In 2001, U.S. government designated the Holy Land Foundation (HLF), the largest Muslim charity in the country, as a Specially Designated Global Terrorist (SDGT) and froze their assets. After its unsuccessful challenge to its designation in federal court, the government indicted HLF and seven individuals associated with it, charging them with conspiracy to provide material support to a foreign terrorist organization (Hamas); providing material support to Hamas; conspiracy to deal in the property of a SDGT; dealing in the property of Hamas; money laundering; and filing false income tax forms.
The government never alleged that HLF gave money to Hamas. Rather, it claimed that HLF gave money to “zakat” committees in Palestine (which were not on a government list), alleging that they were not legitimate charities but instead front organizations controlled by Hamas. A federal jury found HLF and five men who worked with it guilty of three dozen counts related to the illegal transfer of millions of dollars to Hamas, money laundering and tax fraud. This case also raised evidentiary and due process concerns around surveillance and the government’s use of an unindicted co-conspirators list.
- In-Depth: The Fifth Circuit’s Holy Land Foundation Decision
- Publication of Unindicted Co-Conspirator List in Holy Land Case Violated Due Process Rights, Court Rules
- Highlights of Testimony in Second Holy Land Foundation Trial
- Conviction of Holy Land Foundation Raises Questions, Concerns for Nonprofits
The Holy Land Foundation for Relief and Development (HLF), a Texas-based charity with a mission of providing humanitarian aid in Palestine, was the largest Muslim charity in the United States until its closure in December of 2001. HLF had been legally operating for over a decade before it was designated and shut down by the Bush administration three months after 9/11. Its former officials were convicted of providing material support for terrorism on retrial in November 2008, and received sentences ranging from 15 to 65 years. The case, the evidence, the procedure, and the convictions all highlight the precarious legal position of U.S. nonprofits trying to carry out humanitarian missions.
Though the criminal convictions occurred in 2008, this case has roots that reach much further back. In the early 1990s, the U.S. government obtained warrants under the Foreign Intelligence Surveillance Act (FISA) to monitor the communications of senior HLF officials. In January 1995, the U.S. government designated Hamas as a Specially Designated Terrorist (SDT). This designation meant that all financial transactions with or for the benefit of Hamas were prohibited and all Hamas’s assets within the U.S. were frozen (blocked).
On Dec. 3, 2001, the Treasury Department Office of Foreign Assets Control (OFAC) designated HLF as a Specially Designated Global Terrorist (SDGT), based on information obtained from the FISA warrants that allegedly showed HLF’s support for Hamas. OFAC then froze HLF’s assets and conducted a warrantless seizure of the computers and files in HLF’s offices.
In March 2002, HLF filed a lawsuit in federal court, challenging its designation by raising constitutional and statutory claims. The judge granted government’s motion to dismiss the complaint, except as to their search and seizure claim under the Fourth Amendment. HLF appealed to the U.S. Court of Appeals for the D.C. Circuit, which affirmed in all respects, and directed summary judgment in favor of the government. The D.C. Circuit denied HLF’s petition for rehearing en banc (by the full court). In March 2004, the Supreme Court denied HLF’s petition for certiorari.
In late July 2004, HLF filed a complaint with the U.S. Department of Justice, alleging that the FBI had falsified an affidavit used to support the investigation and designation of HLF and its officers. In response, on July 26, 2004, the government unsealed a criminal indictment of HLF and seven individuals associated with it.
The defendants were charged with conspiracy to provide material support to a foreign terrorist organization (Hamas); providing material support to Hamas, conspiracy to deal in the property of a specially designated terrorist group (Hamas); dealing in the property of Hamas; money laundering; and filing false income tax forms. There was no allegation that HLF gave money directly to Hamas. Instead, the allegations were that HLF gave money to “zakat” committees in Palestine, which the government alleged were not legitimate charities but were instead front organizations controlled by Hamas.
The first trial, lasting two months, ended in a mistrial in October 2007, as the jurors deadlocked on all but one of the counts against the defendants. One defendant (El-Mezain) was acquitted on all but one of the counts against him.
This was the first opportunity the charity had to hear the evidence against it and present evidence in its own defense. The government did not claim HLF provided direct support of Hamas or a terrorist group. Instead, it argued that charitable aid that provides a public relations benefit to Hamas is a crime, even though the local charities involved are not on any government lists of terrorist organizations. A conviction on these facts will leave many international aid organizations in the impossible position of guessing about the political beliefs of their grantees and the potential political impact of their programs.
The defense argued that HLF and its leaders did not provide support to Hamas and are being prosecuted for their political beliefs and associations on the basis of faulty evidence. HLF and five of its leaders were indicted in 2004 on charges of providing material support for terrorism, money laundering and conspiracy. At the trial, the prosecution said HLF sent $12.4 million in aid to local charities, known as zakat committees, in the West Bank and Gaza Strip.
The government argued that HLF officials knew the zakat committees were controlled by Hamas and directed aid to families of suicide bombers and prisoners. Most of the government evidence consisted of documents, videos and surveillance materials seized from HLF offices and supporters’ homes. Some show the defendants making speeches supporting Palestinian rights or participating in events where Hamas officials were present. One video involved a defendant acting in a skit and pretending to kill an Israeli. A defense attorney pointed out that many of these events occurred before 1995, when Hamas was designated as a terrorist organization by the U.S. government and constitute protected First Amendment political speech.
Prosecution witnesses included:
- FBI Special Agent Robert Miranda, who said HLF used known Hamas activists to speak at fundraising events. On cross-examination, he admitted that these speakers were not listed as terrorists, and it was not illegal to have them as speakers. Miranda also testified that family connections establish a link between some HLF leaders and Hamas. Defendant Ghassan Elashi’s cousin is married to a high-ranking Hamas leader who is on the government lists.
- FBI Special Agent Lara Burns testified about an HLF letter referring to the zakat committees as “ours” and said that HLF contacts with the committees were Hamas leaders. On cross-examination, Burns admitted that most of these individuals are not on any government watch list.
- Two Israeli agents were allowed to testify anonymously in a closed courtroom. One, called “Avi,” is an agent in Shin Bet, the Israeli domestic security agency. He testified that Hamas funding comes primarily from international groups like HLF and that the zakat committees are staffed by known Hamas members. He said the Israeli military found materials praising suicide bombers in searches of zakat committee offices.
The defense presented evidence to discredit prosecution witnesses and establish that HLF’s funds were spent for charitable purposes. Defense attorney Nancy Holland asked why the zakat committees were not listed by the government if they really are linked to terrorism. They also showed a video of staff from HLF’s Gaza office delivering food to the family of an ambulance driver killed while attempting to assist a child wounded in a shoot-out between Israelis and Palestinians. The HLF paperwork referred to him as a “martyr.”
The five defense witnesses were:
- Edward Abington, former U.S. consul general in Jerusalem and a second-ranking intelligence official in the State Department. He testified that while posted in the Middle East, he received daily intelligence reports from the CIA and never was told zakat committees had links to Hamas. He said Israeli intelligence is unreliable. He also described visits to zakat committee offices and described conditions in refugee camps.
- Attorney and former member of Congress John Bryant, who represented HLF between 1997 and 2000. He testified about his attempts to get guidance from the FBI and State Department on what groups were legal for HLF to fund; he got no response to his inquiries. He was never told HLF could not work with zakat committees.
- George Washington University Professor Nathan Brown, who said the testimony of “Avi” relied too heavily on press accounts and other documents without any context. He supported Abington’s assertion that posters praising suicide bombers were not evidence of terrorist ties, since, on a trip to the Palestinian territories, “every blank wall was plastered with posters of martyrs,” noting that Hamas is a political party with broad public support.
- Former HLF administrative assistant Natalia Suleiman, who testified about food aid and clean water programs the organization operated in Turkey, Albania, Jordan and Lebanon, as well as the West Bank and Gaza Strip. She described the expense documentation process.
- Former HLF accountant Mohammad Wafa Yaish testified that HLF operated its programs without regard to political affiliation and that employees were not allowed to visit political websites while at work.
In the closing arguments, the issues boiled down to whether the defendants’ political beliefs and activities transform charitable aid into material support for terrorism and whether the public can rely on government watch lists to know who it is legal to do business with.
In the second trial, before U.S. District Judge Jorge Solis in 2008, a federal jury in Dallas decided that the charity and five men who worked with it were guilty of three dozen counts related to the illegal transfer millions of dollars to Hamas. They were found guilty of supporting terrorism, money laundering and tax fraud. The verdict came after eight days of deliberations and a 42-day trial.
The basic arguments in the second trial were:
- The prosecution, using over 500 documents, videos, bank records, and wiretap records, alleged that HLF wired $12.4 million to Hamas-controlled zakat committees after the group was designated in 1995. The government did not allege that HLF supported violent acts and admitted the funds were used for hospitals, schools, and charitable programs. However, the prosecutor told jurors not to be distracted by this fact, since it is illegal to support Hamas with any kind of resources.
- HLF argued that the zakat committees were not on the government’s list of designated terrorist organizations and that HLF made every effort to ensure funds were spent only for charity, on a “need, not creed” basis. The charity further argued that HLF and its leaders were being prosecuted for their political beliefs and associations on the basis of faulty evidence.
Prosecutors argued the defendants were supporters of Hamas. The case’s prosecutor, Jim Jacks, argued for the most severe sentences for all five men. “There’s been no acknowledgment by any of these defendants regarding their connection to Hamas,” Jacks said. “They haven’t been deterred. Their entire sentencing presentation is they’re being punished for providing charity. It’s important for the court to impose a sentence that says this is not a case about punishing people for doing nice things.”
On May 27, 2009, U.S. District Judge Jorge Solis handed out sentences for five Arab Americans associated with Holy Land Foundation for Relief and Development (HLF) who had been convicted in November 2008 on charges ranging from supporting a terrorist organization to money laundering and tax fraud. Two of the men, Shukri Abu Baker and Ghassan Elashi were each sentenced to 65 years in a federal prison and the others each received between 15 and 20 years as follows: Mohammed El-Mezain (15 years), Mufid Abdulqader (20 years), and Abdulrahman Odeh (15 years). Addressing the courtroom, the men maintained that their fundraising was devoted exclusively to humanitarian ends, and denied any relationship with Hamas. Prosecutors did not dispute that the money went to humanitarian projects, but managed to convince the jury of a Hamas connection.
The legal standard used by the prosecution and sentences handed down in the HLF trial indicates that the environment for U.S. charities and NGOs operating around the world is legally precarious. The HLF sentencing could have a chilling effect on U.S. NGOs operating in international hot spots three ways. First, despite international human rights norms that bar aid discrimination based on religion, political affiliation or any factor other than need, the convictions in the HLF trial and the prosecution’s arguments indicate potential association with terrorist organizations is a factor in determining eligibility for aid. Second, the process for determining what foreign organizations that U.S. NGOs are legally authorized to associate with is unclear. During the trial, Robert McBrien from Treasury’s Office of Foreign Assets Control testified that it can be illegal to deal with groups that have not been designated as supporters of terrorism and placed on government watchlists. He said that keeping up with front groups “is a task beyond the wise use of resources.” (The zakat committees HLF was convicted of working with have still never been placed on the U.S. government’s list of organizations supporting terrorism.)
HLF, which was unrepresented at trial, was sentenced to one years’ probation. This had little significance, as it remained designated, with its assets frozen (approximately $5 million may be forfeited by the government), and was unable to renew its activities. There is no process for the funds to be released or distributed in a manner that honors the donors’ charitable intent.
The successful prosecution of the HLF leaders on terrorism charges was the first after similar charges in other trials failed. Speaking about the broader implications of this trial on other charities and NGOs, David Kris, assistant attorney general for national security, said, “These sentences should serve as a strong warning to anyone who knowingly provides financial support to terrorists under the guise of humanitarian relief.” The Charity and Security Network statement on the sentencing said, “The U.S. charitable sector has been doing its best to provide humanitarian aid, economic development, human rights protection around the world, despite national security laws that have made these efforts increasingly difficult. The legal standards used by the prosecution and sentences handed down in the Holy Land Foundation trial indicate that this situation is likely to get worse.”
The defense attorneys presented a different viewpoint telling the judge that their clients provided humanitarian relief to Palestinians and sent donations to some of the same zakat (charity) committees supported by the American agency USAID. “I did it because I cared, not at the behest of Hamas,” Abu Baker told the judge Wednesday during a long address to the court.
Defense attorneys also insisted that the closed courtroom testimony of an anonymous Israeli Shin Bet official, “Avi”, who claimed Hamas’ funding comes from groups like HLF and zakat committees are staffed by known Hamas members, should not have been permitted. A defense witness, George Washington University Professor Nathan Brown, said the testimony provided by “Avi” relied too heavily on press accounts and other documents without any context. Defense attorney Nancy Holland asked why the zakat committees were not listed by the government if they were known supporters of terrorism?
The conviction and sentences were then challenged in a 2015 petition seeking a new trial based on new evidence. The petition was made in U.S. District Court for the Northern District of Texas, Dallas Division (Case No. 3:04-CR_00240-P).Although the government admitted that no HLF funds went to Hamas, at trial it argued that the local charity committees HLF worked with were controlled by it. However, these committees have never been placed on the U.S. terrorist list. The new petition presents sworn statements from people directly connected to the local charities that state they were independent and not controlled by Hamas or any other group. HLF itself, which was convicted without representation at trial, was not part of this petition.
Appeal to Fifth Circuit
HLF and the five individual defendants filed an appeal in October 2010. Argument before the Fifth Circuit Court of Appeals was held on Sept. 1, 2011. Attorneys for the Holy Land leaders argued that they were unfairly convicted based on what one attorney called a “textbook on evidentiary error.” A new lawyer for the charity itself, which was unrepresented during the trial, argued for a new trial. Ffederal prosecutors argued that the charity should not be allowed to appeal because it is on the terrorist list and therefore cannot engage legal representation.
An amicus brief was also filed by a group of non-profit organizations in the appeal. Amici argued that the court should have required a showing of knowledge of the Hamas connection before the defendants could be convicted. They stressed the point that, since the zakat committees were not on the terrorist list, the lack of a knowledge requirement in the jury instructions would render thousands of foundations and charities in the United States vulnerable to criminal prosecution.
The convictions for material support of terrorism and other charges were upheld by the Fifth Circuit Court of Appeals on Dec. 7, 2011. While this ruling upheld the jury verdict and judgment against the defendants, the Fifth Circuit addressed a number of issues of broader legal significance (Click here for an in-depth summary of this ruling). It recognized the legitimacy of several arguments raised by the defendants as to the improper use of certain categories of evidence at trial.
HLF and its leaders filed petitions for re-hearing of their appeals from criminal. HLF’s request, filed in December 2011, focused on its lack of representation at trial and alleged a Sixth Amendment violation of the right to counsel and the right to confront evidence. The HLF’s leaders’ petition, filed in January 2012, primarily consisted of questions relating to the admission of certain pieces of evidence and the court’s findings of harmless error.
HLF’s arguments supporting a re-hearing
HLF was convicted without counsel and without putting on a defense. As a result, all its assets were forfeited to the U.S. government at sentencing. After the trial resulted in conviction of all defendants, the trial judge appointed Prof. Ranjana Natarajan of the University of Texas’ National Security Law Clinic to represent HLF for purposes of the appeal, over the objections of the government. The appeals judges dismissed the appeal for lack of jurisdiction, saying the trial court should not have appointed counsel.
Natarajan submitted HLF’s petition for re-hearing on Dec. 21, 2011, arguing that the court should appoint an attorney for appeal purposes. She noted that:
“It is undisputed that HLF, a non-profit charitable corporation, was convicted and sentenced, and had millions of dollars forfeited, after a trial at which it had no counsel. It is also undisputed that no corporate representative made a knowing, intelligent waiver of counsel on behalf of HLF. As such, the trial involved Constitutional error of the greatest magnitude and had no known precedent.”Prof. Ranjana Natarajan
The Sixth Amendment protects the right to counsel and the right to confront evidence. As a nonprofit corporation rather than a living person, HLF could only assert its rights through counsel. HLF was unrepresented at trial because its original attorney, who represented both HLF and its board chair, withdrew from representing HLF before the trial due to the potential conflict of interest between the two. No steps were taken to provide HLF with representation at trial, and it was later convicted.
In the request for re-hearing, Natarajan noted that “Courts routinely take steps to protect litigants who are unable to vindicate their own rights through disability not of their making. In civil cases, courts appoint counsel, guardians ad litem, or next friends to protect the rights of civil litigants who are unable to participate in proceedings ….Courts also appoint third parties such as special masters and receivers when necessary to aid in the administration of justice.” She also noted that in criminal cases “Courts appoint standby counsel for self represented defendants” and indigent defendants.
HLF leaders’ arguments supporting a re-hearing
Attorneys for HLF’s leaders who were also convicted at trial filed their petition for re-hearing on Jan. 4, 2012. The petition sets out three questions of exceptional importance:
- Did the appeals panel of judges err when they held that the trial court made four errors in admitting evidence but that the errors were harmless (and therefore would not affect the convictions)? The defendants argued that this was an error that ignored evidence presented by the defense, “gave no weight to the government’s use of improperly admitted evidence” and overlooked the fact that “these four errors marked the principal differences between appellants’ firs trial, which did not produce a single guilty verdict on any count, and the second trial, which produced guilty verdicts on all counts…”
- “Did the government’s presentation of an anonymous expert witness, whose name was withheld even from defense counsel, violate appellants’ Fifth Amendment right to due process and Sixth Amendment right of confrontation?”
- Did the court use the proper legal reasoning in allowing an exception to the rule against admitting hearsay evidence?
On Feb. 17, 2012, the Fifth Circuit Court of Appeals denied a request for rehearing in the Holy Land Foundation (HLF) appeal. On Oct. 29, 2012, the Supreme Court declined to review the case.
On Oct. 25, 2013 a new attorney for the individual defendants filed a motion to vacate their sentences. The motion argued that the defendants received inadequate assistance of counsel in the trial. It also argued on appeal, that the evidence did not show that Hamas controlled the zakat (charity) committees HLF funded and that the government not only failed to turn over evidence that would have been helpful to the defense, but pursued the prosecution based on the defendants’ religious identity. The motion was only filed on behalf of the individual defendants, so did not seek to overturn the conviction of HLF as a charitable entity.
On March 30, 2015, Judge Jorge A. Solis denied the HLF leaders’ motion to vacate their sentences. Defendants then appealed to the Fifth Circuit on April 10, 2015, and filed a motion for a certificate of appealability in August 2015. The Fifth Circuit denied the motion on July 27, 2016, and denied a subsequent motion for reconsideration on Aug. 17, 2016.
In October 2016, Al Jazeera World produced a two-part documentary titled The Holy Land Five, examining the case through interviews, phone calls, and court documents.
Battle Over HLF Funds
On Nov. 7, 2012, a federal appeals court heard arguments about the distribution of charitable assets seized by the government from the Holy Land Foundation for Relief and Development’s (HLF) to pay victims of terrorism. In 2011, a district judge ruled that all HLF’s property, including millions of dollars in charitable funds and other assets seized by the government, could be used to satisfy, in part, a $214.5 million judgment against Hamas by victims of a 1997 suicide bombing in Israel. The three-judge panel from the U.S. Court of Appeals for the Fifth Circuit did not say when it would make its decision about the seized assets. Just days before, the Supreme Court denied the charity officials’ petition for appeal.
David Strachman, an attorney for the bombing victims, argued during the hearing that the Terrorism Risk Insurance Act of 2002 (TRIA) gives his clients priority over the government’s claim under criminal forfeiture statutes. “After living through this ordeal and years of litigation, they are caught in the web of exactly what Congress intended to remedy by enacting TRIA,” Strachman said.
Also speaking at the hearing, an attorney for the Justice Department said the charitable assets seized by the government were earmarked for paying American victims of Hamas attacks, and that Strachman gave “no reason for this court to deem that disingenuous.”
In the case of assets of a charity like HLF there are additional legal requirements that have not been included in the court proceedings, as HLF was effectively dissolved by being put on the terrorist list. Internal Revenue Service regulations require that the assets of a charitable group must be distributed solely for charitable or public purposes upon dissolution. (See 26 CFR 1.501(c)(3)-1(b)(4)) A state charity regulator, such as the Attorney General, could intervene to protect charitable assets, but that has not happened in this case.” See Review of Legislative History Shows Treasury’s Position on Frozen Charitable Funds Without Basis
By taking the position that the assets should be distributed to victims of terrorism, the government has identified a public purpose. However, it should also “consider the interests of well-intentioned donors who collectively donated tens of millions of dollars to help needy beneficiaries, as well as the people in need of humanitarian aid that these donors intended to assist.” All are, in their way, victims of terrorism.
Outcome of Litigation
The outcome of the HLF case highlights several serious areas of concern for U.S. nonprofits. The legal standard used by the prosecution and sentences handed down indicate that the environment for U.S. charities and NGOs operating around the world is legally precarious. The HLF sentencing could have a chilling effect on U.S. NGOs operating in international hot spots three ways.
First, despite international human rights norms that bar aid discrimination based on religion, political affiliation or any factor other than need, the convictions in the HLF trial and the prosecution’s arguments indicate that potential association with terrorist organizations is a factor in determining eligibility for aid.
Second, the process for determining which foreign organizations that U.S. NGOs are legally authorized to associate with is unclear. During the trial, a witness from OFAC testified that it can be illegal to deal with groups that have not been designated as supporters of terrorism and placed on government watchlists. He said that keeping up with front groups “is a task beyond the wise use of resources.” (The zakat committees HLF was convicted of working with have still never been placed on the U.S. government’s list of organizations supporting terrorism.)
Third, approximately $5 million in HLF funds were frozen by the government during this investigation and trial and may be forfeited to the government. There is no process for the funds to be released or distributed in a manner that honors the donors’ intent.
Although the case if frequently cited, there is little awareness that HLF was unrepresented during the trial that ended in its conviction. The issue of its representation reveals a major gap in the law. Because HLF is on the terrorist list all transactions with it, including legal representation, are illegal, so that there was no one authorized to hire legal counsel. In addition, because HLF’s leaders were co-defendants in the criminal trial, there was a conflict of interest between them and HLF, since HLF could have had different arguments and evidence in the trial.