By NEIL MacFARQUHAR NYTimes 12/12/06
Correction Appended

SAN FRANCISCO, Dec. 11 – In a new challenge to Washington over its closing several American Muslim charities that it has accused of aiding terrorism, the largest such group filed a motion on Monday seeking dismissal of many of the charges.

Lawyers for the group, the Holy Land Foundation of Richardson, Tex., filed the motion in Federal District Court in Dallas two weeks after a federal judge in California called into question a crucial provision in designating terrorist supporters. Since December 2001, the Treasury Department has designated Holy Land and five other Muslim charities in the United States as terrorist supporters, seizing millions of dollars in assets and halting their activities.

No accused charity or any senior officer have been convicted on a charge of terrorism. Some charities have faced no criminal charges.

In a separate case against a Georgia man whom the prosecution identified as a fund-raiser for Holy Land, the defendant pleaded guilty this year to sending money to Hamas, the Islamist Palestinian political party that Washington first designated as a terrorist organization in 1995.

The foundation denies that the man had an official post.

The government has accused the foundation of having been the American fund-raising arm of Hamas. The charity and five officers are expected to go on trial in July on charges of financing a foreign terrorist organization, money laundering and tax fraud.

In October, Ghassan Elashi, a founder and former chairman of the charity, was sentenced to more than six years in prison after he and four brothers were convicted of violating export laws by shipping computers to Syria and Libya, both once on the United States list of terrorism sponsors. Libya was removed this year.

Last year, Mr. Elashi and two brothers were convicted of helping a Hamas leader launder money.

The Treasury Department’s repeated refusal to unfreeze charities’ assets so they can be sent abroad has provoked alarm and frustration in the philanthropic world.

“The question is not whether the individual nonprofits are guilty as organizations,” said Kay Guinane of OMB Watch, a Washington group advocating government transparency.

“The issue is whether there is a fair process to determine that and how to protect the charitable dollars so they are used for the intended purposes,” Ms. Guinane said. “What Treasury has done is treat charities the same way they treat the criminal process. It has really hurt the U.S. image in the places where the aid was expected and where people were depending on it.”

Full article: NYTimes.com