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Trial Exposes Charity Abuse

EUGENE, Ore. - The fate of an Oregon man whose Islamic charity is accused of financing Chechen terrorists is about to be in the hands of a federal jury.

In the five years since its indictment on allegations that the al Haramain Islamic Foundation (AHF) had funneled money to Chechen rebels, Pete Seda's now-defunct organization has wrangled with government attorneys over allegations that the government conducted unlawful surveillance, seized assets without a warrant, and overstepped its authority under the Patriot Act in seeking foreign bank records.

 352_largeAnd while at its core, this is a criminal tax case against Pirouz Sedaghaty, aka Pete Seda, the outcome has broader implications for the continuing efforts to counter-terrorist financing.

But in many ways, Seda's prosecution followed a familiar script. Prosecutors presented evidence showing that despite a façade of charity and moderation, al Haramain was surreptitiously funneling money out of the country and possibly into the hands of Chechen mujahideen, all under the guise of humanitarian efforts.

Seda was charged with conspiring to move $150,000 out of the United States without declaring it, as required by federal law, and with filing false tax returns to hide the fact that the money ever existed. As numerous law enforcement officials told the jury, the path that the money took from Europe to the United States and then to the Middle East was not just suspicious, but indicative of illicit financial activity.

According to IRS Special Agent Colleen Anderson, a wealthy Egyptian named Mahmoud el-Fiki contacted al Haramain with the intention of making a donation "as Zakat [charity] in order to participate in your noble support to our Muslim brothers in Chychnia." After the money arrived in the United States, Seda and Soliman al-Buthe (who unbeknownst to the jury is a Special Designated Global Terrorist) traveled to the local bank and withdrew $130,000 in American Express travelers checks and a $21,000 cashier's check payable to al-Buthe. Three days later, al-Buthe returned to Saudi Arabia and deposited the travelers checks at al Rajhi Bank in Saudi Arabia.

Al-Buthe is charged in the case, too, but is believed to be abroad and was not on trial with Seda. Anderson told jurors that the transactions were done with the intention of defrauding the United States government. According to the government, al-Buthe did not declare the money as he departed JFK Airport in New York, and Seda intentionally mislead his CPA into falsifying al Haramain's tax returns so as not to reflect the existence of the el-Fiki donation.

During the first day of trial, Assistant U.S. Attorney Chris Cardani was adamant that "this is not a terrorism case." But his case was heavy with discussion on the violent support structure in which Seda was allegedly involved.

While there are conspiracy charges and material support for terrorists is illegal, there is no federal crime of "terrorism." As a result, critics of counter-terrorism efforts often claim that the government uses violent rhetoric to make cases appear more substantial. Just as likely, however, is that after evaluating all the tools available prosecutors decide that a case for tax fraud can be just as effective as more flashy indictments. Nowhere is this truer than in combating terrorist financing.

Part of the battle has been attempting to prevent the abuse of charitable organizations for terrorist aims—the type of underlying activity in which Seda allegedly was involved. And while the federal government must ensure that American-Muslims can carry out their religious obligation to give Zakat (charity), it is equally important that the money doesn't make its way into the hands of terrorists. As former Deputy National Security Advisor Juan Zarate explains:

"The act of charity is sacrosanct. We need to take every step possible to stop the flow of terrorist funding through charities and preserving the integrity of charitable giving around the world…the United States is working with our international partners and the charitable community to safeguard this sector from terrorists who mock the very idea of charity by converting good will and humanitarian aid into hate-filled agendas supported by blood money."

Reasonable minds can disagree over the best methods of combating the vulnerabilities, but it is unreasonable to claim that terrorists do not use charities to funnel money to their cause.

The prosecution of Pete Seda is only the most recent in a string of examples of charities financing terrorism.

In 2004, the Holy Land Foundation for Relief and Development (HLF) was charged with serving as the U.S. fundraising arm for Hamas. The Richardson, Texas-based charity funneled millions of dollars to Hamas. Like al Haramain, HLF operated under the guise of humanitarian relief efforts. In 2008, a jury convicted five former officials of providing financial assistance that was used to build Hamas-run schools, to recruit suicide bombers, and to compensate the families of "martyrs."

In August of this year, U.S. authorities in several states announced they had arrested 14 suspects for providing material support to al Shabaab. Prosecutors alleged that the defendants had collected funds door-to-door and via teleconference under the guise of "humanitarian aid." While the militant group continues to extend its reach beyond Somalia, it does its fundraising primarily in North America.

And, in the wake of flooding in Pakistan, there are increasing reports that Jamaat-ud-Dawa, a front for Lashkar-e-Tayyiba (LeT), has set up shop in the area and has been delivering aid in the absence of help from the Pakistani government. And while this aid is desperately needed, allowing militant groups to fill the role of aid giver only strengthens local support, while undermining international efforts at combating the deadly threat posed by LeT.

And while each of these recent examples is troubling, at the top of the list of charities with ties to terrorist organizations is al Haramain Islamic Institution. The "charity" has at times supported the Makhtab al-Khidemat, a precursor to al Qaida; financed a Bangladeshi national to carry out terrorist attacks in India; and diverted humanitarian aid in Indonesia towards weapons procurement. When the entire global organization was designated in 2008, the US Department of the Treasury explained:

"Today's action targets the entirety of the AHF organization, including its headquarters in Saudi Arabia. Evidence demonstrates that the AHF organization was involved in providing financial and logistical support to the al Qaida network and other terrorist organizations designated by the United States and the United Nations."

During Seda's trial, prosecutor Cardani explained that "al Haramain subscribed to a very violent form of Islam." He told the jury that the organization supported "violent jihad….aggressive, kill people jihad."

Knowing of the organization's role as a global terrorist supporter, Seda opened up an American branch for al Haramain in Ashland, Oregon. Despite attempts by the defense to paint Seda as a transformative figure interested in interfaith dialogue and peace negotiations, the government presented witnesses who described the evolution of Seda from the moderate who originally ran the Quran Foundation to the more militant leader of AHF in Oregon.

Former congregants of AHF detailed how they would occasionally hear fiery prayers denouncing the United States and Muslim integration in the West. A former employee, Daveed Gartenstein-Ross, explained that it was his job was to distribute moderate materials to non-Muslims, but to provide "true believers" with copies of the "Noble Quran," which contained an appendix entitled, "A Call to Jihad: Holy Fighting in Allah's Cause," extolling the righteousness of violent jihad. Gartenstein-Ross also testified how he had distributed Mohammad bin Jamil Zino's "Islamic Guidelines for Individual and Social Reform." In the book, Zino explains:

"Jihad is obligatory on every Muslim in two ways: by spending one's wealth or offering oneself for fighting in the cause of Allah."

The prosecution's case is built on business records, email communications, and eyewitness testimony that describe how Seda supported the cause of Chechen mujahideen and covertly used his position as director of AHF to finance the militants. Jurors may determine whether the prosecution met its burden of proof by week's end. Regardless of the outcome, al Haramain stands as yet another reminder that terrorist organizations will use any means available to raise and transfer money in support of their violent ends.

 

 

 

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