF), The
                                             OFAC designated HLF a supporter          continued freezing of its assets
    Global Relief Foundation (GRF),
                                             of terrorism under the Inter-            without notice or due process, and
    and the Benevolence Interna-
                                             national Emergency Economic              based on secret evidence. After the
    tional Foundation (BIF). (See
                                             Powers Act (IEEPA) and Executive         suit was filed, Treasury notified
    The USA PATRIOT Act and its
                                             Orders 13224 and 12947, alleging         HLF and the court that it was con-
    Impact on Nonprofit Organizations
                                             HLF funneled millions of dollars         sidering whether to re-designate
                                             to Hamas, which was designated           HLF based on additional evidence
    ticle/articleview/1803/.) This paper
                                             as a terrorist organization in 1995,     and gave the organization 31 days
    provides an update on what has
                                             and provided funds to families of        to respond. Treasury considered
    happened to these three groups,
                                             suicide bombers. HLF denied the          the HLF response and re-desig-
    as well as information about other
                                             charge, saying it only provided hu-      nated them one month later.
    Muslim charities that have been
                                             manitarian relief, with a focus on
    shut down or become targets of                                                      Subsequently the U.S. District
                                             Palestinian refugees and victims of
    government investigation.                                                         Court for the District of Columbia
                                                                                      upheld Treasury’s action (Holy

8                                            Muslim Charities and the War on Terror
Land Foundation for Relief and                close the classified information” to       charity and its seven top officials,
Development v. John Ashcroft,                 be presented to the court outside          bringing criminal charges of pro-, 219 F. Supp. 2d 67), based            the public record. The court also          viding material support to Hamas
on a legal standard that severely             upheld seizing and freezing of             and money laundering. (DOJ
limits the scope of judicial review.          assets without prior notice, based         press release at http://www.usdoj.
The court noted that it was limited           on IEEPA and the national emer-            gov/opa/pr/2004/July/04_crm_
to a review of the agency record              gency declared by the President            514.htm) That case is the first
to determine whether there was a              after 9/11, saying it “promotes an         criminal action against a U.S.-
rational basis for action.                    important and substantial gov-             based charitable organization. The
                                              ernment interest in combating              case has not yet gone to trial.
    The court also found that the
record has “ample evidence that                                                             The Inspector General declined
FBI informants reliably reported                 The appeals court also agreed           to investigate the HLF accusa-
that HLF funds Hamas.” However,               with the lower court’s finding that        tions, saying the issue of the false
the court allowed Treasury to rely            there is “no other, narrower means         translations could be fully aired in
on hearsay and secret evidence in             of ensuring charitable contribu-           the criminal case. However, John
making its case. It rejected HLF’s            tions to a terrorist organization are      Boyd, attorney for HLF, says “there
attempt to provide information in             used for a legitimate purpose.” This       is no guarantee that the jury will
its defense by striking its exhibits          is a very disturbing finding, given        ever have the opportunity to hear
from the record, saying review of             that less drastic sanctions could          that the allegations against HLF
agency action must be limited to              be imposed. Indeed, similar al-            are founded on falsified transla-
the administrative record.                    leged infractions have been treated        tions.” (Interview, Dec. 20, 2005)
                                              with much greater leniency when            “We’re one thousand percent con-
  The U.S. District Court stated
                                              the entity in question is a for-           fident of our innocence, and we’re
that “the government’s entry
                                              profit corporation, and Treasury           going to fight as long as we can to
into HLF’s offices…and seizure
                                              has helped some foreign chari-             get the truth out,” said Shukri Abu
of equipment…without a war-
                                              ties restructure in order to avoid         Baker, the foundation’s former
rant, do raise significant Fourth
                                              problems.                                  chief executive (Islamic Char-
Amendment [search and seizure]
                                                                                         ity Says F.B.I. Falsified Evidence
concerns. Indeed, these allegations             On July 26, 2004, HLF sent a
                                                                                         Against It, The New York Times,
state a classic Fourth Amendment              letter to the Department of Justice
                                                                                         July 27. 2004.)
violation.” However, the court held           Inspector General requesting an
that freezing assets is not a seizure,        investigation into the FBI’s han-             In the meantime, a heated battle
but a “temporary deprivation” of              dling of the case, alleging “materi-       is raging over the organization’s
property, so the Fourth Amend-                ally misleading” evidence. HLF             frozen assets. In April 2004 HLF
ment claim was dismissed. The                 said the FBI used a “distorted” and        petitioned Treasury for permission
court did suggest that, “plaintiff            erroneous translation of sensitive         to transfer $50,000 of its frozen
may…some day have a credible ar-              Israeli intelligence material as the       assets to the Palestine Children’s
gument that the long-term block-              crux of its case. An independent           Relief Fund. Lawyers for plaintiffs
ing order has ripened into vesting            translating service in Oregon,             in two cases seeking damages
of property in the United States.”            hired by the HLF to review the             on behalf of victims of terrorism
                                              evidence, cited 67 discrepan-              strongly objected to the request,
  The court’s decision was upheld
                                              cies or errors in translation in a         arguing that their clients have
on appeal to the U.S. Circuit Court
                                              four-page FBI document used                priority in claiming the remain-
for the District Columbia (333 F.
                                              in the case. Later the same day            ing assets. Treasury denied HLF’s
3d 156, 2003), which found that
                                              the Justice Department unsealed            request because of the lawsuits.
“HLF has no right to confront
                                              an indictment (see http://www.             There is no mechanism to appeal
and cross-examine witnesses” and
                                                 Treasury’s decision. Salam Al-Ma-
Treasury’s notice “need not dis-
                                              HLF%20Indictment.pdf), of the              rayati of the Muslim Public Affairs

                                         Part : Status of Charities Shut Down by Treasury
                                              Muslim Charities and the War on Terror                                            9
     Council told The New York Times         ity based in Illinois, pending an        of notice and pre-seizure hearing
     on April 15, 2004, “This is still the   investigation into ties to terrorist     were not unconstitutional because
     donor’s money, and it should go         organizations. According OFAC’s          of the government’s overriding
     where the donors wanted it to go,       website “the Global Relief Founda-       interest in stopping terrorism
     to good, charitable causes.”            tion… and its officers and direc-        and preventing funds from being
                                             tors have connections to, and            transferred out the country while a
        In May 2000 the parents of Da-
                                             have provided support for and            hearing is pending.
     vid Boim, a U.S. citizen killed in a
                                             assistance to Usama bin Laden, al
     terrorist shooting in Israel in 1996,                                              Global Relief ’s assets remain fro-
                                             Qaeda, and other known terrorist
     filed suit under the 1990 Anti-Ter-                                              zen although no criminal charges
                                             groups.” (See http://www.treasury.
     rorism Act against individuals                                                   have been filed against it. Like
     and groups, including HLF, with                                                  HLF, Global Relief has still not
     alleged ties to Hamas, which had                                                 had the opportunity to confront
     been blamed for the shooting. On                                                 evidence against it or present evi-
     Nov. 10, 2004, the U.S. District           GRF contested the action,             dence on its own behalf to a court.
     Court for the Northern District of      seeking an injunction in the U.S.
     Illinois granted summary judg-          District Court to end the order           Benevolence International
     ment in favor of the Boims, finding     blocking assets and return the                Foundation (BIF)
     the defendants liable and limiting      seized property. The court upheld
                                                                                        On Dec. 14, 2001 the FBI
     the jury trial to set the amount of     the Treasury action, and GRF
                                                                                      searched Benevolence Interna-
     damages. (See Boim v. Quranic           appealed to the U.S. Court of Ap-
                                                                                      tional Foundation’s (BIF) offices in
     Literacy Institute, 340 F.Supp.2d       peals for the 7th Circuit. Treasury
                                                                                      Palos Hills, Illinois and Newark,
     885, N.D.Ill., 2004) The court did      allowed GRF to submit informa-
                                                                                      New Jersey. They seized financial
     not find direct ties between HLF        tion on its own behalf while the
                                                                                      records and other documents and
     and Hamas or the Boim killing.          investigation was pending. This
                                                                                      property, including computers and
     Instead, it found the defendants        opportunity is of limited use, since
                                                                                      personal effects of BIF employees.
     liable for “aiding and abetting”        GRF could only respond to unclas-
                                                                                      On the same day, the FBI searched
     Hamas, based on Treasury’s allega-      sified information released by
                                                                                      the home of Enaam Arnaout, BIF’s
     tions in the 2001 designation and       Treasury and did not know what
                                                                                      Chief Executive Officer, and seized
     the criminal indictment.                secret evidence was being submit-
                                                                                      personal effects belonging to him
                                             ted to the court. On Oct. 18, 2002,
       On Dec. 8, 2004 the jury award-                                                and his family (including family
                                             a few days before oral argument
     ed the Boims $52 million, and the                                                photographs and a microphone
                                             began in the appeal, OFAC for-
     court tripled the damages pursuant                                               from a Nintendo game). On Nov.
                                             mally designated GRF as a “Spe-
     to the Anti-Terrorism Act, bring-                                                19, 2002, the Treasury Department
                                             cially Designated Global Terror-
     ing the total to $156 million. In the                                            placed BIF on the Specially Desig-
                                             ist” organization, adding it to the
     summer of 2005, HLF and other                                                    nated Global Terrorist list.
                                             list of groups barred from doing
     defendants appealed, and the case
                                             business in the United States. This         According to Treasury, BIF al-
     was argued before the U.S. Court
                                             limited the arguments on appeal          legedly “provided support for and
     of Appeals for the 7th Circuit in
                                             to whether the OFAC action was           has been linked in other ways to
     late 2005.
                                             arbitrary and capricious and not         al Qaeda and its operatives.”(See
                                             based on “substantial evidence.”
       Global Relief Foundation
                (GRF)                          On Dec. 31, 2002 the appeals
                                             court upheld Treasury’s action as
       On Dec. 14, 2001, the Treasury                                                 b.shtml#b) The background
                                             authorized under IEEPA and un-
     Department seized and froze the                                                  provided on BIF also claims that
                                             der the limited standard of review
     assets of the Global Relief Foun-                                                Arnauout had close ties to bin
                                             on appeal. The court also held that
     dation (GRF), a Muslim char-                                                     Laden. On January 30, 2002,
                                             use of secret evidence and lack

10                                           Muslim Charities and the War on Terror
BIF filed suit (Benevolence Int’l             ing, and even offered to have FBI          in 1997 and who donated money
Found., Inc. v. Ashcroft, No. 02 C            agents accompany the funds to              to BIF years before it was accused
763 (N.D. Ill. filed Jan. 30, 2002) to        their overseas destinations. Nev-          of supporting terrorism. Although
contest this action. In March 2002            ertheless, the request was denied.         Maswood has not been charged
BIF filed a motion for preliminary            There is no appeal process.                with any crime, his name remains
injunction, asking that the order                                                        on the no-fly lists. Ironically, a year
                                                By the time the criminal cases
blocking its assets be lifted and its                                                    after the raid, Maswood received
                                              were resolved BIF’s resources
property returned. The supporting                                                        an invitation to serve as an hon-
                                              were gone and it was not able
documents included a declaration                                                         orary chairman at a Republican
                                              to file another civil action chal-
signed by Arnaout “under penalty                                                         fundraiser and dine with President
                                              lenging seizure of its assets. As
of perjury.” On April 29, 2002, the                                                      Bush in Washington. Maswood
                                              a result, the organization is shut
government filed criminal charges                                                        declined the invitation.
                                              down permanently, even though
against BIF and Arnaout, alleging
                                              no terrorism-related charges were
that their sworn statements used                                                             Islamic American Relief
                                              ever proven, and BIF never had
false material.                                                                                   Agency (IARA)
                                              a chance to challenge Treasury’s
   In May 2002, the U.S. District             evidence in open court or present             On Oct. 13, 2004 the Treasury
Court for the Northern District of            witnesses on its own behalf.               Department designated the Islamic
Illinois stayed the civil case pend-                                                     American Relief Agency (IARA),
                                                 In a speech at Pace University
ing the outcome of the criminal                                                          along with five senior officials
                                              Law School, BIF attorney Matthew
case, and then dismissed the civil                                                       from the organization, as sup-
                                              J. Piers described the legal action
case on its own motion (200 F.                                                           porters of terrorism. The IARA
                                              against BIF as the “malevolent de-
Supp. 2d 935). At the criminal                                                           is a U.S. 501(c)(3) tax-exempt
                                              struction of a Muslim charity”. He
trial in February 2003, Judge                                                            organization formed in 1985 that
                                              noted that the government’s case
Suzanne B. Conlon held that the                                                          is focused on charitable work for
                                              was founded on bad intelligence
prosecution had “failed to connect                                                       orphans, disaster and famine relief,
                                              and a case of mistaken identity,
the dots” to prove a relationship                                                        and aid to refugees. The Treasury
                                              based on information from an
between BIF, Arnaout and bin                                                             action froze all accounts, funds
                                              Attorney General Emergency
Laden. The charges against BIF                                                           and assets of IARA in the United
                                              Physical Search Authorization. In
were dismissed. Arnaout plead                                                            States and criminalizes the provi-
                                              concluding the story of this group,
guilty to a lesser charge of fraud,                                                      sion or donation of money to any
                                              Piers said, “It is hard to see how
admitting that he lead BIF donors                                                        of its offices.
                                              the government’s activities with
to believe funds were being used
                                              regard to Muslim charities have              According to the Treasury De-
for humanitarian purposes, but
                                              had any positive effect on the war         partment, IARA is an affiliate of
that some funds were diverted to
                                              on terrorism…One thing is clear:           the Islamic African Relief Agency,
Chechen and Bosnian soldiers.
                                              critically needed resources for the        a Sudanese charity suspected of
He is currently serving an 11-year
                                              many refugees and people living            supporting al Qaeda. In a four-
prison sentence.
                                              in poverty and other dire circum-          page fact sheet on its website,
  In 2002, BIF applied for a license          stances throughout the Islamic             the Treasury Department draws
from OFAC to dispense funds                   world have been terminated.”               connections between terrorists and
earmarked for charitable causes                                                          some of the African charity’s many
                                                Government suspicion and
abroad, including a children’s hos-                                                      offices and officials. (See http://
                                              scrutiny have also spread to BIF’s
pital in Tajikistan and the Charity                                            
                                              principals and donors. For ex-
Women’s Hospital in Dagestan,                                                            js2025.htm)
                                              ample, in 2004, federal agents
Chechnya. BIF supported this
                                              raided the home of Syed Mas-                 IARA’s attorney, Shereef Akeel,
request with signed affidavits
                                              wood, a Bangladeshi immigrant              told The Missourian that IARA-
from hospital staff attesting to the
                                              who became an American citizen             USA, a separate and independent
importance of the expected fund-

                                         Part : Status of Charities Shut Down by Treasury
                                              Muslim Charities and the War on Terror                                               11
     organization from IARA-Sudan,          and seizure of its assets. In Janu-      returned to work within a few days
     was “trying to combat terrorism”       ary 2005, Treasury wrote to Akeel        of the FBI raid. The Missourian
     and would cooperate with the gov-      saying the designation of IARA           reported that the FBI told the
     ernment. IARA-USA has its own          was not a case of mistaken identity      state, Hamed is not a “concern.”
     board of directors, administrative     with the African group. The court        (FBI reportedly finds Hamed not a
     structure, executive decision-mak-     denied the injunction request in         ‘concern’, The Missourian, Oct. 24,
     ing process, and legal and financial   February, and on Sept. 15, 2005          2004.) State official Tim Dan-
     accountability obligations. None of    granted the government’s motion          iel told The Missourian the state
     these functions or responsibilities    to dismiss.                              does not have the resources to do
     is shared with any other organiza-                                              rigorous background checks on
                                               The court noted that “The OFAC
     tion.                                                                           prospective employees, and added,
                                            blocking notice stated that the
                                                                                     “You’re getting into legal area here
       Akeel also said the FBI was          IARA-USA could challenge the
                                                                                     where I do not feel confident to
     contacting IARA donors, and that       blocking order by writing a letter
                                                                                     comment. Is this group illegal,
     IARA had no way of communicat-         to the Director of the OFAC.”
                                                                                     and is his participation in this
     ing with them because the FBI had      However, IARA-USA was not
                                                                                     group illegal? If the answer is no,
     seized all their records, including    allowed to see the affidavits sup-
                                                                                     are you placing the state in a posi-
     donor and mailing lists (Lawyer        porting the search warrant autho-
                                                                                     tion where if you do a background
     Backs Islamic Agency, The Mis-         rizing the raid on its office, so it
                                                                                     check that allows someone to be
     sourian, Oct. 22, 2004). He said,      could not know what allegations it
                                                                                     arbitrary and capricious about not
     “Many people who are very far          needed to rebut.
                                                                                     hiring someone?”
     removed from the investigation are        No criminal charges have been
     being affected. They just thought      filed against IARA. At the time of
                                                                                          Al-Haramain Islamic
     they were doing good.”                 the designation, a spokesman for
       No links were made between the       InterAction, the U.S. coordinat-
                                            ing and policy body for more than           The U.S. branch of the Al-Hara-
     U.S.-based office and terrorism.
                                            160 international charities, said        main Islamic Foundation, Inc. was
     In fact, according to a USA Today
                                            that IARA was a member in good           designated as a supporter of ter-
     report in September 2000, IARA
                                            standing and was in compliance           rorism in September 2004. It was
     received grants from the U.S.
                                            with the organization’s voluntary        the thirteenth designation in 2004
     Agency for International Devel-
                                            standards for administration and         alone of Al Haramain branches
     opment for disaster and poverty
                                            procedures. However, after the           throughout the world. The U.S.
     assistance during the 1990s, total-
                                            Treasury designation, InterAction        branch was established in 1997 by
     ing $4.2 million. In November
                                            suspended IARA’s membership “in          Pete Seda, an Oregon tree trim-
     2000, USAID cancelled the grants
                                            light of the actions of the U.S. De-     mer, and operated a prayer house
     because, according to a letter from
                                            partment of the Treasury and the         and distributed Islamic literature.
     then-Under Secretary of State
                                            loss of their tax-exempt status.”        In February 2005, the charity
     Thomas Pickering, continuation
                                               During a search of IARA’s Co-         was indicted and its assets frozen
     “would be contrary to the national
                                            lumbia, MO, office the FBI seized        for allegedly helping to launder
     defense and foreign policy inter-
                                            boxes, computers and file cabinets.      $150,000 in donations five years
     est of the United States” (Agents
                                            The search expanded to storage           ago to help al Qaeda fighters in
     Search Islamic Relief Group, AP
                                            lockers and the home of Mubarak          Chechnya.
     Alert, Oct. 13, 2004).
                                            Hamed, who served for four years            Yet in the absence of proof of
       On Dec. 30, 2004, IARA filed
                                            as the charity’s executive director.     whether or not the funds ended up
     suit in the U.S. District for the
                                            He also worked as the charity’s          in terrorist hands, the indictment
     District of Columbia challenging
                                            president between 1992 and 1998.         was based largely on the charge
     the constitutionality of Treasury’s
                                            Hamed is employed by the state           that one of the officers of the char-
     action, asking for a preliminary
                                            of Missouri as an economist, and         ity, Soliman Buthe, transported
     injunction against the designation

1                                          Muslim Charities and the War on Terror
$150,000 in traveler’s and cashier’s         March and April of 2004, after the         tions of support for any terrorist
checks to Saudi Arabia without               organization had been shut down            group.
notifying authorities. Although              but before it was officially desig-
                                                                                          KindHearts says it is a hu-
federal law requires travelers to re-        nated as a supporter of terrorism.
                                                                                        manitarian aid organization, and
port when they are carrying more             It seeks $1 million in damages for
                                                                                        raised $5.1 million in 2004. It has
than $10,000 into or out of the              each plaintiff.
                                                                                        branches in Lebanon, the Gaza
country, there are only warnings
                                               According to the Washington              Strip and Pakistan. The Treasury
and mandatory forms to fill out
                                             Post, the surveillance was dis-            Department alleges it gave more
upon entering the country. Buthe’s
                                             covered when the FBI mistak-               than $250,000 to the Sanabil As-
lawyer, Tom Nelson, contends that
                                             enly provided the attorneys with           sociation for Relief and Develop-
his client had no knowledge of this
                                             transcripts of the intercepted             ment, which was designated as a
requirement, and in the absence of
                                             conversations. (Saudi Group                terrorist organization in August
proof of knowing violation of the
                                             Alleges Wiretapping by U.S.,               2003. KindHearts board chair
statute, “we don’t think he can be
                                             Washington Post, March 2, 2006)            Dr. Hatem Elhady told the Toledo
found guilty” (U.S. Indicts Oregon
                                             The FBI demanded return of the             Blade, however, that it contracted
Charity Linked to Saudis, The
                                             documents from attorney Wendell            with Sanabil to provide aid in refu-
Washington Post, Feb. 19, 2005).
                                             Belew, based in Washington, D.C.,          gee camps before the designation
   In September 2005, a federal              and the Washington Post, which             was made, and the amount was
judge dismissed criminal charges             had received a copy from Belew.            no more than $115,000, saying,
against Al Haramain at the request           Tom Nelson, one of the attorneys           “We did not just give money. We
of federal prosecutors, who asked            representing the plaintiffs, filed a       gave it for specific projects, and we
that the charges be dropped be-              motion under seal asking the judge         saw the results, and we have the
cause all that remains of the orga-          to review unspecified documents,           receipts.” (Leaders vigorously rebut
nization is a corporate shell. Marc          presumably the transcripts of the          U.S. allegations; board members
Blackman, the attorney represent-            calls and emails.                          deny Hamas ties, Toledo Blade.
ing the U.S.-based Al-Haramain                                                          Feb. 21, 2006)
branch, requested that the gov-                      KindHearts USA
                                                                                          The evidence in the Treasury
ernment’s motion to dismiss the
                                                On Feb. 19, 2006 the Treasury           Department’s press release focuses
charges be rejected, arguing that
                                             Department froze the assets of             on the group’s ties with other sus-
the case should either proceed to
                                             KindHearts USA, a humanitar-               pected individuals and organiza-
trial with the current indictment
                                             ian organization whose mission             tions, rather than action taken by
or be dismissed with prejudice. As
                                             is to provide aid for children and         KindHearts. Stuart Levey, Treasury
it now stands, Seda and Buthe are
                                             families living in poverty in the          Under Secretary for Terrorism and
considered international fugitives
                                             West Bank and around the world.            Financial Intelligence, charged
and the government maintains
                                             The doors of the Toledo-based              that, “KindHearts is the progeny of
the ability to revive the case in the
                                             charity were padlocked “pending            Holy Land Foundation (HLF) and
                                             an investigation.” The Treasury            Global Relief Foundation (GRF),”
  Al Haramain and two of its U.S.-           Department announcement stated             groups that were shut down by
based attorneys filed suit against           that “KindHearts officials and             Treasury in 2001. For example,
the National Security Agency                 fund-raisers have coordinated with         the founder of KindHearts, Jihad
(NSA), OFAC and others in the                Hamas leaders and made contribu-           Smaili, was previously a public
U.S. District Court in Oregon                tions to Hamas affiliated organiza-        relations representative for the
in late February 2006, claiming              tions.” Hamas has been designated          Global Relief Foundation. The
NSA conducted illegal, warrant-              as a terrorist organization by the         Treasury Department announce-
less surveillance of their com-              U.S. government. KindHearts of-            ment states that, “Smaili founded
munications. The complaint says              ficials vigorously refute the allega-      KindHearts with the intent to
the surveillance occurred during                                                        succeed fundraising efforts of both

                                        Part : Status of Charities Shut Down by Treasury
                                             Muslim Charities and the War on Terror                                             13
     HLF and GRF, aiming for the new         December 2005 interview with The           on payment to employees for
     NGO to fill a void caused by the        Cleveland Plain Dealer, Smaili ac-         past services provided and
     closures.”                              knowledged that while this system          for upcoming legal fees, to be
                                             is a huge financial burden, “our           spent under the auspices and
       The Treasury Department also
                                             goal is survival. We want our char-        administration of the USAID
     cites a KindHearts “connection”
                                             ity to remain open and helping             Program (of which Kind-
     to a former employee of HLF who
                                             around the world (Muslim Charity           Hearts is a member) or any
     was indicted by a federal grand
                                             Drawing Scrutiny, The Cleveland            other NGO (United Nations,
     jury in Texas for providing mate-
                                             Plain Dealer, Dec. 6, 2005).               Red Crescent, etc.) on Kind-
     rial support to Hamas. Moham-
                                                                                        Hearts programs, or any other
     med El-Mezain had been retained           In response to the closure, a
                                                                                        humanitarian program that
     to raise funds for the organization,    coalition of 10 national Muslim
                                                                                        it deems justified. However,
     but Smaili said the contract was        groups, the American Muslim
                                                                                        KindHearts requests that spe-
     voided as soon as KindHearts            Taskforce on Civil Rights and Elec-
                                                                                        cial consideration be given to
     learned about the indictment. The       tions (AMT), sent a letter to Trea-
                                                                                        the refugees in the earthquake
     case has not yet come to trial.         sury Secretary John Snowe stating,
                                                                                        ravaged areas of Pakistan since
                                             “As leading American Muslim or-
        Jihad Smaili, an attorney and                                                   the overwhelming majority of
                                             ganizations, we note that although
     KindHearts board member, reject-                                                   frozen funds were earmarked
                                             we understand the political climate
     ed the Treasury Department’s al-                                                   for projects therein.”
                                             of our country and support our
     legations: “I know the government
                                             government’s efforts to thwart ter-        KindHearts was among two
     has listened to every conversation
                                             rorist financing; we find it unfair      dozen Muslim organizations
     that we’ve made and traced every
                                             that our government has yet made         investigated by the Senate Finance
     wire sent from KindHearts USA
                                             another extrajudicial decision to        Committee, which found no
     to Lebanon or Palestine,” he said.
                                             effectively wipe-out more than five      wrongdoing. In fact, the failure
     “They know exactly what’s going
                                             years of humanitarian assistance         of previous public investigations
     on and that we have not done any-
                                             to the world’s needy by the mere         to find evidence of support for
     thing wrong.” Smaili noted that by
                                             stroke of a pen. The immediate           terrorism, along with the tim-
     using its authority under Executive
                                             effects of KindHearts’ closure have      ing of the closure—on the eve of
     Order 13224, the Treasury Depart-
                                             already been felt in orphanages,         Hamas’ ascendancy to power in
     ment does not have to prove its
                                             schools, shelters, and medical cen-      the Palestinian territories—has
     allegations in court. There is no
                                             ters around the world.”                  raised questions of possible politi-
     deadline for the Treasury Depart-
                                                                                      cal motivations.
     ment to complete its investigation,       The statement from KindHearts
     making it likely that the organiza-     explains that over $1 million was          KindHearts has called on the
     tion will go out of business even if    frozen, most of which had been           government to “not resort to its
     it is ultimately cleared.               earmarked for earthquake victims         usual practice of hiding behind
                                             in Pakistan and for a new office in      the veil of its own laws which
        Kind Hearts reports adherence
                                             Indonesia. It called on the Trea-        have questionable constitutional
     to an exhaustive array of adminis-
                                             sury Department to ensure the            legitimacy, i.e. the use of secret
     trative compliance measures pro-
                                             funds are used for humanitarian          evidence and other extrajudicial
     moted in Treasury’s Anti-Terrorist
                                             aid, stating:                            mechanisms under the pretext
     Financing Guidelines: Voluntary
                                                                                      of national security pursuant to
     Best Practices for U.S.-Based Chari-      “KindHearts is prepared to
                                                                                               the USA PATRIOT Act.
     ties, including checking the names        agree to the distribution
                                                                                               KindHearts only requests
     of potential donors and contrac-          of the funds currently
                                                                                               that to which it is entitled
     tors against terror lists and provid-     held by our Government,
                                                                                               to under our often envied
     ing in-kind goods and services            except for those funds
                                                                                               principles of freedom and
     rather than cash donations. In a          that will be expended

14                                           Muslim Charities and the War on Terror
New Targets of                              responsiveness, the organization           have been ‘cleared’ by the commit-
Government Investigation                    resumed fundraising four months            tee,” and that they will “continue to
                                            after the subpoena to support its          gather information and examine
  In the absence of sufficient evi-
                                            ongoing charitable activities. Yet,        the operations of the charities.”
dence to try and convict charities
                                            their donors, their employees, and
already designated as supporters of                                                       This prolonged scrutiny of the
                                            their board remain fearful that the
terrorism, the FBI and the Trea-                                                       umbrella group has been widely
                                            organization may soon be shut
sury Department have moved on                                                          reported and has cast doubt on
                                            down in the course of the investi-
to new suspects. These investiga-                                                      the legitimacy of its work at a time
tions have been based on tenu-                                                         when Muslim charities are already
ous factual grounds that give the                                                      facing considerable challenges.
                                              Islamic Society of North
impression Treasury’s standard is                                                      Arsalan Iftikhar, the national legal
                                                   America (ISNA)
guilt by association. Indeed, at a                                                     director for the Council on Ameri-
June 2005 Georgetown University                In November 2005, the Senate            can-Islamic Relations, charged that
panel on charities and the war on           Finance Committee concluded a              the investigation “is indicative of
terror, law professor David Cole            high-profile investigation into U.S.       federal law enforcement’s dragnet
reported that the so-called “pre-           Muslim organizations and terror-           against the American Muslim
ventive paradigm” of preemptively           ism financing, saying it discovered        community” (Indiana-Based
weeding out potential threats to            nothing alarming enough to war-            Islamic Society Cleared in Sen-
national security has resurrected           rant new laws or other measures.           ate Investigation, The Indianapolis
guilt by association from the Mc-           The inquiry, which took nearly             Star, Nov. 15, 2005).
Carthy era.                                 two years to conduct, used finan-
                                            cial records given to the Internal
          Kinder USA                        Revenue Service, including donor
   An example of this trend is              lists of two dozen Muslim charities
Treasury’s treatment of Kinder              belonging to the Islamic Society of
USA, an organization that pro-              North America (ISNA). ISNA is
vides aid for children in war-torn          the largest Muslim organization in
regions. In January 2004, a federal         North America, providing social
grand jury issued a subpoena for            services and education to the
the group’s tax returns and other           Muslim community. The organiza-
documents. The board promptly               tion received federal funds in 2004
suspended all fundraising activi-           and 2005 through the Faith Based
ties, fearful that funds intended to        and Community Initiative. Karen
aid children in war zones would be          Hughes, Under Secretary of State
entangled in the ensuing investiga-         for Public Diplomacy, addressed
tion. For months the FBI released           the group in August 2005.
no further information, and would             ISNA remains concerned about
not discuss its concerns with               the Senate investigation and its
Kinder USA officials. The “evi-             impact on the organization’s
dence” against them appears to be           reputation. While the charity wel-
based largely on its ties to suspect        comed an end to the investigation,
individuals and groups. One of the          Grassley’s committee issued a new
founders previously served as the           statement on Dec. 6, 2005 saying
Secretary of the Holy Land Foun-            that “the fact that the committee
dation. Kinder USA leaders felt             has taken no public action based
they had nothing to hide. Given             on the review of these documents
the lack of Justice Department              does not mean that these groups

                                       Part : Status of Charities Shut Down by Treasury
                                            Muslim Charities and the War on Terror                                             15
     Conclusion: What’s been accomplished,
     and at what cost?

     A     s we enter the fifth year in
           the war on terror financing,
     there is growing cause for concern.
                                            Financial Intelligence Stuart Levey
                                            defended the use of designations
                                            of charities by emphasizing that
                                                                                     immigration charges, arrests, and
                                                                                     deportations speak to the fact that
                                                                                     the unequal and targeted applica-
     Despite powerful new investigative     the “designation process entails ex-     tion of immigration law amounts
     tools, little has been accomplished,   haustive research to ensure it is fair   to discrimination.
     and at far too great a cost. Accord-   and fully supported by evidence.”
                                                                                       Looking forward, there is an
     ing to the 9/11 Commission staff         Yet to date, the government has        urgent need for the government to
     monograph on terrorist financing,      officially charged only one orga-        reexamine policies that target the
     the cases of BIF and GRF illustrate    nization with supporting terror-         nonprofit sector with little pros-
     some of the dangers inherent in        ism, and secured no convictions.         pect of stopping terrorism and at
     the government’s post-9/11 strat-      In addition to this “aggressive”         the expense of important humani-
     egy of “active disruption through      new tool afforded to government          tarian and human rights work and
     criminal prosecution.” Treasury        agencies, investigators have also        the constitutional rights of U.S.
     does not seem to recognize these       begun to manipulate other means          donors and U.S.-based charities.
     dangers. Treasury Under Secretary      of pressure and intimidation. For
     for the Office of Terrorism and        example, a growing number of

16                                          Muslim Charities and the War on Terror

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