Charity targeted by Treasury dissolves

Suit against U.S. remains active

1/9/2012

A West Toledo charity, financially crippled after the U.S. government seized its assets in 2006 over allegations of funneling money to terrorist organizations in the Middle East, has ceased to exist, but a lawsuit filed on behalf of the charity against the U.S. government remains active.

KindHearts for Charitable Humanitarian Development Inc. published a public notice Thursday saying it has been dissolved. The nonprofit organization was incorporated in January, 2002, to provide humanitarian aid without regard to religion or political affiliation,

The charity had said it had $1 million in the bank, most of it designated for Pakistan earthquake victims, when the government moved against it.

In a 2004 filing with the IRS, KindHearts listed revenues of $5.1 million.

In its notice, KindHearts advised that financial claims against the organization should be filed by Feb. 13 with its attorney, Fritz Byers. Neither Mr. Byers nor KindHearts' president, Dr.Hatem El-Hady, could be reached for comment.

The American Civil Liberties Union and other civil rights groups sued the U.S. Treasury Department in November, 2008, alleging failure to provide due process in the seizure of KindHearts' assets.

In its challenge, the ACLU said the Treasury Department's office of foreign assets control "unilaterally froze KindHearts' property and shut the charity down based on secret evidence, without giving it any notice or a meaningful opportunity to defend itself."

Hina Shamsi, an ACLU lawyer, said at the time that the office's "unfettered authority is a dangerous and powerful weapon wielded by mid-level bureaucrats, and we're asking the court to find the freeze unconstitutional."

A year later, U.S. District Judge James Carr ruled for the charity, saying authorities had prevented it from adequately defending itself against allegations of ties to terrorism.

In another decision, handed down in May, 2010, Judge Carr ordered the Treasury Department to show probable cause for freezing the assets. He ordered the government to give KindHearts the reason behind its action that effectively put the charity out of business while the government investigated links to a terrorist outfit.

The judge said in his ruling that it was within his power "to remedy constitutional violations" that KindHearts alleged, saying this was "an unusual and atypical remedy, but this is an unusual and atypical situation."

Judge Carr asked the office of foreign assets control to consider KindHearts' request to release money to pay its legal fees.

Later that year Judge Carr ordered the Treasury Department to obtain a judge's permission before it could put a hold on any organization's funds.

After several months of discussions and multiple meetings, lawyers notified Judge Carr recently that they had reached a settlement agreement in the case but that a series of "preliminary steps" were required before the case would be dismissed.

In a one-paragraph joint status report filed with the court, the parties noted that they anticipated completing those steps by July 1.

"By that date, the parties will, as the court has ordered, either jointly move the court for dismissal of the case or file a status report," the document stated.

Details of the agreement were not a part of the court record.

The Treasury Department's actions against KindHearts in 2006 followed the discovery of documents seized by federal agents that suggested that two of three Muslim men accused of plotting to kill American and allied soldiers may have ties to the Muslim charity.

The agents had seized a KindHearts invoice from a travel agency where one of the defendants, Mohammad Zaki Amawi, had worked.

Agents also took a KindHearts binder from an address where another defendant, Marwan Othman El-Hindi, lived.

Federal authorities said at the time that the investigation of KindHearts and the alleged terrorism plot were separate.

KindHearts has denied any terrorist connections and has said it is a humanitarian organization.

Amawi, El-Hindi, and Wassim Mazloum were convicted in 2008 after a jury trial in federal court and sentenced to time in prison.

Staff writer Erica Blake contributed to this report.

Contact Jim Sielicki at: jsielicki@theblade.com or 419-724-6050.