Charities Held Liable for Cash to Terror Group’s Social Service Arm

By Marc Perelman

Published December 11, 2008, issue of December 19, 2008.
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In a landmark ruling likely to influence a series of ongoing terrorism financing legal battles, a Chicago federal appeals court upheld a judgment against three American‑based Muslim charities accused of bankrolling Hamas.

The Seventh Circuit Court of Appeals ruled on December 3 that these American charities can be held liable if they gave money to groups that engage in terrorist acts, even if the funds were earmarked for humanitarian purposes. The defendants in the case directed their support exclusively to Hamas’ social welfare services. The three groups are the American Muslim Society, the Islamic Association for Palestine-National and the Quranic Literacy Institute.

A lower federal judge ordered to groups to pay $156 million in damages to the family of a teenager, David Boim, who was killed by Hamas, despite the fact that the money given to Hamas did not go for explicitly violent ends. A federal appeals court overturned that motion, and said that an explicit link had to be shown. But the newest ruling sided with the lower court and said that it was not necessary to prove such a link.

“This is a very significant ruling because it means you don’t need to show that a dollar buys a bullet,” said Matthew Levitt, a former FBI and treasury department anti-terrorist official who was a government expert witness in the case. “Money is fungible so you can’t argue that you just wanted to give for orphans when you are giving to a terrorist-related entity.”

The ruling is the highest federal precedent on the issue and is likely to affect a number of ongoing terrorism financing cases, such as the one in which the Arab Bank is accused in United States’ courts by American and Israeli victims of terrorism acts for facilitating the transfer of money to Hamas in the Palestinian territories.

The ruling comes on the heels of the criminal conviction of officials from the Holy Land Foundation, which was the largest Muslim charity in the United States until it was shut down by the government in December 2001 because of its alleged ties to Hamas. In November of this year, a jury in Dallas found five of the charity’s leaders guilty on charges of providing material support to Hamas officers.

The new decision could create further headaches for the Holy Land Foundation. The foundation was initially included among the defendants in the Boim case. The ruling in the Seventh Circuit Court reinstated the plaintiffs’ civil allegations against the Holy Land Foundation and asked the district court to rule on whether it should have to pay part of the $156 million awarded to the family.

The case being heard by the Seventh circuit court was brought by the parents of Boim, who was killed in a 1996 drive-by shooting at a bus stop in the West Bank.

In December 2004 a federal jury ordered a $52 million judgment against the three charities and an employee of the Quranic Institute. The judge tripled the judgment.

A year ago, a smaller three-judge panel from the Seventh circuit court ruled that the plaintiffs needed to demonstrate a direct linkage between the activities of the group and Boim’s slaying, but the new decision rejected that ruling.

“Anyone who knowingly contributes to the nonviolent wing of an organization that he knows to engage in terrorism is knowingly contributing to the organization’s terrorist activities,” Judge Richard Posner wrote for the 8-2 majority. “Giving money to Hamas, like giving a loaded gun to a child (which also is not a violent act), is an ‘act dangerous to human life.’”






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