In 2014, the Zionist Advocacy Center sued the American University in Beirut (AUB) under the False Claims Act, alleging that AUB falsely signed its USAID certification that it did not provide material support to terrorists because its journalist training program included designated terrorist supporters. The U.S. Department of Justice intervened in this case in 2017 and the case was settled before trial.
The Zionist Advocacy Center (TZAC) filed a federal False Claims Act complaint against the American University Beirut (AUB) in the U.S. District Court for the Southern District of New York on Aug. 25, 2014. It alleged that AUB falsely certified it had not provided material support to groups on the U.S. terrorist list when it obtained grants from USAID. Under False Claims Act provisions designed to protect the identity of whistleblowers, the case was ordered sealed. The Department of Justice (DOJ) intervened and filed a complaint against AUB on March 21, 2017. Two days later it issued a press release announcing a settlement in the case. On March 28, 2017 the court unsealed key documents and approved the settlement, which required AUB to pay the government $700,000 in damages and augment its internal compliance procedures.
DOJ’s complaint alleged that AUB’s journalist training program included representatives of al Nour Radio and al Manar TV, both designated as terrorist supporters and are on the Treasury Office of Foreign Asset Control’s list of Specially Designated Nationals (SDN). It noted that participants in the training had their transportation, meals and accommodation costs covered by AUB. In addition, it said AUB included Jihad al-Binaa, also on the SDN list, in a database connecting students with nonprofit organizations.
False Claims Act Basics
The False Claims Act is a U.S. law that imposes liability on those that knowingly defraud government programs. Private parties, called “relators,” can bring these suits on the government’s behalf. Complaints filed under the FCA are automatically sealed for 60 days while the government investigates the claims and decides whether or not they merit further action. During this time the defendant (and the public) has no notice that a case has been filed. The court can extend the sealing period for months or even years.
Once the government has investigated the claims, it may choose to:
- join the lawsuit,
- ask that the case be dismissed or
- allow the complaining party to proceed on their own.
For more information see our Issue Brief: False Claims Act Lawsuits: What Nonprofits Need to Know
DOJ, like TZAC, argued that including these representatives violated the anti-terrorism certification USAID requires all grantees to sign. The definition of material support in the certification includes training, expert advice and assistance and personnel. The certification in force at the time stated that grantees would not “knowingly provide” material support and would verify that individuals or entities it serves are not on the SDN list. DOJ argued that “knowing” includes reckless disregard as well as actual knowledge and that “AUB failed to take reasonable steps to ensure that it did not provide material support or resources to SDN list entities.”
The original TZAC complaint and exhibits were not unsealed. However, TZAC filed an amended complaint on March 30, 2017 that included broader claims and allegations than DOJ asserted or that were cited in the settlement agreement. These included several events and conferences at which speakers or guests from Palestinian groups on the SDN list appeared. In addition, to the material support claim, TZAC claims the conduct amounted to discrimination, also a violation of the USAID certification. These claims were effectively dismissed when the settlement was approved.
The government’s complaint did not seek a specific amount of damages but noted that the FCA allows triple damages. TZAC’s amended complaint noted that AUB received $23,500,000 from USAID over a course of six years and sought $70,500,000 as triple damages.
In the settlement AUB agreed to pay $700,000 and to change its internal policies and procedures, including staff training, on compliance with U.S. law and to conduct periodic external audits on compliance.