Court Denies Appeal of Holy Land Foundation and Leaders

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December 20, 2011

The 2008 convictions of the Holy Land Foundation (HLF) and five of its leaders were upheld by the Fifth Circuit Court of Appeals on Dec. 7, 2011. Because HLF was unrepresented the trial judge appointed an attorney to represent it on appeal. The appeals court dismissed HLF's appeal for lack of jurisdiction, saying it "was unauthorized and thus invalid, thereby depriving us of jurisdiction." The court ruled against the individual leaders on most issues, but also ruled that although in some cases the trail court erred on the law, the error was harmless because there was sufficient other evidence to sustain a conviction.

An in-depth summary of the opinion is available here

The Treasury Department put HLF on the terrorist list in December 2001 and all its assets were frozen or seized, including about $5 million. In 2004 HLF and its leaders were charged the providing material support to Hamas, a criminal offense. The indictment charged that the group funded local zakat committees (charities) in Gaza that were controlled by Hamas. It did not allege any funds went to Hamas or were used for anything other than charitable aid. The trial court's instructions to the jury did not require them to find that HLF and its leaders knew about Hamas control of these committees, which have not been put on the U.S. terrorist list.
The issue of representation of HLF 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. As a result of this legal catch-22, about $5 million left over in HLF's bank accounts was forfeited to the U.S. government upon conviction. 
A group of 20 U.S. nonprofits filed a friend of the court brief in the appeal, arguing that the court should have required a showing of knowledge of the Hamas connection before the defendants could be convicted.  They argued 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. Despite this, the appeals court said that since the defendants did not raise the issue (and HLF was not properly before the court), they would make no ruling on it. This ambiguous result raises significant questions about how much charities can rely on Treasury's published list and what risk are associated with funding local charities in international programs. Since partnering with local groups is often a "best practice" in international programs, the ongoing lack of clarity on this issue is very problematic.
Other issues where the court rejected the defendants' arguments include:
  • The content of the defendants' speeches and statements about political issues in the Middle East could be admitted as evidence against them, since the Supreme Court upheld use of speech in Holder v. Humanitarian Law Project  and was considered in the context of other conduct by the defendants
  • The results of searches of HLF's offices without a warrant were admissible because HLF did not challenge the order blocking (freezing) its funds
  • The prosecution did not need to give defendants access to all the wiretapped conversations it used, as some evidence was classified
  • The defendants were not entitled to see warrant applications for surveillance submitted to the Foreign Intelligence Surveillance Court
  • Two witnesses, both employed by the Israeli government, could testify using psyeudonumsEvidence about Hamas violence was admissible and not unduly inflammatory because it served a probative purpose of providing context for the case
Issues where the court ruled in favor defendants, but said were not sufficiently serious to overturn the convictions were:
  • The expert testimony of Treasury official John O'Brien should not have been admitted, since he offered a legal conclusion that the fact that HLF gave funds to undesignated zakat committees was insignificant
  • The testimony of Steven Simon, a former employee of theNational Security Council, about the role of violence in the Middle East peace process was not relevant and should have been excluded.