ISCA - The Islamic Supreme Council of America

Holy Land Foundation Allegedly Mixed Charity Money with Funds for Bombers

Glenn R. Simpson
Wall Street Journal Wednesday, February 27, 2002

On Oct. 1, 1993, a small group of Middle Eastern men gathered at a Courtyard Marriott Hotel near the Philadelphia airport to discuss what they called "Samah."

The meeting's focus was a fund-raising effort by the Holy Land Foundationfor Relief and Development, a group that described itself in incorporation papers filed in Texas as dedicated to "charitable relief for refugees and the indigent needy" among Palestinians in the West Bank and Gaza.

Federal Bureau of Investigation agents electronically eavesdropped on the Philadelphia gathering and unraveled the subterfuge, according to a confidential Nov. 5, 2001, FBI report: Samah was the backward spelling of Hamas, the militant Palestinian group. The FBI agents concluded that thegathering included four men with alleged ties to Hamas, which a few years earlier had begun launching suicide attacks on Israeli civilians.

For the next eight years, the FBI watched the Holy Land Foundation develop into what the U.S. now says was a fund-raising lifeline for Hamas. In 2000, the foundation raised $13.3 million in the U.S., according to its federal tax return. Some of the money it raised over the years allegedly went to families of suicide bombers -- a macabre form of life insurance that U.S. and Israeli officials say has expanded the supply of Palestinian "martyrs." Escalating Hamas attacks recently have helped bring Israelis and Palestinians to the brink of war.

Yet the U.S. government for years did little to curtail the foundation's activities. Based in the Dallas suburb of Richardson, the group had about two dozen U.S. employees and operated unfettered, even after President Clinton branded Hamas a terrorist organization in 1995 and froze its American assets. The Treasury Department -- in a previously undisclosed move -- proposed freezing the foundation's assets in 1997. But Attorney General Janet Reno blocked the proposal. Even when evidence surfaced in 1998 suggesting a tie between the foundation and Osama bin Laden, federal investigators didn't act.

The government's performance didn't reflect lack of concern on the FBI's part. Instead, the bureau struggled with the difficult task of directly connecting money raised in this country to bombs and bullets unleashed in the Middle East. It also struggled with its own embarrassing history of having been forced to disavow earlier investigations of American political activists linked to controversial foreign causes. More broadly, the case illustrates the difficulties of rooting out terror financiers in an open society that is hesitant to squelch political or religious advocacy.

The carnage of Sept. 11 transformed American attitudes toward terrorism and generated the political will to crack down on the Holy Land Foundation, former FBI officials say. On Dec. 6, after a particularly bloody weekend of Hamas attacks on Israeli civilians, the Bush administration froze the foundation's assets and padlocked its offices. "The facts are clear," Mr. Bush declared. "The terrorists benefit from the Holy Land Foundation, and we're not going to allow it. . Money raised by the Holy Land Foundation is used by Hamas to support schools and indoctrinate children to grow up into suicide bombers [and] to recruit suicide bombers and support their families."

The foundation responded in a written statement at the time that it "never provided funds, services or any other form of support to Hamas." In response to a specific question about whether it supported the families of Palestinian suicide bombers, the group said only that it gives aid "without regard to the political, religious, or social views of the residents who receive this aid." The foundation and its lawyers have declined to comment further. Shukri Abu Baker, who was its chief executive before it was closed, declined through a spokesman to comment.

The FBI's Dallas field office opened an inquiry into the foundation shortly after the group was founded in 1992 as a nonprofit corporation in Texas. From the beginning, "there was no question of the connection to Hamas -- the facts were there," says Oliver "Buck" Revell, who ran the inquiry as head of the field office in the early 1990s. The FBI during that period dug up American Express records showing that the foundation financed travel by senior Hamas activists to speak at fund-raising events, according to the Nov. 5 FBI report.

Founded in 1988 in the Gaza Strip, Hamas sets as its primary goal the replacement of the Israeli state with an Islamic theocracy. It pursues that goal by means of violence against Israel, but also through political organizing, charity and education among Palestinians.

The group, whose name is an Arabic abbreviation for Islamic Resistance Movement, operates a large network of schools and charities in Gaza and the West Bank. Initially, its representatives and fund-raisers moved openly in Israel, the U.S. and Europe. Its primary backers have always been Iran and other Islamic regimes in the Persian Gulf. Israel outlawed Hamas in 1989. Some Muslims in the U.S. and Europe continued to openly support Hamas through the 1990s, despite allegations beginning early in the decade that the group was responsible for suicide attacks on Israeli civilians.

Even after the FBI in 1992 observed what it alleged was a connection between the Holy Land Foundation and Hamas, the bureau didn't show any interest in shutting down the foundation, former agents say. Instead, the FBI wanted to generate additional leads to thwart potential future attacks -- "to develop an intelligence base that we didn't have," says Robert Blitzer, who headed the FBI's counterterrorism unit in Washington, D.C., at the time. "To shut it down at that time probably would not have been in the best interest of the nation."

The inquiry quickly bore fruit. "Numerous FBI sources" -- informants and probably eavesdropping efforts, as well -- identified the foundation's head, Mr. Baker, "as being a member of Hamas," according to the 49-page FBI report. The FBI prepared the document, which reviewed its nine-year investigation of Holy Land, for officials at the Treasury Department.

The report said that Mr. Baker attended the 1993 meeting in Philadelphia, along with three other men with links to Hamas: Abdelhaleem Hasan Ashqar had been identified in 1991 by Israeli police as a top U.S. funding source for Hamas. Mohammad Al-Hanooti had been identified by an FBI informant in 1992 as Hamas's top New Jersey fund-raiser, with $6 million to his credit in 1993 alone. And Muin Kamel Mohammed Shabib had been alleged by Israeli authorities to be a Hamas recruiter and weapons-procurement specialist.

Targeting Funds

With FBI eavesdroppers listening electronically, the attendees in Philadelphia discussed how the foundation's money could help Hamas in its jihad, or holy war, the FBI report said. "It was decided that most or almost all of the funds collected in the future should be directed to" Hamas, the report added. "Holy War efforts should be supported by increasing spending on the injured, the prisoners and their families, and the martyrs and their families," the report said. Moreover, it added, "the participants decided that for fundraising purposes, the United States theater was very valuable to them [because it] provided them with a secure, legal base from which to operate." Mr. Ashqar, who lives in Alexandria, Va., declined to comment. Messrs. Al-Hanooti and Shabib couldn't be reached for comment.

The FBI worried from early on about the potential hazards of investigating a foundation that, whatever its allegedly nefarious actions, did raise money for impoverished people abroad, former FBI agents say. In its Nov. 5 report, the FBI acknowledged that Hamas-affiliated charities supported by the Holy Land Foundation "provide needed social services for the Palestinian population," including hospitals, schools and food-and-clothing programs.

"It's very difficult for the U.S. government, given our constitutional precepts, to essentially arbitrarily take away the right of people to contribute to a charity that is going to a cause that needs an awful lot of support," says Mr. Revell, who had been the FBI's No. 2 official in Washington before his stint in Dallas.

But troubling evidence continued to accumulate. The FBI bugged another foundation meeting in early 1994 in Oxford, Miss., according to the FBI's Nov. 5 report. Eavesdropping agents heard Mousa Abu Marzook, then the U.S.-based head of the political arm of Hamas, declare that the foundation was the Palestinian resistance movement's "primary fund-raising entity in the United States," according to the report.

After a conference of Palestinian activists later in 1994 in Culver City, Calif., an informant told the FBI that Mr. Baker was introduced to the audience as the foundation's head -- and as a "senior vice president" of Hamas, the FBI report said. "Baker stated that the monies raised by [the Holy Land Foundation] were strictly for Hamas terrorists," the FBI report added.

By late 1994, journalists learned of and publicized the FBI investigation of the Holy Land Foundation. In occasional media interviews, Mr. Baker adamantly denied he or the foundation had any ties to Hamas.

Yet in 1995, more allegedly incriminating evidence about the Texas foundation's activities surfaced in Israel. In May of that year, Israeli officials raided the foundation's branch office in Beit Hanina, a village near Jerusalem. Israeli investigators concluded that the Holy Land branch there was distributing funds raised by the Texas group, which was also funneling money to numerous, ostensibly independent Islamic charities run by Hamas activists, according to the FBI's Nov. 5 report.

The raid yielded records listing dozens of recipients of foundation money who were associated with Hamas, the report said. These allegedly included the widow and son of Yehye Ayyash, the notorious chief bomb-builder for Hamas, known as "the Engineer," who was assassinated in 1996, allegedly by Israeli authorities. Another alleged recipient was the mother of Ahmed Hussein Mahmoud Shukri, a Hamas activist sentenced to life in prison in Israel for murdering a Jew in Tel Aviv in 1989. Mr. Shukri later killed a prison warden.

Other alleged recipients of Holy Land money included the father of a Hamas activist killed in a 1994 clash with the Israeli army, the mother of a man serving a life sentence for killing three Israeli civilians in 1992, and the family of a convicted bomber who killed a Canadian visiting Israel in 1990.

The 1995 raid marked the beginning of a three-year investigation of the Holy Land Foundation by Israeli authorities. The head of the foundation's Israeli branch, Muhammad Anati, provided Israeli investigators with considerable information, according to Israeli government records. The Israelis plied Mr. Anati with cookies, tea, jelly doughnuts known as sufganiot and "unlimited cigarettes," according to the Israeli records.

He allegedly admitted joining Hamas in 1990 and told his questioners he had been recruited to run the Holy Land Foundation's branch in Israel by Mr. Baker, the Texas foundation's chief executive. Mr. Anati allegedly said he was required to submit the name of every proposed aid recipient to the Texas headquarters for approval. The Israeli authorities estimated the foundation's West Bank annual budget at $1 million.

Like their American counterparts, the Israeli investigators didn't move swiftly to shut down their branch of the foundation. Both countries faced the problem of proving that, beyond its charity work, the foundation was financing terrorism.

Still, Holy Land documents seized by Israeli authorities showed that a form had to be filled out for every orphan applicant, explaining how the parents had died, according to the Israeli government records. Some of these deceased parents were described as having died while killing Israelis.

Mr. Anati allegedly told Israeli investigators that families of so-called martyrs didn't receive any better treatment than other recipients. "We have about 700 orphans, and only 1% of them belong to Hamas families," Mr. Anati said, according to the Israeli records. "If it is the orphan of a martyr or not of a martyr, it is not important to the organization."

Back in the U.S., Congress in 1995 passed legislation increasing the president's power to freeze the assets of groups that assisted terrorists. Bill Clinton quickly issued an executive order freezing the U.S. assets of Hamas. (Since then, the government has frozen $6.5 million under the order.)

The order didn't mention the Holy Land Foundation, even though more evidence was accumulating of links between it and Hamas. The Justice Department in 1995 was building a deportation case against Mr. Marzook, the U.S.-based Hamas leader. FBI agents discovered that Mr. Marzook had written two $100,000 checks to the Holy Land Foundation in 1992, according to the FBI's Nov. 5 report. Mr. Marzook also provided funds to another U.S.-based Hamas activist, Mohammed Salah, the report said.

Arrested in Israel in 1993, Mr. Salah admitted to Israeli authorities that he used the money from Mr. Marzook to buy weapons and explosives for Hamas, according to the FBI report. Mr. Salah later repudiated the confession, saying it was made under duress. He has returned to the U.S. and has denied ties to Hamas.

Acting on Mr. Clinton's 1995 order, the Treasury Department that year froze the personal assets of Messrs. Marzook and Salah. In 1997, the U.S. deported Mr. Marzook to Jordan because of his role with Hamas. He is now a Hamas spokesman in Syria and openly defends suicide bombings in Israel.

Pressure was building in the U.S. for action against the Holy Land Foundation. The organization became a target for criticism by, among others, some backers of Israel in Congress and the Anti-Defamation League. Periodic press coverage drew attention to the foundation. But the FBI still hadn't established a direct link between the foundation's money and violence, so the bureau refrained from acting.

The 1995 antiterrorism law authorized the government to freeze the assets of an organization if its funds merely benefited a terrorist group. "You did not have to be buying bullets," says former FBI analyst Matt Levitt, who is now with the Washington Institute for Near East Policy, a pro-Israel think tank.

But top officials at the FBI, and its parent agency, the Justice Department, were leery of pursuing even civil penalties. Many of those officials had unpleasant memories of past controversy over politically tinged investigations. A series of congressional probes in the 1970s had exposed J. Edgar Hoover-era tactics against left-leaning political and religious groups that included illegal spying, sabotage and blackmail. Even some conservative law-and-order advocates condemned this record.

Also in the 1970s, the FBI felt thwarted in its investigation of a politically oriented group whose methods former agents today compare to those of the Holy Land Foundation. The Irish Northern Aid Committee, or Noraid, collected charity for Catholic widows and orphans in Northern Ireland. The FBI suspected it also ran guns for the outlawed Irish Republican Army. But the bureau had trouble disentangling Noraid's legitimate activities from its alleged criminal ties and never shut down the group. Noraid denied wrongdoing and enjoyed vocal support from numerous politicians.

There was more embarrassment and frustration for the FBI over its investigation from 1981 to 1985 of the Committee in Solidarity with the People of El Salvador, a Chicago-based group sympathetic to Salvadoran Marxist rebels fighting that country's U.S.-backed government. The group, known as CISPES, fought back by filing a petition in federal court in Chicago against the FBI that led to years of bitter litigation.

The government agreed in 1997 to pay $190,000 in CISPES legal fees to settle the case. The government also agreed to make an extraordinary declaration in court: "The FBI shall not conduct an investigation solely on the basis of activities protected by the First Amendment of the Constitution of the United States, or on the lawful exercise of any right secured by the Constitution or laws of the United States." The FBI had told Congress in 1988 that "several" agents were disciplined for "inadequacies" in the CISPES probe.

'Guys Are Terrified'

In the wake of these cases, the FBI became wary of going after groups that claimed to have legitimate political agendas, former agents say. "Guys are terrified," says Mr. Blitzer, the former counterterrorism supervisor. "A bank robbery happens, you go in and investigate it, and you bring the SOB down and throw him in jail for 30 years. You're a hero." But if an investigation of a political group "doesn't go right, you're just hated," he adds.

By the late 1990s, the Holy Land Foundation's leaders repeatedly had been heard at conferences and fund-raising events saying that they supported Hamas, according to the FBI report. At one 1997 meeting, the report said, the foundation's Mr. Baker discussed the "mission to support the martyrs" and stated that "the goal of Hamas to form an Islamic state could not be thwarted."

"We all figured just logically some of that [Holy Land money] was being siphoned off for bad stuff, and the Israelis told us that," says Mr. Blitzer. But the Israelis "couldn't separate a good dollar from a bad dollar, and neither could we."

Whenever FBI agents discussed moving against the foundation, more senior officials at the Justice Department would ask them, "How can you prove to us this money isn't saving children's lives?" recalls Doug Domin, another former agent who worked on the case.

Israeli authorities outlawed the Holy Land Foundation's branch there in 1997 and confiscated its funds. The Israelis then stepped up the amount of information on the foundation they were passing along to the U.S., according to Israeli and U.S. officials.

The U.S. Treasury Department responded in 1997 by drafting a civil order that would freeze the foundation's U.S. assets. But Attorney General Reno vetoed the order. Ms. Reno declined to comment for this article. Former FBI officials say that the bureau had signed off on the asset freeze before Ms. Reno killed it.

In 1998, still more troubling evidence surfaced about the foundation after the bombings in August of that year of two U.S. embassies in East Africa. The U.S. blames the bombings, which killed more than 250 people, on Mr. bin Laden's al Qaeda organization. Investigating the attacks, the FBI discovered diaries kept by a bin Laden lieutenant, Wadih El Hage, that referred to a "joint venture" with the Holy Land Foundation. In addition, Mr. El Hage's address book contained the name and phone number of an alleged Hamas figure who worked with the foundation, Ghassan Dahduli.

Mr. El Hage's diaries and address book were introduced as evidence during his trial in federal court in New York last year. He was convicted of conspiring to kill Americans in the East Africa attacks and was sentenced to life in prison. Joshua Dratel, a lawyer for Mr. El Hage, says his client, who is appealing his conviction, was "never proven to be a member of al Qaeda" and has a history of involvement with legitimate charitable causes.

Leadership of the Justice Department and FBI shifted after Mr. Bush became president in January 2001. Nine months later, FBI agents raided the Richardson offices of InfoCom, a company located in the same office complex as the Holy Land Foundation. InfoCom, which is run by relatives of some Holy Land officials, serviced the foundation's Web site. The Bush administration froze some of the company's assets, but allowed it to continue operating and filed no criminal charges.

Six days later came the attacks of Sept. 11, and then the president's declaration of a new war on terrorism and its financiers. And on Dec. 6, the FBI finally cracked down on the Holy Land Foundation.