[Senate Hearing 107-1156]
[From the U.S. Government Publishing Office]
S. Hrg. 107-1156
AN ASSESSMENT OF THE TOOLS NEEDED TO FIGHT THE FINANCING OF TERRORISM
=======================================================================
HEARING
before the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
NOVEMBER 20, 2002
__________
Serial No. J-107-112
__________
Printed for the use of the Committee on the Judiciary
U.S. GOVERNMENT PRINTING OFFICE
88-867 WASHINGTON : 2006
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
COMMITTEE ON THE JUDICIARY
PATRICK J. LEAHY, Vermont, Chairman
EDWARD M. KENNEDY, Massachusetts ORRIN G. HATCH, Utah
JOSEPH R. BIDEN, Jr., Delaware STROM THURMOND, South Carolina
HERBERT KOHL, Wisconsin CHARLES E. GRASSLEY, Iowa
DIANNE FEINSTEIN, California ARLEN SPECTER, Pennsylvania
RUSSELL D. FEINGOLD, Wisconsin JON KYL, Arizona
CHARLES E. SCHUMER, New York MIKE DeWINE, Ohio
RICHARD J. DURBIN, Illinois JEFF SESSIONS, Alabama
MARIA CANTWELL, Washington SAM BROWNBACK, Kansas
JOHN EDWARDS, North Carolina MITCH McCONNELL, Kentucky
Bruce A. Cohen, Majority Chief Counsel and Staff Director
Makan Delrahim, Minority Staff Director
C O N T E N T S
----------
STATEMENTS OF COMMITTEE MEMBERS
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah,
prepared statement............................................. 97
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont,
prepared statement............................................. 99
Specter, Hon. Arlen, a U.S. Senator from the State of
Pennsylvania................................................... 1
WITNESSES
Al-Marayati, Salam, Executive Director, Muslim Public Affairs
Council, Los Angeles, California............................... 35
Aufhauser, David D., General Counsel, Department of the Treasury,
Washington, D.C................................................ 16
Conrad, Robert J., Jr., United States Attorney, Western District
of North Carolina, Charlotte, North Carolina................... 2
Gerson, Allan, Gerson International Law Group, PLLC and
Professorial Lecturer in Honors, George Washington University,
Washington, D.C................................................ 30
Gurule, Jimmy, Under Secretary for Enforcement, Department of the
Treasury, Washington, D.C...................................... 14
Lewin, Nathan, Lewin and Lewin, LLP, Washington, D.C............. 26
Winer, Jonathan M., Alston and Bird, LLP, and Member, Council on
Foreign Relations, Washington, D.C............................. 33
QUESTIONS AND ANSWERS
Responses of Robert J. Conrad, Jr. to questions submitted by
Senator Biden.................................................. 45
Questions submitted by Senator Biden to Jimmy Gurule (Note: Mr.
Gurule's responses were not received prior to the printing of
this hearing.)................................................. 51
SUBMISSIONS FOR THE RECORD
Al-Marayati, Salam, Executive Director, Muslim Public Affairs
Council, Los Angeles, California, statement.................... 55
Boyd, John W., Attorney at Law, Freedman Boyd Daniels Hollander
Goldberg & Cline P.A., Albuquerque, New Mexico, statement...... 59
Conrad, Robert J., Jr., U.S. Attorney, Western District of North
Carolina, Charlotte, North Carolina, statement................. 66
Gerson, Allan, Gerson International Law Group, PLLC and
Professorial Lecturer in Honors, George Washington University,
Washington, D.C., statement.................................... 71
Gurule, Jimmy, Under Secretary for Enforcement, Department of the
Treasury, Washington, D.C., statement.......................... 78
Lewin, Nathan, Lewin and Lewin, LLP, Washington, D.C., statement
and letter..................................................... 101
Winer, Jonathan M., Alston and Bird, LLP, and Member, Council on
Foreign Relations, Washington, D.C., prepared statement........ 114
AN ASSESSMENT OF THE TOOLS NEEDED TO FIGHT THE FINANCING OF TERRORISM
----------
WEDNESDAY, NOVEMBER 20, 2002
United States Senate,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to notice, at 10:03 a.m., in
room SD-226, Dirksen Senate Office Building, Hon. Arlen Specter
presiding.
Present: Senator Specter.
OPENING STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM
THE STATE OF PENNSYLVANIA
Senator Specter. Good morning, ladies and gentlemen. The
Judiciary Committee hearing will now commence on the subject of
how to combat the financing of worldwide terrorism.
With last night's passage by the U.S. Senate of homeland
security, we have again signaled the determination of the U.S.
Government to fight terrorism worldwide. We face enormous
threats, as it is well-known from the cataclysmic events of
September 11th, and the U.S. Government is in pursuit of Al-
Qaeda around the world. Al-Qaeda cannot function unless it is
well-financed.
There are other major terrorist organizations, such as
Hamas and Hizballah, and there again it is a matter of
financing. The U.S. Government has taken steps to deal with our
allies, our friends, and some who are not our allies and our
friends, to try to stop the financing of terrorism.
We will hear testimony today about what has been undertaken
with a trip in mid-October by a key Federal official to Europe
to talk to our European allies about stopping money laundering
and stopping the financing of terrorism. We are going to hear
testimony about a successful criminal prosecution involving
Hamas, and we are zeroing in on Hizballah and all other
terrorist organizations.
Our hearing today is going to focus on an issue which has
not received much attention, if any, and that is the potential
criminal liability of individuals who contribute to Hamas or
any other terrorist organization, where those organizations are
involved in terrorism which results in the death of Americans.
In 1986, Congress passed the Terrorist Prosecution Act
which makes it a Federal offense to assault, maim, or murder an
American citizen anywhere in the world. In 1984, the United
States exercised what is called extra-terrestrial jurisdiction
on hijackings and kidnappings.
Customarily, a criminal prosecution is brought in the
jurisdiction where the incident occurred. But there is
international law and international support for extra-
territorial jurisdiction where U.S. citizens are involved. And
with the strafing of the Rome and Vienna airports in December
1985, it was obvious that we needed new legislation, which I
had introduced and became the Terrorist Prosecution Act of
1986.
When Hamas attacked Hebrew University and killed eight
people, including five Americans, recently, one of whom was a
resident of Harrisburg, Pennsylvania, those murders triggered
the Terrorist Prosecution Act. People who contribute to Hamas,
with its being well-known that Hamas is engaged in terrorist
activities and well-known that they engage in murder, including
murders of American citizens--those individuals are subject to
criminal prosecution as accessories before the fact to murder.
I think that message ought to be a loud and clear one which
I hope these hearings will emphasize, that where it is known
that you have a terrorist organization and that terrorist
organization, like Hamas or Hizballah or Al-Qaeda or others,
has a record of suicide bombings which result in killing of
Americans, those contributors are liable as accessories before
the fact.
We have a distinguished array of witnesses today. We are
going to proceed at this time to hear from the Honorable Robert
Conrad, Jr., who is the United States Attorney for the Western
District of North Carolina.
Mr. Conrad was the successful prosecutor of 18 defendants
for operating a Hizballah terrorist funding cell in Charlotte,
North Carolina. The indictments occurred before 9/11, but the
case took on added significance as a result of what has
happened on 9/11 and since. This case was the first trial of a,
quote, ``material support to a designated terrorist
organization,'' close quote, charged in the United States.
Mr. Conrad, we compliment you on your work. We thank you
for joining us and we look forward to your testimony. As it is
the practice of the Judiciary Committee, the opening statements
will be timed at 5 minutes. We would like you to stay to the
extent possible within that time. I understand in Mr. Conrad's
case there is a video presentation, so the exception in your
case will prove the rule, Mr. Conrad.
STATEMENT OF ROBERT J. CONRAD, JR., U.S. ATTORNEY, WESTERN
DISTRICT OF NORTH CAROLINA, CHARLOTTE, NORTH CAROLINA
Mr. Conrad. Thank you, Senator, and thank you for inviting
me here. I would like to thank you, as well, for your
sponsorship of the homeland security bill which passed last
night and should be a great asset to our ability to fight
terrorism.
I have submitted for the record a summary of this
PowerPoint presentation. With your permission, I would like to
get right into it.
Senator Specter. Thank you very much. The full summary will
be made a part of the record and we look forward to your
presentation.
Mr. Conrad. Senator, this was a 4-year investigation. It
took about 5 weeks to try, and I have condensed what I can into
a few minutes here to present with you today.
At the outset, I would like to tell you and the public that
this case was prosecuted by our First Assistant U.S. Attorney,
Ken Bell, and the cooperation that he was able to coordinate
among law enforcement agencies is something that the Department
is proud of and I think the American people should be proud of.
The first slide here is just simply the badges of various
law enforcement agencies who cooperated together in the pursuit
of the Hizballah terrorist cell in Charlotte. It goes from the
State and local level to the international level, and it stands
for the position that it is amazing what can be accomplished
when no one cares who gets the credit.
There were prosecutorial challenges in this case that we
didn't face in other cases. The use of confidential sources is
something that all criminal prosecutors deal with, but in this
connection the sources that we used--we had to protect their
lives and the lives of their families. And so it influenced
everything we did in the case, from charging decisions to the
way we structured search warrants, and it was a significant
prosecutorial challenge.
Of course, we did utilize evidence obtained through the
FISA Act, and it is amazing what kind of difference a day can
make. Sitting here talking to you today, we now have a FISA
structure that was unavailable to us when we started this
investigation. And had we had then what we have now, I think we
would have learned of earlier and been more effective in our
pursuit of Hizballah in Charlotte.
We also obtained great cooperation from the Canadian
Intelligence Service. We learned that they had electronic
surveillance of a Hizballah procurement cell in Canada with
ties to our group in Charlotte, and over time we utilized
evidence that they had obtained in their country.
The CIPA Act provided for protection of classified
information, and fortunately by the time we got to trial the
information we relied upon at trial was declassified. But we
were prepared to jump through the CIPA hoops for judges and
defense attorneys and other witnesses who would have access to
classified information.
One of the most significant things about our prosecution is
the RICO charges that we brought against this Hizballah
terrorist cell. It was the first time in my knowledge that a
terrorist cell had been subject to prosecution under the RICO
Act.
It did a number of things for us. It allowed us to call
them what they were, and that was a Hizballah financing cell.
It allowed us to pick up acts of illegality that were time-
barred because of the length of time it took us to uncover the
illegal activity. And it allowed us to show to a jury
fundraising that dated back a number of years.
Our theory was that this group came to the country
illegally, stayed in the country illegally, stole illegally,
and then gave proceeds of stolen funds to Hizballah in the
Middle East. And we could say all of that to a jury in
Charlotte, North Carolina, as a result of the RICO charges.
Senator Specter. Mr. Conrad, where did they come from?
Mr. Conrad. Beirut, Lebanon, and various--they came to the
country, as I will lay out as we go, through various
mechanisms.
Senator Specter. And there were 18 defendants?
Mr. Conrad. Yes, sir.
Senator Specter. Were there other co-conspirators or others
involved in the plot?
Mr. Conrad. Of the 18, there were 6 that we ultimately
charged with material support, and there were other associates
of the 6 who had various levels of awareness of what was going
on. The benefit of the RICO statute is we could charge the
whole group as an association in fact and bring all 18 before
the United States district court.
Senator Specter. So this large group came from Beirut,
Lebanon, in a calculated way, coming to North Carolina,
engaging in cigarette smuggling, which was the gravamen of
their profits, and accumulated millions of dollars and funded
Hizballah?
Mr. Conrad. Yes, sir. You have succinctly summarized our
case.
Senator Specter. Well, you wonder on that kind of an
operation from Beirut, with that many people going to a town in
North Carolina on that kind of a scheme and plot, how far-
ranging their activities must be.
Mr. Conrad. I believe that if there is a Hizballah
terrorist cell in Charlotte, which was proven beyond a
reasonable doubt to the satisfaction of 12 jurors, then there
are similar cells elsewhere. And I think this is a serious----
Senator Specter. You wouldn't ordinarily expect Charlotte
to be the focal point of Hizballah activities, would you?
Mr. Conrad. You would not. We were very surprised to find
that out.
Of course, the material support statute is a great tool in
the Federal prosecutor's arsenal. It allows us to not only
dismantle a financial enterprise, but in this particular case
it allows us to seek heavy sentences for the criminal conduct
involved.
The material support charge we brought in Charlotte was the
first material support charge that was ever tried to a jury in
the country, and it is now being used in Buffalo, Detroit,
Portland, and elsewhere. One of the advantages to the material
support charge is that, upon a finding of guilty and the
application of the Sentencing Guidelines, there is a severe
sentence that is applicable as a result of that charge.
There were other significant legal hurdles that we
encountered and dealt with, but let me move on a little bit to
the facts.
What you have pictured before you is JR's Tobacco Warehouse
in Statesville, North Carolina. JR's Warehouse is the largest
wholesaler of tobacco products in North Carolina, and it was
here that this case began.
An off-duty Iredell County deputy sheriff noticed young men
coming into this warehouse and buying bulk quantities of
cigarettes with bags full of cash, and then he observed them
putting those cigarettes into a van and heading north on I-77.
Now, the only thing north of Statesville on I-77 is Mount
Airy, the home of Andy Griffith, and a State line. And once
that van crosses a State line, a Federal felony is committed.
This deputy sheriff was alert enough to recognize this
suspicious activity and contact his friends at the ATF. The ATF
began a cigarette investigation as a result. Basically, the
investigation began in July 1996, and the surveillance led to
the identification of a Lebanese cigarette-smuggling
organization.
The nature of this case was that in North Carolina,
cigarettes are taxed at a 50-cent-per-carton rate and no tax
stamp is applied to those purchases. In Detroit, Michigan, the
cigarette tax is $7.50 a carton, and so this provided the
economic incentive to purchase bulk-quantity cigarettes in
North Carolina and smuggle them for resale in Michigan.
Our evidence showed that these co-conspirators averaged
about $13,000 per van load, that they made approximately three
to four van trips to Michigan a week, and that all told they
purchased approximately $8 million worth of cigarettes and made
a profit of between $1.5 and $2 million.
Now, the difficulty with the case was that we were sitting
in Statesville, North Carolina, a rural community, and any
juror who sat on this case would have actually benefited from
the illegal activity of these co-conspirators. They were, after
all, paying retail sales tax on these purchases. The loss was
in Michigan, where the tax there was avoided by this illegal
activity. So at this point there was a real question as to the
jury appeal of a case like this.
What happened was that about this time in the investigation
when charging decisions on the cigarette case were made, the
FBI walked in with news that they had, through their
intelligence investigations, discovered a Hizballah terrorist
cell. They showed us a series of pictures that are represented
here, and what was interesting about this is that each of these
people pictured, whom the FBI had identified as being involved
in a terrorist financing cell, were also our cigarette
smugglers. And this case ceased to be about cigarettes and
became about Hizballah. But these were intelligence sources,
not sources we could use in a criminal case without burning
those sources, and so a criminal investigation began on
Hizballah.
Senator post 9/11, people tend to forget who Hizballah is,
in the wake of the attention focused on Al-Qaeda. But we didn't
forget. Senator Graham, of the Senate Intelligence Committee,
just last spring referred to Hizballah, not Al-Qaeda, as the A
Team of terrorism. Imad Mugniyah, in contrast to Osama bin
Laden--he said that Mugniyah made Osama bin Laden look like a
school boy.
Hizballah is responsible for the Marine barracks bombing in
Beirut in 1983 that killed 241 Marines, 6 months after they
blew up the embassy in Beirut. They were responsible for the
skyjacking of TWA flight 847 and the shooting death of a United
States Navy diver who was dropped on the tarmac, and they were
responsible for a series of kidnappings in 1980, including
Terry Anderson, and CIA Station Chief Buckley, who was tortured
and murdered. This is the group that we were confronted with in
Charlotte, North Carolina.
Senator Specter. And they continue to the present time, Mr.
Conrad, to practice terrorism on the southern Lebanon border
going into Israel.
Mr. Conrad. Yes, sir.
Senator Specter. And they are reputedly financed by Iran
and assisted by Syria, so they are a very formidable force.
Mr. Conrad. One of the things that we did in this
investigation is we executed 18 search warrants of residences
of the people we identified as being part of this RICO
enterprise. And at the residence of Mohamad Hammoud, the main
target of this investigation, we uncovered this video.
The scene you are about to see is from that video from the
house of Mohamad Hammoud and it depicts members of the martyr
squad from Hizballah taking an oath.
[Videotape shown.]
Senator Specter. Now, what is this a picture of, Mr.
Conrad?
Mr. Conrad. This is a video taken from the home of Mohamad
Hammoud and it depicts members of a martyr squad taking an
oath.
Senator Specter. Who took the video?
Mr. Conrad. We don't know who took the video. We found it
in the home of Mr. Hammoud.
Senator Specter. It was taken there, not knowing that it
would be subject to seizure and observation by law enforcement
officials?
Mr. Conrad. Yes, sir, and quoting from the trial testimony,
the translator translated what you just heard from the
secretary general of Hizballah saying, ``We will answer the
call and we will take an oath to detonate ourselves, to shake
the grounds under our enemies, America and Israel.'' And then a
group responds, ``We will answer to your call, Hizballah. We
will answer to your call, Hizballah.''
Senator Specter. And that occurred in North Carolina?
Mr. Conrad. Yes, sir.
A second video was seized with, again, the secretary
general of Hizballah speaking to a crowd, and he is saying
``Death to America.'' And the crowd is repeating behind him,
``Death to America and death to Israel.'' The crowd replies,
``Death to Israel.''
Senator Specter. Where did that scene occur, if you know?
Mr. Conrad. It is our understanding that those were
speeches given in Beirut, Lebanon, and found in the home of
Mohamad Hammoud in Charlotte, North Carolina.
Senator Specter. Thank you.
Mr. Conrad. If I could speak briefly about the two main
targets of the investigation, Mohamad Hammoud and Mohamad Atef
Darwich, and Darwich's cousin, Ali Fayez Darwich, they came
into the United States in 1992 through Venezuela. They bought
fraudulent U.S. visas for $200. They landed at JFK, dropped the
credentials in the trash can, and claimed asylum. Their reason
for asylum was that they were being persecuted by Hizballah.
What happened after that is amazing. They were given a
hearing date and released, never to appear again.
Senator Specter. Were they granted asylum?
Mr. Conrad. They never even applied for it after that.
Mohamad Hammoud three times was denied a visa from
Damascus. At trial, he was asked why he went to Damascus for a
visa. He indicated no special reason. He was cross-examined on
the fact that he went to Damascus because Hizballah has blown
up the embassy in Beirut.
This slide is a picture of several of the convicted
defendants. Each of them engaged in marriage fraud to stay in
the country. Some of them tried three times before it finally
worked.
Approximately 500 bank accounts, credit card accounts, and
other financial accounts were examined via a Federal grand jury
subpoena and Federal search warrants. The number of aliases and
fraudulent identities in this case was simply amazing.
Mohamad Hammoud had two valid North Carolina drivers'
licenses, one in his name, one in an alias. He also obtained
other financial identities by either purchasing or being given
student accounts. People who had come to UNC-Charlotte and
other universities and gone back to Lebanon would leave their
account identifications with Mohamad Hammoud, creating an
adoptive identity.
His brother, Chawki Hammoud, had multiple identities, and
what is very interesting is on the far right there is a Social
Security card and an employment authorization card in the name
of Haven Shaveski. This name never came up in the investigation
and we had expert testimony at the trial that the fact that you
would have an identification never used was perfect terrorist
trade craft, that you would have an identity and never use it
unless, of course, you had to.
Said Harb, another co-defendant, had multiple credit cards
and identities. In fact, he had a notebook of fraudulent
identities. His theory was that if you declare bankruptcy,
every 7 years your credit is cleaned and you can start over
again. He had seven sets of false identities and his theory was
to bust out credit cards one identity per year, $150,000 or
more tax-free, and then just put that aside and 7 years later
pick it up and use it again. We caught him in the second year
of that----
Senator Specter. Is there any way for the credit card
companies or law enforcement to track that and stop someone
from these multiple identities?
Mr. Conrad. With the threat of terrorism and the
significant role that identity theft and identity fraud play in
that threat, I hope that that is a focused concentration of law
enforcement throughout the country. It is in Charlotte, North
Carolina.
A simple slide: of course, it is always nice when co-
defendants take pictures of themselves with ill-gotten gains.
We learned through the FBI that Said Harb, our cigarette
smuggler and credit card con artist, was involved in Hizballah
procurement activity in Canada. We began slowly to take baby
steps with the intelligence service in Canada and acquired
information from them over time, first for search warrants
which enabled us to look for Hizballah-related material;
second, for purposes of detention hearings, and ultimately for
use at trial, where we convinced a Federal district court judge
in Charlotte to admit Canadian Intelligence Service summaries
of intercepts as exceptions to the hearsay rule in the trial of
this case.
Here are a few of those intercepts. In the first one----
Senator Specter. What was the basis for the exception to
the hearsay rule? That sounds like a pretty sophisticated
ruling, having tried a few of those cases myself.
Mr. Conrad. It was two-fold. One was the public records
exception. The Canadian Intelligence Service is actually a
public agency whose stated purpose under law is to perform
surveillance of this fashion, and we were successful in making
that argument.
Senator Specter. And what was the quality of the
cooperation by the Canadians?
Mr. Conrad. It was outstanding ultimately, slow at first,
some degree of reluctance to share information with American
prosecutors that maybe they hadn't shared with the RCMP in
cases before. But their cooperation with us was outstanding.
The second theory was past recollection recorded. We were
prepared to bring down the operators of the surveillance
equipment in light disguise to testify at trial at one point
when these things were fresh in their minds that they recorded
in the fashion that they did. And once the judge admitted that
and was going to permit us to let them testify in light
disguise, the defendants stipulated to the admissibility of
these intercepts.
One of the defendants who is still a fugitive is Mohamad
Dbouk. Mohamad Dbouk is such a major player in the Hizballah
organization that on five separate occasions, his application
to be a martyr was rejected. Hizballah is such an organized
terrorist group that they actually have application forms for
martyr duty. Dbouk applied five times----
Senator Specter. Application forms for martyrdom?
Mr. Conrad. To be a martyr.
Senator Specter. That is a special application?
Mr. Conrad. Yes, sir, and he was rejected five times
because of his significance to this organization.
Senator Specter. What are they looking for? What are the
qualifications to be a martyr?
Mr. Conrad. I don't think there are a whole lot of
qualifications to be a martyr.
Senator Specter. Why was he turned down?
Mr. Conrad. I think when you are qualified, they don't want
you to be a martyr. He was such a significant player that they
would rather get other people other than him to perform that
role.
Senator Specter. Too important to be a martyr?
Mr. Conrad. Yes, sir.
Senator Specter. But you say separate application forms?
Mr. Conrad. Yes, sir.
Senator Specter. Like applying for a job or applying to law
school or medical school?
Mr. Conrad. Yes, sir. That is what our investigation
revealed.
Senator Specter. Do you have a copy of such an application?
We would like to put one in the record.
Mr. Conrad. This was human intelligence source information
to us.
Dbouk remarked in this intercept that he did not care about
anything and was committed to securing all the items for the
brothers at any cost to avoid going to hell, and to secure a
place in heaven by so doing.
Senator Specter. You might focus on that for a just minute,
Mr. Conrad. I was asked yesterday as to whether our homeland
security bill would deter Al-Qaeda, and whether the President's
activities in Prague at the NATO meeting would deter Al-Qaeda.
And I responded that Al-Qaeda and Hizballah and Hamas are
motivated by deep religious views and are, as you have noted,
searching for a place in heaven.
I think it would be useful if you would expound on that
just a little bit as to the kind of an enemy you are dealing
with here and how ruthless and how dedicated and how determined
they are.
Mr. Conrad. I agree with that assessment of the seriousness
of their motivation, and it is unlikely that the threat of
criminal prosecution would deter their violent acts. However, I
think a successful criminal prosecution would disrupt their
organized violent activities.
Senator Specter. And incarceration would disrupt their
criminal activities.
Mr. Conrad. Yes, sir, and that was our goal.
This next intercept involved a communication from Mohamad
Dbouk to Hassan Laqis, the head of procurement for Hizballah.
Dbouk tells Laqis that he is ready to do--near the last
sentence, ``I am trying to do my best to do anything you want.
So, please, you must know that I am ready to do anything you or
the Father want me to do, and I mean anything.'' The Father,
our intelligence sources confirmed to us, is Imad Mugniyah, the
most serious terrorist in the Hizballah organization.
This is a lengthy intercept, the significance of which is
that Mohamad Dbouk, in the course of discussing life insurance,
refers to a person who might, in a short period of time, go for
a walk and never come back.
Senator Specter. Mr. Conrad, you might explain why some
part of the sheet is blacked out, the redactions, for those who
are unfamiliar with FBI reports.
Mr. Conrad. Yes, sir. We have presented both at trial and
before you today a declassified version of the intercepts that
were shared with us both by the Canadian Intelligence Service
and as a result of our FISA warrants.
This next intercept is a conversation between a fugitive
defendant and Mohamad Dbouk in which they talk about Imad
Mugniyah. Dbouk says he knew who Imad was. ``Amhaz inquired if
Imad was working with the young men,'' believed a reference to
Hizballah members such as Laqis. Dbouk revealed that Imad was
the whole story.
And then in the next intercept, just talking about Imad
Mugniyah was a terribly dangerous thing to say. Amhaz asked why
Dbouk said what he said and Dbouk answered, ``Would anyone
bring up Imad's name possibly as being associated with Imad
here in Canada or in any other country and stay alive?''
Quickly, on the next slides, our source information was
telling us that one of the members of the Charlotte cell was
going up to Canada to get false drivers' licenses and false
credit cards, and the method of transfer was that these false
documents were put in a cigarette package.
It was greatly appreciated by us when CIS shared
information with us and showed us a series of photographs of
our defendant from Charlotte in Canada taking, first, a credit
card out of a cigarette pack and then a driver's license--an
amazing corroboration of the human intelligence information we
were getting.
Senator here are some of the things charged in the
indictment that were procured by this criminal activity and the
subject of expert testimony in our case as to their dual-nature
use by a terrorist organization: night vision devices;
surveying equipment; global positioning systems; mine and metal
detectors; video equipment; advanced aircraft analysis and
design software; stun guns; hand-held radios and receivers;
cellular phones; nitrogen cutters, which I understand are for
cutting metal underwater; mining, drilling and blasting
equipment; military-style compasses; binoculars; naval
equipment; radars; dog repellers; laser range-finders; camera
equipment.
Senator this is a picture of the main target, Mohamad
Hammoud, who was only 19 when he entered the United States via
Venezuela in 1992. We asked ourselves, how could this person
maintain a leadership role in an organization like this?
One of his main contacts is Sheikh Abbas Haraki, who is the
leader of Hizballah for all of Beirut, and much older than Mr.
Hammoud. This is a FISA intercept of a conversation between Mr.
Haraki and Mr. Hammoud. If I could take a moment to play it for
you, one of the things you will note is the affectionate tone
between the two gentlemen. This is an intercept of a
conversation in about May of 2000 as Israel is withdrawing from
Lebanon.
[Audiotape played.]
Senator Specter. Mr. Conrad, why don't you repeat what is
on the screen so the record can pick it up?
Mr. Conrad. This is the translation of a conversation
between Mohamad Hammoud and Sheikh Abbas Haraki, the leader of
Hizballah for all of Beirut, in which they are congratulating
each other on the withdrawal of Israel from Lebanon in May of
2000.
I will go quickly through some of these slides. I know I am
over time.
Senator Specter. How much longer do you expect to be, Mr.
Conrad?
Mr. Conrad. A few minutes.
These were all additional intercepts of conversations
between our group in Charlotte and others, letters or
intercepts talking about the opportunity to provide material
support to Hizballah from the United States.
Senator Specter. Any references beyond North Carolina?
Mr. Conrad. No, sir, other than the fact that one of our
individuals was working with a group in Canada and coordinating
a procurement out of Canada as well.
This is a still photo of Sheikh Haraki off a video seized
from Hammoud's house with the Hizballah flag on the podium. A
series of receipts for material support to----
Senator Specter. Speaking from Lebanon?
Mr. Conrad. Yes, sir, a series of receipts from Lebanon for
money sent to Hizballah by members of our organization in
Charlotte.
So, in conclusion, ultimately 25 individuals were charged
with, first, cigarette tracking, and later RICO wire fraud,
marriage fraud, and ultimately material support. At the moment,
there are five fugitives, four of them charged with material
support.
This is what we are dealing with, Senator. This is a home
movie seized from Mohamad Hammoud's residence. It is a picture
of his nephews in Lebanon, and the trial testimony revealed
that these two nephews were encouraged by adults to tell who
they were. And initially the children are not very responsive
and they are slapped in the face and commanded, ``Tell them who
you are, tell them who you are,'' to which ultimately the
little boy in red there says, ``Hizballah,'' age 3.
Senator Specter. They start them at a very early age.
Mr. Conrad. Yes, sir.
This is a picture of defendant Mohamad Hammoud, age 15, at
the Hizballah center with his AK standing next to a picture of
the Ayatollah Khomeini.
Senator Specter. Mr. Conrad, how do you combat that? How do
you combat indoctrination of children and teenagers?
Mr. Conrad. From the U.S. Attorney's perspective, you do
what you can with the effects of that indoctrination wherever
you can.
Senator Specter. We have to start at a much earlier phase,
and that is something that this Committee is working on.
Mr. Conrad. Senator, if I could just show you a few slides,
this is defendant Mohamad Darwich, who brought in a family
friend to say there was nothing Hizballah-related about this
group. And when asked about this photograph, he identified
Mohamad Darwich as his cousin. On cross, he was asked if
Darwich was a member of any militia and he said no, despite
this picture.
On the second picture, they asked this witness who the
person on the left was and he said, ``My cousin, Mohamad
Darwich.'' And the prosecutor, Ken Bell, said, ``Holding a
gun?'' And he said, ``Yes, holding a gun, a very big gun.'' But
this did not trigger any response that there was militia
activity by Darwich, nor did this picture. His testimony was it
is just a group of guys hanging out, nor that picture.
Senator Specter. And these pictures were taken where?
Mr. Conrad. They were taken in Lebanon and seized in
Charlotte.
These are the two principal defendants, Mohamad Hammoud and
Mohamad Atef Darwich, in Charlotte, North Carolina, and from
the Washington Monument, in a place we never wanted to see
them. We accomplished our goal of disrupting and dismantling a
financing cell in Charlotte. Whether we did more is anybody's
guess.
Thank you, Senator.
Senator Specter. Well, that is very impressive, Mr. Conrad.
It speaks for itself and it raises the immediate question, if
this is going on in Charlotte, North Carolina, involving
millions dollars in smuggling on a plot coming out of Beirut,
what is happening in other places in the United States? This is
a matter which requires very intensive investigation.
What was the result of the trial?
Mr. Conrad. The result of the investigation is that 18
people have pled or been found guilty.
Senator Specter. Have they been sentenced?
Mr. Conrad. They await sentencing in most every case.
Senator Specter. What do the guidelines call for?
Mr. Conrad. With a material support charge and a 12-level
enhancement under the guidelines, and also a criminal history
category 6 which is triggered by this kind of conviction, the
judge can throw away the key. The statutory maximum, however,
is only a 15-year statutory maximum, and that might be one
thing that the Senate should look at.
Senator Specter. Do you think we ought to reevaluate the
sentencing there for tougher prison terms?
Mr. Conrad. If the guidelines trigger a 30-year-to-life
sentence but a defendant can only get a 15-year sentence as the
result of a statutory maximum, perhaps that is something for
you to consider. In this case, we have box-cared 40-some
charges.
Senator Specter. We will take a look at that. That is the
purpose of the hearing to see if the penalties are adequate.
Mr. Conrad, when you talk about people in Lebanon, and you
showed pictures of planning, conspiracy, incitement to
violence, what action would you recommend as to those people?
American citizens have been murdered as a result of
Hizballah activities. You had the Marine barracks, which you
have already identified, in 1983. You had the man thrown out of
the airplane on the tarmac, a most brutal killing in connection
with hijacking.
Could you give us some idea as to how many murders
Hizballah has been involved in involving Americans, United
States citizens?
Mr. Conrad. I think prior to 9/11, they were responsible
for more murders of United States citizens than any other
terrorist organization known to us.
Senator Specter. And a good many of those occurred after
1986, so they would be subject to the Terrorist Prosecution
Act, with jurisdiction attaching as of that date.
Mr. Conrad. Yes, sir. One of the hopefully significant
things of this investigation--there are four people charged
with material support who are fugitives, one in Canada, and
three we believe are living in Lebanon. We would love to bring
those people someday before a court of justice in the United
States.
Senator Specter. Well, the United States is moving against
Al Qaeda key people. You saw what happened in Yemen not too
long ago, with military action taken against Al-Qaeda key
figures. Would you recommend that for Hizballah key figures
outside the United States?
Mr. Conrad. Yes, sir, and I hope that extradition efforts
and other rendering efforts might someday be fruitful here.
Senator Specter. It is pretty hard to extradite from
Lebanon.
Mr. Conrad. And Canada.
Senator Specter. But it is possible to do other things in
Lebanon.
Mr. Conrad. Yes, sir. At the very least, the world has
become a smaller place for those individuals.
Senator Specter. You mentioned FISA, the Foreign
Intelligence Surveillance Act. Have you had an opportunity to
study the lengthy opinion of the appeals court that was handed
down 2 days ago?
Mr. Conrad. I am not posing as an expert in that area, but
I have read that decision.
Senator Specter. Well, it is a very far-reaching case. It
goes back and disagrees with circuit court opinions which had
concluded that the primary purpose had to be intelligence-
gathering, and picked up the legislative history and noted the
intertwining of foreign intelligence and criminal conduct.
There have been concerns raised about the civil liberties
point of view which are legitimate concerns, and the court said
you could not use the Foreign Intelligence Surveillance Act if
there is only criminal activity. But if there is an
intertwining, then law enforcement does have a legitimate role.
This Committee is going to do some hearings on that. It is
a very, very important subject. The courts had interpreted the
Foreign Intelligence Surveillance Act to say the primary
purpose had to be intelligence-gathering. In the legislation
last fall, the so-called PATRIOT Act, the Congress changed that
to ``significant purpose.''
The Justice Department has argued that if foreign
intelligence-gathering is significant, then the primary purpose
can be law enforcement. The court didn't go quite that far, but
I would be interested in your views at a later date as to how
the interpretation by the appellate court would have affected
your work. That case may well yet end up in the Supreme Court.
Mr. Conrad. Yes, sir.
Senator Specter. Well, Mr. Conrad, we thank you for the
very impressive job you have done here. To take a criminal
prosecution as complex as this from beginning to end--I know
from my own experience how difficult it is and it is a great
result. And perhaps an even greater result is putting the
American people on notice as to how far-reaching Hizballah's
tentacles are. If they go to Charlotte, North Carolina, watch
out.
Mr. Conrad. Thank you, Senator.
Senator Specter. Thank you very much, Mr. Conrad.
[The prepared statement of Mr. Conrad appears as a
submission for the record.]
Senator Specter. We turn now to our panel No. 2: Mr. James
Gurule, Under Secretary for Enforcement, Department of the
Treasury, and Mr. David Aufhauser, General Counsel for the
Department of the Treasury.
Mr. Gurule traveled to Europe very recently, in mid-
October, to provide several European governments specific
information on selected high-impact targets so that they could
be designated ``terrorist financiers'' and have their assets
blocked.
Those involved reportedly were wealthy Saudis with assets
in Europe who provided financial support to Al-Qaeda. That is a
major, major problem about the Saudis financing Al-Qaeda,
something that has to be looked at very, very hard.
Mr. David Aufhauser is General Counsel to the Department of
the Treasury and has a key role as chairman of the Interagency
Task Force on Terrorist Financing, which comes under the ambit
of the National Security Council.
So you men are right in the center of high-level efforts to
block terrorist funding.
Mr. Gurule, I understand this is your first appearance to
testify in a congressional hearing on these important subjects.
We thank you for coming and look forward to your testimony.
STATEMENT OF JIMMY GURULE, UNDER SECRETARY FOR ENFORCEMENT,
DEPARTMENT OF THE TREASURY, WASHINGTON, D.C.
Mr. Gurule. Thank you, Senator Specter, for holding this
important hearing, and thank you for inviting me and my
colleague, David Aufhauser, who you stated is the General
Counsel of the Department of the Treasury.
I would like to take a few minutes of my opening statement
and discuss the actions that the Treasury Department has taken
to identify, to disrupt and dismantle the financial networks
that are supporting Al-Qaeda and other terrorist groups.
It is also a pleasure to be here today with United States
Conrad, from the Western District of North Carolina. As you
have heard, he has been involved in a very important and
cutting-edge terrorist-related case that involved extensive
interagency, international cooperation. I am particularly
pleased with the contributions that Treasury law enforcement
made, specifically the ATF and IRS CI.
I would also like to thank you and this Committee for the
important work that you have done, the tools that you have
given the Treasury Department in the form of the USA PATRIOT
Act. We have been actively involved in implementing the
regulations, publishing the regulations to implement the
legislation, and to actually utilize these important
provisions.
What distinguishes the Department of the Treasury and its
operational law enforcement components is the Department's
unique resources and extensive financial investigative
expertise, and want to emphasis there ``financial,'' which has
been developed over decades. These resources come from many
Treasury law enforcement agencies, including the Customs
Service, the Secret Service, FinCEN, IRS CI, the Office of
Foreign Assets Control, and other important Treasury offices.
The Treasury Department is also in a unique position to
leverage its relationships with domestic and foreign financial
institutions and foreign finance ministers in the war against
terrorist financing.
Treasury's focus is both systemic and financial. We are
looking at systems, ways, methods that terrorists use to raise
and to move money globally, both through traditional financial
systems, banks, but also through non-traditional mechanisms
such as charities, hawalas, bulk-cash smuggling, and we have
seen, in addition, trade-based money laundering.
We follow the money through these systems to identify
targets through public designations, the blocking actions that
we have taken, regulations, and investigation. Through these
means, we are able to cripple terrorist access to these formal
and informal financing channels.
Our strategy is comprehensive and it is long-term. The
President has stated repeatedly that this is a long-term
effort. He is committed to combatting terrorism for the long
term, not only in the form of Al-Qaeda, but other terrorist
groups that threaten freedom and democracy around the world.
This strategy focuses on seven areas: first, targeted
intelligence-gathering; second, freezing of suspect aspects;
third, law enforcement investigative actions; fourth,
diplomatic efforts and outreach, if you will, quiet diplomacy;
fifth, smarter regulatory scrutiny; sixth, outreach to the
financial sector, looking for ways to establish important
partnerships with the public sector, with the government and
the private financial sector; and, last, capacity-building for
other governments in the financial sector to ensure that their
regulatory systems are not vulnerable to money laundering and
terrorist financing.
Let me speak first to the value of the designation process.
This is clearly the most visible and immediately effective
tactic of our comprehensive strategy. This has been to
designate and block the accounts of terrorists and those
associated with financing terrorism.
In fact, just yesterday the United States designated the
Benevolence International Foundation and two sister entities in
Canada and Bosnia, and submitted these names to the United
Nations Sanctions Committee for worldwide designation. So we
are taking action to designate terrorist financiers and cutoff
their access to U.S. financial institutions, but at the same
time work with the international community so that the
international community can take action to cutoff their access
to foreign banks throughout the world.
I believe that this effort to date has been a very
successful effort. It has resulted in the designation of 250
terrorist-related individuals, terrorist financiers and
entities, and it has resulted in the blocking of over $113
million in terrorist-related funds globally.
Senator Specter. 113?
Mr. Gurule. $113 million, Senator.
Senator Specter. Terrorist funds have been seized, blocked?
Mr. Gurule. Have been blocked. The effect of this is that
$113 million have been prevented from going into the hands of
terrorists and terrorist organizations for use to finance
future terrorist acts.
Let me just make one last point. I realize that my time is
short, but I think it is important to emphasize that the
effectiveness of these designations cannot and should not be
measured strictly by the number of terrorist-related
designations and the amount of money blocked. I mean, obviously
this is important, but it is not the principal goal and
objective.
More important than these numbers is the disruptive and
deterrent effect that the designation process has on the actual
and potential terrorist financing networks. Specifically, these
designations advance global interests in suppressing terrorist
financing by the following--and then I will conclude--first, by
shutting down the pipeline by which designated parties move
money to support terrorism; second, by informing third parties
who may be unwittingly financing terrorist activity of their
associations with supporters of terrorism; third, by deterring
undesignated parties that might otherwise be willing to finance
terrorist activity; next, by exposing terrorist financing money
trails that may generate important investigative leads that
will assist the U.S. Government in identifying terrorist cells
in this country and abroad; fifth, by forcing terrorists to use
more costly and informal means to move money, and riskier means
to move money, in essence, to move them out of their comfort
zone and cause them to use less proven methods of moving money
such as bulk-cash smuggling; and then, last, by supporting our
diplomatic effort to strengthen other countries' capacities to
combat terrorist financing.
Finally, let me just comment that, for me, over the last
year-plus that I have been involved in this undertaking, what
has surprised me the most is the extent to which charities are
being used to raise money and to move money to support
terrorist activities.
To date, the U.S. Government has designated 15 Islamic
charities that are connected to terrorist financing, and we
have blocked internationally approximately $20 million in
terrorist-related funds, and domestically a little over $8
million of terrorist-related funds.
With respect to my trip, I would just add that I was in
Europe last month. I visited five countries in 5 days. Three of
those countries represented important international financial
centers. I visited Switzerland, Liechtenstein and Luxembourg to
meet not only with the finance ministers of those countries,
but also to meet with the bankers associations to talk to them
about ways in which we can enhance our efforts and make it more
difficult for terrorists to access foreign banks and move
money.
I also had an opportunity to travel to Copenhagen and to
Stockholm. When I was in Copenhagen, my purpose there was to
meet with the Chair of the EU clearinghouse. The EU has a
clearinghouse process that is similar--there are some
significant differences, but similar to the U.S. process of
designation of terrorist financiers and entities. There, the
concern was how to make the EU process more agile, more
efficient, more expeditious in terms of designating terrorist
financiers by the EU.
Then, last, with my visit in Stockholm, it was to meet with
the incoming president of FATF, the Financial Action Task
Force. In June of 2003, Sweden will assume the presidency. We
have been working very closely that important multilateral
organization to establish international standards against
terrorist financing.
So with that, again let me thank you for this important
hearing and I am happy to respond to any questions that you
might have, Senator.
[The prepared statement of Mr. Gurule appears as a
submission for the record.]
Senator Specter. Thank you very much, Mr. Gurule. I will
have some questions, but first I want to turn to Mr. David
Aufhauser, General Counsel at the Department of the Treasury.
Welcome, Mr. Aufhauser. We look forward to your testimony.
STATEMENT OF DAVID D. AUFHAUSER, GENERAL COUNSEL, DEPARTMENT OF
THE TREASURY, WASHINGTON, D.C.
Mr. Aufhauser. Thank you, sir. I have a very brief
statement if you would like to hear it.
Senator Specter. I would.
Mr. Aufhauser. I have done a little less traveling than the
Under Secretary, but I was in Cambridge, England, on September
11th of 2001, and I was attending an international conference
on money laundering and it was populated by a lot of luminaries
in the field--judges, chief judges, the head of Interpol, the
head of Europol, and a few general counsels.
Although it was a pretty sober affair, it was also an
affair of some self-congratulation because we had made over two
decades of work on money laundering some advances on a pretty
bedeviling, taxing problem. We had elaborate computer screens,
we had predictive models, we had profiles of conduct, we had
some captures, we had some indictments, we had some
forfeitures, all suggesting that we were making some gain on a
pretty tough issue.
The disintegration of the World Trade Center silenced
everybody in Cambridge. It was a crowd of 400 people who prided
themselves on the badges that they wore. And like most of you
in this room, time and time again, in an audience of 400, we
watched the building fall.
The silence wasn't just a demonstration of the awfulness of
what we were watching. What it was, I think--and I might be
projecting here, but what I think it was also was a realization
by the professionals in the world that chase and hunt money
that perhaps we had been looking at the world through the wrong
end of a telescope, and that the priorities were changing
before our eyes.
Instead of the priority of worrying about illicit money
being cleansed and finding a place for concealment and hiding,
what we really had to turn to and focus on, and perhaps had not
properly focused on earlier in time, was trying to capture
clean money that was spirited around the world intended to
kill.
The next morning, they put me on a military jump seat and
flew me home, and I thought that the Treasury Department,
particularly the general counsel of the Treasury Department,
would do the orthodoxy, which is to make sure we collect our
tax revenues, make sure we sell our bonds, and then ship all
the money across the river to the Pentagon to conduct a war.
But this is anything other than a common war and it
requires a pretty unorthodox way of going about things. It is
actually shadow warfare. That is a term that we have heard, and
the primary source of the stealth and the mobility of the
conduct of the war is money and it is money that fuels the
enterprise of terror.
It also happens to be, fortunately, its Achilles heel. It
leaves a signature, an audit trail, and that audit trail
proves, in my judgment, to be the best single means of
identification and prevention and capture. Indeed--and this was
alluded to earlier by the testimony of the Under Secretary--
much of the intelligence that we gather in this war is suspect.
It is the product of treachery and deceit and interrogation and
bribery and listening and trying to read encrypted talk.
But books and records that are not intended for public
oversight to do not lie; they are literally the diaries of the
enterprise of terror. That is kind of a melodramatic statement,
but I don't actually think it is possible to overstate the
importance of the war campaign against terrorist financing. You
can stop the killing if you can stop the flow of money.
I also don't want to understate the difficulty of the
chore. Ours is a deliberately open and porous economy, and the
ways to game it are near infinite. Moreover, the problem is
international in scope. The overwhelming bulk of the assets
that we seek to freeze, the cash-flow that we hope to slow, and
the records that we hope to audit are beyond the oceans that
surround us. To act alone would justly invite criticism.
So once I returned to Washington, Secretary O'Neill and the
Treasury team set about to craft an ambitious program of a
campaign against terrorist financing and it consists, as the
Under Secretary has already stated, of a number of steps.
The first is an executive order that raises the standards
of conduct and due diligence of financial intermediaries, and
explicitly targets even unwitting underwriters of terror for
the seizure of their assets.
The second is U.N. Security Council resolutions that mirror
the same and criminalize terrorist financing. The third is more
scrutiny at the gateways of the U.S. financial markets under
the PATRIOT Act.
The fourth is extensive public diplomacy to champion the
need and the wisdom for international vigilance. The fifth is
engagement of central bankers and finance ministers in the
private pursuit of terrorist funds. And the sixth is outreach
to the private sector for assistance in the identification,
location, and apprehension of terrorists and their bankers.
Much of that effort is overseen by a policy coordinating
Committee which the Senator referred to, established by the
National Security Council which I chair. Although we all have
feet of clay, as best as humanly possible, it is one Government
working in concert, sharing their intelligence resources to
fight the campaign against terrorist financing.
But the task remains unusually daunting. The material
issues that face us include and insatiable appetite for
actionable intelligence, which I know you know a great deal
about, sir; increasing demands by coalition partners that we
share the intelligence; and, frankly, a chorus of competing
voices that risks confusion of our message.
As the Under Secretary said, this is not just a box score
game. Only a small measure of the success in the campaign is
counted in the dollars of frozen assets. The larger balance is
found in the weariness and the caution and the apprehension of
donors; in the renunciation abroad of any immunity for
fiduciaries and financial intermediaries who in the past would
have sought refuge in notions of benign neglect and
professional discretion rather than in vigilance; in pipelines
that we know have gone dry; in the flight to old ways of value
transfer, like gold bullion and precious gems, rather than
digitized electronic commerce, and the ability for us to focus
our resources on those avenues of last resort for value
transfer; and, finally, in the gnawing awareness on the part of
those who have banked terror in the past that the symmetry of
the borderless war that they have declared now means that there
is no place to hide the capital that they are underwriting
terror with.
I have one last point, with your permission. It is a short
story, but I think it is pretty instructive of how we go about
things. The Federal Reserve Bank in New York abuts the
perimeters of the World Trade Center. It is an imposing and
impregnable building, and it is the nerve center of the
execution of U.S. monetary policy.
It also literally houses the wealth of nations. Buried deep
in the vaults of the New York Fed is the wealth of nations--$63
billion worth of gold reserves of hundreds of countries. It all
had to be abandoned for the first and only time in history when
the----
Senator Specter. You say $63 billion in gold reserves?
Mr. Aufhauser. Yes, sir, in gold bullion reserves.
It all had to be abandoned when the World Trade Center
collapsed. The structural integrity of a third building, World
Trade Center 7, was threatened by an inferno burning in the
center of it, and the prospect of its toppling recommended
evacuation for the New York Fed.
Now, this was a first for the fortress-like Fed, as I told
you. My counterpart, the general counsel up there, Tom Baxter,
who is a member of my Committee, by the way, sir, raced through
the building, assuring himself that each and every one of his
colleagues was out safely.
Once satisfied, Tom prepared himself to descend the steps
of that rather majestic building. There was a palpable sense of
urgency. The World Trade Center was still smoldering and there
was the risk of the third building toppling. Police sirens were
blaring and the Fed's own police were urging Tom to run down
the stairs.
But, first, he turned to lock the door, only to recognize
it doesn't lock from the outside. $63 billion of gold in an
open building and the last man out, so Tom hesitated. He
thought of all the alternative ways of returning and winding
his way through a maze of corridors and parking lot alleys to
secure the building. But entreaties of the police prevailed and
Tom joined them and was sped to a place of refuge where his
colleagues were.
When he arrived, he immediately telephoned Chairman
Greenspan to report the good news that all employees were safe,
out, and accounted for, and evacuation had gone without
incident. The chairman had only one question: ``Tom, did you
lock the door?'' The answer, of course, was, no, we did not
lock the door and we will not lock the door. If we do that to
our financial markets, the bad guys win.
So with perfect intelligence, we wouldn't need something
like the PATRIOT Act. In that respect, it is a default
mechanism, but a badly needed one, because we don't have
perfect intelligence. Indeed, the predicate for everything we
do is actionable intelligence, sir.
I welcome the opportunity to discuss that with you perhaps
in another venue that doesn't jeopardize operations and sources
and methods and the like, but I will try to be as responsive as
I can be this morning to any questions you otherwise pose.
Thank you, sir.
Senator Specter. So the officials of the Fed just left $63
billion in gold unsecured?
Mr. Aufhauser. Well, actually, it is buried pretty deep in
the bedrock of Manhattan, well below the subway system, and
there is a safe.
Senator Specter. Lucky these fellows from North Carolina
didn't know about it.
Mr. Aufhauser. Yes, sir.
Senator Specter. How much would $63 billion in gold weigh?
Mr. Aufhauser. More than you and I can carry.
Senator Specter. It wouldn't take a whole lot for that.
That is quite a story, and it is enormously serious, the work
that you men are up to. I am glad to see what you are doing,
and it shows areas where we have to be very, very vigilant.
Mr. Aufhauser, when you commented about the donors and the
apprehension of them, and identification of the donors and
discouraging the donors, I think that is a very, very key
point.
Mr. Gurule talks about the charities at the outset of his
testimony, and then he talks about 15 Islamic charities. It is
true that some of those charities have traditional charitable
purposes in mind to help people, help widows, orphans, and help
the destitute. But where the dollars are intermingled with
funding terrorists, funding murderers, those donors have to be
on notice that they are culpable, that they are liable, and
that the jurisdiction of the United States attaches where U.S.
citizens are murdered.
People who make contributions, once they know--you have to
have knowledge that there is terrorist activity and there has
to be the assistance of that group, but that is pretty apparent
from the history of Hizballah, Hamas, and Al-Qaeda. Where these
donors are put on notice that they could be liable for being
accessories before the fact to murder, an accessory is equally
guilty with the principal under the law. That is the law of
accessories, so that our quest here for the donors is very well
placed and very well calibrated.
Mr. Gurule, when you made your trip--and there may be some
of this you would want to comment about in camera, in a closed
hearing, but the issue of the Saudis is a very, very big one.
We have not yet come to grips with the bombing of the Khobar
Towers from 1996, where 19 U.S. military personnel died and 400
were wounded. The FBI was thwarted from questioning the people
who were in custody.
Fourteen of the suicide bombers were Saudis. Osama bin
Laden is a Saudi. There are public reports from our
intelligence Committees about the Saudis financing Al-Qaeda.
They do so under the representation that they are charitable,
but that only goes so far. They know what Al-Qaeda is doing.
To what extent, if you can make a public disclosure, have
your activities been directed to discouraging Saudi financing
of Al-Qaeda?
Mr. Gurule. Well, I think we have made some important
progress with the Saudis on this issue, on this problem of
terrorist financing, and let me just illustrate with a couple
of examples.
In fact, in March of this year, the U.S. Government and the
Saudi Arabian government jointly designated an Islamic charity
by the name of Al Haramain. This was the Somalia and the
Bosnia-Herzegovina branches of Al Haramain. So we jointly
designated these branches of this particular Saudi-based
charity and these names were forwarded to the U.N. Security
Council for addition to the U.N. list.
As early as September of this year, the U.S. and Saudi
Arabia jointly referred to the Sanctions Committee an
individual by the name of Wa'el Julaidan, an associate of Osama
bin Laden and a supporter of Al-Qaeda, for designation and
blocking.
And perhaps even more important is the fact that we have
been working very closely with the Saudis on ways to enhance
oversight of Saudi-based charities. And one of the fruits, I
think, of our joint actions has been an oversight Committee
that was recently established in Saudi Arabia, referred to as
the Saudi Higher Authority for Relief and Charity.
This is a Committee that is making recommendation to the
crown prince of Saudi Arabia on ways to better regulate, better
control, and make more transparent these charities so they are
not vulnerable to abuse by terrorist financiers and so the
money is only going to support legitimate humanitarian efforts
and activities, not terrorism-related activities.
Senator Specter. How can that be accomplished, Mr. Gurule?
If the money goes into the charity, who can supervise the
disbursement of the funds to be sure that those moneys do not
go to terrorists?
Mr. Gurule. I think that one of the ways that they are
looking at doing this--and this again is based upon a recent
meeting, in fact, yesterday that David Aufhauser and I held
with the foreign policy adviser to the crown prince where we
discussed at some length this issue, and we are going to be
engaged in further discussions. They are looking at
establishing an oversight agency that would audit these
charities, conduct internal audits of these charities to
determine who the money is going to.
Senator Specter. Who would those auditors be?
Mr. Gurule. Well, they would be internal auditors within
the Saudi government, part of this oversight agency that would
be responsible for overseeing the activities and the
transparency----
Senator Specter. Would it be possible to structure some
international participation there? I would feel a lot more
comfortable if the Saudis weren't auditing the Saudis. We have
had some experience with auditors with conflicts of interest.
Mr. Gurule. Certainly, I can appreciate that. Well, this is
certainly something that we could raise with the Saudi
government. I think it is important, though, nonetheless to
recognize the fact that the Saudi government is moving forward.
They have recognized the problem. I think that they have
acknowledged the problem and they are taking, I think,
important steps. They may be first steps and they may be baby
steps, but they are taking steps to address the problem and
they are working with us in that effort. So that is
encouraging.
Senator Specter. Do your conversations with the Saudis
include the issue of the Saudis financing Palestinian suicide
terrorists, giving money to those individuals and their
families?
Mr. Gurule. That subject has been raised. By the way, that
subject has been raised in a broader scope with respect to our
European allies as well. When I traveled to Europe in October,
I raised at each of my stops and visits this issue that is a
vexing issue for the U.S. Government, and that is a distinction
that is often made by European countries with respect to the
military wing of Hamas, for example, and the political and the
social wing of Hamas.
They are willing to take action against the military wing
in terms of blocking and designations, but less willing,
reluctant, to take action against the social or the political
wing. The U.S. Government does not make that distinction. If
the money is going to Hamas, we do not believe that there is a
bank account for humanitarian activities and a bank account
that is being maintained for terrorist activities.
Senator Specter. Well, it is a distinction without a
difference, the political wing and the military wing. The
political wing has funds and they co-join in a body and those
funds are made available to the military wing.
Mr. Gurule. Well, we certainly believe that it supports the
infrastructure of Hamas. It directly or at least indirectly
supports the activities of Hamas, including terrorist
activities, and we are working with our allies to see if we can
move them away from that distinction and into taking more
aggressive action against supporters of Hamas and Hizballah.
Senator Specter. Well, if we come to the point where we
proceed criminally against a contributor to Hamas for being an
accessory to murder of the five Americans murdered at Hebrew
University and there is a defense that it went to the political
wing and not to the military wing, I have had a fair amount of
experience as a prosecuting attorney, a district attorney, and
that kind of an argument doesn't have much credence with a
jury. People better not try to defend themselves on the ground
that they are dealing with the political wing and not the
military wing when those funds are interchangeable.
When you said you were successful on cutting off the
funding for some $113 million, do you have any ballpark figure
as to the extent of the money that is involved here? $113
million s a very impressive figure, but obviously there is a
lot more. Is that the tip of the iceberg? Are we really dealing
with funding into the billions?
Mr. Gurule. It is very difficult to define the scope and
magnitude of the problem with respect to the funds that are
available to support terrorism. I think the fact that we have
blocked, frozen, if you will, $113 million is significant, but
I think it is even more significant that we have been able to
cutoff important channels of funding, and specifically
financial networks like Al Barakaat.
With respect to Al Barakaat, an organization that we
believe has tentacles, if you will, that reach as many as 40
countries around the world, on the one hand when we designated
Al Barakaat in the United States back in November of last year,
we blocked just a little over $1 million. But more importantly,
we basically dismantled that network for moving money.
In the process, we cutoff a channel that we believe had
been moving as much as $20 million or more a year to support
the UBL and Al-Qaeda. So, again, sometimes the money itself,
the amount of money that has been blocked does not tell the
true story, the full story of the effect and the impact of our
actions.
But to be more direct and responsive to your question, I
can't give you a precise figure as to the amount of money that
is out there that is available.
Senator Specter. But we are dealing with large sums.
Mr. Gurule. Huge sums.
Senator Specter. If you intercepted $113 million, you can
speculate or estimate it is many, many times that.
Mr. Gurule. That is fair. I would agree.
Senator Specter. Mr. Gurule, do you need any more
legislation on the freezing of assets? Is there anything we can
do for you here to start some legislation through to help you?
This is the right place to come.
Mr. Gurule. Thank you, thank you, and we appreciate your
support. The PATRIOT Act has been very valuable, provided us
some very valuable tools. Just recently, Deputy Secretary Ken
Dam established a USA PATRIOT Act task force. This is a task
force that Mr. Aufhauser and I, as well as Under Secretary
Taylor and Under Secretary Fisher, serve on. It is chaired by
the Deputy Secretary and its purpose is to evaluate the
effectiveness of the PATRIOT Act provisions and come back to
Congress and ask for any amendments, any changes as we identify
them.
Senator Specter. Well, we are very interested in responding
to your needs. It took us a little time to get the homeland
security bill. Senator Lieberman and I introduced on October
11, 1 month after 9/11, and it took too long and it was touch
and go up until the last minute. The House of Representatives
last Wednesday passed a bill which was materially different
from the bill that we had expected, and when you go to the fine
print many of us were very unhappy with a great deal of what
was in the bill. They say that you don't like to see either
sausage or legislation made, but that bill bordered on giving
sausage a bad name. It was a very tough matter.
Mr. Aufhauser. Can I take you up on your offer and give you
some ideas?
Senator Specter. Sure. I made it to you as well, Mr.
Aufhauser.
Mr. Aufhauser. We actually have a bill up here right now.
When we name a charity such as Benevolence or Global Relief or
Holy Land as a terrorist organization under the executive order
and IEEPA, its 501(c)(3) status continues in place and we have
to go through a rather elaborate procedure at the IRS to revoke
that license and the revocation proceedings threaten to expose
important information.
So we have asked Congress, and it has been passed by the
House and I think it is--I must confess I don't know if you are
still in session today, but if not this lame duck session, then
in January we have asked for a very simple amendment to the
Internal Revenue Code which would say that when we name a U.S.
domestic charity as a terrorist organization, its 501(c)(3)
status is suspended and/or revoked. So that is issue one. So
that is automatic.
Second, one of the powers that you granted the Treasury
Department, in particular, under the PATRIOT Act is called
Section 311, which is the power to designate persons or even
jurisdictions, whole countries, as primary money laundering
concerns, and there are severe consequences if they are named
as such by the Secretary of the Treasury.
In those proceedings, we do not enjoy the same privileges
of keeping classified information secret that we do in IEEPA
proceedings. So we would like a parallel provision to protect
evidence so that we can present it ex parte, in camera, in
Section 311 proceedings that mirrors what you all granted us in
the PATRIOT Act with regard to the execution and the
implementation of the International Emergency Economic Powers
Act. I can put that in writing to you, too.
A third percolating thought, because I heard your question
about accessories to murder, is we want to be clearly
understood that we think those who bank terror are equally
culpable to those who commit it.
Senator Specter. Good.
Mr. Aufhauser. That is point one. That is what the Under
Secretary and I and Secretary O'Neill are about on this mission
on terrorist financing. Again, I meant it when I said if we
stop the money, we stop the killing.
Having said that, I think you know better than anyone,
having prosecuted cases--and I know from defending cases with
the likes of Brendan Sullivan and Edward Bennett Williams--that
it is difficult for you to make a case for aiding and abetting
in the absence of a knowing of specific intent of the actual
injury that is worked.
An idea that might be worth looking at by the Committee and
by your staff is borrowed from an area of law where I used to
practice, which is public welfare offenses in the environmental
area or in the food and drug area, and that is the notion of
reckless endangerment, knowing and reckless endangerment.
It is possible to get a serious felony for people who bank
something like Hamas without having to demonstrate that they
knew with certainty or beyond a reasonable doubt that it was
going to result in the death of an American. So that is another
idea that I think you could profit from looking at.
One last point, if I can, also on the Saudi issue, and I
know you didn't intend it. We are not at war with Islamic
charities. In fact, we applaud them. It is important that what
we do is not perceived incorrectly as having declared a
campaign to undercut Islamic giving and Islamic charities. It
is a tenet of their faith, as it is a tenet of most people's
faiths, that charitable giving is good and should be applauded.
We have, however, declared war on counterfeit charities,
and where it gets very, very difficult is that deliberate
strategic decisions are made by terrorists to use a charity,
frequently unwitting to the charity's fiduciaries, in a manner
to divert money because of lax financial controls and the like,
because the charities have outposts throughout the world in
trouble spots which are not well-policed.
So when we talk to the Saudi government, for example, about
more rigor in the audit and management of money that goes
through charities, it is really an exploration with them of how
to manage financial controls well so that money doesn't get
diverted.
Senator Specter. Well, I believe that it is indispensable,
as you have noted, to make the distinction between what is
really charitable work. Islamic giving and Islamic charities
are to be commended, and Islam is a great religion and we have
to avoid painting with a broad brush. We have to be very
specific. But when the distinctions are made between a military
wing and a political wing, that simply will not stand up.
Mr. Aufhauser. We are in heated agreement with you on that.
The idea that there is a firewall there is counterfeit.
Senator Specter. So that has to be pursued. From my work in
chairing the Intelligence Committee in the 104th Congress back
in 1995 and 1996, I have a lot of questions about the degree of
cooperation of the Saudi officials.
When I went and talked to the crown prince about the Khobar
Towers, it was a stone wall. And when FBI Director Louis Freeh
went there on several occasions to question those suspects--and
I have wondered whether those suspects were involved with Al-
Qaeda and ultimately with 9/11. We did not have a chance to
question them. There was a car bombing in Riyadh shortly before
the Khobar Towers was blown up.
I believe we have to press the Saudis much harder. We have
got 5,000 of our military out there in the middle of the desert
protecting Saudi Arabia. We talk about cooperation by the
Saudis in the movement by the U.N. as to Iraq and we are not
getting it. So I think it is important to be very precise in
what we are asking for, and very demanding. You have to be
fair. You have to acknowledge charities, but if it crosses the
line, we have got to be very tough about it.
I think your idea on reckless endangerment is a good idea.
At common law, if there is a reckless disregard for the safety
of another resulting in death, that is the equivalent of
malice, which supports a prosecution for murder in the second
degree. So you do not have to prove premeditation or the same
level of criminal intent on reckless endangerment, and I think
that is a good suggestion. It is good to have lawyers sit down
and talk every now and then.
Well, this has been very fruitful, Mr. Aufhauser and Mr.
Gurule. I thank you for what you are doing and we will pursue
the suggestions that you have made. I think when you talk about
the revocation of a 501(c)(3), you are talking about something
very different from detaining someone or denying someone
liberty or having a search warrant and seizing property. You
are talking about really a privilege which is given, a benefit
which is given. The Treasury Department of the U.S. Government
can determine that. We don't have to exercise excessive largess
if there is reason to pull back.
And tell that Pennsylvanian, Secretary Paul O'Neill, that
we thank you for your good work and thank him for his work.
Mr. Gurule. Thank you very much.
Mr. Aufhauser. Thank you, sir.
Senator Specter. We will now go to panel No. 3. While panel
three is being seated, I think it worth noting that other
Senators are not here today to participate in this hearing
because late last night the Senate finished its business and we
had a last vote on the continuing resolution. When the Senate
concludes its voting, there are many, many plans. Many of my
colleagues were in the air before 7 a.m. this morning.
Senator Leahy, the chairman, and Senator Hatch, the ranking
Republican, have statements which we will include, without
objection, in the record.
[The prepared statements of Senators Leahy and Hatch appear
as submissions for the record.]
Senator Specter. Senator Leahy had asked me to chair this
hearing, even though we do not have the same party designation,
because of his agreement that the hearing was important and
because of the work which I have done on the Judiciary
Committee and in law enforcement before.
We had asked the Holy Land Foundation to attend and testify
to give other points of view, a hearing, an audience, but they
declined, saying that they did not have adequate time to
prepare once the notice of the hearing was given. So we will
maintain an open record. If they wish to submit something for
the record or if they wish to be heard, we will give them an
opportunity for a public hearing at a later time.
Our first witness is Mr. Nathan Lewin, who represents the
family of David Boim, a dual U.S.-Israeli citizen who was
murdered by Hamas terrorists in a drive-by shooting in Israel.
Mr. Lewin has instituted suit against a number of charities and
has had considerable experience in the field.
We welcome you here, Mr. Lewin, and look forward to your
testimony.
STATEMENT OF NATHAN LEWIN, LEWIN AND LEWIN, LLP, WASHINGTON,
D.C.
Mr. Lewin. Thank you very much, Senator Specter. My name is
Nathan Lewin. I am a lawyer in private practice in Washington,
D.C., in a family law firm called Lewin and Lewin that I
operate with my daughter, Alyza Lewin, who is here with me
today.
I was a prosecutor with the Department of Justice many
years ago, and I practiced white collar criminal defense law
and appellate litigation. I have represented former President
Richard Nixon and Attorney General Ed Meese while he was
Attorney General in an independent counsel proceeding. I have
argued 27 cases in the Supreme Court of the United States, and
have taught at Harvard, the University of Chicago, Georgetown,
Columbia, and George Washington University law schools.
I am gratified to have received your invitation to testify
on the subject of the assessment of the tools needed to fight
the financing of terrorism because I believe I have discovered
the cheapest means from the perspective of the American
taxpayer to fight the financing of terrorism from sources
within the United States.
The principal tool for this battle is, I believe, America's
private litigators, lawyers who are ready to bring private
lawsuits at no taxpayer expense against private organizations
and individuals who provide funds to organizations that engage
in terrorist acts abroad or in the United States.
Senator Specter. Excuse me one moment. We have people in
the hall, people who have come in. You are welcome to come up
front and have seats. There is no additional charge. Anybody
who is in hallway needn't stand in the hallway. I believe that
you are all taxpayers, so we will try to provide seating for
you.
You may proceed, Mr. Lewin.
Mr. Lewin. I was saying, Senator Specter, that I thought
this was the cheapest way from the American taxpayer
perspective of deterring individuals and charities in the
United States from supporting terrorism.
I speak from personal experience. Sometime in 1997, when I
was visiting the state of Israel, as I frequently do, I was
introduced to Joyce and Stanley Boim, the parents of David
Boim, a young man who was killed by Hamas terrorists in May
1996 when he was only 17 years old.
David, who was born in the United States to American
citizen parents, was standing at a bus stop near the school he
attended when a car drove past and shot randomly at passengers
boarding a bus and others standing nearby. The killers were two
members of Hamas, the organization that immediately took credit
for the attack. One of the killers went on to be a suicide
bomber in September 1997, in the heart of Jerusalem, when he
killed seven others, including a young girl who was an American
citizen, and wounded 192, including several young American
students.
The second, the driver of the car, is named Amjad Hinawi.
He confessed when he was finally brought to trial in a court in
the Palestinian Authority in early 1997. An American State
Department representative, Mr. Abdelnour Zaibeck, witnessed the
confession and reported on it. Hinawi received a slap on the
wrist from the Palestinian court. Although he was found guilty
and sentenced to 10 years in prison at hard labor, he has been
seen walking around free in Palestinian territory.
I testified about this outrage and the inexplicable failure
of the Department of Justice to indict Hinawi and seek his
extradition in a subcommittee proceeding chaired by you,
Senator Specter, in March 1999. Absolutely no progress has been
made in the more than 3 years since that time.
There is no reason in the world why a confessed murderer of
an American student shot in cold blood while waiting at a bus
stop has not been criminally charged by American authorities
and brought to trial in an American court.
I have met with the Department of Justice three times on
this subject and have received no satisfactory explanation
whatever. And there has not been a single criminal prosecution,
Senator Specter, under the statute that you referred to that I
think you were involved in getting enacted, the Act of 1986,
which makes this a criminal act that should be prosecuted by
American authorities. Not a single person killed in Israel,
American citizen killed in Israel, has been the subject--none
of the killers of those people have been the subject of an
indictment in a United States court.
The Boims asked me then whether they had any remedy at all
under American law, and I did what maybe too few lawyers do
today and I looked at the statute books. I found that in 1991
and 1992, Congress had passed anti-terrorism laws, including
what is now 18 U.S.C. 2333, that gave American citizen victims
of such terror anywhere in the world a civil remedy, with
treble damages and attorneys' fees, against those who commit
murder or assault.
Obviously, there was no purpose in suing Mr. Hinawi, who
has no funds, if he can be found, and no funds that can be
reached for a judgment. And his confederate killed himself and
seven others in a later suicide bombing. Against whom can such
a statute be used?
Over initial objections from my then-partners, I drafted
and filed a lawsuit against those who enabled the perpetrators
to kill David Boim, the organizations in the United States that
collected funds and provided other support for Hamas in the
years preceding May 1996.
I was challenged by my partners, by friends, and other
lawyers who wanted to know why I was suing the leading Muslim
charity in the United States, the Holy Land Foundation for
Relief and Development, and others that were engaged in
purportedly charitable activities in the Middle East.
I responded that the defendants in my case, none of whom
are foreign governments or government agencies, knew that they
were also funding violence by Hamas directed against civilians.
I sued in Federal district court in Chicago, in the Northern
District of Illinois, because the United States had seized $1.4
million in a civil forfeiture action based on allegations of
money laundering on behalf of Hamas. I hoped that the Boims,
who were the victims of Hamas terrorism, would be able to reach
those funds.
Our complaint was filed on May 12, 2000. On January 11,
2001, District Judge George Lindberg denied motions by the Holy
Land Foundation and other defendants to dismiss the complaint.
I agree to the defendants' request for an interlocutory appeal
to the Court of Appeals for the Seventh Circuit because I
believed it important that the litigation's deterrence to
contributions for terrorism receive great prominence.
Briefs were filed and the case was set to be argued on
September 25, 2001, and then came September 11th. The judges on
the court of appeals, realizing the importance of the issues
they were being asked to decide, asked the Department of
Justice to file a friend-of-the-court brief. We argued the case
on September 25, and in November 2001 the Department of Justice
filed its brief supporting my argument that any organization
that contributes to a terrorist organization, with knowledge
that it engages in terrorism, is an aider and abettor of the
terrorism and is civilly liable for damages.
The Court of Appeals accepted that argument in a landmark
decision issued on June 5 of this year, which is called Boim v.
Quranic Literacy Institute and is reported at 291 F.3d 1000.
The Holy Land Foundation did not seek Supreme Court review and
we are now engaged in the discovery process.
We are fortunate to have the volunteer assistance of a
major Chicago litigation firm, Wildman Harold Allen and Dixon,
of Chicago, and specifically Stephen Landes and Richard Hoffman
of that firm, in this time-intensive discovery stage. If not,
we would not be able to continue with this exceedingly
important lawsuit. And this brings me to my recommendations for
legislative amendments that are essential to make this
deterrent to the funding of terrorism work.
First, although 18 U.S.C. 2333 provides for very
substantial damage awards, treble damages and attorneys' fees,
it does nothing to enable lawyers to pursue litigation prior to
a final judgment. I and the firms I have been with since I
began this project have invested approximately $1 million of
attorneys' time in this case. Although $1.4 million of seized
funds is sitting in the clerk's office in the Federal court in
Chicago, we have received not one penny for the heretofore
successful prosecution of this action.
The law should provide that if a plaintiff is successful in
defeating a motion to dismiss, he automatically recovers
attorneys' fees and out-of-pocket expenses from the defendants.
That will enable the private attorneys general, such as myself
and Mr. Gerson and the a attorneys who are bringing his
lawsuit, to continue to prosecute these cases to a successful
conclusion. Otherwise, well-financed defendants can exhaust a
plaintiff's lawyer in all the preliminary skirmishes that have
marked this case.
Second, funds that have been seized by the United States
from defendants in----
Senator Specter. Mr. Lewin, you are at about double time
now. Could you sum at this point?
Mr. Lewin. I will. I am coming to a conclusion.
My second point is that the funds that have been seized
should be made available for the payment of plaintiffs'
attorneys' fees whenever the plaintiffs have prevailed at the
pre-trial stages.
We sued the Holy Land Foundation. On December 4, 2001,
President Bush, Attorney General Ashcroft and Secretary of the
Treasury O'Neill announced that they were seizing the assets of
the Holy Land Foundation because they were used to support
schools and indoctrinate children to grow into suicide bombers.
Now, those seized funds are being used at a rapid rate to
pay lawyers for the Holy Land Foundation for their work in
challenging the seizure and in defending against our lawsuit.
If the litigation goes on long enough, all the money that has
been seized will be spent paying the lawyers for the Holy Land
Foundation. They have lost their challenge to a seizure in a
recent district court decision here in the District of
Columbia, where the district court held that they had
connections with Hamas, that they were actively involved with
Hamas leaders, and that they provided financial support to the
Hamas suicide bombers. Their lawyers are being paid top dollar
from seized assets. Why should not the plaintiffs' lawyers also
receive compensation for the work they have done?
Third, the law should authorize the distribution and the
availability of information that Federal prosecutors gain in
their investigations to the private attorneys general.
Prosecutors are loathe to share information. There should be a
provision that grand jury and other investigative materials
should be disclosed to private attorneys for their actions
under court----
Senator Specter. Mr. Lewin, we have that point. Do you have
any other specific points, because we are going to have to move
on?
Mr. Lewin. OK, then let me just say my two other proposals
are that the statute of limitations be amended and that causes
of action--that the theories that we have established in our
litigation be specifically provided in the statute. Aiding and
abetting, which you have spoken about, Senator Specter, should
be specified in the statute as a basis for civil liability, and
individual responsibility by individuals who contribute to
these organizations.
I thank the Committee for the opportunity to testify here
this morning in this very, very important endeavor to cutoff
what the Senator has called, and I think what everybody else
has called, stopping the money to stop the killing, to
discourage the donors. I think that is the effort that should
be made by the statutes.
Thank you.
[The prepared statement of Mr. Lewin appears as a
submission for the record.]
Senator Specter. Well, thank you very much for your
testimony, Mr. Lewin. I am very distressed that the Department
of Justice has not acted under the Terrorist Prosecution Act.
You noted the hearing we had 3 years ago that went into the
case in some detail. You have performed extraordinary service
not only to your clients, but to America in pursuing this
matter, and I will have some questions for you when we move
forward on the panel.
Our next witness is distinguished lawyer Allan Gerson, co-
counsel on a case filed by September 11th victims against the
financiers of Al-Qaeda. He was involved in representing Pam Am
103's victims' families and their claims against Libya, very
extensive experience in this field.
Thank you for joining us, Professor Gerson, and we look
forward to your testimony.
STATEMENT OF ALLAN GERSON, PROFESSORIAL LECTURER IN HONORS,
GEORGE WASHINGTON UNIVERSITY, WASHINGTON, D.C.
Mr. Gerson. Thank you, Senator Specter. I am very
appreciative of this opportunity to appear here today to
contribute to the terribly important and urgent goal that this
Committee has set for itself: assessing the tools needed to
fight the financing of terrorism.
Surely, Senator Specter, the standard by which these tools
can be assessed must in large measure revolve around the
progress that has been made in securing for the families of the
victims of 9/11 the rights guaranteed to them under recent U.S.
antiterrorism legislation. It is through these initiatives that
they seek to hold accountable those responsible for
facilitating the murders of their loved ones, and that begins
with the proposition that the root of the problem lies in the
financing of terrorism.
First, I would like to express gratitude to you, Senator
Specter, and the entire Committee on behalf of the over 3,600
individual family members that Ron Motley, my partner in this
endeavor, and I have the honor to represent. They understand
that your continuing interest and involvement in the justice of
their cause will enable them to play the important role carved
out for them in the war against terrorism.
Senator Specter, 9/11 was the work of terrorists that
preach global jihad. The mass rallies of the Nazis and the
fanning of bigotry and hatred have now been replaced by the use
of global jihad's adherence to the Internet and the click of a
computer mouse. Yet, I fear, Senator Specter, that we are still
using--and I will try to illustrate this in my remarks--
antiquated and obsolete techniques and ideas to deal with
today's threats.
The victims of 9/11 were, of course, predominantly
civilians, and yet today these families, the families of the
victims, have the capacity to strike back, but if, and only if,
their hands are not tied. They must be allowed to invoke the
full force of our laws.
As Secretary of State Powell recently noted, ``The
coalition against terrorism must advance on all fronts--
political, financial, legal and military--to root out
terrorists wherever they live and plot.'' Indeed, President
Bush almost immediately following the September 11th attacks
proclaimed, ``Our goal is to deny terrorists the money they
need to carry out their plans. Our weapons are military and
diplomatic, financial and legal.''
Today, the families of the 9/11 victims are in the front
ranks of those fighting the war on the financial and legal
fronts. Their weapon is the legal process. Their principal
target is terrorism's financial underbelly, and it is no
accident that the organized 9/11 families call themselves
Families United to Bankrupt Terrorism, for they are essentially
acting through their lawyers, as Harvard Professor Alan
Dershowitz has characterized it, as private attorneys general,
stepping in where the Government is constrained by economic and
political considerations.
In this regard, our legal team has assembled highly
experienced litigators to scour records in 13 countries on
behalf of the suit we have filed entitled Burnett, et al. v. Al
Baraka Investment and Development Corp. here in the District
Court for the District of Columbia.
The suit names over 100 defendants in a complaint that
spans 1,000 pages, with the third amended complaint to be filed
this Friday. In addition, a more recently filed case in New
York, Ashton, et al. v. al Qaeda, et al., names many of the
same defendants on behalf of approximately an additional 1,000
9/11 family members. The defendants in the Burnett suit are
primarily Saudi banks, charities, institutions, wealthy
contributors, and individuals, some of whom have very close
associations with the government of Saudi Arabia.
In this effort, we have the active assistance of the
governments of Russia, Uzbekistan, Israel, and Bosnia, to name
but a few. We have the active cooperation of the judiciary and
the government's prosecutorial arms in Spain and in Germany.
Indeed, in Germany we are preparing as I speak to appear on
behalf of the families as co-plaintiffs in a criminal
prosecution against one of the alleged 9/11 plotters, a
procedure permitted under German law. This will enable us to
see evidence that is fresh, to call witnesses, and to
strengthen our case.
For example, one of the items obtained in our global
investigatory efforts and which will be noted in the third
amended complaint which we will be filing on Friday is a
document that shows fund transfers made by the Saudi American
Bank located here in Washington's Watergate Hotel complex--
payments made to the Middle East that ultimately ended up in
Hamas's pockets for the purpose of suicide bombings in Israel.
We intend to demonstrate that this financing pattern served as
a template for funding Al-Qaeda. We have also obtained judicial
cooperation in tracking the Al-Qaeda money trail that, as
reported by the New York Times on September 21 of this year,
ran from Saudi Arabia through Spain and directly to the
perpetrators of 9/11.
Senator Specter, for all of these reasons, I believe we are
making good progress in using the tools that Congress has
already made available to us. I am not here to ask for new
legislation. Rather, I come to thank you for what the Committee
has made possible and to make one specific request.
I respectfully urge you to do all in your power to make
sure that those advances not be frustrated by pernicious
maneuverings by those who persist in viewing the 9/11 families
suit as unwarranted interference in America's foreign policy.
Credible reports that our Government might be considering
stalling or otherwise impeding the suit were reported in the
New York Times on October 25, and as a result a large
delegation of family members promptly came by bus loads from
New York to stand vigil before the Capitol on November 1 to
insist that our Government stand with them and not against
them.
Regretfully, I am not in a position to assure the families
that the cause for their great anxiety and fear of betrayal has
passed. In a full-page, open letter to the President that
appeared in the Washington Post on November 1, they asked that
President Bush, quote, ``disavow any effort by our Government
to disarm us as we join you in the fight against terrorism,''
end quote. No response has been forthcoming.
Today, recourse to the courts by American citizens against
the perpetrators of terrorism is surely a constitutional right.
It cannot be taken away or suspended without violating the due
process and taking of property provisions of the Fifth
Amendment.
What is needed is an affirmative statement that there will
be no interference in the 9/11 families' efforts to seek
redress. Beyond that, I would hope that, wherever practicable,
there would be active cooperation in the sharing of evidence
because, if I may conclude, it is in this context, a context of
cooperation and sharing of documents between courts,
involvement of private plaintiffs all along the way, making
sure that evidence that does not turn stale, and allowing them
to go into areas where for economic or other reasons
governments are loathe to tread, that we have the essential
elements of the new international public-private partnerships
that are essential in enabling us to successfully wage the
fight against terrorism.
Thank you, Senator Specter.
Senator Specter. Thank you, Professor Gerson. The Congress
has supported these claims with legislation on civil rights of
action and I do not believe that the executive branch will
impede what you are doing. You may come to a point where you
are seeking to attach assets of some foreign government where
you may have some difficulties. Many of us on Capitol Hill have
been supportive of you there, as well. We will monitor it all
very closely and we are available to be of assistance.
Mr. Gerson. We enormously appreciate that expression of
support, Senator Specter.
[The prepared statement of Mr. Gerson appears as a
submission for the record.]
Senator Specter. We turn now to Mr. Jonathan Winer, former
U.S. Deputy Assistant Secretary of State for International Law
Enforcement, a member of the Council on Foreign Relations, and
a member of task force that recently published a report on
terrorist financing.
Thank you for joining us, Mr. Winer, and we look forward to
your testimony.
STATEMENT OF JONATHAN M. WINER, ALSTON AND BIRD, LLP, AND
MEMBER, COUNCIL ON FOREIGN RELATIONS, WASHINGTON, D.C.
Mr. Winer. Thank you very much, Mr. Chairman. I am grateful
for the opportunity to testify before you on the
administration's use of the tools provided them to fight
terrorism over the past year, and to discuss the findings of
the report of the Independent task Force on Terrorist
Financing, sponsored by the Council on Foreign Relations and
chaired by Maurice Greenberg.
I have been working in the field of anti-money laundering
for some two decades. Since September 11, 2001, we have
accomplished more in the past year than I thought would be
achieved during my entire lifetime. Over the past year, the
administration has undertaken a herculean task of transforming
the tools provided to it by the Congress in the PATRIOT Act
into practical realities. By and large, they have done a
remarkable job. As always, there are a few things that can
still be done.
In light of the discussion today, I would like to turn
directly to the charity issue. I think we still need to
consider further action on Islamic charities, such as
subjecting them to the Bank Secrecy Act. Some of these
charities turn President Lincoln's quote on its head; it is
charity toward none and malice unto all.
After I testified before the Senate last year, right after
September 11, one Islamic charity I listed on a chart as being
alleged to have ties to terrorism gave me an ultimatum: I
retract what I told the Senate or they would sue me. On the
very day they were planning on filing the lawsuit against me,
the defamation action for my constitutionally protected
testimony before the Congress, President Bush shut them down as
a terrorist finance organization. You have heard about them
earlier today. It was the Holy Land Foundation.
Senator Specter. Well, there you are, Professor Gerson. Do
you see the cooperation from the executive branch?
Mr. Gerson. We welcome it.
Mr. Winer. That was the Holy Land Foundation that gave me
that ultimatum.
I am tremendously concerned that funds from some of these
charities have been used to purchase interests in otherwise
legitimate U.S. businesses. I think that there is a penetration
of other institutions that some of these charities have been
able to engage in and it is going to be tremendously important
to investigate that and go after it.
I have also seen that charity fraud and charity abuse is
not limited to Islamic charities, as we have seen in the
Washington area recently. I have encountered abuses of
charities in many contexts during my time in Government, both
on the Hill and in the executive branch. Our regulation of
charities at the Federal level is minimal to non-existent, and
charities are not today expressly covered by U.S. money
laundering regulations.
I would urge consideration of whether the administration
should use its existing authorities to treat charities as
financial institutions for the purposes of the Bank Secrecy
Act, and thereby become subject to Federal examination for
compliance with our anti-money laundering laws. We are asking
insurance companies and loan and finance companies to be
subject to examination, we are asking hedge funds to be subject
to examination, but not charities.
Second, I would suggest that the Secretary of the Treasury
should use his powers under Section 311 of the PATRIOT Act to
designate foreign jurisdictions or financial institutions for
special measures for enhanced scrutiny. This is a power the
Congress gave the Secretary in the PATRIOT Act. The Treasury
hasn't used the power.
It is hard for me to understand that the Treasury has not
identified even one foreign country or one financial
institution that poses an unacceptable level of money
laundering or terrorist finance risk, and therefore hasn't
subjected a single one to the lesser level of sanctions
available to the United States under Section 311.
Mr. Aufhauser has asked for some additional protections in
order for them to use the Section 311 authority. I can't assess
whether the absence of those protections precludes such action,
but I think using that particular authority would send a very
strong signal to financial institutions in other jurisdictions
that we are going to protect ourselves.
Third, I believe the U.S. Government should be developing
international standards for regulating and tracking gold and
other precious metals and jewels that are used for trans-
national terrorist finance. The U.S. has had an exemplary
investigation of money laundering through gold by Italian
organized crime and Colombian drug traffickers in the Colon
Free Zone, in Panama.
Dubai is the largest gold trading zone in the world. There
really is more that we should be doing to try and create a
standardized international global regulatory regime for
tracking and regulating gold and other precious metals and
gemstones subject to abuse especially across borders. One means
of doing it might be through the existing G-8 anti-terrorist
group led by Treasury.
Fourth, you have heard quite a bit about problems for the
private sector and the administration sharing information. I
believe that in that connection, further information needs to
be shared about our actions vis-a-vis halawadars, alternative
remittance systems.
There is no location today where the public can go to
determine whether a money transfer business has registered with
the Government, as they are all required to do under the Bank
Secrecy Act and the PATRIOT Act. FinCEN has a confidential
system for Federal prosecutors to use. Not all of them know
about it. I have talked to some who had no idea it existed, but
they have such a system.
The information is not public. I think it should be public,
who has registered and who hasn't. It would have a lot of
positive assistance for the financial institutions that don't
want to do business with unregistered money service businesses.
Last, and this relates to the information-sharing issue as
well, the private sector has to be brought in as a partner to
governments in combating terrorist finance. British law
enforcement has referred to the private sector as the deputy
sheriffs who have been deputized to assist the government in
going after the bad guys and protecting us against them.
I believe the U.S. could work with private sector
institutions and non-governmental institutions to create white
lists of financial institutions and perhaps charities that,
regardless of the legal environment in their home jurisdiction,
commit to the highest level of due diligence, anti-money
laundering, and anti-terrorist finance procedures, and agree to
a system of external assessment of compliance, precisely the
idea, Mr. Chairman, that you raised in the Saudi context.
External assessment for compliance is a critical element for
such a white list.
In addition to the reputational benefit from being included
on such a white list, inclusion on the list could be a factor
taken into consideration by the World Bank, the International
Monetary Fund, and other IFIs in considering which financial
institutions to put their money through, as well as by USAID
and its counterparts in the rest of the world.
Mr. Chairman, these suggestions have been endorsed by the
distinguished bipartisan group of the Council on Foreign
Relations on which I participated. I thank you for the
opportunity to testify before you today.
[The prepared statement of Mr. Winer appears as a
submission for the record.]
Senator Specter. Well, thank you very much, Mr. Winer. We
appreciate your being here.
We now turn to Mr. Salam Al-Marayati, Director of the Los
Angeles-based Muslim Public Affairs Council, who authored an op
ed piece in the New York Times to the effect that Muslim
charities should not be prosecuted, but rather the officers of
those charities if they support terrorism.
We welcome you here and look forward to your point of view,
sir.
STATEMENT OF SALAM AL-MARAYATI, EXECUTIVE DIRECTOR, MUSLIM
PUBLIC AFFAIRS COUNCIL, LOS ANGELES, CALIFORNIA
Mr. Al-Marayati. Thank you, Mr. Specter. I would like my
full testimony in writing to be submitted for the record.
Senator Specter. Without objection, your full testimony
will be made a part of the record.
Mr. Al-Marayati. Thank you, and I will keep my time limit
to 5 minutes so I will keep my remarks very brief.
Senator Specter. Thank you.
Mr. Al-Marayati. The Muslim Public Affairs Council has
issued its counter-terrorism policy position paper in 1999. It
presented it to the Clinton administration, and it has also
submitted it to the Bush administration. In the paper, we talk
about means of dealing with this problem of financing terrorism
without shutting down charities in whole or making blanket
indictments against charities.
We believe that the effective way to combat terrorism is
there must be a culture of understanding and cooperation among
all Americans, between government officials and law enforcement
on the one hand, and ordinary citizens and communities on the
other hand. Unfortunately, this tool of partnership is being
threatened today.
I would like to talk a little bit about zakat, alms-giving,
religious freedom, and national security. First, in terms of
zakat, this is the religious obligation of every Muslim. It is
one of the five pillars of Islam. It is similar to the
Christian tradition of tithing. Zakat is the major
manifestation of social justice in Islam.
American Muslim charities make special appeals for the
needy, whether in terms of feeding the homeless or in helping
refugees abroad. American Muslims become very disturbed when
reading reports that funds intended to uplift the downtrodden
are used for violent purposes or are frozen under suspicion of
being used for violent purposes.
A very unfortunate climate has been created in which
Muslims who donate money are being associated with nefarious
activities. Just as it is wrong to associate all American
Catholic charitable giving with the activities of the IRA, it
is just as wrong to associate American Muslim giving with
terrorism.
Fundraising by American Muslim charities has been conducted
in cooperation with and support from local American Muslim
communities and their mosques. If it is proven that directors
of any institution were guilty of embezzlement of funds, then
those individuals should be subjected to the full extent of the
law, and they will be met with stiff opposition from American
Muslims as well.
The funds should either be returned to the donors or should
be directed to the needy through legitimate non-governmental
channels. If any wrongdoing is proven in an open court,
government diversion of those funds for any purpose other than
the donor's intent would be a misdirection of those funds a
second time.
The shut-down of American Muslim charities has
detrimentally affected innocent people working or volunteering
their time to the non-profits. Incriminating innocent people
results in a tragic attack on the character of humanitarian
activists throughout America.
MPAC has argued that the U.S. Department of the Treasury
should provide guidelines for meeting new anti-terrorism
standards in order for American Muslim charities to demonstrate
accountability in their fundraising and financial
disbursements. We are encouraged that the Treasury Department
has issued voluntary best practices for U.S.-based charities.
We have argued that the tools to combat terrorism are
optimized in an open, democratic process, and preserving our
democratic traditions in America is paramount for effectively
combatting terrorism. Short circuits to justice usually lead to
a false sense of security. MPAC works with other groups to
oppose the use of secret evidence in the courts, asks for open
hearings, and protests indefinite detentions.
In an ideal setting, American Muslim charities serve a
national security interest by promoting a positive image of
America throughout the Muslim world. Unfortunately, the view
that American Muslims are a harassed or persecuted religious
minority is gaining ground overseas, partially because of the
blockage of the Muslim charities.
Another important aspect of this problem is the issue of
religious freedom, which the U.S. has championed in recent
years, yet seems to be back-tracking on as a result of new
anti-terrorism standards. The United States risks being
perceived as failing to adhere to the values we are promoting
abroad.
Last, Muslim charities which meet the urgent development
and subsistence needs of many of the Muslim world's poor,
dispossessed and destitute can be used to enhance our national
security interest by helping to mitigate some of the factors
that breed extremism and violence.
Thank you very much.
[The prepared statement of Mr. Al-Marayati appears as a
submission for the record.]
Senator Specter. Thank you very much, Mr. Al-Marayati, for
your testimony.
Mr. Lewin, beginning with you in sequence of direct
testimony, are the funds which have been frozen in the Holy
Land Foundation available for disbursement to their attorneys?
Mr. Lewin. Yes, they are available and they are used by
their attorneys.
Senator Specter. How can that be if the funds are frozen?
Mr. Lewin. Well, pursuant to the regulations of the
Treasury Department, the funds that are frozen and proceedings
to freeze those funds are made available to attorneys to defend
in that case. In other words, the argument that is made is that
as a constitutional matter, the organization that is being sued
should be entitled to defend itself.
Senator Specter. No limitation, not even if those fees
totally deplete the fund?
Mr. Lewin. Well, there is no indication that there would be
any limitation. I will tell you that in our case, in Chicago,
there is an attorney who is a very fine counsel. He comes up
from New Mexico for every status conference in Chicago and is
being paid out of that fund, even though our case is not the
case in which the freezing of those funds is an issue.
But nonetheless, because the funds may be used by counsel,
to our knowledge, they are being distributed for his attorney's
fees. And our concern is that this litigation may last long
enough that by the time it is over, there will be nothing left
because the attorneys defending these cases will simply have
depleted the funds.
Senator Specter. Mr. Lewin, how do you propose to establish
liability for the Holy Land Foundation?
Mr. Lewin. We believe that it was public knowledge in the
United States from newspapers well before 1996 that Hamas was
engaged in violence and murder of civilians in Israel and in
the Middle East. This was known through the media to everybody
who ran the foundation, and indeed to people who contributed to
it.
Therefore, we believe the foundation, when it contributed
to Hamas, although they claim they were trying, as I think had
come out in prior testimony, to contribute only to its
charitable activities such as hospitals----
Senator Specter. Does the Holy Land Foundation have genuine
charitable activities?
Mr. Lewin. The Holy Land Foundation, I think, has genuine
charitable activities, but the problem is that they also engage
in financing terror, which is what the President and the
Attorney General and the Secretary of the Treasury found when
they seized its funds.
You don't have to show that the foundation or the
organization is engaged exclusively in terrorist activities,
but if they do so to a substantial degree by contributing to
Hamas, which is what was found and what the district judge
found to be true, then their funds may be seized and they are
engaging in illegal funding of terrorism.
Since they contributed to Hamas, and we believe that their
own literature showed that they knew they were contributing to
Hamas violence as well as to Hamas charities----
Senator Specter. How do you prove that they knew they were
contributing to Hamas violence?
Mr. Lewin. Well, that is going to be proved, we think, A,
by the fact that it was public knowledge that Hamas was engaged
in violence, and they contributed to Hamas. And, B, it is going
to be proven through discovery by the testimony of their
officers, whom we will subject to examination on the question
of what they knew about the people to whom they contributed,
the organizations to which they contributed.
Senator Specter. How do you deal, Mr. Lewin, with the
considerations and the contentions raised by Mr. Al-Marayati
about freedom of religion and about the basic tenet, as Mr. Al-
Marayati articulates it, for Islam to help on charitable goals?
Mr. Lewin. Let me begin my answer by just a personal note.
I don't think there has been any lawyer in the United States
who has been more involved in trying to protect freedom of
religion than I have. I have argued a number of cases in the
Supreme Court under the Free Exercise Clause, and I am very
concerned about that both with regard to Jewish citizens and
Muslims and Catholics and all minorities in the United States.
I believe that freedom of religion can be protected by
ensuring that the charities that collect for charitable
purposes have internal guidelines which make sure that they
disburse their funds only for peaceful, charitable purposes. If
they send it abroad, as the Holy Land Foundation did, they may
not send it abroad to an organization that engages in violence.
Senator Specter. Mr. Al-Marayati, would you accept that
approach as a limitation on internal audits? That might not be
too hard to accomplish if it would satisfy Mr. Lewin. What do
you think?
Mr. Al-Marayati. Well, yes, and we are representing really
not the charities themselves, but the donors. And the issue is
if the charities don't fulfill their obligations by filing the
proper tax forms or conduct the audits, then they are at fault
and the question is what to do with the money that the donors
intended to give to the needy. That money should not be used
for lawyers fighting battles out in court. That money should
not be used for another country or another purpose altogether.
Senator Specter. How do you deal with the considerations
which have been raised throughout this hearing about Hamas, for
example, having a political wing and a military wing, when the
funds can move from one to other?
A contributor may say, I want to give it to the charitable
wing, but when you see what Hamas does at Hebrew University, is
Mr. Lewin right or wrong when he talks about notice to the
public as to what Hamas is really up to?
Mr. Al-Marayati. Well, I agree that if a group is on the
foreign terrorist organization list, then any support financial
for that group is a violation of the law and is a criminal act.
And any person who conducts such a financial support for that
group should be held liable. The charity itself should not be
held liable.
For example, if the United Way's chief executive officer
commits fraud, the charity of the United Way should not be held
liable. The donors to the United Way still want that money to
go for the proper purposes. But the issue of what happens
abroad--the Treasury Guidelines are making it available for
Muslim charities to demonstrate transparency not only here in
terms of the financial fundraising, but in terms of the
financial disbursements over there.
I think by following those guidelines and by having an
authentic accrediting agency, then we can overcome this problem
of intermingling of funds between legitimate charity needs and
terrorist activity.
Senator Specter. But the United Way doesn't have a military
wing.
Mr. Al-Marayati. I agree, but I am talking about in terms
of the problem of embezzlement and liability of the officer
himself.
Senator Specter. Well, embezzlement is always available as
a criminal prosecution if some officer takes the money that
belongs to the organization. But where you have an organization
like Hamas which is well-known for the military wing, do you
think it inappropriate to say to donors to Hamas, with what has
been on the public record, that they are not knowingly
contributing funds in a direction which will be used for
murder?
Mr. Al-Marayati. Donors should be notified if that is the
case. If the case is the money is going to a foreign terrorist
organization, then donors should be notified and the money
should not go through those channels anymore.
My argument is we believe as American Muslim donors--and I
am not here to support any foreign group. We don't take money
from any foreign governments. I am not here to even support the
foreign governments that were made an issue today. But as
donors, we believe that money can go to those in need in the
West Bank and Gaza Strip without necessarily intermingling
those funds with terrorist activities.
Senator Specter. Mr. Winer, when we talk about regulations,
should there be more regulations? Should there be Federal
legislation to deal with charities to try to make the dichotomy
which Mr. Al-Marayati suggests?
Mr. Winer. First of all, I think it would be useful for
this Committee to look generally speaking at the issue of
regulation of charities and whether the current regulation of
charities at the Federal level, which is essentially an IRS
matter, is sufficient.
Senator Specter. What do you think? We are calling you as
an expert here.
Mr. Winer. The short answer is no.
Senator Specter. Not sufficient?
Mr. Winer. Not sufficient.
Senator Specter. What more should we do?
Mr. Winer. There has to be some mechanism for examination
and monitoring at least of larger charities, certainly of
larger charities that are operating internationally.
Senator Specter. Examination and monitoring?
Mr. Winer. Yes.
Senator Specter. Would you propose Federal legislation to
accomplish that?
Mr. Winer. What I would propose in the first instance is
that the PATRIOT Act, which gives the Secretary of the Treasury
the authority to designate certain kinds of institutions as
susceptible to sufficient money laundering risk that they
should be covered by the PATRIOT Act, should consider whether
charities or certain types of charities should be required to
be listed as financial institutions and must be subject to
examination in the same way we are subjecting insurance
companies, for example.
Senator Specter. So you think the Secretary of the Treasury
has sufficient authority under the so-called PATRIOT Act?
Mr. Winer. Yes, sir, and under the Bank Secrecy Act, I do,
sir.
Senator Specter. Well, you have had a lot of experience
with this, Mr. Winer, with the Council on Foreign Relations.
The Committee would be interested in your views as to what
supplemental legislation would be appropriate.
Mr. Winer. I will consider that further and respond.
Senator Specter. That really is what we are looking at
here, whether there ought to be more legislation. Mr. Lewin
would like to have access to those funds before he gets a
judgment. He thinks a motion to dismiss ought to be sufficient,
and we will entertain those thoughts. We can legislate on that.
Professor Gerson, how are you going to collect from Al-
Qaeda?
Mr. Gerson. Well, our focus is not simply Al-Qaeda. Our
focus is much, much broader than that.
Senator Specter. You have a third amended complaint?
Mr. Gerson. We have a third amended complaint.
Senator Specter. Now, as your complaint, do you have a
first amended complaint and then a second amended complaint,
and now you have a third amended complaint?
Mr. Gerson. That is correct.
Senator Specter. Your pleading file must be very thick.
Mr. Gerson. It is enormous, and the reason it is enormous
is because we have become, in effect, private attorneys general
doing what the families of 9/11 have asked us to do, which is
to focus on one issue, and that is accountability.
Senator Specter. How many families do you represent?
Mr. Gerson. We represent about 3,600 family members at this
particular point, and we continue to represent more families
everyday and they tell us repeatedly it is well and good to
listen to members of the administration. Some of them have
testified today about new regulatory reforms that are going on,
greater cooperation between the United States and the Saudi
government in this regard. But we are interested in
accountability because we want deterrence. We don't want a
repetition of what occurred to our loved ones to happen to
other loved ones. And that can't happen without accountability,
so that is our focus.
Senator Specter. Are some of the families whom you
represent among those from Flight 93 which crashed in
Shanksville, Pennsylvania?
Mr. Gerson. Yes.
Senator Specter. How many do you represent there, if you
know?
Mr. Gerson. It is over a dozen. I am not exactly sure.
Senator Specter. We had a memorial service on September 11
this year, and the families were there and it was a most moving
situation where the families came from all over the country to
visit the site where their loved ones had gone down on Flight
93, and very, very poignant and a tremendous need.
Mr. Gerson. Well, out of this terrible tragedy, the
families are trying to salvage something that will be beyond
themselves and be a legacy to all Americans.
Senator Specter. And you believe you have a realistic
change of identifying financial institutions where you can
recover damages for 9/11?
Mr. Gerson. Senator, I spent the last week in Spain working
with the Spanish authorities under a special procedure that was
authorized by Judge Robertson of the district court here.
Senator Specter. Give me one illustration as to how you
propose to establish liability and collect money from somebody.
Mr. Gerson. Well, liability is established by using the
standard that Attorney Nat Lewin referred to earlier in the
landmark Boim case. It is not incumbent upon us to prove that
individuals that contributed to charities had actual knowledge
of particular horrific acts that were going to be committed.
Senator Specter. So you are looking to contributors to Al-
Qaeda?
Mr. Gerson. We are looking to the financial institutions
that contributed part of their own revenues, sitting on their
board of directors.
Senator Specter. You have already filed this publicly. Can
you name one financial institution? I am trying to get a
specific idea as to how you are proceeding.
Mr. Gerson. Sure. I will give you a list of the names of
some of them.
Senator Specter. No. Just give me one and tell me what your
approach is, your theory, how you are going to prove your case,
and how you are going to collect the money.
Mr. Gerson. Well, we are naming a number of organizations
in Spain, for example, which goes beyond the focus strictly on
Saudi-related institutions.
Senator Specter. And you have jurisdiction in the United
States?
Mr. Gerson. We have jurisdiction in the United States.
Senator Specter. And service?
Mr. Gerson. We have already completed service on many of
these banks. Many of the banks have financial holdings in the
United States. The Saudis, for example, have on their own about
$860 billion in the United States. We are intent on----
Senator Specter. You are going after the Saudis?
Mr. Gerson. Saudi interests. We have not named the
government of Saudi Arabia as a defendant at this point.
Senator Specter. Saudi interests. Name one Saudi interest,
just so I have an idea.
Mr. Gerson. Well, I mentioned earlier the Saudi American
Bank, which is located in the Watergate, will be named as a
defendant.
Senator Specter. The Saudi American Bank?
Mr. Gerson. Yes. They will be named as a defendant this
Friday.
Senator Specter. What did the Saudi American Bank in the
Watergate do?
Mr. Gerson. They served as a conduit for the transfer of
funds to Hamas, we allege, and to Al-Qaeda.
Senator Specter. OK, and do you have to show knowledge on
their part?
Mr. Gerson. We have to satisfy the standard that the
Seventh Circuit Court of Appeals spoke about in the Boim case,
which is not actual knowledge, but constructive knowledge; that
is that a reasonable person understanding the circumstances had
reason to believe that this money was going to be used for
terrorist purposes.
Senator Specter. For Al-Qaeda and Hamas, and if you can do
that, of course, they know what Al-Qaeda and Hamas are up to?
Mr. Gerson. Yes, of course.
Senator Specter. Sure.
Well, listen, thank you very much.
Mr. Lewin. Could I just make one more point in response to
the exchange you had here, just a very hypothetical----
Senator Specter. Just one more point? Frankly, Mr. Lewin, I
doubt that you can make only one point, but go ahead.
Mr. Lewin. I will. This one, I promise, will----
Senator Specter. You are free to comment even if it is more
than one point.
Mr. Lewin. All right. I think the analogy with regard to
the Holy Land Foundation and the money being given to Hamas is
as if the United Way disbursement Committee said, we are going
to give 15 percent to Murder, Incorporated. Now, if they did
that, then I think everybody would know that that is illegal
and it is involved in murder.
I don't understand why the Holy Land Foundation, if it is
says ``I am giving some percent to Hamas formally,'' can say,
``well, OK, now as a charity we are free of that.'' I think
that is what Mr. Al-Marayati is saying. The charity shouldn't
be held responsible for the fact that it has given money to
Murder, Incorporated. That is what it has done.
Senator Specter. Mr. Al-Marayati, you are entitled to
respond.
Mr. Al-Marayati. Yes, thank you. Well, first of all, let's
go to other examples. For example, you had the Jewish Defense
League that targeted our office on December 17. The FBI
notified us. It was a group of Jewish terrorists who were
involved in that activity. They killed Alex O'Day, allegedly,
in 1985. The culprits have not been brought to justice. So are
those who supported the Jewish Defense League going to be held
with the same standard as American Muslims today are being held
in terms of supporting other charities?
You mentioned the point about the distinction between the
political wing and the military wing. In 1995, the Congress
actually allowed Sinn Fein, the political wing of the IRA, to
operate. I am not saying that that is the road we need to take
today because we live in a different era, but the point is we
have many Muslims in need throughout the world.
The hot spots involved in terms of charitable giving are
going to involve the West Bank and Gaza Strip, Kashmir,
Chechnya, Bosnia. Those are the areas where the front line of
the war on terrorism is being fought. So we have to work more
closely together with the Government and with law enforcement
because I think there needs to be a paradigm shift where
American Muslim charities are being used as a partner for
national security abroad and for counter-terrorism here even
domestically in a more constructive way.
Senator Specter. Mr. Winer, you can have the last word.
Mr. Winer. Thank you, sir. It is a very bad thing when a
witness, given an opportunity by a chairman of a Committee like
this, doesn't take advantage of it, so let me take advantage of
your previous question.
Senator Specter. It happens all the time.
Mr. Winer. The Committee could consider the possibility of
creating a receivership for any charity found to have had its
legitimate funds commingled with terrorist funds and
appointment of a Federal receiver. In that case, the Federal
receiver would then be in a position to be able to continue the
legitimate activities of the charity, while shutting down and
stopping any potential leakage of that charity into
illegitimate areas.
Thank you, sir.
Senator Specter. Well, thank you very much, gentlemen. I
think it has been very productive hearing. I admire what you
are all doing. You, Mr. Lewin, and you, Professor Gerson, on
tackling these matters are private attorneys general is very,
very important. The Government cannot maintain all these cases.
Our courts are open to citizens and that is why we
legislated as we did to give rights of action and treble
damages and counsel fees, on the analogy to the antitrust
field. The lawyers are very frequently criticized, and I think
very, very often unjustifiably, because cases are undertaken
which are extremely difficult. They are undertaken without
being on a retainer or without having an hourly rate which is
paid. Very substantial costs have to be advanced--filing fees,
deposition costs, travel. So you are to be commended in the
greatest tradition of the American legal profession.
Mr. Al-Marayati, we are very much concerned about the
issues you raise on freedom of religion and about the Islamic
religion and charitable matters and helping the needy. That is
commendable, but we are going to have to draw the line and I
think Mr. Winer may be able to help us with some practical
suggestions from the Council on Foreign Relations to draw that
line.
But this Judiciary Committee is going to be very active. I
have already given instructions, Mr. Lewin, to followup on the
hearing we had 3 years ago. It is just not right that the
Justice Department has not acted. I have discussed those
matters with the Israeli Prime Minister, Prime Minister
Netanyahu, back in 1996, and Chairman Arafat. There ought to be
extradition; there definitely should be extradition. There
ought to be teeth there.
We are available to legislate in the field. We appreciate
your suggestions and we are going to be pursuing this matter
further so that people are on notice we are dealing with Al-
Qaeda or Hamas or Hizballah. When money goes there and it is
known what the purposes are, people can be responsible as
accessories before the fact to murder, or as the suggestion was
made, for reckless endangerment, which would not require the
same specific intent that is equal to malice which would
support a prosecution for second-degree murder.
So thank you all and that concludes our hearing.
[Whereupon, at 12:30 p.m., the Committee was adjourned.]
[Questions and answers and submissions for the record
follow.]
[Additional material is being retained in the Committee
files.]
[GRAPHIC] [TIFF OMITTED] T8867.001
[GRAPHIC] [TIFF OMITTED] T8867.002
[GRAPHIC] [TIFF OMITTED] T8867.003
[GRAPHIC] [TIFF OMITTED] T8867.004
[GRAPHIC] [TIFF OMITTED] T8867.005
[GRAPHIC] [TIFF OMITTED] T8867.006
[GRAPHIC] [TIFF OMITTED] T8867.007
[GRAPHIC] [TIFF OMITTED] T8867.008
[GRAPHIC] [TIFF OMITTED] T8867.009
[GRAPHIC] [TIFF OMITTED] T8867.010
[GRAPHIC] [TIFF OMITTED] T8867.011
[GRAPHIC] [TIFF OMITTED] T8867.012
[GRAPHIC] [TIFF OMITTED] T8867.013
[GRAPHIC] [TIFF OMITTED] T8867.014
[GRAPHIC] [TIFF OMITTED] T8867.015
[GRAPHIC] [TIFF OMITTED] T8867.016
[GRAPHIC] [TIFF OMITTED] T8867.017
[GRAPHIC] [TIFF OMITTED] T8867.018
[GRAPHIC] [TIFF OMITTED] T8867.019
[GRAPHIC] [TIFF OMITTED] T8867.020
[GRAPHIC] [TIFF OMITTED] T8867.021
[GRAPHIC] [TIFF OMITTED] T8867.022
[GRAPHIC] [TIFF OMITTED] T8867.023
[GRAPHIC] [TIFF OMITTED] T8867.024
[GRAPHIC] [TIFF OMITTED] T8867.025
[GRAPHIC] [TIFF OMITTED] T8867.026
[GRAPHIC] [TIFF OMITTED] T8867.027
[GRAPHIC] [TIFF OMITTED] T8867.028
[GRAPHIC] [TIFF OMITTED] T8867.029
[GRAPHIC] [TIFF OMITTED] T8867.030
[GRAPHIC] [TIFF OMITTED] T8867.031
[GRAPHIC] [TIFF OMITTED] T8867.032
[GRAPHIC] [TIFF OMITTED] T8867.033
[GRAPHIC] [TIFF OMITTED] T8867.034
[GRAPHIC] [TIFF OMITTED] T8867.035
[GRAPHIC] [TIFF OMITTED] T8867.036
[GRAPHIC] [TIFF OMITTED] T8867.037
[GRAPHIC] [TIFF OMITTED] T8867.038
[GRAPHIC] [TIFF OMITTED] T8867.039
[GRAPHIC] [TIFF OMITTED] T8867.040
[GRAPHIC] [TIFF OMITTED] T8867.041
[GRAPHIC] [TIFF OMITTED] T8867.042
[GRAPHIC] [TIFF OMITTED] T8867.043
[GRAPHIC] [TIFF OMITTED] T8867.044
[GRAPHIC] [TIFF OMITTED] T8867.045
[GRAPHIC] [TIFF OMITTED] T8867.046
[GRAPHIC] [TIFF OMITTED] T8867.047
[GRAPHIC] [TIFF OMITTED] T8867.048
[GRAPHIC] [TIFF OMITTED] T8867.049
[GRAPHIC] [TIFF OMITTED] T8867.050
[GRAPHIC] [TIFF OMITTED] T8867.051
[GRAPHIC] [TIFF OMITTED] T8867.052
[GRAPHIC] [TIFF OMITTED] T8867.053
[GRAPHIC] [TIFF OMITTED] T8867.054
[GRAPHIC] [TIFF OMITTED] T8867.055
[GRAPHIC] [TIFF OMITTED] T8867.056
[GRAPHIC] [TIFF OMITTED] T8867.057
[GRAPHIC] [TIFF OMITTED] T8867.058
[GRAPHIC] [TIFF OMITTED] T8867.059
[GRAPHIC] [TIFF OMITTED] T8867.060
[GRAPHIC] [TIFF OMITTED] T8867.061
[GRAPHIC] [TIFF OMITTED] T8867.062
[GRAPHIC] [TIFF OMITTED] T8867.063
[GRAPHIC] [TIFF OMITTED] T8867.064
[GRAPHIC] [TIFF OMITTED] T8867.065
[GRAPHIC] [TIFF OMITTED] T8867.066
[GRAPHIC] [TIFF OMITTED] T8867.067
[GRAPHIC] [TIFF OMITTED] T8867.068
[GRAPHIC] [TIFF OMITTED] T8867.069
[GRAPHIC] [TIFF OMITTED] T8867.070
[GRAPHIC] [TIFF OMITTED] T8867.071
[GRAPHIC] [TIFF OMITTED] T8867.072
[GRAPHIC] [TIFF OMITTED] T8867.073
[GRAPHIC] [TIFF OMITTED] T8867.074
[GRAPHIC] [TIFF OMITTED] T8867.075
[GRAPHIC] [TIFF OMITTED] T8867.076