Islamic charity pleads guilty to tax fraud

Al Haramain, a Saudi-based international charity which once maintained its U.S. branch in Oregon, has pleaded guilty to tax fraud 14 years after filing a false return designed to conceal a $150,000 check issued to Chechen jihadists.

The Associated Press reported on July 29:

…On Tuesday, the charity pleaded guilty in U.S. District Court in Eugene to one count of filing a false tax return with the Internal Revenue Service. The group was placed on probation for three years, and it agreed during that time not to resume operating as a tax-exempt charity in the U.S., prosecutors said.

The charity failed to report to the Internal Revenue Service that a $150,000 donation in 2000 went overseas to Saudi Arabia and was meant to be sent to Chechnya, prosecutors said. The charity falsely reported on its tax return that the money was used partly to buy a building in the U.S.

The foundation was disbanded after the U.S. government declared it was a terrorist organization and froze its assets…

Far from being a lawless series of raids in the early- to mid-2000s against innocent Islamic charities that CAIR and the ACLU have depicted, the successful convictions against the Holy Land Foundation and guilty pleas such a this illustrate that the Bush-era crackdowns on front charities was legitimate.

As part of the plea deal, Al Haramain’s former U.S. director, Pete Seda, who was previously convicted for his involvement in the case, is getting charges dropped against him.

Spotlight: terror finance in the Netherlands

A reader recently asked Money Jihad for information on terrorist financing based in the Netherlands.  An examination of Dutch charities, the banking sector, and crime rings is necessary to begin understanding how terrorists have used the Netherlands to fund their activities.

Dutch zakat

The majority of terrorist financing problems in the Netherlands over the past decade have originated from the Islamic charitable sector, particularly from Dutch Muslim groups purporting to provide “relief” in the Palestinian territories.

In 2003, the Dutch blocked Al-Aqsa Foundation assets in the Netherlands after discovering that Al-Aqsa funded terrorism in the Middle East.  A previous manager of Al-Aqsa in the Netherlands, Amin Abu Rashed, was recently described by a financial crimes expert as, “the principal representative of Hamas in Holland.”  Al Haramain Islamic Foundation, the Saudi-based terror front charity, was once active in the Netherlands as well.

Palestinian terror funding probably shifted after the Al-Aqsa closure to Internationale Steun Rechtstreeks Aan Armen (ISRAA).  ISRAA remains active in the Palestinian territories and Syria, and maintains tax-exempt status in the Netherlands.

In April 2011, the Netherlands froze the assets of the Dutch branch of the Turkish, pro-Hamas charity IHH.  A court later overturned the freeze, and IHH Nederland continues to operate in Holland.

Islamic Relief Nederland, a chapter of Islamic Relief Worldwide, is involved at least indirectly in the financing of terrorism through its parent organization. IRW has previously funded Hamas and Al Qaeda operatives.  Like ISRAA, IR Nederland is currently active in Syria.

Groups linked with the Muslim Brotherhood in the Netherlands have used domestic and foreign funds to finance their projects.  Dutch intelligence revealed in 2010 that Salafi networks exploit generous Dutch public benefit programs to fund their own activities.  Europe Trust Netherlands (ETN), a leading Dutch-Muslim group, has worked with Muslim Brotherhood leaders last year to arrange Gulf-based financing for the controversial Blue Mosque project in Amsterdam.

Banking sector threats

The large Dutch banking sector, which includes internationally known firms such as ING (which settled with U.S. authorities in 2012 over Cuban and Iranian sanctions violations), has probably been a factor in drawing some terrorist financiers and interlocutors to have a presence in the Netherlands.  After 9/11, it was reported that the Al Rajhi banking family, whose patriarch was named in the Golden Chain document for funding Osama Bin Laden, reportedly maintained “a large portion of their funding from the Netherlands. The family owns an investment company in Amsterdam, which has funded ‘islamic investments’ for well over a billion dollars.”

The Islamic finance sector in the Netherlands is also a source of concern.  Islamic finance has been documented as a sector marred by a lack of transparency and an increased risk of diverting profits toward terrorism as a form of corporate zakat.

Financial crimes and smuggling

Illicit transfers for terrorism based in the Netherlands have also taken place among criminal rings of various sizes.  Tamil Tiger terrorists have used the Netherlands as a funding base with front organizations operating there.  The trade in khat, a stimulant that is legal to import in the Netherlands, has been known for several years to fund the al-Shabaab terrorist organization in Somalia.  More recently, Sunni donors have transferred funds from the Netherlands for jihad in Yemen.  Meanwhile, a Dutch fugitive from Panamanian justice, Okke Ornstein, is subject to an INTERPOL red notice and is probably involved with laundering money for Hamas.

Lastly, it should be noted that former Dutch dependencies which have relaxed regulatory climates may also be susceptible to abuse for financial crimes.  Hezbollah allegedly maintains bank accounts in the Dutch Antilles.  Khalid Bin Mahfouz (the Saudi billionaire who sued Rachel Ehrenfeld for reporting that he funded terrorism), once parked money in the Dutch Antilles in a company called Pathfinder Investments, according to the Wall Street Journal.  Pathfinder funds were subsequently transferred to the Success Foundation, a Virginia-based front charity for the International Islamic Relief Organization, a Saudi-backed office which was closed after 9/11 for its role in financing Al Qaeda.

Liberal judges toss Chechen financier’s conviction

Just four months after the Boston marathon bombing, two federal judges on a three-judge panel have overturned the conviction of the Oregon-based Islamic “charity leader” and terrorist fundraiser Pete Seda, who helped facilitate the transfer of $130,000 to Chechen terrorists in the early 2000s.

Activists like Seda have served as key conduits for funneling zakat donations from Western countries through Islamic front charities to jihadist causes around the world.  The revenues supported the creation of websites and recruitment tools that helped radicalize North Caucasus diaspora like Tamerlan Tsarnaev.

Seda’s conviction was overturned by Judge Mary Schroeder, who was appointed by Jimmy Carter, and Judge Margaret McKeown, who was appointed by Bill Clinton and considered for a Supreme Court appointment by Barack Obama, on the grounds of alleged unfairness during the Seda investigation and trial.

The two judges claim that the Seda trial began as a white collar crime case but ended as a terrorism case, that some information about a witness named Barbara Cabral was not shared with defense attorneys, and that the scope of a warrant served against Seda before the trial was exceeded by law enforcement.

Meanwhile, Judge Robert Tallman, a Republican who was appointed by Bill Clinton, delivered a vigorous dissent from the liberal judges’ opinion.  Oregon’s Daily Tidings summarizes Judge Tallman’s reasoning:

…In his dissenting opinion, Judge Richard Tallman wrote that the majority judges in the appeal improperly failed to take into consideration that [trial court judge] Hogan held a separate hearing on the Cabral issues before ruling the evidence would not have changed the jury’s verdict.

Tallman wrote that the appellate judges should not reverse Hogan’s ruling without it being “clearly erroneous,” which was not the case.

Moreover, Tallman’s minority opinion argued that the scope of the search warrant was not breached by agents searching Seda’s computers and that the other issues do not rise to the level necessary for overturning the jury’s guilty verdict.

Tallman also took issue with the majority opinion’s apparent dismissing of the key evidence in the actual tax fraud and conspiracy charges that were at the core of the case against Seda.

Seda and his codefendant, a Saudi national named Soliman Al-Buthe, went to great lengths and expenses to convert funds wired to Al-Haramain into $130,000 worth of hard-to-trace $1,000 cashier’s checks that Al-Buthe then carried from Ashland to Saudi Arabia in 2000, according to Tallman’s opinion.

Al-Buthe, also known as Al-Buthi, did so in violation of federal financial-reporting rules that he had complied with on nine other occasions, Tallman noted.

Also, Al-Buthe carried with him and failed to report that he was carrying a cashier’s check made out to him at an Ashland bank for $21,000, which Al-Buthe deposited in his personal bank account in Saudi Arabia.

“A reasonable jury could have concluded on this evidence that this was Al-Buthe’s ‘cut’ for serving as the courier,” Tallman wrote.

The jury also heard plenty of evidence on what Tallman calls the “deceitful manner” in which Seda hid the smuggled money by falsely declaring on a tax return that the money went toward the purchase of a prayer house in Missouri.

Had the men’s intent been not to smuggle the money to the Middle East, Seda simply could have wired the money directly to Al-Haramain’s main office in Saudi Arabia for about $15, Tallman wrote.

“The jury obviously thought the entire handling of the money reeked of criminal intent, as evidenced by its verdict,” Tallman wrote.

Hat tip to Rushette for alerting us to the appeals court decision.

Saudi charity workers on trial for funding terror

Officials from a Saudi Islamic charity are on trial in an ongoing, multi-defendant prosecution in Riyadh.  The Arab News is calling them members of the “Haramain Cell.”

The Saudi-based Al Haramain Islamic Foundation has been under international scrutiny since 9/11 for its role in financing terrorism around the world.  Its Oregon branch was shut down by federal authorities and its leader was convicted in 2010.  Its Saudi parent organization was said to have been rolled “along with several other charities, into a new government-run National Commission for Relief and Charity Work Abroad.”

Saudi investigators and prosecutors have provided cover for the Haramain Cell charity workers by claiming that they were “misusing” their positions through fraud and “using the names of reputable people as alibis.”  Money Jihad has no doubt that “reputable people” were actually involved, and the Saudis have concocted the story of “misuse” as a public relations favor for their own elites.  This case represents willful continuity, not an accidental deviation, from Haramain’s longstanding jihadist patronage.

Defendants have also been charged with arming militants in Iraq.  From Arab News via Maktoob on Mar. 27:

Trial of terror suspects continues

A terror suspect is on trial in a special court in Riyadh for allegedly planning to set up a weapons factory to supply militants in Iraq and for opening an office in China to carry out his logistical operations.

“Defendant No.12 collaborated with Abu Mustafa Al-Iraqi to manufacture SAM 7 missiles while he was in Afghanistan,” said representative of the Bureau of Investigation and Public Prosecution (BIPP) during the court hearing on Sunday.

The BIP also charged defendant No. 8, affiliated to the terror cell known as the Haramain Cell, with misusing his position as the chairman of a leading charity fund in the Kingdom to enable Al-Qaeda operatives to infiltrate the fund’s ranks and divert its revenue to finance terror operations inside and outside the Kingdom.

“Even after defendant No. 8 was informed officially of the decision to shut down the charity organization and freeze its account, he went against the court’s ruling by fraudulently investing the charity’s funds in militant activities, using the names of reputable people as alibis,” the BIP official said during his court appeal.

The BIP added that defendant No. 8 invested SR 751.8 million [approximately 200 million USD], belonging to the charity to buy property, including two large buildings, at 45 locations in various provinces in the Kingdom. Moreover the investment returns from the property plots were channeled into financing terror activities, the BIP source said.

The suspect was also accused of using one of the charity’s properties to construct a water desalination factory at the cost of SR 4 million, which was placed under his son’s ownership.

Eleven of the 22 members of the Haramain Cell appeared in court on Sunday, Al-Hayat daily reported.

The suspects face charges of working in tandem with eight terror organizations including Al-Qaeda, Jamaat Abu Yusuf and Usba Al-Ansar.

Defendant No. 1 is accused of assisting certain terror organizations financially with SR8.4 million, including transferring SR2.2 million to a Saudi detained in a Lebanese jail for links with a Lebanese-based terror outfit.

Meanwhile, defendant No. 2, who holds a doctoral degree, has been charged with planning terrorist attacks in the Kingdom, in coordination with Al-Qaeda. The suspect has also been accused of contacting a number of members from Al-Qaeda as well as meeting and recruiting representatives from various terror organizations during Haj and Umrah seasons.

Charges against defendant No.7 include misappropriating the charity’s funds as well as supporting terror activities in the Kingdom.

UN removes fugitive financier from Al Qaeda list

Working together with convicted terror money man Pete Seda, Soliman al-Buthe carried out a funding operation for jihadists in Chechnya in early 2000 by helping route money through the now closed Oregon chapter of the Saudi-based Al Haramain Islamic Foundation.  Al-Buthe personally cashed $130,000 in smuggled checks from this operation at the notorious Al Rajhi Bank for subsequent transfer to the mujahideen.

While Seda faced the U.S. justice system, al-Buthe eluded it, but remained under international sanctions—until now.  It may take a little arm twisting and payola at the UN, but even Al Qaeda financiers like this fellow, and Yasin al-Qadi before him, can get themselves removed from the blacklist if they lobby hard enough… This outrageous news comes from Shariah Finance Watch on Feb. 13:

United Nations Caves to Saudi and OIC Influence, Removes Saudi Official Who is Al Qaeda Financier From Sanctions List

The involvement of wealthy Saudis and Saudi charities in funding Al Qaeda and other Jihadist terrorist organizations has been extensively documented for years, including by the US Treasury Department.

One such individual is Soliman al-Buthe, who is currently a Saudi government official and previously started a charity here in the United States in Oregon that has been tied to Al Qaeda.

This week, the UN has decided to remove al-Buthe from its Al Qaeda sanctions list. This no doubt comes due to pressure from Saudi Arabia and the Organisation of Islamic Cooperation (OIC). The OIC is a 57-member nation bloc in the UN which increasingly dictates policy to the UN…

Read the rest from SFW here.  Unfortunately, Islamic charities have played a major role in the international financing of terrorism, and Al Haramain has been one of the most prominent examples.  Viewed in this context, the UN decision is a significant step in the wrong direction for international counter-terror finance policy.

Sheikh: preventing terror finance violates rights

Sheikh Saleh bin Abdulrahman Al-Hussein, formerly the chief of the presidency of Saudi Arabia’s two holy mosques and a member of the Senior Ulema Council, has written a 1,600 word opinion piece in the Arab News defending the transfer of funds overseas through “charity” from Saudi Arabia.  Hussein asserts that such “charity” is a personal freedom and human right.

In the piece, Sheikh Saleh Hussein slams a 2003 U.S. congressional hearing, which he claims had no facts, just emotional smears, about Saudi charities involved in financing terror.  He blames that hearing, subsequent arm twisting at the United Nations, and traitorous reporting by local Gulf journalists, for giving Saudi Arabia a bad reputation as the world’s terror financial hub.

If the evidence of Saudi perfidy is all based on false or exaggerated rhetoric, can the sheikh please explain the following events?

• Why the Saudi International Islamic Relief Organization (IIRO) branch in the Philippines, which was designated by the U.S. as a terrorist entity, was founded by Osama Bin Laden’s brother-in-law, Muhammad Jamal Khalifah—a senior Al Qaeda leader?
• Why Saudi Arabia conceded that Al Haramain (a charity that operated under the control of the government of Saudi Arabia) branches in Bosnia, Indonesia, Kenya, Tanzania, and Pakistan were terrorist entities?
• Why the former head of Al Haramain in the U.S. was convicted last year to 33 months in prison for funding jihad in Chechnya?
• Why the founder of Saudi Arabia’s largest private bank (and the Sunni world’s largest sharia bank) was named in the infamous “Golden Chain” list of 20 financial benefactors of Al Qaeda, and why Saudi Arabia has resisted all legal attempts to access his bank’s records?
• Why Saudi Arabia sponsors telethons to raise money for suicide bombers?
• Why the chief of the Bangladeshi terrorist organization JMB says his funding sources include the Saudi-based Muslim World League and the World Assembly of Muslim Youth?
• Why the Saudi government continues to award public contracts to the Bin Laden family for construction projects?

Oh, and one more question.  Sheikh Hussein concludes his commentary by invoking a verse from the eighth chapter of the Koran (“The Spoils”), a sura which addresses taking the spoils of war from conquered infidels.  If the sheikh is truly interested in defending the principle of charity toward the poor, this is a quite remarkable passage to select!

Another conviction against Islamic charity leader

The zakat defenders are still out there claiming that there have been “no convictions” of Islamic charities.  They ignore the Holy Land Foundation convictions, the racketeering conviction against the CEO of Benevolence International Foundation, the successful deportation hearing against the founder of Global Relief Foundation, and convictions of Islamic American Relief Agency leaders.

Earlier this month the leader of the Oregon branch of Al Haramain Islamic Foundation, one of the handful of charities designated by the U.S. Treasury Department, was convicted on charges related to smuggling cash out of the country to jihadists overseas.  “Peace activist” Pete Seda now joins the ranks of the other Islamic charity leaders living behind bars.

From the Register-Guard on Sept. 10:

An Oregon federal jury convicted an Ashland Islamic charity leader Thursday of conspiring with a Saudi associate to smuggle $130,000 out of the United States with the intent of funneling it to Muslim fighters battling Russian troops in Chechnya.

The panel also convicted Pete Seda of filing a falsified tax return for his Al-Haramain USA charity to hide that offense. The jurors deliberated for 1½ days before delivering their 6 p.m. decision.

Seda’s face grew grim, but he otherwise was stoic as a court bailiff read the verdict. There was quiet weeping among more than a dozen of Seda’s family members and other supporters in the Eugene courtroom.

U.S. District Judge Michael Hogan set a Nov. 23 sentencing date for the Iranian born, 16-year U.S. citizen. But he ordered Seda taken into immediate custody after prosecutor Charles Gorder, Jr. argued that he might flee the country, as he did in 2003 after learning he was under investigation.

Defense attorney Steve Wax had urged that Seda remain out on bail, noting that his client had voluntarily returned face his charges in 2007.

Seda was indicted in February 2005, along with co-founder Soliman Al-Buthe and Al-Haramain USA. Al-Buthe lives in Saudi Arabia, which has no extradition agreement with the United States.

Though the charity was branded a global terror organization by U.S. officials, charges against it were dismissed when it became defunct after Seda’s 2003 departure. Other former U.S. associates of the group are suing the government for wiretapping their phone conversations without a warrant. A federal appeals judge ruled this spring that those wiretaps broke the law.

Oregon U.S. Attorney Dwight Holton praised the verdict Thursday night.

“Money is the lifeblood of terrorism in these shady, violent, religious extremist groups,” he said. “If we can stop the flow of money, we can significantly reduce the threat here at home and abroad.”

He said the jury found that Seda lied to U.S. customs and IRS officials to duck reporting requirements “vital to our effort to make sure that money does not land in the hands of terrorists or other violent extremists.”

Read the rest of the story here.

Where are they now?

The Treasury Department has designated seven U.S. Muslim charities since the terrorist attacks of Sept. 11, 2001.  Critics of U.S. designation procedures love to point out that only one of those organizations involved has been convicted, but what of the others?

Al Haramain Islamic Foundation—The Saudi charity Al Haramain funded Somali and Bosnian Islamists, had ties to Al Qaeda, and helped fund the 2002 Bali bombing.  Its U.S. branch in Oregon was designated by Treasury in 2004.  Al Haramain’s parent organization was dissolved by the Saudi government and the United Nations also blacklisted Al Haramain.  Legal charges in the U.S. were dropped because the two individuals who operated the charity fled to Saudi Arabia.  The charity was shut down and its assets are sold.  Therefore the government determined, “it would be an inefficient waste of resources to proceed against the shell corporation in this case until one of the individual defendants is apprehended.”

Benevolence International Foundation—BIF raised money to arm Al Qaeda.  Treasury designated them in 2002.  The “charity” has been shut down, and their CEO is serving time in federal prison for racketeering.