Consortium Against Terrorist Finance Oct. 28, 2015, 6:07pm

At its peak in 2001, the Muslim-oriented Foundation for Relief and Development—known colloquially as the Holy Land Foundation or HLF—was the largest Islamic charity then operating in the United States. It is reported to have raised more than $36 million for a variety of health and welfare causes as well as terrorist plots.  The importance of reflecting on its checkered history now is the joint lesson that both counterterrorism officials and terrorist fund raisers have apparently learned about operating a purportedly legal charities in full public view.

The U.S. government initiated steps to dissolve the charity as a terrorist front organization as far back as 2001. That non-criminal action preceded the 2004 indictment and 2008 conviction of HLF organizers living in the U.S., and their 2009 sentencing in a Dallas federal court to prison terms ranging from15 to 56 years. The five principle defendants were found guilty on all 108 federal counts involving over $12 million that was funneled from HLS to Hamas, which the US government had listed as a foreign terrorist organization. The defendants were convicted of providing material support in the form of money to Hamas, with charges ranging from income tax evasion to money laundering and conspiracy. HLF transferred the money that had been solicited as tax exempt charitable contributions to local Palestinian organizations known as zakat committees. Those zakats operated in the Palestinian territories of Gaza and the West Bank allegedly to support terrorist actions such as suicide bombings and payment of rewards to the families of the bombers. According to the Department of Justice, "HLF intentionally hid its financial support for Hamas behind the guise of charitable donations."

HLF had been shut down with its assets frozen by the government after it was designated as a prohibited organization that provided material and logistical support to Hamas—under Executive Orders 13224 and 12947 that empowered the President to act against terrorists by choking off the flow of money to their front organizations. Judicial appeals by HLF to release its assets were unsuccessful. In 2004, the Justice Department obtained an indictment against HLF, charging the charity and its leaders with conspiracy to provide material aid to a designated terrorist organization. Public documents, including records released by the government at the Dallas trial, showed in fact that HLF was part of an elaborate bureaucratic structure created by the extremist Muslim Brotherhood to benefit Hamas.  

Prosecutors contended that HLF provided more than $12 million to individuals and organizations linked to Hamas between 1995 and 2001. In addition, the group reportedly raised a total of $57 million since it was formed in 1992 but it only reported $36.2 million to the IRS, the agency to which non profits are required to report. The first trial ended in a mistrial in 2007. During the second trial, several Muslim organizations joined forces to support HLF, including the Council on American-Islamic Relations (CAIR) which was listed as an unindicted co-conspirator in the HLF indictment, and the Muslim American Society (MAS).

In the years since the exposure and demise of HLF, terrorist finance has clearly evolved in the direction of even more clandestine fundraising and money transfers. We now see widespread criticism of countries that have served as terrorist financing sources or conduits that are becoming more deceptive with how they channel funds. This development reportedly impacts both overt and covert means of transferring money to terrorist organizations and their front entities. In other cases, terrorist groups have resorted to overt criminality—from selling narcotics to human trafficking—to raise funds. But the bottom line is clear: the sinister transfer of money collected by tax exempt organizations to avowedly terrorist organizations continues.  What the HLF exposure and prosecution seems to have taught terrorists and their financiers is that open solicitations coupled with clandestine transfers only invites law enforcement scrutiny and results in heavy, painful penalties. Nations that persist in sponsoring, harboring, or otherwise tolerating the financing of terrorism present a more formidable challenge now than before the HLF cases went public.

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