On Jan. 11, 2012, U.S. District Judge Nanette Laughrey sentenced former officials of the Islamic American Relief Agency (IARA) for violating Iraq economic sanctions and illegally acting as an unregistered foreign agent. None of the men charged in the criminal case, first filed in 2007, were alleged to have provided support to terrorists. In addition, a former congressman and U.S. ambassador to the United Nations was sentenced to one year in prison for obstructing justice and acting as an unregistered foreign agent on behalf of IARA. IARA was shut down in October 2004 after being designated a terrorist entity by the Department of Treasury.
Charges Against Charity
IARA-USA and five of its leaders have been charged with engaging in prohibited transactions with Gulbuddin Hekmatyar, an Afghan rebel leader who was designated as a terrorist in 2003. IARA-USA, which was shut down in October 2004, was funding an orphanage in the Shamshatu Refugee Camp in Pakistan that is located on land belonging to Hekmatyar. The defendants were not charged with supporting terrorism. The leaders, along with a former member of Congress, Mark J. Siljander, was also charged with misappropriating funds from a federal grant to pay for Siljander to lobby for IARA-USA’s removal from a Senate list of organizations suspected of supporting terrorism.
IARA-USA, its former executive director, and other leaders were
originally indicted in March 2007 for violating economic sanctions against Iraq. The new indictment, issued by a federal grand jury in the Western District of Missouri on Jan. 16, 2008 adds eight new charges relating to the orphanage in Pakistan, as well as charges of money laundering, conspiracy, and obstruction of justice relating to the alleged lobbying payments to Siljander. The indictment says IARA-USA provided financial support to the orphanage between 2002 and 2004 by sending payments to the Pakistan account of the Islamic Relief Agency (ISRA). A Department of Justice (DOJ)
press release said the payments to ISRA were “purportedly for an orphanage housed in buildings owned and controlled by Hekmatyar.” After Hekmatyar was designated as a terrorist in early 2003, eight more payments were sent to ISRA, from March 2003 to August 2004, totaling $130,000. The indictment says these payments were “for the benefit of Gulbuddin Hekmatyar…”
DOJ’s announcement included the following statement: “It is important to note that the indictment does not charge any of the defendants with material support of terrorism, nor does it allege that they knowingly financed acts of terror. Instead, the indictment alleges that some of the defendants engaged in financial transactions that benefited property controlled by a designated terrorist, in violation of the International Emergency Economic Powers Act.” This raises the question of when a nonprofit must withdraw support for a charitable project when someone with an indirect relationship is designated as a terrorist. In this case, Hekmatyar appears to have owned the land the orphanage and refugee camp are located on, but payments did not go to him.
The indictment also alleges that IARA-USA failed to return $84,922 from a United States Agency for International Development (USAID) grant that was cancelled in December 1999. It further charges that IARA-USA officials used $50,000 of these funds to pay Siljander, a Republican member of Congress from Michigan between 1981 and 1987, to lobby the Senate Finance Committee to take IARA-USA off a list of charities being investigated so it could have its USAID funding reinstated. In interviews with the FBI, Siljander denied the payments were for lobbying, leading to an additional charge of obstruction of justice. Siljander said the payment was to support a book, due for publication in June, on Muslim-Christian relations.
Court Upholds Asset Freeze
On Feb.13, 2007, the U.S. Court of Appeals for the District of Columbia upheld a lower court decision that allowed the Treasury Department’s Office of Foreign Assets Control (OFAC) to freeze the assets of the Missouri-based Islamic American Relief Agency. The court said the asset seizure was lawful because the court found the organization is an affiliate of a Sudanese group that was designated as a terrorist organization in 2004, making this the first case to allow such designation based solely on an alleged branch relationship. There was no finding that the U.S. group used funds to support terrorist activities.
In October 2004, OFAC designated the Sudan-based Islamic African Relief Agency (IARA), based in Sudan, as a “Specially Designated Global Terrorist.” A few weeks later the Federal Bureau of Investigation raided the Islamic American Relief Agency’s (IARA-USA) offices in Columbia, MO, shutting down a relief organization that provided disaster and war relief in Africa, Asia and Bosnia. The Columbia Tribune reported that tax records indicate IARA-USA provided nearly $23 million in such relief from 1992-2002. It was founded in 1985 by a Sudanese immigrant and named the Islamic African Relief Agency USA. In 2000, the U.S. group changed its name to the Islamic American Relief Agency and established a separate board of directors and finances.
In December 2004, IARA-USA filed suit challenging the asset seizure, claiming OFAC’s action was not supported by the record and violated federal law and the U.S. Constitution. In September 2005, the U.S. District Court for the District of Columbia ruled in favor of OFAC, holding the “record supported OFAC’s conclusion that IARA-USA was a branch of IARA,” making the seizure lawful under Executive Order 13224 and the International Emergency Economic Powers Act, as amended by the PATRIOT Act. The court used incidents occurring prior to 2000, when IARA-USA changed its name and governance, to find a “branch” relationship between it and the IARA. It also did not allow IARA-USA access to documents used by the government.
In upholding the lower court ruling, the appeals court said a “highly deferential standard of review applies,” and it would only overturn OFAC’s action if it was found to be arbitrary or an abuse of discretion. The court noted, “We may not substitute our judgment for OFAC’s.” It acknowledged “that the unclassified record evidence is not overwhelming, but we reiterate that our review — in an area at the intersection of national security, foreign policy, and administrative law — is extremely deferential.”
In its opinion, the court cited its previous decision upholding OFAC’s action against the Holy Land Foundation, emphasizing that, when foreign affairs are involved, “We owe the executive branch even more latitude than in the domestic context.” However, the ongoing criminal prosecution of members of Holy Land’s board of directors has revealed questionable evidence supporting OFAC’s claims.
The IARA-USA case is significant, since the court states that a charity can be shut down even when there is no allegation of direct support of terrorism if the organization has a close enough relationship, history or other ties to a group that is designated by OFAC. The opinion notes, “IARA-USA argues that OFAC cannot block an entity’s assets unless it determines that the entity poses an ‘unusual and extraordinary threat to national security.’ The district court rejected this argument, holding that the threat need not be found with regard to each individual entity….We agree.”
The court also rejected IARA-USA’s constitutional claims.
Charity Leader Pleads Guilty
On June 30, 2010 IARA-USA’s former director plead guilty to conspiring to transfer money to Iraq in violation of federal sanctions. Mubarak Hamed admitted to illegally transferring more than $1 million money to Iraq from 1999 to 2002. He had been the Executive Director of the organization in Columbia, Missouri, which shut down after being designated a terrorist entity by the Department of Treasury on Oct. 13, 2004.
Hamed is the third defendant to plead guilty in the case. In Dec. 2009, charity fundraiser Ahmad Mustafa pleaded guilty to illegally transferring money to Iraq and former IARA board member, Ali Mohamed Begegni, pleaded guilty to a role in the conspiracy on April 6. It is unclear from media reports if the charity is represented by counsel during these proceedings. Other defendants include former U.S. congressman Mark Siljander (R-MI), who is accused of taking $75,000 from a U.S. Agency for International Development grant that IARA was supposed to have used for relief projects in Mali. Prosecutors said the money was to help remove the charity’s name from a U.S. Senate Finance Committee list of organizations that allegedly supported terrorism.
Sentencing
Mubarak Hamed, the charity’s executive director was sentenced to four years and 10 months in prison for sending more than $1 million to Iraq in violation of U.S. sanctions during the Saddam Hussein period. Three other officials received between six months to two years probation on similar charges.
“If we had a terrorist event we would have charged a more serious case,” Assistant U.S. Attorney Anthony Peter Gonzalez said.
Mark Deli Siljander, a Michigan Republican who served in Congress from 1981 to 1987, pleaded guilty to the charges in July 2010. In his plea agreement, Siljander acknowledged that he was paid about $75,000 by charity officials to lobby between March and May 2004 for its removal from a U.S. Senate Finance Committee list of organizations suspected of funding international terrorism. He also admitting to lying to investigators about what he was doing, claiming the money he received was in support of book he was writing about Christian-Islamic relations.
Those sentenced:
