On Jan. 11, three former leaders of an Islamic charity based in Boston were convicted of tax fraud and making false statements because they did not include a description of their newsletter and its content in their tax-exempt status application and annual Internal Revenue Service (IRS) Form 990 filings. The prosecution argued that the now-defunct group, Care International, supported jihadist movements in articles in its newsletter and postings on its website. The defense argued that no funds went to jihadist groups and that the leaders were being prosecuted for expressing unpopular political views. The convictions, which could result in prison terms of up to five years, are being appealed. The circumstances of the case, combined with public statements of the prosecutors, raise questions about the free expression rights of nonprofits and the level of detail required when reporting to the IRS.
Care International was formed in 1993 and collected $1.7 million over a ten-year period for “providing assistance to victims of natural and man-made disasters…” The criminal case began in May 2005 with an indictment charging Muhamed Mubayyid and Emadeddin Muntasser with concealing material facts from the IRS, conspiring to defraud the United States, filing false tax returns, and making false statements to the FBI. A third defendant, Samir Al-Monia, was charged later. The factual basis of the charges was that the group raised funds for publications supporting jihad, as well as its humanitarian operations, and that it concealed the fact that it was an outgrowth of another nonprofit, Al-Kifah, whose Brooklyn branch had been linked by the media to the World Trade Center bombing in 1993. The defense argued that the Boston branch of Al-Kifah was separate and that the defendants started Care to break away from the New York group.
Although the prosecutors spoke broadly that Care used its funds to “support” jihad, the only evidence they presented related to publications, including their newsletter, Al-Hussam, which was also the name of Al-Kifah’s newsletter. According to a Nov. 28, 2007, Worcester Telegram article, prosecutors read lengthy articles from the newsletter to the jury, while the judge frequently warned them that the defendants had the right to hold and publish their views. The convictions were for the technical crime of not informing the IRS that the group would publish such articles. However, in an FBI press release after the conviction, prosecutors made statements that indicate their motivation in bringing the case was to discourage such publications. U.S. Attorney Michael J. Sullivan said, “Today’s convictions should be a warning to organizations or persons who intend to fund their support of any militant organization or goal, including mujahideen and jihad, by abusing our nation’s tax laws, that they will be proactively investigated and prosecuted to the fullest extent of the law.”
The Worcester Telegram reported that on Jan. 18, Judge F. Dennis Saylor, who presided over the trial, disputed the government’s claim that the case was about terrorism, saying there was no evidence of terrorism presented in the trial. During the trial, Judge Saylor banned references to terrorism and repeatedly reminded the jurors that the case was about tax fraud. The judge later heard arguments on whether to release the defendants on bail until their sentencing and said there would be a decision soon.
The case leaves open the question of when a nonprofit could be prosecuted for advocating views the FBI deems “militant.” Charities and religious organizations are not limited to providing services to qualify for tax exemption under Sec. 501(c)(3) of the tax code. In fact, 26 C.F.R. 1.501(c)(3)-1(d)(2) explicitly states that:
[t]he fact that an organization, in carrying out its primary purpose, advocates social or civic changes or presents opinion on controversial issues with the intention of molding public opinion or creating public sentiment to an acceptance of its views does not preclude such organization from qualifying under section 501(c)(3) ….”