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Charity's Fate Seen as Test of Wider War on Terror

U.S. accuses an Islamic foundation of ties to Hamas. FBI errors may spark a legal challenge.

September 14, 2003|Stephen Braun | Times Staff Writer

DALLAS — For a decade, the Holy Land Foundation for Relief and Development was the nation's fastest-growing Islamic American charity, its suburban North Texas headquarters brimming with cash and checks collected in the name of refugees in the Mideast. The charity exists only in the abstract now, decimated by America's war on terrorism.

The foundation's bank accounts are frozen by government edict. Its possessions, from computers to potted plants, have been locked away in government storerooms for nearly two years. The charity's sole activity is a lawsuit aimed at recovering $5 million in assets frozen by the U.S. Treasury Department.

Federal judges have repeatedly upheld the government's authority to shut down Holy Land because of its suspected ties to the Palestinian militant group Hamas. At the same time, the Justice Department is targeting the charity in a criminal investigation that accelerated last month with a round of subpoenas ordering several former employees to appear before a Dallas grand jury.

"Every day," said Shukri Abu Baker, Holy Land's Palestinian American director, "I wake up thinking: 'Is this the day they will come to handcuff me?' "

Holy Land's public transformation from almsgiver to pariah reveals a charity whose deeds were blurred by associations with suspected militants.

Wracked by a decade of internal debate over how to deal with the charity, the U.S. government veered from inaction to crackdown. There have also been missteps. The Times has learned that a secret FBI application for surveillance connected to the Holy Land case was flawed and could prompt a new legal challenge.

The government's stance against Holy Land reflects the official view that Hamas operations inside the United States require the same level of scrutiny as Al Qaeda, even though the Palestinian faction has not been known to target American citizens. Hamas cultivates Palestinian popular support and deflects international criticism by blending welfare with violence -- sending bomb-laden recruits against Israeli civilian targets while showering social aid on destitute refugees.

Holy Land's fate has become a key test of the Bush administration's expanded view of terrorism: that charities can pose a threat by funding legitimate programs used to provide cover for militants. Officials charge that Holy Land secretly aided Hamas by funneling donations to Palestinian schools, hospitals and other aid programs tied to the resistance group -- and to stipends that nurtured the families of suicide bombers.

"We don't deny that a lot of their funds went for good works," said Juan C. Zarate, deputy assistant Treasury secretary for terrorism and violent crime. "But they helped an organization that had a larger agenda of fomenting terrorism."

Holy Land's officers and lawyers counter that no donations were knowingly given to any Hamas entity. The funds were directed to nonpartisan Palestinian agencies and to impoverished families with no known Hamas affiliations, said Holy Land lawyer John Boyd. He accused the government of distortions, false testimony and "crushing an Arab American success story."

Hamas, formed by Islamic fundamentalists in 1988 to resist Israeli occupation, spurned the secular opposition led by Palestine Liberation Organization chief Yasser Arafat. Its campaign of suicide bombings has killed hundreds of Israelis -- and several Americans -- over the last decade. Hamas leaders insist their political and military wings act separately, a rationale rejected by the Bush administration.

As new violence in recent weeks has dashed hopes for the U.S.-backed "road map" to peace in the Middle East, the Treasury Department has blocked the assets of six senior Hamas leaders. Among them is Mousa Abu Marzouk, a top strategist who heads the Hamas political wing and allegedly helped organize Holy Land's creation in Southern California in the late 1980s.


President Bush froze Holy Land's funds and designated the charity a terrorist group three months after the Sept. 11, 2001, attacks -- part of his first official response to the mass deaths in New York, at the Pentagon and in Pennsylvania. Donations "raised by the Holy Land Foundation," Bush said, gave Hamas "much of the money that it pays for murder abroad."

Investigators have not found any direct links between Hamas and Holy Land and the Sept. 11 plot. But the shock of the events of two years ago prompted federal officials to reexamine all U.S.-based organizations suspected of terrorist activities.

Hamas had been classified as a terrorist group by President Clinton in 1997. The move made funding any Hamas entity a crime. More recent authorizations by Bush and Congress allowed the Treasury Department to block the assets of anyone suspected of providing financial and material support. And, Zarate said, the agency also now has the "revolutionary" ability to make a detailed case against designated terrorist groups without filing criminal charges.

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