Kindhearts v. Treasury: Successfully Challenging the Constitutionality of Treasury Shutting Down a Charity

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The Aug. 18, 2009 federal court ruling in KindHearts v. Treasury is a positive step forward in the ongoing efforts of U.S. charities to make national security laws fair and ensure they protect vulnerable people that depend on charities for vital aid. The 100 page order found that the Department of Treasury's (Treasury) seizure of KindHearts assets without notice or means of appeal is a violation of the Fourth and Fifth Amendments. 

The case was filed in the United States District Court for the Northern District of Ohio Western Division on Oct. 9, 2008. Treasury froze KindHearts’ funds and seized all its assets on Feb. 19, 2006, pending an investigation into whether the group provided material support to Hamas, which has been designated as a terrorist organization by the United States government. To date KindHearts has not been designated. Its efforts to defend itself have been hampered by lack of specific allegations to respond to and lack of deadlines or procedures for Treasury reconsideration. Treasury has denied KindHearts' requests to have its funds released for aid through other organizations.
 
Because KindHearts has never been designated as a supporter of terrorism, the factual background of the case (see KindHearts Timeline) presents important constitutional and human rights questions about how post-9/11 emergency measures should be applied to charities in the long term.  So the question before the court was not whether or not KindHearts supported Hamas, but whether the legal process used was constitutional.  The Court found in favor of KindHearts under protections guaranteed by the Fourth and Fifth Amendments.
 
The Court ruled that the freeze action by the government of over $1 million of KindHearts’ assets was an unlawful seizure of property under the Fourth Amendment and that the government did not allege probable cause for the seizure. The court rejected the government’s argument that it did not need probable cause to obtain a warrant to seize the property, and could act on the basis of reasonable suspicion.
 
The Court found further that the Office of Foreign Assets Control (OFAC) authority to designate or to freeze assets “pending an investigation” was unconstitutionally vague as applied to the KindHearts organization because OFAC failed to follow the Fourth Amendment in imposing the asset freeze “pending investigation.”
 
Finally, the Court held that KindHearts was denied its Fifth Amendment right to due process when OFAC issued the blocking order freezing KindHearts assets because “OFAC violated KindHearts’ fundamental right to be told on what basis and for what reasons the government deprived it of all access to all its assets and shut down its operations.” [p. 76]  According to the Court, the OFAC had an inexplicable fifteen month delay of KindHearts’ post-deprivation hearing, an inexcusable misplacement of a 1,369-page submission by KindHearts, and waited more than thirty months to provide KindHearts with redacted records in support of its action.  The effect is that the OFAC did not provide timely or sufficient notice to enable KindHearts to prepare an effective challenge.
 
On Oct. 26, 2009 the Court issued a temporary restraining order against the Department of Treasury, prohibiting further action against KindHearts until a remedy to the constitutional violations has been decided.