A federal court this week ruled for the first time that the U.S. Government cannot freeze an organization's assets under a terror financing law without a warrant based upon probable cause and without telling the organization the basis for its action and a meaningful opportunity to defend itself.
If the decision of U.S. District Judge James G. Carr is upheld, it will strip the government of a key weapon in the broad counter-terrorism authority claimed by the administration of former President George W. Bush following the attacks of September 11, 2001.
The ruling came Tuesday in a lawsuit originally filed in November 2008 by the American Civil Liberties Union, the ACLU of Ohio and several civil rights attorneys on behalf of KindHearts for Charitable Humanitarian Development, Inc., a charity based in Columbus, Ohio. Lawyers from the Obama Justice Department defended the position of their predecessors.
Georgetown University law professor David Cole, who is co-counsel in the case, called the government's approach "a blunt sledgehammer."
He told us, "The government has an undoubtedly legitimate interest in stopping the funding of terrorist activity, but the authority used against KindHearts and so many other charities is a blunt sledgehammer that permits the government to shut down charities indefinitely without any finding of wrongdoing, without any notice of the basis for its actions, without any prior judicial approval, and without any meaningful opportunity for the charity to defend itself."
He added, "Judge Carr's decision recognizes that such unchecked power cannot be squared with the Constitution's Fourth and Fifth Amendments, which were designed, in the wake of King George's legendary abuses, to restrain official power to seize property arbitrarily."
The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) froze KindHearts' assets three-and-a-half years ago without a warrant, notice or a hearing, based simply on the assertion that OFAC was investigating whether the charity should be designated as a "specially designated global terrorist (SDGT)."
In Tuesday's ruling, Judge Carr found that the administration must obtain a warrant based on probable cause before seizing an organization's assets, citing judicial precedent holding that the executive branch's "domestic actions - even when taken in the name of national security - must comport with the Fourth Amendment."
Judge Carr also ruled that OFAC violated the Fifth Amendment's guarantee of due process because it "violated KindHearts' fundamental right to be told on what basis and for what reasons the government deprived it of all access to all its assets and shut down its operations."
KindHearts had never been found to have engaged in any wrongdoing and had never been designated an SDGT, yet it was effectively shut down since OFAC first froze its assets on February 19, 2006. As a result of the freeze pending investigation, it would have been a crime for anyone to do any business with KindHearts and the charity would have no access to its own property.
KindHearts provided detailed information to the government about its operations and requested that the government specify its reasons for blocking its assets pending investigation. But the government ignored KindHearts' submissions and repeatedly delayed in responding to its requests. The court found that the government's actions were fundamental violations of due process.
Judge Carr ordered a hearing for September to determine how to correct what he said were constitutional flaws in the government's case. Justice Department lawyers are reviewing the opinion, but it is unclear whether they will appeal the decision to a higher court.
The Treasury Department alleged that KindHearts provided financial support for Hamas and worked with this group in the West Bank of Israel and in Lebanon to support terrorist activities.
While KindHearts was never named a "specially designated global terrorist," Judge Carr said the government "has effectively shut KindHearts down" by freezing its assets and designating its as criminal.
The organization was unable to use its own resources to pay for a legal defense. Judge Carr said OFAC was "arbitrary and capricious" in considering whether the group could pay its lawyers.
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