U.S. Islamic Charity’s Assets Frozen

The Bush administration froze the assets Tuesday of a prominent U.S.-based Muslim charity and two overseas groups accused of financing the militant Palestinian organization Hamas. The move marked the first time the U.S. government has used its war on terrorism to intervene in the Middle East conflict.

The assets freeze prompted immediate and angry denials--and denunciations--from Muslims here and abroad, and came as FBI agents raided at least four offices of the Texas-based Holy Land Foundation for Relief and Development, seizing computer files and records. Financial authorities also froze the assets of Beit el Mal Holdings, an investment company that they alleged is controlled by Hamas, and Al Aqsa Islamic Bank, which they described as a financial arm of Hamas.

The enforcement action, which began at midnight Monday, also marked the first time the administration has moved against a U.S.-based charity in its crackdown on terrorist organizations after the Sept. 11 attacks on the World Trade Center and the Pentagon.

Bush charged that Holy Land, based in Richardson, Texas, used its tax-exempt status as a charitable foundation to raise $13 million last year, much of which ultimately went to Hamas terrorists. Authorities froze $1.9 million in Holy Land funds and said they expected to move against “several million more” dollars by early today.

While the Bush administration’s self-described war on terrorism has progressed on many fronts--law enforcement, diplomatic, financial and military--until Tuesday it had focused primarily on Al Qaeda, the terrorist network overseen by Osama bin Laden that U.S. officials have blamed for the attacks.

Bush acknowledged that he was wading into politically sensitive waters by targeting the high-profile charity, potentially jeopardizing already sensitive relations between his administration and the U.S. Muslim community. But he said the asset freeze was needed, citing Hamas’ claim of responsibility for suicide bombings in Israel that killed 28 people over the weekend.

Hamas One of ‘Deadliest’ Terror Outfits, Bush Says

Most donors to the Holy Land foundation--and perhaps even some of its officers--believed that their donations were going to relieve suffering in the Middle East, Bush said at a Rose Garden news conference, where he was joined by Treasury Secretary Paul H. O’Neill and Atty. Gen. John Ashcroft.

“But Hamas has obtained much of the money that it pays for murder abroad [from] right here in the United States, money originally raised by the Holy Land Foundation . . . and we’re not going to allow it,” Bush said. He called Hamas “an extremist group that calls for the total destruction of the state of Israel [and] one of the deadliest terrorist organizations in the world today.”

Holy Land representatives and other Muslim representatives angrily denounced the government’s actions and asked Bush to reconsider.

“Where’s the evidence?” asked Khalid Hamideh, a lawyer for the foundation. “This is stupid, ludicrous.”

The charity said in a statement that the assets freeze would deprive Palestinian orphans of desperately needed food and clothing.

“The Holy Land Foundation denies allegations that it provides any financial support to terrorist groups or individuals,” the statement said. “We feel the Holy Land Foundation has been unfairly targeted in the nationwide smear campaign to undermine Muslims and the institutions that serve them.

“The decision by the U.S. government to seize the charitable donations of Muslims during the holy month of Ramadan is an affront to millions of Muslim Americans who entrust charities like ours to assist in fulfilling their religious obligations.”

Representatives of Beit el Mal and Al Aqsa, both located in the Palestinian territories, could not be reached for comment.

Treasury officials said a wealth of evidence has shown links between Hamas and the three groups.

“This is not a case of one bad actor stealing from the petty-cash drawer and giving the stolen money to terrorists,” O’Neill said of Holy Land. “This organization exists to raise money in the United States to promote terror.”

Jimmy Gurule, Treasury undersecretary for enforcement, insisted that the crackdown wasn’t politically motivated. Hamas’ claim of responsibility for the weekend suicide bombings only moved up the timeline of the assets freeze, he said.

“We have the evidence; we stand by the evidence. This was the right thing to do,” said Gurule, who confirmed an ongoing Justice Department investigation into Holy Land.

Authorities on Tuesday also shuttered Holy Land offices in San Diego, Bridgeview, Ill., and Paterson, N.J.

Jonathan M. Winer, a former State Department official in charge of international law enforcement, said the action was unprecedented.

“It was as tough a condemnation of any organization, let alone a religious organization, as I’ve ever heard,” Winer said. “It breaks new ground.”

For many Muslims, the foundation is one of the most visible and trusted Islamic charities in the United States.

Ghassan Elashi, the chairman of Holy Land’s board, incorporated the charity in Los Angeles in 1989 as the Occupied Land Fund. Elashi is a cousin of the wife of Hamas political leader Mousa Abu Marzook. Marzook gave the group a $210,000 contribution in 1992 as a “one-time” grant, tax records show.

Last year, the State Department removed the charity from its international aid program, saying that any financial relationship with the group was “contrary to the national defense and foreign policy interests of the United States.”

Most of Money Comes From U.S. Donations

The charity raises most of its money through donations in the U.S., then sends the funds overseas.

Some foundation money goes to widows and children of Hamas members killed by Israeli forces. But the charity contends that such aid represents a “negligible percentage of those receiving assistance.”

A State Department official filed a court document in 1999 that said officials had considered listing the charity as a terrorist organization because two individuals “associated with the foundation” were linked to Hamas. The official didn’t name them.

The move was the third financial action taken under the authority of an executive order Bush signed Sept. 23 authorizing aggressive actions against the suspected bankers of international terrorism.

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Times staff writer Teresa Watanabe in Los Angeles and researcher Robert Patrick in Washington contributed to this report.