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Federal Court Rules U.S. Seizure of Muslim Charity's Assets Unconstitutional
By William Fisher
The Public Record
Aug 20th, 2009
A federal court this week ruled for the first time that the U.S. government cannot freeze an organization's assets under a terror financing law without a warrant based upon probable cause and without telling the organization the basis for its action and a meaningful opportunity to defend itself.
If the decision of U.S. District Judge James G. Carr is upheld, it will strip the government of a key weapon in the broad counter-terrorism authority claimed by the administration of former President George W. Bush following the attacks of Sept. 11, 2001.
The ruling came Tuesday in a lawsuit originally filed in November 2008 by the American Civil Liberties Union, the ACLU of Ohio and several civil rights attorneys on behalf of KindHearts for Charitable Humanitarian Development, Inc., a charity based in Columbus, Ohio. Lawyers from the Obama Justice Department defended the position of their predecessors.
Georgetown University law professor David Cole, who is co-counsel in the case, called the government's approach "a blunt sledgehammer."
He told us, "The government has an undoubtedly legitimate interest in stopping the funding of terrorist activity, but the authority used against KindHearts and so many other charities is a blunt sledgehammer that permits the government to shut down charities indefinitely without any finding of wrongdoing, without any notice of the basis for its actions, without any prior judicial approval, and without any meaningful opportunity for the charity to defend itself."
He added, "Judge Carr's decision recognizes that such unchecked power cannot be squared with the Constitution's Fourth and Fifth Amendments, which were designed, in the wake of King George's legendary abuses, to restrain official power to seize property arbitrarily."
The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) froze KindHearts' assets three-and-a-half years ago without a warrant, notice or a hearing, based simply on the assertion that OFAC was investigating whether the charity should be designated as a "specially designated global terrorist (SDGT)."
In Tuesday's ruling, Judge Carr found that the administration must obtain a warrant based on probable cause before seizing an organization's assets, citing judicial precedent holding that the executive branch's "domestic actions – even when taken in the name of national security – must comport with the Fourth Amendment."
Judge Carr also ruled that OFAC violated the Fifth Amendment's guarantee of due process because it "violated KindHearts' fundamental right to be told on what basis and for what reasons the government deprived it of all access to all its assets and shut down its operations."
KindHearts had never been found to have engaged in any wrongdoing and had never been designated an SDGT, yet it was effectively shut down since OFAC first froze its assets on February 19, 2006. As a result of the freeze pending investigation, it would have been a crime for anyone to do any business with KindHearts and the charity would have no access to its own property.
KindHearts provided detailed information to the government about its operations and requested that the government specify its reasons for blocking its assets pending investigation. But the government ignored KindHearts' submissions and repeatedly delayed in responding to its requests. The court found that the government's actions were fundamental violations of due process.
Judge Carr ordered a hearing for September to determine how to correct what he said were constitutional flaws in the government's case. Justice Department lawyers are reviewing the opinion, but it is unclear whether they will appeal the decision to a higher court.
The Treasury Department alleged that KindHearts provided financial support for Hamas and worked with this group in the West Bank of Israel and in Lebanon to support terrorist activities.
While KindHearts was never named a "specially designated global terrorist," Judge Carr said the government "has effectively shut KindHearts down" by freezing its assets and designating its as criminal.
The organization was unable to use its own resources to pay for a legal defense. Judge Carr said OFAC was "arbitrary and capricious" in considering whether the group could pay its lawyers.
He rejected the position of the Justice Department that the Fourth Amendment to the U.S. Constitution — which protects against unreasonable searches and seizures – was trumped by the national security authority of the President. He called the Fourth Amendment "a bulwark against the abuses and excesses of unchecked government authority."
Judge Carr was also critical of the limited information provided to the charity by the Treasury Department. He said this information came only after "long, unexplained and inexplicable delay" and repeated requests from the group's lawyers.
KindHearts' founders established the charity in 2002 – after the government shut down a number of other charities – with the express purpose of providing humanitarian aid both abroad and in the United States in full compliance with the law. Despite the efforts KindHearts took to implement OFAC policies and even seek its guidance, OFAC froze about $1 million of KindHearts' assets in February 2006.
Since 9/11, the government has shut down eight charitable organizations in the U.S. and frozen the assets of hundreds others in other countries. Last November, five members of the now-defunct Holy Land Foundation for Relief and Development were convicted in federal court in Dallas of funneling money to the Palestinian militant group Hamas and sentenced to prison. The defendants said they only gave much-needed aid to a volatile region.
Two other high-profile terrorism-financing trials, in Chicago and Florida, ended without convictions on the major counts.
The USA PATRIOT Act of 2001 enhanced OFAC's ability to implement sanctions and to coordinate with other agencies by clarifying OFAC's authorities to block assets of suspect entities prior to a formal designation in "aid of an investigation."
Later amendments to the PATRIOT Act authorized submission of classified information to a court, in camera and ex parte, upon a legal challenge to a designation.
The Treasury Department says, "This new PATRIOT Act authority has greatly enhanced our ability to make and defend designations by making it absolutely clear that OFAC may use classified information in making designations without turning the material over to an entity or individual that challenges its designation."
But civil libertarians contend that changes in the law have greatly enhanced the Department's ability to target and disable organizations and individuals based primarily on suspicion and not on proven evidence of wrong-doing as would be required in a court of law for a conviction of terrorism.
Attorney David Cole, a widely respected Constitutional scholar, sees a correlation between the McCarthy witch-hunts of the 1950s and the government's current policies. He told us, "With our return to a 'preventive paradigm' of preemptively weeding out threats to national security, guilt by association has been resurrected from the McCarthy era. While it was illegal in the 1950s to be a member of the Communist Party, it is now a crime to support an individual or organization on a terror watch list, although the government can designate and freeze assets without a showing of actual ties to terrorism or illegal acts."
"While the House Un-American Activities Committee once relied on the private sector to mete out punishment through the destruction of reputations and careers, today measures such as the Anti-Terrorist Financing Guidelines have turned funders into the new enforcers. In this light, he said the nonprofit sector has an obligation to resist such a partnership with government."
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CAIR Welcomes Ruling in Support of Muslim Charity's Due Process Rights
(WASHINGTON, D.C., 8/19/09) - The Council on American-Islamic Relations (CAIR) today welcomed a federal judge's ruling in support of the due process rights of KindHearts, an Ohio-based Muslim charity that had its assets frozen by the government more than three years ago.
U.S. District Judge James Carr ruled yesterday that the government had an obligation to explain the asset freeze and to give KindHearts an opportunity to respond to any allegations. Judge Carr also said the treasury department should have obtained a probable cause warrant before it could legally seize the charity's assets. The American Civil Liberties Union (ACLU) represented KindHearts in its challenge to the government's actions.
SEE: Judge Rules Against Freeze on Assets [below]
"This is a victory for all Americans who value the constitutional rights to due process and freedom from unreasonable search and seizure," said CAIR National Executive Director Nihad Awad. "We thank the ACLU for defending American Muslim civil liberties, even in the politically-charged post-9/11 environment."
In 2006, the American Muslim Taskforce on Civil Rights and Elections (AMT), a coalition of national Muslim organizations, wrote to then Secretary of the Treasury John W. Snow to request a meeting to discuss growing concerns "about the continued targeting of Muslim charities without due process of law."
AMT's letter said government closures of Islamic charities, such as the shutdown of KindHearts, impaired the ability of American Muslims to carry out their religious obligation to help the needy in this country and overseas. When the government froze KindHearts' assets, most of the funds were earmarked for earthquake relief in Pakistan and for KindHearts' recently-established South Asia Division.
In its letter, AMT stated: "As leading American Muslim organizations, we note that although we understand the political climate of our country and support our government's efforts to thwart terrorist financing; we find it unfair that our government has yet made another extrajudicial decision to effectively wipe out more than five years of humanitarian assistance to the world's needy by the mere stroke of a pen. The immediate effects of KindHearts' closure have already been felt in orphanages, schools, shelters, and medical centers around the world."
CAIR is America's largest Muslim civil liberties and advocacy organization. Its mission is to enhance the understanding of Islam, encourage dialogue, protect civil liberties, empower American Muslims, and build coalitions that promote justice and mutual understanding.
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Judge Rules Against Freeze on Assets
August 19, 2009
By THE ASSOCIATED PRESS
TOLEDO, Ohio (AP) -- The federal government must have probable cause to seize an organization's assets even when it involves national security, a federal judge ruled in a case involving an Ohio-based charity accused of having ties to the militant Islamic group Hamas.
U.S. District Judge James Carr said Tuesday the government has an obligation to tell an organization why it is freezing its assets and to give it a chance to respond.
Attorneys for KindHearts for Charitable Humanitarian Development sued the government after it refused to say why the charity was essentially shut down three years ago.
The U.S. Treasury Department in 2006 ordered U.S. banks to freeze the Toledo charity's assets, saying it was funneling money to a terrorist organization. KindHearts officials have denied being connected to any terrorist group.
The judge said the treasury department wrongly froze KindHearts' assets because it failed to first get a probable cause warrant.
''The ruling provides a much-needed judicial check on executive power,'' Hina Shamsi, an attorney with the American Civil Liberties Union, said Wednesday. The ACLU is representing KindHearts in the case.
A Treasury department spokeswoman said the department would not comment on pending litigation.
''Treasury will continue to employ all authorities at our disposal to track and disrupt the deadly flow of money to terrorist groups,'' spokeswoman Natalie Wyeth said.
KindHearts officials have denied being connected to any terrorist group ever since federal agents padlocked the charity's office in 2006. Treasury department officials said KindHearts was connected with the Hamas-affiliated Holy Land Foundation and the al-Qaida-affiliated Global Relief Foundation.
The charity was shut down two days before three men from Toledo were accused of plotting to kill American and allied soldiers overseas.
Documents seized by federal agents suggested that two of the three Muslim men, who were later convicted, may have had ties to KindHearts. Federal officials, though, said the investigations were not connected.
KindHearts leaders have said it is a nonprofit charitable organization administering humanitarian aid to the world's poor. It estimated the group provided $5 million to $6 million annually in charity assistance.
The government said KindHearts officials coordinated with Hamas leaders and made contributions to Hamas-affiliated organizations. The United States considers Hamas a terrorist group.
U.S. Justice Department attorney Jonathan Zimmerman said during a hearing in May that the government does not need to show probable cause or seek a warrant to freeze assets, especially in cases when the assets are spread worldwide.
''We are dealing with money exported overseas,'' Zimmerman said.
He also said that even though KindHearts' funds were frozen, they did remain in the charity's name and in the same accounts.
