Going After Terrorism’s Financiers Is the Right Strategy, But the Law Needs Reform
By JENNIFER VAN BERGEN Findlaw 4/19/06

The basic strategy of rooting out terrorism by targeting its financiers is inarguably a sound one. As one official noted about the War on Terror: “To root out terrorism, we not only need to capture terrorists and their supporters and bring them to justice but we must stem the flow of funds that keep them in business.” Similarly, former Attorney General John Ashcroft said “We will pursue the financiers of terror as aggressively as we pursue the thugs who do their dirty work.”

However, it’s become clear that the major means for serving this goal — the civil asset forfeiture laws that grew out of the War on Drugs and have been expanded by the PATRIOT Act – sweep too broadly, and thus have been applied in ways that are ethically and constitutionally troubling. In particular, these laws have been used to shut down several large, legitimate Muslim charities.
In this column, the first in a two-part series, I will argue that these laws need significant reform. (Part Two will discuss the application of the law in specific cases.)

Civil Asset Forfeiture Before 9/11

One of the upshots of the drug war was the advent and tremendous growth of civil asset forfeiture laws – laws that permitted the government to “forfeit” (that is, seize and retain) property it deemed “tainted” by criminal activity.

Because the forfeiture was civil not criminal — and because of the fiction that the action was against the tainted property (not the person who owned it) — no proof of criminal activity was required. All that was needed was probable cause that the property was subject to forfeiture (with the burden of proof then shifting to the owner to prove the negative). Indeed, a pending investigation was sufficient grounds on which to seize. No criminal charges – let alone a criminal conviction – were required.

By the mid-1990’s over 200 federal offenses triggered forfeiture, with new ones being steadily added. Worse, the laws allowed the seizing police agency to keep the proceeds of forfeited property — creating an unethical symbiotic relationship between drug lords and law enforcement. It became more profitable for the police to allow the illicit trade of drugs and to seize the profits, than to stop the criminals.

Public criticism of these laws led to the Civil Asset Forfeiture Reform Act of 2000 (CAFRA). CAFRA provided a slightly higher threshold to be satisfied before the government could seize property; placed the burden on the government to prove by a preponderance of evidence that the property was properly forfeited; provided an “innocent owner” defense – by which the owner could prove he or she had no idea the property was being used for crime; and contained hardship and compensation provisions. But CAFRA retained the provision permitting law enforcement to retain the seized assets – and thus the sharp conflict of interest remained.

Many civil libertarians have decried this disturbing development. For instance Brant Hadaway, a Miami attorney, has argued that “The use of forfeiture as a means of generating revenue represents one of the most serious threats to personal liberty in U.S. history.” And Hadaway points out that, “Not since the writs of assistance, which helped to inspire our revolution against the British Crown, has a U.S. government mandated that law enforcement officers be allowed, in essence, to eat what they kill.”

“Writs of assistance” were general warrants giving British officials blanket authority to search and seize whatever and wherever they pleased; in America, the Fourth Amendment abolished this practice. Yet Fourth Amendment challenges to civil asset forfeiture laws have proved unavailing.

It seems that the property owners – typically, suspected drug lords or Mafia figures – were unable to win courts’ sympathies even when their constitutional points had merit.

Forfeiture Since 9/11: Targeting Muslim Charities

In short, civil forfeiture laws were already infringing rights, and creating government conflicts of interest, prior to 9/11. And then, after 9/11, the PATRIOT Act worsened the situation.

Among other finance-related measures, the Patriot Act expanded civil asset forfeiture laws to authorize the seizure of the property of any individual, entity, or organization engaged in domestic or international terrorism. The definition of domestic terrorism is viewed by critics as overbroad. And this time, the targets were not the Mafia or drug lords; they were – and are – major Muslim charities.

In the past, when government targeted suspected organized crime figures or drug lords, cases of mistaken identity (or of innocent owners) occurred now and then. But in the War on Terror, when mistakes occur, entire charities are brought down — potentially leaving a large humanitarian gap in regions of greatest need.

In 2002, former Deputy Secretary of the Treasury Kenneth W. Dam told the Council on Foreign Relations:
Our challenge is to prevent terrorists from using charities as a cover for supporting terrorism while ensuring that charitable giving and charitable works continue. We are pursing these two goals by freezing the flow of funds through charities that have been corrupted by terrorist supporters and increasing the transparency and oversight of charities around the world.
(Emphasis added).

In theory, this approach is the right one. But in reality, the government has been shutting down organizations that engaged in beneficial, humanitarian activities – upon nothing more than a Department of Justice or Treasury designation. No hearing or trial is necessary.

“Drastic sanctions in anti-terrorist financing laws are being used to shut down entire organizations, resulting in the loss of badly needed humanitarian assistance around the world and creating a climate of fear in the nonprofit sector,” according to OMB Watch, a nonprofit research and advocacy organization dedicated to promoting government accountability on fiscal issues. Yet, also according to OMB Watch, authorities have failed to produce any solid evidence of terror financing by these U.S.-based charities, despite sweeping post-9/11 investigative powers and expensive government investigations, says OMB Watch.

The Legal Authority (Besides the PATRIOT Act): IEEPA

It’s not just the Patriot Act that is the culprit here: It’s also the longstanding International Emergency Economic Powers Act (IEEPA), used in a new way.

As Deputy Treasury Secretary Dam admitted, “In the United States, all that [is] immediately necessary [is] to promulgate an executive order invoking the President’s authority under [IEEPA] to go after not just terrorists but also their financial supporters, to announce the designations, and to transmit the blocking orders to U.S. financial institutions.”

David Cole, a law professor at Georgetown University, points out the problem with this use of IEEPA in his book Enemy Aliens:

In shutting down three of the largest Muslim charities in the United States, the government . . .invok[es] an obscure administrative regime that allows it to bypass the criminal process altogether. Under [IEEPA], the president has unilaterally banned all transactions with the charities, frozen millions of dollars, and effectively closed them down, all without a criminal conviction, a criminal charge, or even an administrative hearing.

Such laws should be reformed to remove their most problematic aspects. Hadaway’s pre-9/11 suggestions are still good ones: “to require that (1) forfeited assets be deposited into a general treasury fund instead of being funneled to the seizing agency, and (2) a forfeiture can only occur pursuant to a criminal conviction.”
Unless reform occurs, court challenges may be the only promising avenue. According to Hadaway, forfeiture victims in the past have raised various constitutional challenges (most often unsuccessfully): due process, the Takings Clause, Excessive Fines, and Double Jeopardy. One troubling constitutional issue may arise from the Appropriations Clause — which mandates that only Congress may appropriate funds for government programs. Arguably, when the police can garner revenue from asset forfeiture, the Executive Branch is infringing on the Legislative Branch’s money-raising power, and thus violating the Constitution’s separation of powers. Similarly, separation of powers is also jeopardized when the President can do the same via an Executive Order.

Shutting Down Legitimate Muslim Charities Gravely Alienates Muslim-Americans

Clearly, if individuals or organizations have, indeed, funded criminal or terrorist activity, they should be stopped and brought to justice, and the ill-gotten goods taken out of the criminals’ hands. But forfeiture of assets without proof of criminal activity is bad policy – especially so when the target is a legitimate charity that, until its shutdown, served important functions.

It is no small matter, finally, that these charities are Muslim. With Muslim-Americans already facing post-9/11 suspicion and bias, both from other Americans and from the government, shutting down Muslim charities – and Muslim charities alone – sends an ugly message. Despite crime within the Catholic Church – in the form of clergy child sexual abuse, and related cover-ups – no civil forfeiture of Church assets has, to my knowledge, occurred. When Halliburton manages to get only a request for compliance for violating IEEPA and Help the Needy gets criminally prosecuted for similar violations, how are Muslim-Americans to interpret the contrast, except as an instance of government bias? As OMB Watch points out, such treatment of Muslim charities hurts, not helps, the war on terrorism.

Jennifer Van Bergen, a journalist with a law degree, is the author of THE TWILIGHT OF DEMOCRACY: THE BUSH PLAN FOR AMERICA (Common Courage Press, 2004). She writes frequently on civil liberties, human rights, and international law. Her book, ARCHETYPES FOR WRITERS, about the characterization method she developed and taught at the New School University, will be out in 2007.