By Richard Williamson and Matthew Sinclair

Feds are seizing assests

The nation's largest Islamic charities are fighting to clear their names and reclaim millions of dollars in assets amid a widening U.S. anti-terrorism campaign that's drawing accusations of anti-Muslim bias.
Against a backdrop of growing hostilities in the Middle East, federal agents last month raided the headquarters of three of the foundations with Middle East ties and alleged ties to terrorism.

At the Holy Land Foundation for Relief and Development in Richardson, Texas, federal agents seized financial assets suspected of aiding Palestinian terrorists. Officials also shut foundation offices in Paterson, N.J., Bridgeview, Ill., and San Diego.

Two Illinois-based foundations were the next targets. The Benevolence International Foundation (BIF) in Worth, with offices in New Jersey, and the Global Relief Foundation in Bridgeview also had assets frozen and records seized. A BIF spokesperson could not be reached for comment. A Global Relief spokesman denied charges in a prepared statement.

The move against Holy Land Foundation marked the first action against the Palestinian organization Hamas, along with Al Qaeda, the organization of Osama bin Laden, alleged mastermind of the September 11 attacks on the World Trade Center and the Pentagon.

"With this action we go beyond the Al Qaeda network to target groups whose violent actions are designed to destroy the Middle East peace process," said Attorney General John Ashcroft.

But the Holy Land Foundation and other Islamic organizations said that the raid was misguided, as was its timing. "The foundation has never provided funds, services, or any other form of support to Hamas or any other group that advocates, sponsors, or endorses terrorism, terrorist acts, or violence in any form or for any purpose," said foundation president Shukri Abu-Baker, who vowed legal action to recover the assets. Abu-Baker said the foundation was never notified that it was the target of a federal investigation until the seizures.

Nonetheless, Federal Bureau of Investigation (FBI) records cited in several news reports show that the Holy Land Foundation has been under investigation for eight years. According to an "action memorandum" prepared by the FBI's assistant director for counter-terrorism, federal agents eavesdropped on private meetings between foundation officers and Hamas representatives and culled other background by working with Israeli investigators.

The FBI memo recounted a 1993 meeting in Philadelphia in which Holy Land officials met with Hamas activists, allegedly to discuss increasing funds for the families of suicide bombers, prisoners and the wounded. The raid on the Holy Land headquarters came within days of a series of suicide bombings in Israel.

Holy Land Foundation had previously been known as the Occupied Land Fund, before moving to Texas from California. Reportedly it had made appeals in Arabic publications calling on Muslims to jihad and intifada. According to The New York Times, in 1989 the organization published an ad in Ila Filastin, an Arabic monthly, stating, "We call you to Jihad for the sake of Allah by donating any amount you can in support of the Intifada's families in Palestine. You can send your contributions in the name of Occupied Land Fund."

The Holy Land Foundation, which qualified for a 501(c)(3) classification under the Internal Revenue Service (IRS) code and raised $13 million in 2000, insists that its mission is purely philanthropic. The organization said it donated $20,000 to the American Red Cross to aid victims of the September 11 attacks, held blood drives and rejected any administration fees in collecting donations to the Emergency Relief Fund. The organization said it provides hot meals and medical services for families in the impoverished Palestinian camps in Israel.

A joint statement from several U.S.-based Islamic charities denounced the U.S. actions as a "smear campaign" against Islamic organizations.

"No relief group anywhere in the world should be asked to question hungry orphans about their parents' religious beliefs, political affiliations or legal status," the statement read.

"The decision by the U.S. government to seize the charitable donations of Muslims during the holy month of Ramadan is an affront to millions of Muslim Americans who entrust charities like ours to assist in fulfilling their religious obligations," the organizations said, adding that the seizures "can only damage America's credibility with Muslims in this country and around the world and could create the impression that there has been a shift from a war on terrorism to an attack on Islam."

Nonetheless, President Bush insisted "the facts are clear, the terrorists benefit from the Holy Land Foundation, and we're not going to allow it."

Bush charged that, "Money raised by the Holy Land Foundation is used by Hamas to support schools and indoctrinate children to grow up into suicide bombers. Money raised by the Holy Land Foundation is also used by Hamas to recruit suicide bombers and to support their families."

The U.S. Treasury Department has frozen assets of 153 groups and individuals, including more than $5 million of the Holy Land Foundation's assets, a spokeswoman said. Federal investigators have targeted eight Islamic charities for investigation, including one once headed by bin Laden's chief of logistics, The Los Angeles Times reported.

In a 49-page memo, the FBI identified the Holy Land Foundation as the chief U.S. fundraising arm of Hamas, so designated by Mousa Abu Marzook, identified by Israeli officials as a Hamas political leader in Syria who donated $210,000 to Holy Land.

Holy Land officials attended a 1994 conference of the Muslim Arab Youth Association at a Los Angeles hotel where Sheikh Muhammed Siyam, described as head of operations for the Hamas military wing, urged the audience to "finish off the Israelis," The Los Angeles Times reported, quoting the memo.

Last month's raid against the Holy Land Foundation came about a month after the foundation won retractions from major media organizations that had reported links to terrorist organizations. Even the Food Bank of New Jersey had backed away from a suspension of the Holy Land Foundation's membership.

"After conducting our inquiry, we did not find that there had been a change in your organization's charitable status," the Food Bank said in a prepared statement. "The Community Food Bank has reinstated the foundation's membership: It is not our intent to contribute to the problem and hysteria in this country against the Muslim community."

Meanwhile, before the warrants were executed in Illinois, the Global Relief Foundation (GRF) had filed suit in Chicago against several media outlets that had linked the suburban Chicago organization to terrorist groups in newspaper and broadcast stories.

In its suit, the GRF claimed the reports seriously damaged fundraising efforts. Before mid-September, GRF said it was receiving more than "50 donations a day by mail." After the news reports, that number dropped to three or four, the group said.

"While the U.S. government has moved quickly to freeze the assets of those suspected of supporting terrorist operations in the wake of the September 11 attacks on the World Trade Center and the Pentagon, GRF has not been among the organizations targeted by federal authorities," the foundation said in a news release. "GRF's staff makes every reasonable effort to ensure that the humanitarian aid that GRF provides to some of the most distressed areas of the world is not used in support of terrorist activities."

GRF's Medical Relief Coordinator Khaled Diab was detained in November by Pakistani intelligence officials after reported contact with Taliban officials during the U.S.-led military campaign in Afghanistan. Diab, a naturalized U.S. citizen born in Syria, was believed to be the first American detained during the war.

But, GRF's attorney Roger Simmons said Diab had cleared his trip with U.S. and Pakistani officials before going to Afghanistan.

"Before he went he told the consulate he was going, and he was told there was no bar to that at all," Simmons said. "He went with the proper visa and worked with the Red Crescent (the Islamic version of Red Cross)."

As a dentist, Diab was "assisting people by doing medical care and providing food," Simmons said. "When he was there he helped on a number of fronts."

Technically speaking, the actions taken by the U.S. Department of Customs, the FBI was not part of a "case" according to Tasia Scolinos, a customs spokesperson. "It's blocked under the power of an executive order," she said.

Generally speaking, she said organizations or companies that believe they've been subjected to such actions inappropriately can write a letter to the U.S. Department of the Treasury and meet with the department's attorneys. "We are rarely contested with our designations," Scolinos said.

In the meantime, what assets are frozen do nothing but collect interest. They cannot be accessed and nothing can be added to them. And, the trusteeship of the accounts can not be transferred. "It's frozen in time," she said.

With charities, however, it's conceivable that money could be sent to the organization, though it cannot place that money into the frozen accounts.

Contacted within the 10-day period in which banks discern the accounts that must be frozen, Scolinos said, "The assets will remain blocked for the foreseeable future."

Though the officers did take custody of files and computers and other records, the government would need a warrant before searching through them, according to Scolinos. She said that no warrant has been requested, though an investigation is ongoing.

Currently the custom's department is running "Operation Green Quest" tracking financial trails of terrorism. Scolinos said Operation Green Quest is a new plan in which customs, as part of the treasury department, parlays leads to the Foreign Terrorist Tracking Center.

Noticeably absent in much of the discussion of Holy Land Foundation has been the government agency that approved its tax-exempt status. The IRS declined to comment about the process an organization would undergo after its assets have been frozen.

Marcus Owens, the former head of the exempt organizations office of the IRS and now an attorney with Washington, D.C.-based Caplin & Drysdale, said he wasn't surprised at the IRS stance on the sidelines in this effort.

"Under the Bob Jones University Supreme Court case," Owens said, "it continues to qualify for exemption (unless) it's involved in a significant, qualitative sense in activities that violate law or fundamental public policy. … There's not a whole lot to point to as to what would be sufficient violation of law."

Owens said he did not expect the IRS to be too involved in Holy Land's future. "The resolution of any asset seizing or freezing will be through the court system," he said. "The tax code is not a very efficient or effective instrument for dealing with what's happening today. … It's designed to deal with what happened two years ago."

Attorney Bruce Hopkins has written extensively about nonprofit law, but he's unaware of any past situations similar to what has occurred to Holy Land Foundation. "Even during the Vietnam War, The Gulf War, I don't think it happened," said Hopkins.

Intellectually, the process facing for-profits and nonprofits in this situation would be identical, Hopkins said. He wasn't sure how fair it was for an organization that had received its tax-exempt status from the IRS to later have its assets frozen by the treasury. "With its assets frozen, it can't function. Therefore, it's not doing anything programmatically. At some point it would lose its exemption, you would think," Hopkins said. "It's put the charity in the same position it would be in if it filed for bankruptcy."

As for what would happen to checks that were sent to the organization, Hopkins surmised the Postal Service would deliver them. But with no account in which to deposit, "I can't imagine that anybody would cash the check," he said. "A liquor store maybe."

Richard Williamson is a Dallas-based reporter for the Denver News Bureau.

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