Appeals Court Finds Treasury's Procedures in Shutting Down Charity Unconstitutional

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October 1, 2011

On Sept. 23, 2011 the Ninth Circuit Court of Appeals upheld a lower court ruling that procedures used by the Department of Treasury to shut down the Al-Haramain Islamic Foundation of Oregon (AHIF-OR) in 2004 are unconstitutional. The court said 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. 

Click here to view Al-Haramain summary page

In addition, the court ruled that freezing the groups assets amounts to a seizure under the Fourth Amendment, so that a court order is required. The court also ruled that a group that wishes to engage in joint communications with AHIF-OR may do so, distinguishing the facts from the Supreme Court's decision in Holder v. Humanitarian Law Project.

The court found that:
  1. OFAC's reliance on classified evidence without providing a summary or access to the evidence for counsel with a security clearance violated due process.
  2. OFAC's failure to provide notice of the charges violated due process.
  3. OFAC's freeze was a "seizure" requiring a warrant and probable cause, and therefore violated the Fourth Amendment.
  4. The criminal prohibition on "coordinated advocacy" with AHIF-Oregon violated the First Amendment rights of a community group that sought to advocate in coordination with AHIF-Oregon, distinguishing Holder v. HLP largely on ground that AHIF-Oregon is a domestic group with frozen funds and there is no evidence supporting concerns that advocacy with it will undermine the government's national security concerns. 
  5. The Due process errors were harmless because there is nothing AHIF could have done to refute the evidence supporting its designation.