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
http://www.ombwatch.org
(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, et.al., 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
terrorism.
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-
Watch.org 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
http://www.mpac.org/home_ar-
Rather than seizing and freezing Halliburton’s assets...
ticle_display.aspx?ITEM=755).
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
http://www.ombwatch.org/ar-
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-
et.al., 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
terrorism.”
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
usdoj.gov/usao/txn/PressRel04/ 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
gov/offices/enforcement/key-is-
and groups, including HLF, with HLF, Global Relief has still not
sues/protecting/charities_execord-
alleged ties to Hamas, which had had the opportunity to confront
er_13224-e.shtml#g.)
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.” http://www.treasury.gov/offices/
Global Relief Foundation
enforcement/key-issues/protect-
(GRF) On Dec. 31, 2002 the appeals
ing/charities_execorder_13224-
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 www.treas.gov/press/releases/
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
Foundation
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
future.
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
democracy.”
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
gation.
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