Al Haramain v. Treasury: Successful Constitutional Challenge to Unlimited Treasury Power to Shut Down Charities

Al-Haramain v. Treasury

The government is appealing the decision of the federal district court in Oregon that found Treasury's procedures in listing and shutting down the Al Haramain Islamic Foundation of Oregon to be unconstitutional.  On March 9, 2011, the Ninth Circuit Court of Appeals heard oral arguments in the case. Here are the briefs:

Older documents:

Al-Haramain's Complaint and the court's ruling.

For more analysis see the Nov. 17, 2008 Jurist article Treasury Department must improve terrorism designation procedures by Victor Comras.

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Date: 
October 1, 2012

In June 2012, the U.S. Solicitor General decided not to file a request for Supreme Court review of the Ninth Circuit Court of Appeals decision in Al-Haramain v. Treasury. The appellate court opinion from September 2011 had upheld alower court’s ruling that said procedures used by the Department of Treasury to shut down the Al-Haramain Islamic Foundation of Oregon (AHIF-OR) violated the organization's Fifth Amendment and Fourth Amendment rights.  In February 2004, federal agents raided AHIF-OR's offices pursuant to a warrant as part of an investigation into financial crimes. The next day OFAC froze AHIF-OR's assets pending an investigation into whether or not the charity would be classified as a Specially Designated Global Terrorist (SDGT). 

In November 2008, a district court in Oregon ruled that the Fifth Amendment's guarantee of due process requires Treasury to give adequate notice of the reasons it puts a group on the terrorist list, as well as a meaningful opportunity to respond. In addition, the court ruled that freezing the groups assets amounts to a seizure under the Fourth Amendment. Judge Garr King also ruled that the term "material support" of terrorism in Bush's Executive Order 13224, which grants the Secretary of Treasury power to designate SDGTs, is unconstitutionally vague.

In addition to pursuing charges against the charity, the government also pursued money laundering and tax evasion charges against Pete Seda, the head of AHIF-OR.  He was convicted in late 2010 and began his 33-month prison sentence in February 2012.

On Feb. 1, 2004 Treasury's Office of Foreign Assets Control (OFAC) designated Al Haramain charities in six countries to its list of Specially Designated Global Terrorists (SDGT). Other AHIF organizations remained unlisted, including those based in Oregon and Saudi Arabia. After raiding AHIF-OR and seizing its assets in February 2012,  OFAC issued a press release announcing the freeze, but did not state the reasons for it or obtain a court order authorizing it.

The Fifth Amendment's due process clause requires the government to provide notice and an opportunity to be heard before depriving a person or organization of their property. The Court determined there was a violation of AHIF-Oregon's due process rights because Treasury failed to provide notice for eight months between the time it froze  AHIF's assets "pending investigation" in February 2004, and the designation of the organization as an SDGT in September 2004.

Additionally, the Court found a potential violation of AHIF-Oregon's Fourth Amendment protection against unreasonable seizures. The judge ruled that the freezing order against AHIF-Oregon did constitute a seizure and, unless the government's actions were reasonable, the government violated the Fourth Amendment. However, it has not yet been decided whether the government's actions were reasonable because the Court has ordered additional arguments. (This issue was later decided in Kindhearts v. Treasury.

Finally, the Court ruled that the term "material support" is unconstitutionally vague, meaning that the term is not clear enough to where a person of common intelligence could be sure of its meaning.   The Treasury's definition of "material support" was confusing, lacked context for how the term should be understood, and did not have a set of standards in place as to how the term would be used.  Therefore the "material support" provision in EO 13224 was struck down by the District Court, but itis still in effect pending a final decision by the courts after appeal, or a new order by the current administration.