Court Orders Treasury Not to List KindHearts as Supporter of Terrorism Pending Outcome of Litigation

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On Oct. 26, 2009 U.S. District Court Judge James G. Carr issued a temporary restraining order against the Department of Treasury (Treasury) barring further action against KindHearts for Charitable Humanitarian Development (KindHearts), which was shut down in February 2006 "pending investigation" into whether it is a supporter of terrorism. The court said the action is necessary for it to consider a remedy to the constitutional violations against KindHearts, as found in its August 2009 ruling.  It ordered the parties to submit briefs on the remedy issue by Jan. 11, 2010.

In February 2006, using powers authorized under President Bush's Executive Order 13224, Treasury froze all of KindHearts' funds and seized all its files, equipment and other assets "pending investigation" into whether or not the group should be listed as a "Specially Designated Global Terrorist" (SDGT). The Ohio-based charity filed suit in October 2008 challenging the constitutionality of the action. In August the court ruled in favor of KindHearts, holding that Treasury:

• violated its Fourth Amendment rights by seizing assets without a warrant based on probable cause
• violated its Fifth Amendment rights by failure to provide adequate notice of the basis for its action and a meaningful opportunity to defend itself
• arbitrarily restricted KindHearts access to legal counsel by limiting access to its own funds.

The August ruling did not order a specific remedy to right these wrongs. Instead, it scheduled further proceedings to determine what an appropriate remedy should be. A hearing was held on Sept. 21, 2009, and KindHearts argued that Treasury should be restrained from continuing to require it to respond to allegations and from designating as an SDGT. 
 
In the Oct. 26 order the judge agreed with KindHearts, saying "By requiring KindHearts to respond to allegations that I have found constitutionally lacking, KindHearts must, as a result, effectively disprove a negative if compelled to proceed before I provide whatever remedy I determine is proper. This constitutionally inadequate notice, moreover, has severely prejudiced KindHearts' ability to respond especially in light of defendants' arbitrary and capricious denial of KindHearts' requests to pay attorneys fees with its own blocked resources. To analogize, KindHearts is not only blindfolded, but also has its hands tied behind its back." [p. 7] (emphasis added)
 
As a result, the court said KindHearts would suffer irreparable harm if it is compelled to continue with the constitutionally deficient process. It said, "Allowing defendants to go forward with the designation process would interfere with the properly exercised jurisdiction of this court." [p. 11]
 
Treasury opposed the temporary restraining order, arguing that it is concerned about delays. The court rejected this reasoning, saying "Defendants, moreover, have demonstrated that time is not of the essence to them. While defendants have a legitimate interest in continuing the designation process, the matter has been before them since sometime before February 2006, the date KindHearts assets were blocked. By their arguments and actions, defendants have failed to show a pressing need for immediate continuation of the designation process." [p. 9] A review of Treasury's actions in the case to date (see CSN's KindHearts Timeline) demonstrates that it has not pursued its investigation in a timely manner.
 
The court recognized the need for Treasury to "conduct its inquiries according to its own timetable without interference from the courts." But the court said that, while the judicial branch generally defers to the executive branch in matters of national security, "[T]he manifest and continuing harm to KindHearts, however, when balanced against the intangible harm to defendants, justifies granting a temporary stay in this extraordinary and unique circumstance." [p. 9]