Charity's Fourth and Fifth Amendments Violated By Treasury’s Unchecked Investigative Powers

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Date: 
August 21, 2009

On Aug. 18, 2009, a federal judge ruled the Treasury Department’s seizure of a charity’s assets without notice or means of appeal is a violation of the Fourth and Fifth Amendments. If the 100 page order is upheld, the ruling challenges the emergency measure passed two weeks after 9/11 that allows Treasury to shut down any organization suspected of financing terrorists without warrants or court approval.  A hearing to address additional issues has been set for Sept. 21.

In Feb. 2006, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) froze nearly $1 million in assets from a Toledo-based organization KindHearts for Charitable Humanitarian Development’s (KindHearts) without notice or a hearing, and declared the charity was “under investigation." Since, 9/11, eight U.S. charities have had assets totaling nearly $21 million seized by Treasury.

Treasury claimed KindHearts financially supported Hamas, collaborated with its leaders in the West Bank and Lebanon, and had connections with the recently convicted Holy Land Foundation. Despite the accusations, KindHearts was never listed as a Specially Designated Global Terrorist (SDGT) group by Treasury and no charges have been filed against the charity. KindHearts denies any affiliation with terrorists. 
 
Judge James Carr ruled that Treasury “has effectively shut KindHearts down” by freezing its assets which amounted to a "seizure" under the Fourth Amendment and was "unreasonable" because the government did not first obtain a warrant based on probable cause.  The Judge also found OFAC violated the Fifth Amendment's guarantee of due process because it "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."
 
Carr was critical of several Treasury actions. He expressed that Treasury never properly informed KindHearts why its assets were frozen and called Treasury’s refusal to allow the charity to pay legal fees with its own money as "arbitrary and capricious."  The order also  agreed with KindHearts’ argument that there is “vagueness” in the law that allows OFAC to seize assets and investigate any organization without any appeal process.

A lawyer for KindHearts, Lynne Bernabei, applauded the ruling. “The government has been taking action unilaterally and basically destroying these charities on the flimsiest of evidence. We see this as the beginning of the effort to rein in executive authority,” she said.
 
Another lawyer for KindHearts, Fritz Byers, said, "Judge Carr's historic ruling makes clear that the government can't circumvent the Constitution, which protects us against unreasonable searches and seizures and affords us the due-process rights of notice and a chance to be heard, even when the government invokes national security as an excuse."

Justice Department lawyers argued that Fourth Amendment protection did not apply to groups suspected of terrorism or supporting terrorists. Rejecting that argument, the ruling found “nothing in our Fourth Amendment jurisprudence or constitutional tradition supports complete elimination of the probable cause, prior judicial review and warrant requirements.”
 
Charles Miller, a spokesman for the Civil Division at the Justice Department, declined comment on the judge’s ruling. "We're going to review it and then ultimately make a determination of how the government will proceed in this matter," he said. 

Judge Carr's decision may be appealed to the 6th U.S. Circuit Court of Appeals in Cincinnati. On May 1, government lawyers had expressed their intentions to request a stay until the appellate court heard the case if the freeze on KindHeart’s assets is lefted.

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PDF icon KindHearts order 8.18.09.pdf288.18 KB