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S. HRG. 107–1156

AN ASSESSMENT OF THE TOOLS NEEDED TO

FIGHT THE FINANCING OF TERRORISM

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

NOVEMBER 20, 2002

Serial No. J–107–112

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERBERT KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

MARIA CANTWELL, Washington 

JOHN EDWARDS, North Carolina 

ORRIN G. HATCH, Utah 

STROM THURMOND, South Carolina 

CHARLES E. GRASSLEY, Iowa 

ARLEN SPECTER, Pennsylvania 

JON KYL, Arizona 

MIKE DEWINE, Ohio 

JEFF SESSIONS, Alabama 

SAM BROWNBACK, Kansas 

MITCH MCCONNELL, Kentucky 

BRUCE A. COHEN, Majority Chief Counsel and Staff Director 

MAKAN DELRAHIM, Minority Staff Director 

(III)

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah, prepared 

statement .............................................................................................................. 97

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, prepared 

statement .............................................................................................................. 99

Specter, Hon. Arlen, a U.S. Senator from the State of Pennsylvania ................. 1

WITNESSES 

Al-Marayati, Salam, Executive Director, Muslim Public Affairs Council, Los 

Angeles, California ............................................................................................... 35

Aufhauser, David D., General Counsel, Department of the Treasury, Washington, D.C. ........................................................................................................... 16

Conrad, Robert J., Jr., United States Attorney, Western District of North 

Carolina, Charlotte, North Carolina ................................................................... 2

Gerson, Allan, Gerson International Law Group, PLLC and Professorial Lecturer in Honors, George Washington University, Washington, D.C. ............... 30

Gurule, Jimmy, Under Secretary for Enforcement, Department of the Treasury, Washington, D.C. ......................................................................................... 14

Lewin, Nathan, Lewin and Lewin, LLP, Washington, D.C. ................................. 26

Winer, Jonathan M., Alston and Bird, LLP, and Member, Council on Foreign 

Relations, Washington, D.C. ............................................................................... 33

QUESTIONS AND ANSWERS 

Responses of Robert J. Conrad, Jr. to questions submitted by Senator Biden .. 45

Questions submitted by Senator Biden to Jimmy Gurule (Note: Mr. Gurule’s 

responses were not received prior to the printing of this hearing.) ................. 51

SUBMISSIONS FOR THE RECORD 

Al-Marayati, Salam, Executive Director, Muslim Public Affairs Council, Los 

Angeles, California, statement ............................................................................ 55

Boyd, John W., Attorney at Law, Freedman Boyd Daniels Hollander Goldberg 

& Cline P.A., Albuquerque, New Mexico, statement ........................................ 59

Conrad, Robert J., Jr., U.S. Attorney, Western District of North Carolina, 

Charlotte, North Carolina, statement ................................................................ 66

Gerson, Allan, Gerson International Law Group, PLLC and Professorial Lecturer in Honors, George Washington University, Washington, D.C., statement ...................................................................................................................... 71

Gurule, Jimmy, Under Secretary for Enforcement, Department of the Treasury, Washington, D.C., statement ...................................................................... 78

Lewin, Nathan, Lewin and Lewin, LLP, Washington, D.C., statement and 

letter ...................................................................................................................... 101

Winer, Jonathan M., Alston and Bird, LLP, and Member, Council on Foreign 

Relations, Washington, D.C., prepared statement ............................................ 114

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AN ASSESSMENT OF THE TOOLS NEEDED TO 

FIGHT THE FINANCING OF TERRORISM 

WEDNESDAY, NOVEMBER 20, 2002

UNITED STATES SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:03 a.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Arlen Specter presiding. 

Present: Senator Specter. 

OPENING STATEMENT OF HON. ARLEN SPECTER, A U.S. 

SENATOR FROM THE STATE OF PENNSYLVANIA 

Senator SPECTER. Good morning, ladies and gentlemen. The Judiciary Committee hearing will now commence on the subject of 

how to combat the financing of worldwide terrorism. 

With last night’s passage by the U.S. Senate of homeland security, we have again signaled the determination of the U.S. Government to fight terrorism worldwide. We face enormous threats, as 

it is well-known from the cataclysmic events of September 11th, 

and the U.S. Government is in pursuit of Al-Qaeda around the 

world. Al-Qaeda cannot function unless it is well-financed. 

There are other major terrorist organizations, such as Hamas 

and Hizballah, and there again it is a matter of financing. The U.S. 

Government has taken steps to deal with our allies, our friends, 

and some who are not our allies and our friends, to try to stop the 

financing of terrorism. 

We will hear testimony today about what has been undertaken 

with a trip in mid-October by a key Federal official to Europe to 

talk to our European allies about stopping money laundering and 

stopping the financing of terrorism. We are going to hear testimony 

about a successful criminal prosecution involving Hamas, and we 

are zeroing in on Hizballah and all other terrorist organizations. 

Our hearing today is going to focus on an issue which has not 

received much attention, if any, and that is the potential criminal 

liability of individuals who contribute to Hamas or any other terrorist organization, where those organizations are involved in terrorism which results in the death of Americans. 

In 1986, Congress passed the Terrorist Prosecution Act which 

makes it a Federal offense to assault, maim, or murder an American citizen anywhere in the world. In 1984, the United States exercised what is called extra-terrestrial jurisdiction on hijackings 

and kidnappings. 

2

Customarily, a criminal prosecution is brought in the jurisdiction 

where the incident occurred. But there is international law and 

international support for extra-territorial jurisdiction where U.S. 

citizens are involved. And with the strafing of the Rome and Vienna airports in December 1985, it was obvious that we needed 

new legislation, which I had introduced and became the Terrorist 

Prosecution Act of 1986. 

When Hamas attacked Hebrew University and killed eight people, including five Americans, recently, one of whom was a resident 

of Harrisburg, Pennsylvania, those murders triggered the Terrorist 

Prosecution Act. People who contribute to Hamas, with its being 

well-known that Hamas is engaged in terrorist activities and wellknown that they engage in murder, including murders of American 

citizens—those individuals are subject to criminal prosecution as 

accessories before the fact to murder. 

I think that message ought to be a loud and clear one which I 

hope these hearings will emphasize, that where it is known that 

you have a terrorist organization and that terrorist organization, 

like Hamas or Hizballah or Al-Qaeda or others, has a record of suicide bombings which result in killing of Americans, those contributors are liable as accessories before the fact. 

We have a distinguished array of witnesses today. We are going 

to proceed at this time to hear from the Honorable Robert Conrad, 

Jr., who is the United States Attorney for the Western District of 

North Carolina. 

Mr. Conrad was the successful prosecutor of 18 defendants for 

operating a Hizballah terrorist funding cell in Charlotte, North 

Carolina. The indictments occurred before 9/11, but the case took 

on added significance as a result of what has happened on 9/11 and 

since. This case was the first trial of a, quote, ‘‘material support to 

a designated terrorist organization,’’ close quote, charged in the 

United States. 

Mr. Conrad, we compliment you on your work. We thank you for 

joining us and we look forward to your testimony. As it is the practice of the Judiciary Committee, the opening statements will be 

timed at 5 minutes. We would like you to stay to the extent possible within that time. I understand in Mr. Conrad’s case there is 

a video presentation, so the exception in your case will prove the 

rule, Mr. Conrad. 

STATEMENT OF ROBERT J. CONRAD, JR., U.S. ATTORNEY, 

WESTERN DISTRICT OF NORTH CAROLINA, CHARLOTTE, 

NORTH CAROLINA 

Mr. CONRAD. Thank you, Senator, and thank you for inviting me 

here. I would like to thank you, as well, for your sponsorship of the 

homeland security bill which passed last night and should be a 

great asset to our ability to fight terrorism. 

I have submitted for the record a summary of this PowerPoint 

presentation. With your permission, I would like to get right into 

it. 

Senator SPECTER. Thank you very much. The full summary will 

be made a part of the record and we look forward to your presentation. 

3

Mr. CONRAD. Senator, this was a 4-year investigation. It took 

about 5 weeks to try, and I have condensed what I can into a few 

minutes here to present with you today. 

At the outset, I would like to tell you and the public that this 

case was prosecuted by our First Assistant U.S. Attorney, Ken Bell, 

and the cooperation that he was able to coordinate among law enforcement agencies is something that the Department is proud of 

and I think the American people should be proud of. 

The first slide here is just simply the badges of various law enforcement agencies who cooperated together in the pursuit of the 

Hizballah terrorist cell in Charlotte. It goes from the State and 

local level to the international level, and it stands for the position 

that it is amazing what can be accomplished when no one cares 

who gets the credit. 

There were prosecutorial challenges in this case that we didn’t 

face in other cases. The use of confidential sources is something 

that all criminal prosecutors deal with, but in this connection the 

sources that we used—we had to protect their lives and the lives 

of their families. And so it influenced everything we did in the case, 

from charging decisions to the way we structured search warrants, 

and it was a significant prosecutorial challenge. 

Of course, we did utilize evidence obtained through the FISA Act, 

and it is amazing what kind of difference a day can make. Sitting 

here talking to you today, we now have a FISA structure that was 

unavailable to us when we started this investigation. And had we 

had then what we have now, I think we would have learned of earlier and been more effective in our pursuit of Hizballah in Charlotte. 

We also obtained great cooperation from the Canadian Intelligence Service. We learned that they had electronic surveillance of 

a Hizballah procurement cell in Canada with ties to our group in 

Charlotte, and over time we utilized evidence that they had obtained in their country. 

The CIPA Act provided for protection of classified information, 

and fortunately by the time we got to trial the information we relied upon at trial was declassified. But we were prepared to jump 

through the CIPA hoops for judges and defense attorneys and other 

witnesses who would have access to classified information. 

One of the most significant things about our prosecution is the 

RICO charges that we brought against this Hizballah terrorist cell. 

It was the first time in my knowledge that a terrorist cell had been 

subject to prosecution under the RICO Act. 

It did a number of things for us. It allowed us to call them what 

they were, and that was a Hizballah financing cell. It allowed us 

to pick up acts of illegality that were time-barred because of the 

length of time it took us to uncover the illegal activity. And it allowed us to show to a jury fundraising that dated back a number 

of years. 

Our theory was that this group came to the country illegally, 

stayed in the country illegally, stole illegally, and then gave proceeds of stolen funds to Hizballah in the Middle East. And we could 

say all of that to a jury in Charlotte, North Carolina, as a result 

of the RICO charges. 

Senator SPECTER. Mr. Conrad, where did they come from? 

4

Mr. CONRAD. Beirut, Lebanon, and various—they came to the 

country, as I will lay out as we go, through various mechanisms. 

Senator SPECTER. And there were 18 defendants? 

Mr. CONRAD. Yes, sir. 

Senator SPECTER. Were there other co-conspirators or others involved in the plot? 

Mr. CONRAD. Of the 18, there were 6 that we ultimately charged 

with material support, and there were other associates of the 6 who 

had various levels of awareness of what was going on. The benefit 

of the RICO statute is we could charge the whole group as an association in fact and bring all 18 before the United States district 

court. 

Senator SPECTER. So this large group came from Beirut, Lebanon, in a calculated way, coming to North Carolina, engaging in 

cigarette smuggling, which was the gravamen of their profits, and 

accumulated millions of dollars and funded Hizballah? 

Mr. CONRAD. Yes, sir. You have succinctly summarized our case. 

Senator SPECTER. Well, you wonder on that kind of an operation 

from Beirut, with that many people going to a town in North Carolina on that kind of a scheme and plot, how far-ranging their activities must be. 

Mr. CONRAD. I believe that if there is a Hizballah terrorist cell 

in Charlotte, which was proven beyond a reasonable doubt to the 

satisfaction of 12 jurors, then there are similar cells elsewhere. And 

I think this is a serious——

Senator SPECTER. You wouldn’t ordinarily expect Charlotte to be 

the focal point of Hizballah activities, would you? 

Mr. CONRAD. You would not. We were very surprised to find that 

out. 

Of course, the material support statute is a great tool in the Federal prosecutor’s arsenal. It allows us to not only dismantle a financial enterprise, but in this particular case it allows us to seek 

heavy sentences for the criminal conduct involved. 

The material support charge we brought in Charlotte was the 

first material support charge that was ever tried to a jury in the 

country, and it is now being used in Buffalo, Detroit, Portland, and 

elsewhere. One of the advantages to the material support charge 

is that, upon a finding of guilty and the application of the Sentencing Guidelines, there is a severe sentence that is applicable as 

a result of that charge. 

There were other significant legal hurdles that we encountered 

and dealt with, but let me move on a little bit to the facts. 

What you have pictured before you is JR’s Tobacco Warehouse in 

Statesville, North Carolina. JR’s Warehouse is the largest wholesaler of tobacco products in North Carolina, and it was here that 

this case began. 

An off-duty Iredell County deputy sheriff noticed young men 

coming into this warehouse and buying bulk quantities of cigarettes with bags full of cash, and then he observed them putting 

those cigarettes into a van and heading north on I–77. 

Now, the only thing north of Statesville on I–77 is Mount Airy, 

the home of Andy Griffith, and a State line. And once that van 

crosses a State line, a Federal felony is committed. This deputy 

sheriff was alert enough to recognize this suspicious activity and 

5

contact his friends at the ATF. The ATF began a cigarette investigation as a result. Basically, the investigation began in July 1996, 

and the surveillance led to the identification of a Lebanese cigarette-smuggling organization. 

The nature of this case was that in North Carolina, cigarettes 

are taxed at a 50-cent-per-carton rate and no tax stamp is applied 

to those purchases. In Detroit, Michigan, the cigarette tax is $7.50 

a carton, and so this provided the economic incentive to purchase 

bulk-quantity cigarettes in North Carolina and smuggle them for 

resale in Michigan. 

Our evidence showed that these co-conspirators averaged about 

$13,000 per van load, that they made approximately three to four 

van trips to Michigan a week, and that all told they purchased approximately $8 million worth of cigarettes and made a profit of between $1.5 and $2 million. 

Now, the difficulty with the case was that we were sitting in 

Statesville, North Carolina, a rural community, and any juror who 

sat on this case would have actually benefited from the illegal activity of these co-conspirators. They were, after all, paying retail 

sales tax on these purchases. The loss was in Michigan, where the 

tax there was avoided by this illegal activity. So at this point there 

was a real question as to the jury appeal of a case like this. 

What happened was that about this time in the investigation 

when charging decisions on the cigarette case were made, the FBI 

walked in with news that they had, through their intelligence investigations, discovered a Hizballah terrorist cell. They showed us 

a series of pictures that are represented here, and what was interesting about this is that each of these people pictured, whom the 

FBI had identified as being involved in a terrorist financing cell, 

were also our cigarette smugglers. And this case ceased to be about 

cigarettes and became about Hizballah. But these were intelligence 

sources, not sources we could use in a criminal case without burning those sources, and so a criminal investigation began on 

Hizballah. 

Senator post 9/11, people tend to forget who Hizballah is, in the 

wake of the attention focused on Al-Qaeda. But we didn’t forget. 

Senator Graham, of the Senate Intelligence Committee, just last 

spring referred to Hizballah, not Al-Qaeda, as the A Team of terrorism. Imad Mugniyah, in contrast to Osama bin Laden—he said 

that Mugniyah made Osama bin Laden look like a school boy. 

Hizballah is responsible for the Marine barracks bombing in Beirut in 1983 that killed 241 Marines, 6 months after they blew up 

the embassy in Beirut. They were responsible for the skyjacking of 

TWA flight 847 and the shooting death of a United States Navy 

diver who was dropped on the tarmac, and they were responsible 

for a series of kidnappings in 1980, including Terry Anderson, and 

CIA Station Chief Buckley, who was tortured and murdered. This 

is the group that we were confronted with in Charlotte, North 

Carolina. 

Senator SPECTER. And they continue to the present time, Mr. 

Conrad, to practice terrorism on the southern Lebanon border 

going into Israel. 

Mr. CONRAD. Yes, sir. 

6

Senator SPECTER. And they are reputedly financed by Iran and 

assisted by Syria, so they are a very formidable force. 

Mr. CONRAD. One of the things that we did in this investigation 

is we executed 18 search warrants of residences of the people we 

identified as being part of this RICO enterprise. And at the residence of Mohamad Hammoud, the main target of this investigation, 

we uncovered this video. 

The scene you are about to see is from that video from the house 

of Mohamad Hammoud and it depicts members of the martyr 

squad from Hizballah taking an oath. 

[Videotape shown.] 

Senator SPECTER. Now, what is this a picture of, Mr. Conrad? 

Mr. CONRAD. This is a video taken from the home of Mohamad 

Hammoud and it depicts members of a martyr squad taking an 

oath. 

Senator SPECTER. Who took the video? 

Mr. CONRAD. We don’t know who took the video. We found it in 

the home of Mr. Hammoud. 

Senator SPECTER. It was taken there, not knowing that it would 

be subject to seizure and observation by law enforcement officials? 

Mr. CONRAD. Yes, sir, and quoting from the trial testimony, the 

translator translated what you just heard from the secretary general of Hizballah saying, ‘‘We will answer the call and we will take 

an oath to detonate ourselves, to shake the grounds under our enemies, America and Israel.’’ And then a group responds, ‘‘We will 

answer to your call, Hizballah. We will answer to your call, 

Hizballah.’’

Senator SPECTER. And that occurred in North Carolina? 

Mr. CONRAD. Yes, sir. 

A second video was seized with, again, the secretary general of 

Hizballah speaking to a crowd, and he is saying ‘‘Death to America.’’ And the crowd is repeating behind him, ‘‘Death to America 

and death to Israel.’’ The crowd replies, ‘‘Death to Israel.’’

Senator SPECTER. Where did that scene occur, if you know? 

Mr. CONRAD. It is our understanding that those were speeches 

given in Beirut, Lebanon, and found in the home of Mohamad 

Hammoud in Charlotte, North Carolina. 

Senator SPECTER. Thank you. 

Mr. CONRAD. If I could speak briefly about the two main targets 

of the investigation, Mohamad Hammoud and Mohamad Atef 

Darwich, and Darwich’s cousin, Ali Fayez Darwich, they came into 

the United States in 1992 through Venezuela. They bought fraudulent U.S. visas for $200. They landed at JFK, dropped the credentials in the trash can, and claimed asylum. Their reason for asylum 

was that they were being persecuted by Hizballah. 

What happened after that is amazing. They were given a hearing 

date and released, never to appear again. 

Senator SPECTER. Were they granted asylum? 

Mr. CONRAD. They never even applied for it after that. 

Mohamad Hammoud three times was denied a visa from Damascus. At trial, he was asked why he went to Damascus for a visa. 

He indicated no special reason. He was cross-examined on the fact 

that he went to Damascus because Hizballah has blown up the embassy in Beirut. 

7

This slide is a picture of several of the convicted defendants. 

Each of them engaged in marriage fraud to stay in the country. 

Some of them tried three times before it finally worked. 

Approximately 500 bank accounts, credit card accounts, and 

other financial accounts were examined via a Federal grand jury 

subpoena and Federal search warrants. The number of aliases and 

fraudulent identities in this case was simply amazing. 

Mohamad Hammoud had two valid North Carolina drivers’ licenses, one in his name, one in an alias. He also obtained other financial identities by either purchasing or being given student accounts. People who had come to UNC-Charlotte and other universities and gone back to Lebanon would leave their account identifications with Mohamad Hammoud, creating an adoptive identity. 

His brother, Chawki Hammoud, had multiple identities, and 

what is very interesting is on the far right there is a Social Security card and an employment authorization card in the name of 

Haven Shaveski. This name never came up in the investigation and 

we had expert testimony at the trial that the fact that you would 

have an identification never used was perfect terrorist trade craft, 

that you would have an identity and never use it unless, of course, 

you had to. 

Said Harb, another co-defendant, had multiple credit cards and 

identities. In fact, he had a notebook of fraudulent identities. His 

theory was that if you declare bankruptcy, every 7 years your credit is cleaned and you can start over again. He had seven sets of 

false identities and his theory was to bust out credit cards one 

identity per year, $150,000 or more tax-free, and then just put that 

aside and 7 years later pick it up and use it again. We caught him 

in the second year of that——

Senator SPECTER. Is there any way for the credit card companies 

or law enforcement to track that and stop someone from these multiple identities? 

Mr. CONRAD. With the threat of terrorism and the significant 

role that identity theft and identity fraud play in that threat, I 

hope that that is a focused concentration of law enforcement 

throughout the country. It is in Charlotte, North Carolina. 

A simple slide: of course, it is always nice when co-defendants 

take pictures of themselves with ill-gotten gains. 

We learned through the FBI that Said Harb, our cigarette smuggler and credit card con artist, was involved in Hizballah procurement activity in Canada. We began slowly to take baby steps with 

the intelligence service in Canada and acquired information from 

them over time, first for search warrants which enabled us to look 

for Hizballah-related material; second, for purposes of detention 

hearings, and ultimately for use at trial, where we convinced a 

Federal district court judge in Charlotte to admit Canadian Intelligence Service summaries of intercepts as exceptions to the hearsay rule in the trial of this case. 

Here are a few of those intercepts. In the first one——

Senator SPECTER. What was the basis for the exception to the 

hearsay rule? That sounds like a pretty sophisticated ruling, having tried a few of those cases myself. 

Mr. CONRAD. It was two-fold. One was the public records exception. The Canadian Intelligence Service is actually a public agency 

8

whose stated purpose under law is to perform surveillance of this 

fashion, and we were successful in making that argument. 

Senator SPECTER. And what was the quality of the cooperation 

by the Canadians? 

Mr. CONRAD. It was outstanding ultimately, slow at first, some 

degree of reluctance to share information with American prosecutors that maybe they hadn’t shared with the RCMP in cases before. 

But their cooperation with us was outstanding. 

The second theory was past recollection recorded. We were prepared to bring down the operators of the surveillance equipment in 

light disguise to testify at trial at one point when these things were 

fresh in their minds that they recorded in the fashion that they 

did. And once the judge admitted that and was going to permit us 

to let them testify in light disguise, the defendants stipulated to 

the admissibility of these intercepts. 

One of the defendants who is still a fugitive is Mohamad Dbouk. 

Mohamad Dbouk is such a major player in the Hizballah organization that on five separate occasions, his application to be a martyr 

was rejected. Hizballah is such an organized terrorist group that 

they actually have application forms for martyr duty. Dbouk applied five times——

Senator SPECTER. Application forms for martyrdom? 

Mr. CONRAD. To be a martyr. 

Senator SPECTER. That is a special application? 

Mr. CONRAD. Yes, sir, and he was rejected five times because of 

his significance to this organization. 

Senator SPECTER. What are they looking for? What are the qualifications to be a martyr? 

Mr. CONRAD. I don’t think there are a whole lot of qualifications 

to be a martyr. 

Senator SPECTER. Why was he turned down? 

Mr. CONRAD. I think when you are qualified, they don’t want you 

to be a martyr. He was such a significant player that they would 

rather get other people other than him to perform that role. 

Senator SPECTER. Too important to be a martyr? 

Mr. CONRAD. Yes, sir. 

Senator SPECTER. But you say separate application forms? 

Mr. CONRAD. Yes, sir. 

Senator SPECTER. Like applying for a job or applying to law 

school or medical school? 

Mr. CONRAD. Yes, sir. That is what our investigation revealed. 

Senator SPECTER. Do you have a copy of such an application? We 

would like to put one in the record. 

Mr. CONRAD. This was human intelligence source information to 

us. 

Dbouk remarked in this intercept that he did not care about anything and was committed to securing all the items for the brothers 

at any cost to avoid going to hell, and to secure a place in heaven 

by so doing. 

Senator SPECTER. You might focus on that for a just minute, Mr. 

Conrad. I was asked yesterday as to whether our homeland security bill would deter Al-Qaeda, and whether the President’s activities in Prague at the NATO meeting would deter Al-Qaeda. And I 

responded that Al-Qaeda and Hizballah and Hamas are motivated 

9

by deep religious views and are, as you have noted, searching for 

a place in heaven. 

I think it would be useful if you would expound on that just a 

little bit as to the kind of an enemy you are dealing with here and 

how ruthless and how dedicated and how determined they are. 

Mr. CONRAD. I agree with that assessment of the seriousness of 

their motivation, and it is unlikely that the threat of criminal prosecution would deter their violent acts. However, I think a successful criminal prosecution would disrupt their organized violent activities. 

Senator SPECTER. And incarceration would disrupt their criminal 

activities. 

Mr. CONRAD. Yes, sir, and that was our goal. 

This next intercept involved a communication from Mohamad 

Dbouk to Hassan Laqis, the head of procurement for Hizballah. 

Dbouk tells Laqis that he is ready to do—near the last sentence, 

‘‘I am trying to do my best to do anything you want. So, please, you 

must know that I am ready to do anything you or the Father want 

me to do, and I mean anything.’’ The Father, our intelligence 

sources confirmed to us, is Imad Mugniyah, the most serious terrorist in the Hizballah organization. 

This is a lengthy intercept, the significance of which is that 

Mohamad Dbouk, in the course of discussing life insurance, refers 

to a person who might, in a short period of time, go for a walk and 

never come back. 

Senator SPECTER. Mr. Conrad, you might explain why some part 

of the sheet is blacked out, the redactions, for those who are unfamiliar with FBI reports. 

Mr. CONRAD. Yes, sir. We have presented both at trial and before 

you today a declassified version of the intercepts that were shared 

with us both by the Canadian Intelligence Service and as a result 

of our FISA warrants. 

This next intercept is a conversation between a fugitive defendant and Mohamad Dbouk in which they talk about Imad 

Mugniyah. Dbouk says he knew who Imad was. ‘‘Amhaz inquired 

if Imad was working with the young men,’’ believed a reference to 

Hizballah members such as Laqis. Dbouk revealed that Imad was 

the whole story. 

And then in the next intercept, just talking about Imad 

Mugniyah was a terribly dangerous thing to say. Amhaz asked why 

Dbouk said what he said and Dbouk answered, ‘‘Would anyone 

bring up Imad’s name possibly as being associated with Imad here 

in Canada or in any other country and stay alive?’’

Quickly, on the next slides, our source information was telling us 

that one of the members of the Charlotte cell was going up to Canada to get false drivers’ licenses and false credit cards, and the 

method of transfer was that these false documents were put in a 

cigarette package. 

It was greatly appreciated by us when CIS shared information 

with us and showed us a series of photographs of our defendant 

from Charlotte in Canada taking, first, a credit card out of a cigarette pack and then a driver’s license—an amazing corroboration of 

the human intelligence information we were getting. 

10

Senator here are some of the things charged in the indictment 

that were procured by this criminal activity and the subject of expert testimony in our case as to their dual-nature use by a terrorist 

organization: night vision devices; surveying equipment; global positioning systems; mine and metal detectors; video equipment; advanced aircraft analysis and design software; stun guns; hand-held 

radios and receivers; cellular phones; nitrogen cutters, which I understand are for cutting metal underwater; mining, drilling and 

blasting equipment; military-style compasses; binoculars; naval 

equipment; radars; dog repellers; laser range-finders; camera 

equipment. 

Senator this is a picture of the main target, Mohamad 

Hammoud, who was only 19 when he entered the United States via 

Venezuela in 1992. We asked ourselves, how could this person 

maintain a leadership role in an organization like this? 

One of his main contacts is Sheikh Abbas Haraki, who is the 

leader of Hizballah for all of Beirut, and much older than Mr. 

Hammoud. This is a FISA intercept of a conversation between Mr. 

Haraki and Mr. Hammoud. If I could take a moment to play it for 

you, one of the things you will note is the affectionate tone between 

the two gentlemen. This is an intercept of a conversation in about 

May of 2000 as Israel is withdrawing from Lebanon. 

[Audiotape played.] 

Senator SPECTER. Mr. Conrad, why don’t you repeat what is on 

the screen so the record can pick it up? 

Mr. CONRAD. This is the translation of a conversation between 

Mohamad Hammoud and Sheikh Abbas Haraki, the leader of 

Hizballah for all of Beirut, in which they are congratulating each 

other on the withdrawal of Israel from Lebanon in May of 2000. 

I will go quickly through some of these slides. I know I am over 

time. 

Senator SPECTER. How much longer do you expect to be, Mr. 

Conrad? 

Mr. CONRAD. A few minutes. 

These were all additional intercepts of conversations between our 

group in Charlotte and others, letters or intercepts talking about 

the opportunity to provide material support to Hizballah from the 

United States. 

Senator SPECTER. Any references beyond North Carolina? 

Mr. CONRAD. No, sir, other than the fact that one of our individuals was working with a group in Canada and coordinating a procurement out of Canada as well. 

This is a still photo of Sheikh Haraki off a video seized from 

Hammoud’s house with the Hizballah flag on the podium. A series 

of receipts for material support to——

Senator SPECTER. Speaking from Lebanon? 

Mr. CONRAD. Yes, sir, a series of receipts from Lebanon for 

money sent to Hizballah by members of our organization in Charlotte. 

So, in conclusion, ultimately 25 individuals were charged with, 

first, cigarette tracking, and later RICO wire fraud, marriage 

fraud, and ultimately material support. At the moment, there are 

five fugitives, four of them charged with material support. 

11

This is what we are dealing with, Senator. This is a home movie 

seized from Mohamad Hammoud’s residence. It is a picture of his 

nephews in Lebanon, and the trial testimony revealed that these 

two nephews were encouraged by adults to tell who they were. And 

initially the children are not very responsive and they are slapped 

in the face and commanded, ‘‘Tell them who you are, tell them who 

you are,’’ to which ultimately the little boy in red there says, 

‘‘Hizballah,’’ age 3. 

Senator SPECTER. They start them at a very early age. 

Mr. CONRAD. Yes, sir. 

This is a picture of defendant Mohamad Hammoud, age 15, at 

the Hizballah center with his AK standing next to a picture of the 

Ayatollah Khomeini. 

Senator SPECTER. Mr. Conrad, how do you combat that? How do 

you combat indoctrination of children and teenagers? 

Mr. CONRAD. From the U.S. Attorney’s perspective, you do what 

you can with the effects of that indoctrination wherever you can. 

Senator SPECTER. We have to start at a much earlier phase, and 

that is something that this Committee is working on. 

Mr. CONRAD. Senator, if I could just show you a few slides, this 

is defendant Mohamad Darwich, who brought in a family friend to 

say there was nothing Hizballah-related about this group. And 

when asked about this photograph, he identified Mohamad 

Darwich as his cousin. On cross, he was asked if Darwich was a 

member of any militia and he said no, despite this picture. 

On the second picture, they asked this witness who the person 

on the left was and he said, ‘‘My cousin, Mohamad Darwich.’’ And 

the prosecutor, Ken Bell, said, ‘‘Holding a gun?’’ And he said, ‘‘Yes, 

holding a gun, a very big gun.’’ But this did not trigger any response that there was militia activity by Darwich, nor did this picture. His testimony was it is just a group of guys hanging out, nor 

that picture. 

Senator SPECTER. And these pictures were taken where? 

Mr. CONRAD. They were taken in Lebanon and seized in Charlotte. 

These are the two principal defendants, Mohamad Hammoud 

and Mohamad Atef Darwich, in Charlotte, North Carolina, and 

from the Washington Monument, in a place we never wanted to see 

them. We accomplished our goal of disrupting and dismantling a financing cell in Charlotte. Whether we did more is anybody’s guess. 

Thank you, Senator. 

Senator SPECTER. Well, that is very impressive, Mr. Conrad. It 

speaks for itself and it raises the immediate question, if this is 

going on in Charlotte, North Carolina, involving millions dollars in 

smuggling on a plot coming out of Beirut, what is happening in 

other places in the United States? This is a matter which requires 

very intensive investigation. 

What was the result of the trial? 

Mr. CONRAD. The result of the investigation is that 18 people 

have pled or been found guilty. 

Senator SPECTER. Have they been sentenced? 

Mr. CONRAD. They await sentencing in most every case. 

Senator SPECTER. What do the guidelines call for? 

12

Mr. CONRAD. With a material support charge and a 12-level enhancement under the guidelines, and also a criminal history category 6 which is triggered by this kind of conviction, the judge can 

throw away the key. The statutory maximum, however, is only a 

15-year statutory maximum, and that might be one thing that the 

Senate should look at. 

Senator SPECTER. Do you think we ought to reevaluate the sentencing there for tougher prison terms? 

Mr. CONRAD. If the guidelines trigger a 30-year-to-life sentence 

but a defendant can only get a 15-year sentence as the result of 

a statutory maximum, perhaps that is something for you to consider. In this case, we have box-cared 40-some charges. 

Senator SPECTER. We will take a look at that. That is the purpose of the hearing to see if the penalties are adequate. 

Mr. Conrad, when you talk about people in Lebanon, and you 

showed pictures of planning, conspiracy, incitement to violence, 

what action would you recommend as to those people? 

American citizens have been murdered as a result of Hizballah 

activities. You had the Marine barracks, which you have already 

identified, in 1983. You had the man thrown out of the airplane on 

the tarmac, a most brutal killing in connection with hijacking. 

Could you give us some idea as to how many murders Hizballah 

has been involved in involving Americans, United States citizens? 

Mr. CONRAD. I think prior to 9/11, they were responsible for more 

murders of United States citizens than any other terrorist organization known to us. 

Senator SPECTER. And a good many of those occurred after 1986, 

so they would be subject to the Terrorist Prosecution Act, with jurisdiction attaching as of that date. 

Mr. CONRAD. Yes, sir. One of the hopefully significant things of 

this investigation—there are four people charged with material 

support who are fugitives, one in Canada, and three we believe are 

living in Lebanon. We would love to bring those people someday before a court of justice in the United States. 

Senator SPECTER. Well, the United States is moving against Al 

Qaeda key people. You saw what happened in Yemen not too long 

ago, with military action taken against Al-Qaeda key figures. 

Would you recommend that for Hizballah key figures outside the 

United States? 

Mr. CONRAD. Yes, sir, and I hope that extradition efforts and 

other rendering efforts might someday be fruitful here. 

Senator SPECTER. It is pretty hard to extradite from Lebanon. 

Mr. CONRAD. And Canada. 

Senator SPECTER. But it is possible to do other things in Lebanon. 

Mr. CONRAD. Yes, sir. At the very least, the world has become 

a smaller place for those individuals. 

Senator SPECTER. You mentioned FISA, the Foreign Intelligence 

Surveillance Act. Have you had an opportunity to study the lengthy 

opinion of the appeals court that was handed down 2 days ago? 

Mr. CONRAD. I am not posing as an expert in that area, but I 

have read that decision. 

Senator SPECTER. Well, it is a very far-reaching case. It goes 

back and disagrees with circuit court opinions which had concluded 

13

that the primary purpose had to be intelligence-gathering, and 

picked up the legislative history and noted the intertwining of foreign intelligence and criminal conduct. 

There have been concerns raised about the civil liberties point of 

view which are legitimate concerns, and the court said you could 

not use the Foreign Intelligence Surveillance Act if there is only 

criminal activity. But if there is an intertwining, then law enforcement does have a legitimate role. 

This Committee is going to do some hearings on that. It is a 

very, very important subject. The courts had interpreted the Foreign Intelligence Surveillance Act to say the primary purpose had 

to be intelligence-gathering. In the legislation last fall, the so-called 

PATRIOT Act, the Congress changed that to ‘‘significant purpose.’’

The Justice Department has argued that if foreign intelligencegathering is significant, then the primary purpose can be law enforcement. The court didn’t go quite that far, but I would be interested in your views at a later date as to how the interpretation by 

the appellate court would have affected your work. That case may 

well yet end up in the Supreme Court. 

Mr. CONRAD. Yes, sir. 

Senator SPECTER. Well, Mr. Conrad, we thank you for the very 

impressive job you have done here. To take a criminal prosecution 

as complex as this from beginning to end—I know from my own experience how difficult it is and it is a great result. And perhaps an 

even greater result is putting the American people on notice as to 

how far-reaching Hizballah’s tentacles are. If they go to Charlotte, 

North Carolina, watch out. 

Mr. CONRAD. Thank you, Senator. 

Senator SPECTER. Thank you very much, Mr. Conrad. 

[The prepared statement of Mr. Conrad appears as a submission 

for the record.] 

Senator SPECTER. We turn now to our panel No. 2: Mr. James 

Gurule, Under Secretary for Enforcement, Department of the 

Treasury, and Mr. David Aufhauser, General Counsel for the Department of the Treasury. 

Mr. Gurule traveled to Europe very recently, in mid-October, to 

provide several European governments specific information on selected high-impact targets so that they could be designated ‘‘terrorist financiers’’ and have their assets blocked. 

Those involved reportedly were wealthy Saudis with assets in 

Europe who provided financial support to Al-Qaeda. That is a 

major, major problem about the Saudis financing Al-Qaeda, something that has to be looked at very, very hard. 

Mr. David Aufhauser is General Counsel to the Department of 

the Treasury and has a key role as chairman of the Interagency 

Task Force on Terrorist Financing, which comes under the ambit 

of the National Security Council. 

So you men are right in the center of high-level efforts to block 

terrorist funding. 

Mr. Gurule, I understand this is your first appearance to testify 

in a congressional hearing on these important subjects. We thank 

you for coming and look forward to your testimony. 

14

STATEMENT OF JIMMY GURULE, UNDER SECRETARY FOR ENFORCEMENT, DEPARTMENT OF THE TREASURY, WASHINGTON, D.C. 

Mr. GURULE. Thank you, Senator Specter, for holding this important hearing, and thank you for inviting me and my colleague, 

David Aufhauser, who you stated is the General Counsel of the Department of the Treasury. 

I would like to take a few minutes of my opening statement and 

discuss the actions that the Treasury Department has taken to 

identify, to disrupt and dismantle the financial networks that are 

supporting Al-Qaeda and other terrorist groups. 

It is also a pleasure to be here today with United States Conrad, 

from the Western District of North Carolina. As you have heard, 

he has been involved in a very important and cutting-edge terrorist-related case that involved extensive interagency, international cooperation. I am particularly pleased with the contributions that Treasury law enforcement made, specifically the ATF 

and IRS CI. 

I would also like to thank you and this Committee for the important work that you have done, the tools that you have given the 

Treasury Department in the form of the USA PATRIOT Act. We 

have been actively involved in implementing the regulations, publishing the regulations to implement the legislation, and to actually 

utilize these important provisions. 

What distinguishes the Department of the Treasury and its operational law enforcement components is the Department’s unique resources and extensive financial investigative expertise, and want to 

emphasis there ‘‘financial,’’ which has been developed over decades. 

These resources come from many Treasury law enforcement agencies, including the Customs Service, the Secret Service, FinCEN, 

IRS CI, the Office of Foreign Assets Control, and other important 

Treasury offices. 

The Treasury Department is also in a unique position to leverage 

its relationships with domestic and foreign financial institutions 

and foreign finance ministers in the war against terrorist financing. 

Treasury’s focus is both systemic and financial. We are looking 

at systems, ways, methods that terrorists use to raise and to move 

money globally, both through traditional financial systems, banks, 

but also through non-traditional mechanisms such as charities, 

hawalas, bulk-cash smuggling, and we have seen, in addition, 

trade-based money laundering. 

We follow the money through these systems to identify targets 

through public designations, the blocking actions that we have 

taken, regulations, and investigation. Through these means, we are 

able to cripple terrorist access to these formal and informal financing channels. 

Our strategy is comprehensive and it is long-term. The President 

has stated repeatedly that this is a long-term effort. He is committed to combatting terrorism for the long term, not only in the 

form of Al-Qaeda, but other terrorist groups that threaten freedom 

and democracy around the world. 

This strategy focuses on seven areas: first, targeted intelligencegathering; second, freezing of suspect aspects; third, law enforceVerDate 0ct 09 2002 09:22 Jul 24, 2006 Jkt 088867 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\88867.TXT SJUD4 PsN: CMORC
15

ment investigative actions; fourth, diplomatic efforts and outreach, 

if you will, quiet diplomacy; fifth, smarter regulatory scrutiny; 

sixth, outreach to the financial sector, looking for ways to establish 

important partnerships with the public sector, with the government 

and the private financial sector; and, last, capacity-building for 

other governments in the financial sector to ensure that their regulatory systems are not vulnerable to money laundering and terrorist financing. 

Let me speak first to the value of the designation process. This 

is clearly the most visible and immediately effective tactic of our 

comprehensive strategy. This has been to designate and block the 

accounts of terrorists and those associated with financing terrorism. 

In fact, just yesterday the United States designated the Benevolence International Foundation and two sister entities in Canada 

and Bosnia, and submitted these names to the United Nations 

Sanctions Committee for worldwide designation. So we are taking 

action to designate terrorist financiers and cutoff their access to 

U.S. financial institutions, but at the same time work with the 

international community so that the international community can 

take action to cutoff their access to foreign banks throughout the 

world. 

I believe that this effort to date has been a very successful effort. 

It has resulted in the designation of 250 terrorist-related individuals, terrorist financiers and entities, and it has resulted in the 

blocking of over $113 million in terrorist-related funds globally. 

Senator SPECTER. 113? 

Mr. GURULE. $113 million, Senator. 

Senator SPECTER. Terrorist funds have been seized, blocked? 

Mr. GURULE. Have been blocked. The effect of this is that $113 

million have been prevented from going into the hands of terrorists 

and terrorist organizations for use to finance future terrorist acts. 

Let me just make one last point. I realize that my time is short, 

but I think it is important to emphasize that the effectiveness of 

these designations cannot and should not be measured strictly by 

the number of terrorist-related designations and the amount of 

money blocked. I mean, obviously this is important, but it is not 

the principal goal and objective. 

More important than these numbers is the disruptive and deterrent effect that the designation process has on the actual and potential terrorist financing networks. Specifically, these designations 

advance global interests in suppressing terrorist financing by the 

following—and then I will conclude—first, by shutting down the 

pipeline by which designated parties move money to support terrorism; second, by informing third parties who may be unwittingly 

financing terrorist activity of their associations with supporters of 

terrorism; third, by deterring undesignated parties that might otherwise be willing to finance terrorist activity; next, by exposing terrorist financing money trails that may generate important investigative leads that will assist the U.S. Government in identifying 

terrorist cells in this country and abroad; fifth, by forcing terrorists 

to use more costly and informal means to move money, and riskier 

means to move money, in essence, to move them out of their comfort zone and cause them to use less proven methods of moving 

16

money such as bulk-cash smuggling; and then, last, by supporting 

our diplomatic effort to strengthen other countries’ capacities to 

combat terrorist financing. 

Finally, let me just comment that, for me, over the last year-plus 

that I have been involved in this undertaking, what has surprised 

me the most is the extent to which charities are being used to raise 

money and to move money to support terrorist activities. 

To date, the U.S. Government has designated 15 Islamic charities that are connected to terrorist financing, and we have blocked 

internationally approximately $20 million in terrorist-related 

funds, and domestically a little over $8 million of terrorist-related 

funds. 

With respect to my trip, I would just add that I was in Europe 

last month. I visited five countries in 5 days. Three of those countries represented important international financial centers. I visited Switzerland, Liechtenstein and Luxembourg to meet not only 

with the finance ministers of those countries, but also to meet with 

the bankers associations to talk to them about ways in which we 

can enhance our efforts and make it more difficult for terrorists to 

access foreign banks and move money. 

I also had an opportunity to travel to Copenhagen and to Stockholm. When I was in Copenhagen, my purpose there was to meet 

with the Chair of the EU clearinghouse. The EU has a clearinghouse process that is similar—there are some significant differences, but similar to the U.S. process of designation of terrorist 

financiers and entities. There, the concern was how to make the 

EU process more agile, more efficient, more expeditious in terms of 

designating terrorist financiers by the EU. 

Then, last, with my visit in Stockholm, it was to meet with the 

incoming president of FATF, the Financial Action Task Force. In 

June of 2003, Sweden will assume the presidency. We have been 

working very closely that important multilateral organization to establish international standards against terrorist financing. 

So with that, again let me thank you for this important hearing 

and I am happy to respond to any questions that you might have, 

Senator. 

[The prepared statement of Mr. Gurule appears as a submission 

for the record.] 

Senator SPECTER. Thank you very much, Mr. Gurule. I will have 

some questions, but first I want to turn to Mr. David Aufhauser, 

General Counsel at the Department of the Treasury. 

Welcome, Mr. Aufhauser. We look forward to your testimony. 

STATEMENT OF DAVID D. AUFHAUSER, GENERAL COUNSEL, 

DEPARTMENT OF THE TREASURY, WASHINGTON, D.C. 

Mr. AUFHAUSER. Thank you, sir. I have a very brief statement 

if you would like to hear it. 

Senator SPECTER. I would. 

Mr. AUFHAUSER. I have done a little less traveling than the 

Under Secretary, but I was in Cambridge, England, on September 

11th of 2001, and I was attending an international conference on 

money laundering and it was populated by a lot of luminaries in 

the field—judges, chief judges, the head of Interpol, the head of 

Europol, and a few general counsels. 

17

Although it was a pretty sober affair, it was also an affair of 

some self-congratulation because we had made over two decades of 

work on money laundering some advances on a pretty bedeviling, 

taxing problem. We had elaborate computer screens, we had predictive models, we had profiles of conduct, we had some captures, 

we had some indictments, we had some forfeitures, all suggesting 

that we were making some gain on a pretty tough issue. 

The disintegration of the World Trade Center silenced everybody 

in Cambridge. It was a crowd of 400 people who prided themselves 

on the badges that they wore. And like most of you in this room, 

time and time again, in an audience of 400, we watched the building fall. 

The silence wasn’t just a demonstration of the awfulness of what 

we were watching. What it was, I think—and I might be projecting 

here, but what I think it was also was a realization by the professionals in the world that chase and hunt money that perhaps we 

had been looking at the world through the wrong end of a telescope, and that the priorities were changing before our eyes. 

Instead of the priority of worrying about illicit money being 

cleansed and finding a place for concealment and hiding, what we 

really had to turn to and focus on, and perhaps had not properly 

focused on earlier in time, was trying to capture clean money that 

was spirited around the world intended to kill. 

The next morning, they put me on a military jump seat and flew 

me home, and I thought that the Treasury Department, particularly the general counsel of the Treasury Department, would do the 

orthodoxy, which is to make sure we collect our tax revenues, make 

sure we sell our bonds, and then ship all the money across the 

river to the Pentagon to conduct a war. 

But this is anything other than a common war and it requires 

a pretty unorthodox way of going about things. It is actually shadow warfare. That is a term that we have heard, and the primary 

source of the stealth and the mobility of the conduct of the war is 

money and it is money that fuels the enterprise of terror. 

It also happens to be, fortunately, its Achilles heel. It leaves a 

signature, an audit trail, and that audit trail proves, in my judgment, to be the best single means of identification and prevention 

and capture. Indeed—and this was alluded to earlier by the testimony of the Under Secretary—much of the intelligence that we 

gather in this war is suspect. It is the product of treachery and deceit and interrogation and bribery and listening and trying to read 

encrypted talk. 

But books and records that are not intended for public oversight 

to do not lie; they are literally the diaries of the enterprise of terror. That is kind of a melodramatic statement, but I don’t actually 

think it is possible to overstate the importance of the war campaign 

against terrorist financing. You can stop the killing if you can stop 

the flow of money. 

I also don’t want to understate the difficulty of the chore. Ours 

is a deliberately open and porous economy, and the ways to game 

it are near infinite. Moreover, the problem is international in scope. 

The overwhelming bulk of the assets that we seek to freeze, the 

cash-flow that we hope to slow, and the records that we hope to 

18

audit are beyond the oceans that surround us. To act alone would 

justly invite criticism. 

So once I returned to Washington, Secretary O’Neill and the 

Treasury team set about to craft an ambitious program of a campaign against terrorist financing and it consists, as the Under Secretary has already stated, of a number of steps. 

The first is an executive order that raises the standards of conduct and due diligence of financial intermediaries, and explicitly 

targets even unwitting underwriters of terror for the seizure of 

their assets. 

The second is U.N. Security Council resolutions that mirror the 

same and criminalize terrorist financing. The third is more scrutiny at the gateways of the U.S. financial markets under the PATRIOT Act. 

The fourth is extensive public diplomacy to champion the need 

and the wisdom for international vigilance. The fifth is engagement 

of central bankers and finance ministers in the private pursuit of 

terrorist funds. And the sixth is outreach to the private sector for 

assistance in the identification, location, and apprehension of terrorists and their bankers. 

Much of that effort is overseen by a policy coordinating Committee which the Senator referred to, established by the National 

Security Council which I chair. Although we all have feet of clay, 

as best as humanly possible, it is one Government working in concert, sharing their intelligence resources to fight the campaign 

against terrorist financing. 

But the task remains unusually daunting. The material issues 

that face us include and insatiable appetite for actionable intelligence, which I know you know a great deal about, sir; increasing 

demands by coalition partners that we share the intelligence; and, 

frankly, a chorus of competing voices that risks confusion of our 

message. 

As the Under Secretary said, this is not just a box score game. 

Only a small measure of the success in the campaign is counted in 

the dollars of frozen assets. The larger balance is found in the weariness and the caution and the apprehension of donors; in the renunciation abroad of any immunity for fiduciaries and financial 

intermediaries who in the past would have sought refuge in notions 

of benign neglect and professional discretion rather than in vigilance; in pipelines that we know have gone dry; in the flight to old 

ways of value transfer, like gold bullion and precious gems, rather 

than digitized electronic commerce, and the ability for us to focus 

our resources on those avenues of last resort for value transfer; 

and, finally, in the gnawing awareness on the part of those who 

have banked terror in the past that the symmetry of the borderless 

war that they have declared now means that there is no place to 

hide the capital that they are underwriting terror with. 

I have one last point, with your permission. It is a short story, 

but I think it is pretty instructive of how we go about things. The 

Federal Reserve Bank in New York abuts the perimeters of the 

World Trade Center. It is an imposing and impregnable building, 

and it is the nerve center of the execution of U.S. monetary policy. 

It also literally houses the wealth of nations. Buried deep in the 

vaults of the New York Fed is the wealth of nations—$63 billion 

19

worth of gold reserves of hundreds of countries. It all had to be 

abandoned for the first and only time in history when the——

Senator SPECTER. You say $63 billion in gold reserves? 

Mr. AUFHAUSER. Yes, sir, in gold bullion reserves. 

It all had to be abandoned when the World Trade Center collapsed. The structural integrity of a third building, World Trade 

Center 7, was threatened by an inferno burning in the center of it, 

and the prospect of its toppling recommended evacuation for the 

New York Fed. 

Now, this was a first for the fortress-like Fed, as I told you. My 

counterpart, the general counsel up there, Tom Baxter, who is a 

member of my Committee, by the way, sir, raced through the building, assuring himself that each and every one of his colleagues was 

out safely. 

Once satisfied, Tom prepared himself to descend the steps of that 

rather majestic building. There was a palpable sense of urgency. 

The World Trade Center was still smoldering and there was the 

risk of the third building toppling. Police sirens were blaring and 

the Fed’s own police were urging Tom to run down the stairs. 

But, first, he turned to lock the door, only to recognize it doesn’t 

lock from the outside. $63 billion of gold in an open building and 

the last man out, so Tom hesitated. He thought of all the alternative ways of returning and winding his way through a maze of 

corridors and parking lot alleys to secure the building. But entreaties of the police prevailed and Tom joined them and was sped 

to a place of refuge where his colleagues were. 

When he arrived, he immediately telephoned Chairman Greenspan to report the good news that all employees were safe, out, and 

accounted for, and evacuation had gone without incident. The 

chairman had only one question: ‘‘Tom, did you lock the door?’’ The 

answer, of course, was, no, we did not lock the door and we will 

not lock the door. If we do that to our financial markets, the bad 

guys win. 

So with perfect intelligence, we wouldn’t need something like the 

PATRIOT Act. In that respect, it is a default mechanism, but a 

badly needed one, because we don’t have perfect intelligence. Indeed, the predicate for everything we do is actionable intelligence, 

sir. 

I welcome the opportunity to discuss that with you perhaps in 

another venue that doesn’t jeopardize operations and sources and 

methods and the like, but I will try to be as responsive as I can 

be this morning to any questions you otherwise pose. 

Thank you, sir. 

Senator SPECTER. So the officials of the Fed just left $63 billion 

in gold unsecured? 

Mr. AUFHAUSER. Well, actually, it is buried pretty deep in the 

bedrock of Manhattan, well below the subway system, and there is 

a safe. 

Senator SPECTER. Lucky these fellows from North Carolina didn’t 

know about it. 

Mr. AUFHAUSER. Yes, sir. 

Senator SPECTER. How much would $63 billion in gold weigh? 

Mr. AUFHAUSER. More than you and I can carry. 

20

Senator SPECTER. It wouldn’t take a whole lot for that. That is 

quite a story, and it is enormously serious, the work that you men 

are up to. I am glad to see what you are doing, and it shows areas 

where we have to be very, very vigilant. 

Mr. Aufhauser, when you commented about the donors and the 

apprehension of them, and identification of the donors and discouraging the donors, I think that is a very, very key point. 

Mr. Gurule talks about the charities at the outset of his testimony, and then he talks about 15 Islamic charities. It is true that 

some of those charities have traditional charitable purposes in 

mind to help people, help widows, orphans, and help the destitute. 

But where the dollars are intermingled with funding terrorists, 

funding murderers, those donors have to be on notice that they are 

culpable, that they are liable, and that the jurisdiction of the 

United States attaches where U.S. citizens are murdered. 

People who make contributions, once they know—you have to 

have knowledge that there is terrorist activity and there has to be 

the assistance of that group, but that is pretty apparent from the 

history of Hizballah, Hamas, and Al-Qaeda. Where these donors 

are put on notice that they could be liable for being accessories before the fact to murder, an accessory is equally guilty with the 

principal under the law. That is the law of accessories, so that our 

quest here for the donors is very well placed and very well calibrated. 

Mr. Gurule, when you made your trip—and there may be some 

of this you would want to comment about in camera, in a closed 

hearing, but the issue of the Saudis is a very, very big one. We 

have not yet come to grips with the bombing of the Khobar Towers 

from 1996, where 19 U.S. military personnel died and 400 were 

wounded. The FBI was thwarted from questioning the people who 

were in custody. 

Fourteen of the suicide bombers were Saudis. Osama bin Laden 

is a Saudi. There are public reports from our intelligence Committees about the Saudis financing Al-Qaeda. They do so under the 

representation that they are charitable, but that only goes so far. 

They know what Al-Qaeda is doing. 

To what extent, if you can make a public disclosure, have your 

activities been directed to discouraging Saudi financing of AlQaeda? 

Mr. GURULE. Well, I think we have made some important 

progress with the Saudis on this issue, on this problem of terrorist 

financing, and let me just illustrate with a couple of examples. 

In fact, in March of this year, the U.S. Government and the 

Saudi Arabian government jointly designated an Islamic charity by 

the name of Al Haramain. This was the Somalia and the BosniaHerzegovina branches of Al Haramain. So we jointly designated 

these branches of this particular Saudi-based charity and these 

names were forwarded to the U.N. Security Council for addition to 

the U.N. list. 

As early as September of this year, the U.S. and Saudi Arabia 

jointly referred to the Sanctions Committee an individual by the 

name of Wa’el Julaidan, an associate of Osama bin Laden and a 

supporter of Al-Qaeda, for designation and blocking. 

21

And perhaps even more important is the fact that we have been 

working very closely with the Saudis on ways to enhance oversight 

of Saudi-based charities. And one of the fruits, I think, of our joint 

actions has been an oversight Committee that was recently established in Saudi Arabia, referred to as the Saudi Higher Authority 

for Relief and Charity. 

This is a Committee that is making recommendation to the 

crown prince of Saudi Arabia on ways to better regulate, better 

control, and make more transparent these charities so they are not 

vulnerable to abuse by terrorist financiers and so the money is only 

going to support legitimate humanitarian efforts and activities, not 

terrorism-related activities. 

Senator SPECTER. How can that be accomplished, Mr. Gurule? If 

the money goes into the charity, who can supervise the disbursement of the funds to be sure that those moneys do not go to terrorists? 

Mr. GURULE. I think that one of the ways that they are looking 

at doing this—and this again is based upon a recent meeting, in 

fact, yesterday that David Aufhauser and I held with the foreign 

policy adviser to the crown prince where we discussed at some 

length this issue, and we are going to be engaged in further discussions. They are looking at establishing an oversight agency that 

would audit these charities, conduct internal audits of these charities to determine who the money is going to. 

Senator SPECTER. Who would those auditors be? 

Mr. GURULE. Well, they would be internal auditors within the 

Saudi government, part of this oversight agency that would be responsible for overseeing the activities and the transparency——

Senator SPECTER. Would it be possible to structure some international participation there? I would feel a lot more comfortable if 

the Saudis weren’t auditing the Saudis. We have had some experience with auditors with conflicts of interest. 

Mr. GURULE. Certainly, I can appreciate that. Well, this is certainly something that we could raise with the Saudi government. 

I think it is important, though, nonetheless to recognize the fact 

that the Saudi government is moving forward. They have recognized the problem. I think that they have acknowledged the problem and they are taking, I think, important steps. They may be 

first steps and they may be baby steps, but they are taking steps 

to address the problem and they are working with us in that effort. 

So that is encouraging. 

Senator SPECTER. Do your conversations with the Saudis include 

the issue of the Saudis financing Palestinian suicide terrorists, giving money to those individuals and their families? 

Mr. GURULE. That subject has been raised. By the way, that subject has been raised in a broader scope with respect to our European allies as well. When I traveled to Europe in October, I raised 

at each of my stops and visits this issue that is a vexing issue for 

the U.S. Government, and that is a distinction that is often made 

by European countries with respect to the military wing of Hamas, 

for example, and the political and the social wing of Hamas. 

They are willing to take action against the military wing in 

terms of blocking and designations, but less willing, reluctant, to 

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22

ernment does not make that distinction. If the money is going to 

Hamas, we do not believe that there is a bank account for humanitarian activities and a bank account that is being maintained for 

terrorist activities. 

Senator SPECTER. Well, it is a distinction without a difference, 

the political wing and the military wing. The political wing has 

funds and they co-join in a body and those funds are made available to the military wing. 

Mr. GURULE. Well, we certainly believe that it supports the infrastructure of Hamas. It directly or at least indirectly supports the 

activities of Hamas, including terrorist activities, and we are working with our allies to see if we can move them away from that distinction and into taking more aggressive action against supporters 

of Hamas and Hizballah. 

Senator SPECTER. Well, if we come to the point where we proceed 

criminally against a contributor to Hamas for being an accessory 

to murder of the five Americans murdered at Hebrew University 

and there is a defense that it went to the political wing and not 

to the military wing, I have had a fair amount of experience as a 

prosecuting attorney, a district attorney, and that kind of an argument doesn’t have much credence with a jury. People better not try 

to defend themselves on the ground that they are dealing with the 

political wing and not the military wing when those funds are 

interchangeable. 

When you said you were successful on cutting off the funding for 

some $113 million, do you have any ballpark figure as to the extent 

of the money that is involved here? $113 million s a very impressive figure, but obviously there is a lot more. Is that the tip of the 

iceberg? Are we really dealing with funding into the billions? 

Mr. GURULE. It is very difficult to define the scope and magnitude of the problem with respect to the funds that are available 

to support terrorism. I think the fact that we have blocked, frozen, 

if you will, $113 million is significant, but I think it is even more 

significant that we have been able to cutoff important channels of 

funding, and specifically financial networks like Al Barakaat. 

With respect to Al Barakaat, an organization that we believe has 

tentacles, if you will, that reach as many as 40 countries around 

the world, on the one hand when we designated Al Barakaat in the 

United States back in November of last year, we blocked just a little over $1 million. But more importantly, we basically dismantled 

that network for moving money. 

In the process, we cutoff a channel that we believe had been moving as much as $20 million or more a year to support the UBL 

and Al-Qaeda. So, again, sometimes the money itself, the amount 

of money that has been blocked does not tell the true story, the full 

story of the effect and the impact of our actions. 

But to be more direct and responsive to your question, I can’t 

give you a precise figure as to the amount of money that is out 

there that is available. 

Senator SPECTER. But we are dealing with large sums. 

Mr. GURULE. Huge sums. 

Senator SPECTER. If you intercepted $113 million, you can speculate or estimate it is many, many times that. 

Mr. GURULE. That is fair. I would agree. 

23

Senator SPECTER. Mr. Gurule, do you need any more legislation 

on the freezing of assets? Is there anything we can do for you here 

to start some legislation through to help you? This is the right 

place to come. 

Mr. GURULE. Thank you, thank you, and we appreciate your support. The PATRIOT Act has been very valuable, provided us some 

very valuable tools. Just recently, Deputy Secretary Ken Dam established a USA PATRIOT Act task force. This is a task force that 

Mr. Aufhauser and I, as well as Under Secretary Taylor and Under 

Secretary Fisher, serve on. It is chaired by the Deputy Secretary 

and its purpose is to evaluate the effectiveness of the PATRIOT Act 

provisions and come back to Congress and ask for any amendments, any changes as we identify them. 

Senator SPECTER. Well, we are very interested in responding to 

your needs. It took us a little time to get the homeland security 

bill. Senator Lieberman and I introduced on October 11, 1 month 

after 9/11, and it took too long and it was touch and go up until 

the last minute. The House of Representatives last Wednesday 

passed a bill which was materially different from the bill that we 

had expected, and when you go to the fine print many of us were 

very unhappy with a great deal of what was in the bill. They say 

that you don’t like to see either sausage or legislation made, but 

that bill bordered on giving sausage a bad name. It was a very 

tough matter. 

Mr. AUFHAUSER. Can I take you up on your offer and give you 

some ideas? 

Senator SPECTER. Sure. I made it to you as well, Mr. Aufhauser. 

Mr. AUFHAUSER. We actually have a bill up here right now. 

When we name a charity such as Benevolence or Global Relief or 

Holy Land as a terrorist organization under the executive order 

and IEEPA, its 501(c)(3) status continues in place and we have to 

go through a rather elaborate procedure at the IRS to revoke that 

license and the revocation proceedings threaten to expose important information. 

So we have asked Congress, and it has been passed by the House 

and I think it is—I must confess I don’t know if you are still in 

session today, but if not this lame duck session, then in January 

we have asked for a very simple amendment to the Internal Revenue Code which would say that when we name a U.S. domestic 

charity as a terrorist organization, its 501(c)(3) status is suspended 

and/or revoked. So that is issue one. So that is automatic. 

Second, one of the powers that you granted the Treasury Department, in particular, under the PATRIOT Act is called Section 311, 

which is the power to designate persons or even jurisdictions, 

whole countries, as primary money laundering concerns, and there 

are severe consequences if they are named as such by the Secretary 

of the Treasury. 

In those proceedings, we do not enjoy the same privileges of 

keeping classified information secret that we do in IEEPA proceedings. So we would like a parallel provision to protect evidence 

so that we can present it ex parte, in camera, in Section 311 proceedings that mirrors what you all granted us in the PATRIOT Act 

with regard to the execution and the implementation of the InterVerDate 0ct 09 2002 09:22 Jul 24, 2006 Jkt 088867 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\88867.TXT SJUD4 PsN: CMORC
24

national Emergency Economic Powers Act. I can put that in writing 

to you, too. 

A third percolating thought, because I heard your question about 

accessories to murder, is we want to be clearly understood that we 

think those who bank terror are equally culpable to those who commit it. 

Senator SPECTER. Good. 

Mr. AUFHAUSER. That is point one. That is what the Under Secretary and I and Secretary O’Neill are about on this mission on terrorist financing. Again, I meant it when I said if we stop the 

money, we stop the killing. 

Having said that, I think you know better than anyone, having 

prosecuted cases—and I know from defending cases with the likes 

of Brendan Sullivan and Edward Bennett Williams—that it is difficult for you to make a case for aiding and abetting in the absence 

of a knowing of specific intent of the actual injury that is worked. 

An idea that might be worth looking at by the Committee and 

by your staff is borrowed from an area of law where I used to practice, which is public welfare offenses in the environmental area or 

in the food and drug area, and that is the notion of reckless 

endangerment, knowing and reckless endangerment. 

It is possible to get a serious felony for people who bank something like Hamas without having to demonstrate that they knew 

with certainty or beyond a reasonable doubt that it was going to 

result in the death of an American. So that is another idea that 

I think you could profit from looking at. 

One last point, if I can, also on the Saudi issue, and I know you 

didn’t intend it. We are not at war with Islamic charities. In fact, 

we applaud them. It is important that what we do is not perceived 

incorrectly as having declared a campaign to undercut Islamic giving and Islamic charities. It is a tenet of their faith, as it is a tenet 

of most people’s faiths, that charitable giving is good and should be 

applauded. 

We have, however, declared war on counterfeit charities, and 

where it gets very, very difficult is that deliberate strategic decisions are made by terrorists to use a charity, frequently unwitting 

to the charity’s fiduciaries, in a manner to divert money because 

of lax financial controls and the like, because the charities have 

outposts throughout the world in trouble spots which are not wellpoliced. 

So when we talk to the Saudi government, for example, about 

more rigor in the audit and management of money that goes 

through charities, it is really an exploration with them of how to 

manage financial controls well so that money doesn’t get diverted. 

Senator SPECTER. Well, I believe that it is indispensable, as you 

have noted, to make the distinction between what is really charitable work. Islamic giving and Islamic charities are to be commended, and Islam is a great religion and we have to avoid painting with a broad brush. We have to be very specific. But when the 

distinctions are made between a military wing and a political wing, 

that simply will not stand up. 

Mr. AUFHAUSER. We are in heated agreement with you on that. 

The idea that there is a firewall there is counterfeit. 

25

Senator SPECTER. So that has to be pursued. From my work in 

chairing the Intelligence Committee in the 104th Congress back in 

1995 and 1996, I have a lot of questions about the degree of cooperation of the Saudi officials. 

When I went and talked to the crown prince about the Khobar 

Towers, it was a stone wall. And when FBI Director Louis Freeh 

went there on several occasions to question those suspects—and I 

have wondered whether those suspects were involved with AlQaeda and ultimately with 9/11. We did not have a chance to question them. There was a car bombing in Riyadh shortly before the 

Khobar Towers was blown up. 

I believe we have to press the Saudis much harder. We have got 

5,000 of our military out there in the middle of the desert protecting Saudi Arabia. We talk about cooperation by the Saudis in 

the movement by the U.N. as to Iraq and we are not getting it. So 

I think it is important to be very precise in what we are asking 

for, and very demanding. You have to be fair. You have to acknowledge charities, but if it crosses the line, we have got to be very 

tough about it. 

I think your idea on reckless endangerment is a good idea. At 

common law, if there is a reckless disregard for the safety of another resulting in death, that is the equivalent of malice, which 

supports a prosecution for murder in the second degree. So you do 

not have to prove premeditation or the same level of criminal intent on reckless endangerment, and I think that is a good suggestion. It is good to have lawyers sit down and talk every now and 

then. 

Well, this has been very fruitful, Mr. Aufhauser and Mr. Gurule. 

I thank you for what you are doing and we will pursue the suggestions that you have made. I think when you talk about the revocation of a 501(c)(3), you are talking about something very different 

from detaining someone or denying someone liberty or having a 

search warrant and seizing property. You are talking about really 

a privilege which is given, a benefit which is given. The Treasury 

Department of the U.S. Government can determine that. We don’t 

have to exercise excessive largess if there is reason to pull back. 

And tell that Pennsylvanian, Secretary Paul O’Neill, that we 

thank you for your good work and thank him for his work. 

Mr. GURULE. Thank you very much. 

Mr. AUFHAUSER. Thank you, sir. 

Senator SPECTER. We will now go to panel No. 3. While panel 

three is being seated, I think it worth noting that other Senators 

are not here today to participate in this hearing because late last 

night the Senate finished its business and we had a last vote on 

the continuing resolution. When the Senate concludes its voting, 

there are many, many plans. Many of my colleagues were in the 

air before 7 a.m. this morning. 

Senator Leahy, the chairman, and Senator Hatch, the ranking 

Republican, have statements which we will include, without objection, in the record. 

[The prepared statements of Senators Leahy and Hatch appear 

as submissions for the record.] 

Senator SPECTER. Senator Leahy had asked me to chair this 

hearing, even though we do not have the same party designation, 

26

because of his agreement that the hearing was important and because of the work which I have done on the Judiciary Committee 

and in law enforcement before. 

We had asked the Holy Land Foundation to attend and testify 

to give other points of view, a hearing, an audience, but they declined, saying that they did not have adequate time to prepare once 

the notice of the hearing was given. So we will maintain an open 

record. If they wish to submit something for the record or if they 

wish to be heard, we will give them an opportunity for a public 

hearing at a later time. 

Our first witness is Mr. Nathan Lewin, who represents the family of David Boim, a dual U.S.-Israeli citizen who was murdered by 

Hamas terrorists in a drive-by shooting in Israel. Mr. Lewin has 

instituted suit against a number of charities and has had considerable experience in the field. 

We welcome you here, Mr. Lewin, and look forward to your testimony. 

STATEMENT OF NATHAN LEWIN, LEWIN AND LEWIN, LLP, 

WASHINGTON, D.C. 

Mr. LEWIN. Thank you very much, Senator Specter. My name is 

Nathan Lewin. I am a lawyer in private practice in Washington, 

D.C., in a family law firm called Lewin and Lewin that I operate 

with my daughter, Alyza Lewin, who is here with me today. 

I was a prosecutor with the Department of Justice many years 

ago, and I practiced white collar criminal defense law and appellate 

litigation. I have represented former President Richard Nixon and 

Attorney General Ed Meese while he was Attorney General in an 

independent counsel proceeding. I have argued 27 cases in the Supreme Court of the United States, and have taught at Harvard, the 

University of Chicago, Georgetown, Columbia, and George Washington University law schools. 

I am gratified to have received your invitation to testify on the 

subject of the assessment of the tools needed to fight the financing 

of terrorism because I believe I have discovered the cheapest means 

from the perspective of the American taxpayer to fight the financing of terrorism from sources within the United States. 

The principal tool for this battle is, I believe, America’s private 

litigators, lawyers who are ready to bring private lawsuits at no 

taxpayer expense against private organizations and individuals 

who provide funds to organizations that engage in terrorist acts 

abroad or in the United States. 

Senator SPECTER. Excuse me one moment. We have people in the 

hall, people who have come in. You are welcome to come up front 

and have seats. There is no additional charge. Anybody who is in 

hallway needn’t stand in the hallway. I believe that you are all taxpayers, so we will try to provide seating for you. 

You may proceed, Mr. Lewin. 

Mr. LEWIN. I was saying, Senator Specter, that I thought this 

was the cheapest way from the American taxpayer perspective of 

deterring individuals and charities in the United States from supporting terrorism. 

I speak from personal experience. Sometime in 1997, when I was 

visiting the state of Israel, as I frequently do, I was introduced to 

27

Joyce and Stanley Boim, the parents of David Boim, a young man 

who was killed by Hamas terrorists in May 1996 when he was only 

17 years old. 

David, who was born in the United States to American citizen 

parents, was standing at a bus stop near the school he attended 

when a car drove past and shot randomly at passengers boarding 

a bus and others standing nearby. The killers were two members 

of Hamas, the organization that immediately took credit for the attack. One of the killers went on to be a suicide bomber in September 1997, in the heart of Jerusalem, when he killed seven others, including a young girl who was an American citizen, and 

wounded 192, including several young American students. 

The second, the driver of the car, is named Amjad Hinawi. He 

confessed when he was finally brought to trial in a court in the Palestinian Authority in early 1997. An American State Department 

representative, Mr. Abdelnour Zaibeck, witnessed the confession 

and reported on it. Hinawi received a slap on the wrist from the 

Palestinian court. Although he was found guilty and sentenced to 

10 years in prison at hard labor, he has been seen walking around 

free in Palestinian territory. 

I testified about this outrage and the inexplicable failure of the 

Department of Justice to indict Hinawi and seek his extradition in 

a subcommittee proceeding chaired by you, Senator Specter, in 

March 1999. Absolutely no progress has been made in the more 

than 3 years since that time. 

There is no reason in the world why a confessed murderer of an 

American student shot in cold blood while waiting at a bus stop 

has not been criminally charged by American authorities and 

brought to trial in an American court. 

I have met with the Department of Justice three times on this 

subject and have received no satisfactory explanation whatever. 

And there has not been a single criminal prosecution, Senator 

Specter, under the statute that you referred to that I think you 

were involved in getting enacted, the Act of 1986, which makes this 

a criminal act that should be prosecuted by American authorities. 

Not a single person killed in Israel, American citizen killed in 

Israel, has been the subject—none of the killers of those people 

have been the subject of an indictment in a United States court. 

The Boims asked me then whether they had any remedy at all 

under American law, and I did what maybe too few lawyers do 

today and I looked at the statute books. I found that in 1991 and 

1992, Congress had passed anti-terrorism laws, including what is 

now 18 U.S.C. 2333, that gave American citizen victims of such terror anywhere in the world a civil remedy, with treble damages and 

attorneys’ fees, against those who commit murder or assault. 

Obviously, there was no purpose in suing Mr. Hinawi, who has 

no funds, if he can be found, and no funds that can be reached for 

a judgment. And his confederate killed himself and seven others in 

a later suicide bombing. Against whom can such a statute be used? 

Over initial objections from my then-partners, I drafted and filed 

a lawsuit against those who enabled the perpetrators to kill David 

Boim, the organizations in the United States that collected funds 

and provided other support for Hamas in the years preceding May 

1996. 

28

I was challenged by my partners, by friends, and other lawyers 

who wanted to know why I was suing the leading Muslim charity 

in the United States, the Holy Land Foundation for Relief and Development, and others that were engaged in purportedly charitable 

activities in the Middle East. 

I responded that the defendants in my case, none of whom are 

foreign governments or government agencies, knew that they were 

also funding violence by Hamas directed against civilians. I sued 

in Federal district court in Chicago, in the Northern District of Illinois, because the United States had seized $1.4 million in a civil 

forfeiture action based on allegations of money laundering on behalf of Hamas. I hoped that the Boims, who were the victims of 

Hamas terrorism, would be able to reach those funds. 

Our complaint was filed on May 12, 2000. On January 11, 2001, 

District Judge George Lindberg denied motions by the Holy Land 

Foundation and other defendants to dismiss the complaint. I agree 

to the defendants’ request for an interlocutory appeal to the Court 

of Appeals for the Seventh Circuit because I believed it important 

that the litigation’s deterrence to contributions for terrorism receive great prominence. 

Briefs were filed and the case was set to be argued on September 

25, 2001, and then came September 11th. The judges on the court 

of appeals, realizing the importance of the issues they were being 

asked to decide, asked the Department of Justice to file a friendof-the-court brief. We argued the case on September 25, and in November 2001 the Department of Justice filed its brief supporting 

my argument that any organization that contributes to a terrorist 

organization, with knowledge that it engages in terrorism, is an 

aider and abettor of the terrorism and is civilly liable for damages. 

The Court of Appeals accepted that argument in a landmark decision issued on June 5 of this year, which is called Boim v. 

Quranic Literacy Institute and is reported at 291 F.3d 1000. The 

Holy Land Foundation did not seek Supreme Court review and we 

are now engaged in the discovery process. 

We are fortunate to have the volunteer assistance of a major Chicago litigation firm, Wildman Harold Allen and Dixon, of Chicago, 

and specifically Stephen Landes and Richard Hoffman of that firm, 

in this time-intensive discovery stage. If not, we would not be able 

to continue with this exceedingly important lawsuit. And this 

brings me to my recommendations for legislative amendments that 

are essential to make this deterrent to the funding of terrorism 

work. 

First, although 18 U.S.C. 2333 provides for very substantial damage awards, treble damages and attorneys’ fees, it does nothing to 

enable lawyers to pursue litigation prior to a final judgment. I and 

the firms I have been with since I began this project have invested 

approximately $1 million of attorneys’ time in this case. Although 

$1.4 million of seized funds is sitting in the clerk’s office in the 

Federal court in Chicago, we have received not one penny for the 

heretofore successful prosecution of this action. 

The law should provide that if a plaintiff is successful in defeating a motion to dismiss, he automatically recovers attorneys’ fees 

and out-of-pocket expenses from the defendants. That will enable 

the private attorneys general, such as myself and Mr. Gerson and 

29

the a attorneys who are bringing his lawsuit, to continue to prosecute these cases to a successful conclusion. Otherwise, well-financed defendants can exhaust a plaintiff’s lawyer in all the preliminary skirmishes that have marked this case. 

Second, funds that have been seized by the United States from 

defendants in——

Senator SPECTER. Mr. Lewin, you are at about double time now. 

Could you sum at this point? 

Mr. LEWIN. I will. I am coming to a conclusion. 

My second point is that the funds that have been seized should 

be made available for the payment of plaintiffs’ attorneys’ fees 

whenever the plaintiffs have prevailed at the pre-trial stages. 

We sued the Holy Land Foundation. On December 4, 2001, President Bush, Attorney General Ashcroft and Secretary of the Treasury O’Neill announced that they were seizing the assets of the Holy 

Land Foundation because they were used to support schools and 

indoctrinate children to grow into suicide bombers. 

Now, those seized funds are being used at a rapid rate to pay 

lawyers for the Holy Land Foundation for their work in challenging 

the seizure and in defending against our lawsuit. If the litigation 

goes on long enough, all the money that has been seized will be 

spent paying the lawyers for the Holy Land Foundation. They have 

lost their challenge to a seizure in a recent district court decision 

here in the District of Columbia, where the district court held that 

they had connections with Hamas, that they were actively involved 

with Hamas leaders, and that they provided financial support to 

the Hamas suicide bombers. Their lawyers are being paid top dollar from seized assets. Why should not the plaintiffs’ lawyers also 

receive compensation for the work they have done? 

Third, the law should authorize the distribution and the availability of information that Federal prosecutors gain in their investigations to the private attorneys general. Prosecutors are loathe to 

share information. There should be a provision that grand jury and 

other investigative materials should be disclosed to private attorneys for their actions under court——

Senator SPECTER. Mr. Lewin, we have that point. Do you have 

any other specific points, because we are going to have to move on? 

Mr. LEWIN. OK, then let me just say my two other proposals are 

that the statute of limitations be amended and that causes of action—that the theories that we have established in our litigation 

be specifically provided in the statute. Aiding and abetting, which 

you have spoken about, Senator Specter, should be specified in the 

statute as a basis for civil liability, and individual responsibility by 

individuals who contribute to these organizations. 

I thank the Committee for the opportunity to testify here this 

morning in this very, very important endeavor to cutoff what the 

Senator has called, and I think what everybody else has called, 

stopping the money to stop the killing, to discourage the donors. I 

think that is the effort that should be made by the statutes. 

Thank you. 

[The prepared statement of Mr. Lewin appears as a submission 

for the record.] 

Senator SPECTER. Well, thank you very much for your testimony, 

Mr. Lewin. I am very distressed that the Department of Justice 

30

has not acted under the Terrorist Prosecution Act. You noted the 

hearing we had 3 years ago that went into the case in some detail. 

You have performed extraordinary service not only to your clients, 

but to America in pursuing this matter, and I will have some questions for you when we move forward on the panel. 

Our next witness is distinguished lawyer Allan Gerson, co-counsel on a case filed by September 11th victims against the financiers 

of Al-Qaeda. He was involved in representing Pam Am 103’s victims’ families and their claims against Libya, very extensive experience in this field. 

Thank you for joining us, Professor Gerson, and we look forward 

to your testimony. 

STATEMENT OF ALLAN GERSON, PROFESSORIAL LECTURER 

IN HONORS, GEORGE WASHINGTON UNIVERSITY, WASHINGTON, D.C. 

Mr. GERSON. Thank you, Senator Specter. I am very appreciative 

of this opportunity to appear here today to contribute to the terribly important and urgent goal that this Committee has set for 

itself: assessing the tools needed to fight the financing of terrorism. 

Surely, Senator Specter, the standard by which these tools can 

be assessed must in large measure revolve around the progress 

that has been made in securing for the families of the victims of 

9/11 the rights guaranteed to them under recent U.S. antiterrorism 

legislation. It is through these initiatives that they seek to hold accountable those responsible for facilitating the murders of their 

loved ones, and that begins with the proposition that the root of the 

problem lies in the financing of terrorism. 

First, I would like to express gratitude to you, Senator Specter, 

and the entire Committee on behalf of the over 3,600 individual 

family members that Ron Motley, my partner in this endeavor, and 

I have the honor to represent. They understand that your continuing interest and involvement in the justice of their cause will 

enable them to play the important role carved out for them in the 

war against terrorism. 

Senator Specter, 9/11 was the work of terrorists that preach global jihad. The mass rallies of the Nazis and the fanning of bigotry 

and hatred have now been replaced by the use of global jihad’s adherence to the Internet and the click of a computer mouse. Yet, I 

fear, Senator Specter, that we are still using—and I will try to illustrate this in my remarks—antiquated and obsolete techniques 

and ideas to deal with today’s threats. 

The victims of 9/11 were, of course, predominantly civilians, and 

yet today these families, the families of the victims, have the capacity to strike back, but if, and only if, their hands are not tied. They 

must be allowed to invoke the full force of our laws. 

As Secretary of State Powell recently noted, ‘‘The coalition 

against terrorism must advance on all fronts—political, financial, 

legal and military—to root out terrorists wherever they live and 

plot.’’ Indeed, President Bush almost immediately following the 

September 11th attacks proclaimed, ‘‘Our goal is to deny terrorists 

the money they need to carry out their plans. Our weapons are 

military and diplomatic, financial and legal.’’

31

Today, the families of the 9/11 victims are in the front ranks of 

those fighting the war on the financial and legal fronts. Their 

weapon is the legal process. Their principal target is terrorism’s financial underbelly, and it is no accident that the organized 9/11 

families call themselves Families United to Bankrupt Terrorism, 

for they are essentially acting through their lawyers, as Harvard 

Professor Alan Dershowitz has characterized it, as private attorneys general, stepping in where the Government is constrained by 

economic and political considerations. 

In this regard, our legal team has assembled highly experienced 

litigators to scour records in 13 countries on behalf of the suit we 

have filed entitled Burnett, et al. v. Al Baraka Investment and Development Corp. here in the District Court for the District of Columbia. 

The suit names over 100 defendants in a complaint that spans 

1,000 pages, with the third amended complaint to be filed this Friday. In addition, a more recently filed case in New York, Ashton, 

et al. v. al Qaeda, et al., names many of the same defendants on 

behalf of approximately an additional 1,000 9/11 family members. 

The defendants in the Burnett suit are primarily Saudi banks, 

charities, institutions, wealthy contributors, and individuals, some 

of whom have very close associations with the government of Saudi 

Arabia. 

In this effort, we have the active assistance of the governments 

of Russia, Uzbekistan, Israel, and Bosnia, to name but a few. We 

have the active cooperation of the judiciary and the government’s 

prosecutorial arms in Spain and in Germany. Indeed, in Germany 

we are preparing as I speak to appear on behalf of the families as 

co-plaintiffs in a criminal prosecution against one of the alleged 9/

11 plotters, a procedure permitted under German law. This will enable us to see evidence that is fresh, to call witnesses, and to 

strengthen our case. 

For example, one of the items obtained in our global investigatory efforts and which will be noted in the third amended complaint which we will be filing on Friday is a document that shows 

fund transfers made by the Saudi American Bank located here in 

Washington’s Watergate Hotel complex—payments made to the 

Middle East that ultimately ended up in Hamas’s pockets for the 

purpose of suicide bombings in Israel. We intend to demonstrate 

that this financing pattern served as a template for funding AlQaeda. We have also obtained judicial cooperation in tracking the 

Al-Qaeda money trail that, as reported by the New York Times on 

September 21 of this year, ran from Saudi Arabia through Spain 

and directly to the perpetrators of 9/11. 

Senator Specter, for all of these reasons, I believe we are making 

good progress in using the tools that Congress has already made 

available to us. I am not here to ask for new legislation. Rather, 

I come to thank you for what the Committee has made possible and 

to make one specific request. 

I respectfully urge you to do all in your power to make sure that 

those advances not be frustrated by pernicious maneuverings by 

those who persist in viewing the 9/11 families suit as unwarranted 

interference in America’s foreign policy. 

32

Credible reports that our Government might be considering stalling or otherwise impeding the suit were reported in the New York 

Times on October 25, and as a result a large delegation of family 

members promptly came by bus loads from New York to stand vigil 

before the Capitol on November 1 to insist that our Government 

stand with them and not against them. 

Regretfully, I am not in a position to assure the families that the 

cause for their great anxiety and fear of betrayal has passed. In a 

full-page, open letter to the President that appeared in the Washington Post on November 1, they asked that President Bush, quote, 

‘‘disavow any effort by our Government to disarm us as we join you 

in the fight against terrorism,’’ end quote. No response has been 

forthcoming. 

Today, recourse to the courts by American citizens against the 

perpetrators of terrorism is surely a constitutional right. It cannot 

be taken away or suspended without violating the due process and 

taking of property provisions of the Fifth Amendment. 

What is needed is an affirmative statement that there will be no 

interference in the 9/11 families’ efforts to seek redress. Beyond 

that, I would hope that, wherever practicable, there would be active cooperation in the sharing of evidence because, if I may conclude, it is in this context, a context of cooperation and sharing of 

documents between courts, involvement of private plaintiffs all 

along the way, making sure that evidence that does not turn stale, 

and allowing them to go into areas where for economic or other reasons governments are loathe to tread, that we have the essential 

elements of the new international public-private partnerships that 

are essential in enabling us to successfully wage the fight against 

terrorism. 

Thank you, Senator Specter. 

Senator SPECTER. Thank you, Professor Gerson. The Congress 

has supported these claims with legislation on civil rights of action 

and I do not believe that the executive branch will impede what 

you are doing. You may come to a point where you are seeking to 

attach assets of some foreign government where you may have 

some difficulties. Many of us on Capitol Hill have been supportive 

of you there, as well. We will monitor it all very closely and we are 

available to be of assistance. 

Mr. GERSON. We enormously appreciate that expression of support, Senator Specter. 

[The prepared statement of Mr. Gerson appears as a submission 

for the record.] 

Senator SPECTER. We turn now to Mr. Jonathan Winer, former 

U.S. Deputy Assistant Secretary of State for International Law Enforcement, a member of the Council on Foreign Relations, and a 

member of task force that recently published a report on terrorist 

financing. 

Thank you for joining us, Mr. Winer, and we look forward to your 

testimony. 

33

STATEMENT OF JONATHAN M. WINER, ALSTON AND BIRD, LLP, 

AND MEMBER, COUNCIL ON FOREIGN RELATIONS, WASHINGTON, D.C. 

Mr. WINER. Thank you very much, Mr. Chairman. I am grateful 

for the opportunity to testify before you on the administration’s use 

of the tools provided them to fight terrorism over the past year, 

and to discuss the findings of the report of the Independent task 

Force on Terrorist Financing, sponsored by the Council on Foreign 

Relations and chaired by Maurice Greenberg. 

I have been working in the field of anti-money laundering for 

some two decades. Since September 11, 2001, we have accomplished more in the past year than I thought would be achieved 

during my entire lifetime. Over the past year, the administration 

has undertaken a herculean task of transforming the tools provided 

to it by the Congress in the PATRIOT Act into practical realities. 

By and large, they have done a remarkable job. As always, there 

are a few things that can still be done. 

In light of the discussion today, I would like to turn directly to 

the charity issue. I think we still need to consider further action 

on Islamic charities, such as subjecting them to the Bank Secrecy 

Act. Some of these charities turn President Lincoln’s quote on its 

head; it is charity toward none and malice unto all. 

After I testified before the Senate last year, right after September 11, one Islamic charity I listed on a chart as being alleged 

to have ties to terrorism gave me an ultimatum: I retract what I 

told the Senate or they would sue me. On the very day they were 

planning on filing the lawsuit against me, the defamation action for 

my constitutionally protected testimony before the Congress, President Bush shut them down as a terrorist finance organization. You 

have heard about them earlier today. It was the Holy Land Foundation. 

Senator SPECTER. Well, there you are, Professor Gerson. Do you 

see the cooperation from the executive branch? 

Mr. GERSON. We welcome it. 

Mr. WINER. That was the Holy Land Foundation that gave me 

that ultimatum. 

I am tremendously concerned that funds from some of these 

charities have been used to purchase interests in otherwise legitimate U.S. businesses. I think that there is a penetration of other 

institutions that some of these charities have been able to engage 

in and it is going to be tremendously important to investigate that 

and go after it. 

I have also seen that charity fraud and charity abuse is not limited to Islamic charities, as we have seen in the Washington area 

recently. I have encountered abuses of charities in many contexts 

during my time in Government, both on the Hill and in the executive branch. Our regulation of charities at the Federal level is minimal to non-existent, and charities are not today expressly covered 

by U.S. money laundering regulations. 

I would urge consideration of whether the administration should 

use its existing authorities to treat charities as financial institutions for the purposes of the Bank Secrecy Act, and thereby become 

subject to Federal examination for compliance with our anti-money 

laundering laws. We are asking insurance companies and loan and 

34

finance companies to be subject to examination, we are asking 

hedge funds to be subject to examination, but not charities. 

Second, I would suggest that the Secretary of the Treasury 

should use his powers under Section 311 of the PATRIOT Act to 

designate foreign jurisdictions or financial institutions for special 

measures for enhanced scrutiny. This is a power the Congress gave 

the Secretary in the PATRIOT Act. The Treasury hasn’t used the 

power. 

It is hard for me to understand that the Treasury has not identified even one foreign country or one financial institution that poses 

an unacceptable level of money laundering or terrorist finance risk, 

and therefore hasn’t subjected a single one to the lesser level of 

sanctions available to the United States under Section 311. 

Mr. Aufhauser has asked for some additional protections in order 

for them to use the Section 311 authority. I can’t assess whether 

the absence of those protections precludes such action, but I think 

using that particular authority would send a very strong signal to 

financial institutions in other jurisdictions that we are going to protect ourselves. 

Third, I believe the U.S. Government should be developing international standards for regulating and tracking gold and other precious metals and jewels that are used for trans-national terrorist 

finance. The U.S. has had an exemplary investigation of money 

laundering through gold by Italian organized crime and Colombian 

drug traffickers in the Colon Free Zone, in Panama. 

Dubai is the largest gold trading zone in the world. There really 

is more that we should be doing to try and create a standardized 

international global regulatory regime for tracking and regulating 

gold and other precious metals and gemstones subject to abuse especially across borders. One means of doing it might be through the 

existing G–8 anti-terrorist group led by Treasury. 

Fourth, you have heard quite a bit about problems for the private 

sector and the administration sharing information. I believe that in 

that connection, further information needs to be shared about our 

actions vis-a-vis halawadars, alternative remittance systems. 

There is no location today where the public can go to determine 

whether a money transfer business has registered with the Government, as they are all required to do under the Bank Secrecy Act 

and the PATRIOT Act. FinCEN has a confidential system for Federal prosecutors to use. Not all of them know about it. I have 

talked to some who had no idea it existed, but they have such a 

system. 

The information is not public. I think it should be public, who 

has registered and who hasn’t. It would have a lot of positive assistance for the financial institutions that don’t want to do business 

with unregistered money service businesses. 

Last, and this relates to the information-sharing issue as well, 

the private sector has to be brought in as a partner to governments 

in combating terrorist finance. British law enforcement has referred to the private sector as the deputy sheriffs who have been 

deputized to assist the government in going after the bad guys and 

protecting us against them. 

I believe the U.S. could work with private sector institutions and 

non-governmental institutions to create white lists of financial inVerDate 0ct 09 2002 09:22 Jul 24, 2006 Jkt 088867 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\88867.TXT SJUD4 PsN: CMORC
35

stitutions and perhaps charities that, regardless of the legal environment in their home jurisdiction, commit to the highest level of 

due diligence, anti-money laundering, and anti-terrorist finance 

procedures, and agree to a system of external assessment of compliance, precisely the idea, Mr. Chairman, that you raised in the 

Saudi context. External assessment for compliance is a critical element for such a white list. 

In addition to the reputational benefit from being included on 

such a white list, inclusion on the list could be a factor taken into 

consideration by the World Bank, the International Monetary 

Fund, and other IFIs in considering which financial institutions to 

put their money through, as well as by USAID and its counterparts 

in the rest of the world. 

Mr. Chairman, these suggestions have been endorsed by the distinguished bipartisan group of the Council on Foreign Relations on 

which I participated. I thank you for the opportunity to testify before you today. 

[The prepared statement of Mr. Winer appears as a submission 

for the record.] 

Senator SPECTER. Well, thank you very much, Mr. Winer. We appreciate your being here. 

We now turn to Mr. Salam Al-Marayati, Director of the Los Angeles-based Muslim Public Affairs Council, who authored an op ed 

piece in the New York Times to the effect that Muslim charities 

should not be prosecuted, but rather the officers of those charities 

if they support terrorism. 

We welcome you here and look forward to your point of view, sir. 

STATEMENT OF SALAM AL-MARAYATI, EXECUTIVE DIRECTOR, 

MUSLIM PUBLIC AFFAIRS COUNCIL, LOS ANGELES, CALIFORNIA 

Mr. AL-MARAYATI. Thank you, Mr. Specter. I would like my full 

testimony in writing to be submitted for the record. 

Senator SPECTER. Without objection, your full testimony will be 

made a part of the record. 

Mr. AL-MARAYATI. Thank you, and I will keep my time limit to 

5 minutes so I will keep my remarks very brief. 

Senator SPECTER. Thank you. 

Mr. AL-MARAYATI. The Muslim Public Affairs Council has issued 

its counter-terrorism policy position paper in 1999. It presented it 

to the Clinton administration, and it has also submitted it to the 

Bush administration. In the paper, we talk about means of dealing 

with this problem of financing terrorism without shutting down 

charities in whole or making blanket indictments against charities. 

We believe that the effective way to combat terrorism is there 

must be a culture of understanding and cooperation among all 

Americans, between government officials and law enforcement on 

the one hand, and ordinary citizens and communities on the other 

hand. Unfortunately, this tool of partnership is being threatened 

today. 

I would like to talk a little bit about zakat, alms-giving, religious 

freedom, and national security. First, in terms of zakat, this is the 

religious obligation of every Muslim. It is one of the five pillars of 

36

Islam. It is similar to the Christian tradition of tithing. Zakat is 

the major manifestation of social justice in Islam. 

American Muslim charities make special appeals for the needy, 

whether in terms of feeding the homeless or in helping refugees 

abroad. American Muslims become very disturbed when reading reports that funds intended to uplift the downtrodden are used for 

violent purposes or are frozen under suspicion of being used for violent purposes. 

A very unfortunate climate has been created in which Muslims 

who donate money are being associated with nefarious activities. 

Just as it is wrong to associate all American Catholic charitable 

giving with the activities of the IRA, it is just as wrong to associate 

American Muslim giving with terrorism. 

Fundraising by American Muslim charities has been conducted 

in cooperation with and support from local American Muslim communities and their mosques. If it is proven that directors of any institution were guilty of embezzlement of funds, then those individuals should be subjected to the full extent of the law, and they will 

be met with stiff opposition from American Muslims as well. 

The funds should either be returned to the donors or should be 

directed to the needy through legitimate non-governmental channels. If any wrongdoing is proven in an open court, government diversion of those funds for any purpose other than the donor’s intent 

would be a misdirection of those funds a second time. 

The shut-down of American Muslim charities has detrimentally 

affected innocent people working or volunteering their time to the 

non-profits. Incriminating innocent people results in a tragic attack 

on the character of humanitarian activists throughout America. 

MPAC has argued that the U.S. Department of the Treasury 

should provide guidelines for meeting new anti-terrorism standards 

in order for American Muslim charities to demonstrate accountability in their fundraising and financial disbursements. We are encouraged that the Treasury Department has issued voluntary best 

practices for U.S.-based charities. 

We have argued that the tools to combat terrorism are optimized 

in an open, democratic process, and preserving our democratic traditions in America is paramount for effectively combatting terrorism. Short circuits to justice usually lead to a false sense of security. MPAC works with other groups to oppose the use of secret 

evidence in the courts, asks for open hearings, and protests indefinite detentions. 

In an ideal setting, American Muslim charities serve a national 

security interest by promoting a positive image of America 

throughout the Muslim world. Unfortunately, the view that American Muslims are a harassed or persecuted religious minority is 

gaining ground overseas, partially because of the blockage of the 

Muslim charities. 

Another important aspect of this problem is the issue of religious 

freedom, which the U.S. has championed in recent years, yet seems 

to be back-tracking on as a result of new anti-terrorism standards. 

The United States risks being perceived as failing to adhere to the 

values we are promoting abroad. 

Last, Muslim charities which meet the urgent development and 

subsistence needs of many of the Muslim world’s poor, dispossessed 

37

and destitute can be used to enhance our national security interest 

by helping to mitigate some of the factors that breed extremism 

and violence. 

Thank you very much. 

[The prepared statement of Mr. Al-Marayati appears as a submission for the record.] 

Senator SPECTER. Thank you very much, Mr. Al-Marayati, for 

your testimony. 

Mr. Lewin, beginning with you in sequence of direct testimony, 

are the funds which have been frozen in the Holy Land Foundation 

available for disbursement to their attorneys? 

Mr. LEWIN. Yes, they are available and they are used by their 

attorneys. 

Senator SPECTER. How can that be if the funds are frozen? 

Mr. LEWIN. Well, pursuant to the regulations of the Treasury Department, the funds that are frozen and proceedings to freeze those 

funds are made available to attorneys to defend in that case. In 

other words, the argument that is made is that as a constitutional 

matter, the organization that is being sued should be entitled to defend itself. 

Senator SPECTER. No limitation, not even if those fees totally deplete the fund? 

Mr. LEWIN. Well, there is no indication that there would be any 

limitation. I will tell you that in our case, in Chicago, there is an 

attorney who is a very fine counsel. He comes up from New Mexico 

for every status conference in Chicago and is being paid out of that 

fund, even though our case is not the case in which the freezing 

of those funds is an issue. 

But nonetheless, because the funds may be used by counsel, to 

our knowledge, they are being distributed for his attorney’s fees. 

And our concern is that this litigation may last long enough that 

by the time it is over, there will be nothing left because the attorneys defending these cases will simply have depleted the funds. 

Senator SPECTER. Mr. Lewin, how do you propose to establish liability for the Holy Land Foundation? 

Mr. LEWIN. We believe that it was public knowledge in the 

United States from newspapers well before 1996 that Hamas was 

engaged in violence and murder of civilians in Israel and in the 

Middle East. This was known through the media to everybody who 

ran the foundation, and indeed to people who contributed to it. 

Therefore, we believe the foundation, when it contributed to 

Hamas, although they claim they were trying, as I think had come 

out in prior testimony, to contribute only to its charitable activities 

such as hospitals——

Senator SPECTER. Does the Holy Land Foundation have genuine 

charitable activities? 

Mr. LEWIN. The Holy Land Foundation, I think, has genuine 

charitable activities, but the problem is that they also engage in financing terror, which is what the President and the Attorney General and the Secretary of the Treasury found when they seized its 

funds. 

You don’t have to show that the foundation or the organization 

is engaged exclusively in terrorist activities, but if they do so to a 

substantial degree by contributing to Hamas, which is what was 

38

found and what the district judge found to be true, then their funds 

may be seized and they are engaging in illegal funding of terrorism. 

Since they contributed to Hamas, and we believe that their own 

literature showed that they knew they were contributing to Hamas 

violence as well as to Hamas charities——

Senator SPECTER. How do you prove that they knew they were 

contributing to Hamas violence? 

Mr. LEWIN. Well, that is going to be proved, we think, A, by the 

fact that it was public knowledge that Hamas was engaged in violence, and they contributed to Hamas. And, B, it is going to be 

proven through discovery by the testimony of their officers, whom 

we will subject to examination on the question of what they knew 

about the people to whom they contributed, the organizations to 

which they contributed. 

Senator SPECTER. How do you deal, Mr. Lewin, with the considerations and the contentions raised by Mr. Al-Marayati about freedom of religion and about the basic tenet, as Mr. Al-Marayati articulates it, for Islam to help on charitable goals? 

Mr. LEWIN. Let me begin my answer by just a personal note. I 

don’t think there has been any lawyer in the United States who 

has been more involved in trying to protect freedom of religion 

than I have. I have argued a number of cases in the Supreme 

Court under the Free Exercise Clause, and I am very concerned 

about that both with regard to Jewish citizens and Muslims and 

Catholics and all minorities in the United States. 

I believe that freedom of religion can be protected by ensuring 

that the charities that collect for charitable purposes have internal 

guidelines which make sure that they disburse their funds only for 

peaceful, charitable purposes. If they send it abroad, as the Holy 

Land Foundation did, they may not send it abroad to an organization that engages in violence. 

Senator SPECTER. Mr. Al-Marayati, would you accept that approach as a limitation on internal audits? That might not be too 

hard to accomplish if it would satisfy Mr. Lewin. What do you 

think? 

Mr. AL-MARAYATI. Well, yes, and we are representing really not 

the charities themselves, but the donors. And the issue is if the 

charities don’t fulfill their obligations by filing the proper tax forms 

or conduct the audits, then they are at fault and the question is 

what to do with the money that the donors intended to give to the 

needy. That money should not be used for lawyers fighting battles 

out in court. That money should not be used for another country 

or another purpose altogether. 

Senator SPECTER. How do you deal with the considerations which 

have been raised throughout this hearing about Hamas, for example, having a political wing and a military wing, when the funds 

can move from one to other? 

A contributor may say, I want to give it to the charitable wing, 

but when you see what Hamas does at Hebrew University, is Mr. 

Lewin right or wrong when he talks about notice to the public as 

to what Hamas is really up to? 

Mr. AL-MARAYATI. Well, I agree that if a group is on the foreign 

terrorist organization list, then any support financial for that group 

39

is a violation of the law and is a criminal act. And any person who 

conducts such a financial support for that group should be held liable. The charity itself should not be held liable. 

For example, if the United Way’s chief executive officer commits 

fraud, the charity of the United Way should not be held liable. The 

donors to the United Way still want that money to go for the proper purposes. But the issue of what happens abroad—the Treasury 

Guidelines are making it available for Muslim charities to demonstrate transparency not only here in terms of the financial fundraising, but in terms of the financial disbursements over there. 

I think by following those guidelines and by having an authentic 

accrediting agency, then we can overcome this problem of intermingling of funds between legitimate charity needs and terrorist 

activity. 

Senator SPECTER. But the United Way doesn’t have a military 

wing. 

Mr. AL-MARAYATI. I agree, but I am talking about in terms of the 

problem of embezzlement and liability of the officer himself. 

Senator SPECTER. Well, embezzlement is always available as a 

criminal prosecution if some officer takes the money that belongs 

to the organization. But where you have an organization like 

Hamas which is well-known for the military wing, do you think it 

inappropriate to say to donors to Hamas, with what has been on 

the public record, that they are not knowingly contributing funds 

in a direction which will be used for murder? 

Mr. AL-MARAYATI. Donors should be notified if that is the case. 

If the case is the money is going to a foreign terrorist organization, 

then donors should be notified and the money should not go 

through those channels anymore. 

My argument is we believe as American Muslim donors—and I 

am not here to support any foreign group. We don’t take money 

from any foreign governments. I am not here to even support the 

foreign governments that were made an issue today. But as donors, 

we believe that money can go to those in need in the West Bank 

and Gaza Strip without necessarily intermingling those funds with 

terrorist activities. 

Senator SPECTER. Mr. Winer, when we talk about regulations, 

should there be more regulations? Should there be Federal legislation to deal with charities to try to make the dichotomy which Mr. 

Al-Marayati suggests? 

Mr. WINER. First of all, I think it would be useful for this Committee to look generally speaking at the issue of regulation of charities and whether the current regulation of charities at the Federal 

level, which is essentially an IRS matter, is sufficient. 

Senator SPECTER. What do you think? We are calling you as an 

expert here. 

Mr. WINER. The short answer is no. 

Senator SPECTER. Not sufficient? 

Mr. WINER. Not sufficient. 

Senator SPECTER. What more should we do? 

Mr. WINER. There has to be some mechanism for examination 

and monitoring at least of larger charities, certainly of larger charities that are operating internationally. 

Senator SPECTER. Examination and monitoring? 

40

Mr. WINER. Yes. 

Senator SPECTER. Would you propose Federal legislation to accomplish that? 

Mr. WINER. What I would propose in the first instance is that the 

PATRIOT Act, which gives the Secretary of the Treasury the authority to designate certain kinds of institutions as susceptible to 

sufficient money laundering risk that they should be covered by the 

PATRIOT Act, should consider whether charities or certain types 

of charities should be required to be listed as financial institutions 

and must be subject to examination in the same way we are subjecting insurance companies, for example. 

Senator SPECTER. So you think the Secretary of the Treasury has 

sufficient authority under the so-called PATRIOT Act? 

Mr. WINER. Yes, sir, and under the Bank Secrecy Act, I do, sir. 

Senator SPECTER. Well, you have had a lot of experience with 

this, Mr. Winer, with the Council on Foreign Relations. The Committee would be interested in your views as to what supplemental 

legislation would be appropriate. 

Mr. WINER. I will consider that further and respond. 

Senator SPECTER. That really is what we are looking at here, 

whether there ought to be more legislation. Mr. Lewin would like 

to have access to those funds before he gets a judgment. He thinks 

a motion to dismiss ought to be sufficient, and we will entertain 

those thoughts. We can legislate on that. 

Professor Gerson, how are you going to collect from Al-Qaeda? 

Mr. GERSON. Well, our focus is not simply Al-Qaeda. Our focus 

is much, much broader than that. 

Senator SPECTER. You have a third amended complaint? 

Mr. GERSON. We have a third amended complaint. 

Senator SPECTER. Now, as your complaint, do you have a first 

amended complaint and then a second amended complaint, and 

now you have a third amended complaint? 

Mr. GERSON. That is correct. 

Senator SPECTER. Your pleading file must be very thick. 

Mr. GERSON. It is enormous, and the reason it is enormous is because we have become, in effect, private attorneys general doing 

what the families of 9/11 have asked us to do, which is to focus on 

one issue, and that is accountability. 

Senator SPECTER. How many families do you represent? 

Mr. GERSON. We represent about 3,600 family members at this 

particular point, and we continue to represent more families everyday and they tell us repeatedly it is well and good to listen to members of the administration. Some of them have testified today about 

new regulatory reforms that are going on, greater cooperation between the United States and the Saudi government in this regard. 

But we are interested in accountability because we want deterrence. We don’t want a repetition of what occurred to our loved 

ones to happen to other loved ones. And that can’t happen without 

accountability, so that is our focus. 

Senator SPECTER. Are some of the families whom you represent 

among those from Flight 93 which crashed in Shanksville, Pennsylvania? 

Mr. GERSON. Yes. 

41

Senator SPECTER. How many do you represent there, if you 

know? 

Mr. GERSON. It is over a dozen. I am not exactly sure. 

Senator SPECTER. We had a memorial service on September 11 

this year, and the families were there and it was a most moving 

situation where the families came from all over the country to visit 

the site where their loved ones had gone down on Flight 93, and 

very, very poignant and a tremendous need. 

Mr. GERSON. Well, out of this terrible tragedy, the families are 

trying to salvage something that will be beyond themselves and be 

a legacy to all Americans. 

Senator SPECTER. And you believe you have a realistic change of 

identifying financial institutions where you can recover damages 

for 9/11? 

Mr. GERSON. Senator, I spent the last week in Spain working 

with the Spanish authorities under a special procedure that was 

authorized by Judge Robertson of the district court here. 

Senator SPECTER. Give me one illustration as to how you propose 

to establish liability and collect money from somebody. 

Mr. GERSON. Well, liability is established by using the standard 

that Attorney Nat Lewin referred to earlier in the landmark Boim

case. It is not incumbent upon us to prove that individuals that 

contributed to charities had actual knowledge of particular horrific 

acts that were going to be committed. 

Senator SPECTER. So you are looking to contributors to Al-Qaeda? 

Mr. GERSON. We are looking to the financial institutions that 

contributed part of their own revenues, sitting on their board of directors. 

Senator SPECTER. You have already filed this publicly. Can you 

name one financial institution? I am trying to get a specific idea 

as to how you are proceeding. 

Mr. GERSON. Sure. I will give you a list of the names of some of 

them. 

Senator SPECTER. No. Just give me one and tell me what your 

approach is, your theory, how you are going to prove your case, and 

how you are going to collect the money. 

Mr. GERSON. Well, we are naming a number of organizations in 

Spain, for example, which goes beyond the focus strictly on Saudirelated institutions. 

Senator SPECTER. And you have jurisdiction in the United 

States? 

Mr. GERSON. We have jurisdiction in the United States. 

Senator SPECTER. And service? 

Mr. GERSON. We have already completed service on many of 

these banks. Many of the banks have financial holdings in the 

United States. The Saudis, for example, have on their own about 

$860 billion in the United States. We are intent on——

Senator SPECTER. You are going after the Saudis? 

Mr. GERSON. Saudi interests. We have not named the government of Saudi Arabia as a defendant at this point. 

Senator SPECTER. Saudi interests. Name one Saudi interest, just 

so I have an idea. 

42

Mr. GERSON. Well, I mentioned earlier the Saudi American 

Bank, which is located in the Watergate, will be named as a defendant. 

Senator SPECTER. The Saudi American Bank? 

Mr. GERSON. Yes. They will be named as a defendant this Friday. 

Senator SPECTER. What did the Saudi American Bank in the Watergate do? 

Mr. GERSON. They served as a conduit for the transfer of funds 

to Hamas, we allege, and to Al-Qaeda. 

Senator SPECTER. OK, and do you have to show knowledge on 

their part? 

Mr. GERSON. We have to satisfy the standard that the Seventh 

Circuit Court of Appeals spoke about in the Boim case, which is not 

actual knowledge, but constructive knowledge; that is that a reasonable person understanding the circumstances had reason to believe that this money was going to be used for terrorist purposes. 

Senator SPECTER. For Al-Qaeda and Hamas, and if you can do 

that, of course, they know what Al-Qaeda and Hamas are up to? 

Mr. GERSON. Yes, of course. 

Senator SPECTER. Sure. 

Well, listen, thank you very much. 

Mr. LEWIN. Could I just make one more point in response to the 

exchange you had here, just a very hypothetical——

Senator SPECTER. Just one more point? Frankly, Mr. Lewin, I 

doubt that you can make only one point, but go ahead. 

Mr. LEWIN. I will. This one, I promise, will——

Senator SPECTER. You are free to comment even if it is more 

than one point. 

Mr. LEWIN. All right. I think the analogy with regard to the Holy 

Land Foundation and the money being given to Hamas is as if the 

United Way disbursement Committee said, we are going to give 15 

percent to Murder, Incorporated. Now, if they did that, then I think 

everybody would know that that is illegal and it is involved in murder. 

I don’t understand why the Holy Land Foundation, if it is says 

‘‘I am giving some percent to Hamas formally,’’ can say, ‘‘well, OK, 

now as a charity we are free of that.’’ I think that is what Mr. AlMarayati is saying. The charity shouldn’t be held responsible for 

the fact that it has given money to Murder, Incorporated. That is 

what it has done. 

Senator SPECTER. Mr. Al-Marayati, you are entitled to respond. 

Mr. AL-MARAYATI. Yes, thank you. Well, first of all, let’s go to 

other examples. For example, you had the Jewish Defense League 

that targeted our office on December 17. The FBI notified us. It 

was a group of Jewish terrorists who were involved in that activity. 

They killed Alex O’Day, allegedly, in 1985. The culprits have not 

been brought to justice. So are those who supported the Jewish Defense League going to be held with the same standard as American 

Muslims today are being held in terms of supporting other charities? 

You mentioned the point about the distinction between the political wing and the military wing. In 1995, the Congress actually allowed Sinn Fein, the political wing of the IRA, to operate. I am not 

43

saying that that is the road we need to take today because we live 

in a different era, but the point is we have many Muslims in need 

throughout the world. 

The hot spots involved in terms of charitable giving are going to 

involve the West Bank and Gaza Strip, Kashmir, Chechnya, Bosnia. Those are the areas where the front line of the war on terrorism is being fought. So we have to work more closely together 

with the Government and with law enforcement because I think 

there needs to be a paradigm shift where American Muslim charities are being used as a partner for national security abroad and 

for counter-terrorism here even domestically in a more constructive 

way. 

Senator SPECTER. Mr. Winer, you can have the last word. 

Mr. WINER. Thank you, sir. It is a very bad thing when a witness, given an opportunity by a chairman of a Committee like this, 

doesn’t take advantage of it, so let me take advantage of your previous question. 

Senator SPECTER. It happens all the time. 

Mr. WINER. The Committee could consider the possibility of creating a receivership for any charity found to have had its legitimate funds commingled with terrorist funds and appointment of a 

Federal receiver. In that case, the Federal receiver would then be 

in a position to be able to continue the legitimate activities of the 

charity, while shutting down and stopping any potential leakage of 

that charity into illegitimate areas. 

Thank you, sir. 

Senator SPECTER. Well, thank you very much, gentlemen. I think 

it has been very productive hearing. I admire what you are all 

doing. You, Mr. Lewin, and you, Professor Gerson, on tackling 

these matters are private attorneys general is very, very important. 

The Government cannot maintain all these cases. 

Our courts are open to citizens and that is why we legislated as 

we did to give rights of action and treble damages and counsel fees, 

on the analogy to the antitrust field. The lawyers are very frequently criticized, and I think very, very often unjustifiably, because cases are undertaken which are extremely difficult. They are 

undertaken without being on a retainer or without having an hourly rate which is paid. Very substantial costs have to be advanced—

filing fees, deposition costs, travel. So you are to be commended in 

the greatest tradition of the American legal profession. 

Mr. Al-Marayati, we are very much concerned about the issues 

you raise on freedom of religion and about the Islamic religion and 

charitable matters and helping the needy. That is commendable, 

but we are going to have to draw the line and I think Mr. Winer 

may be able to help us with some practical suggestions from the 

Council on Foreign Relations to draw that line. 

But this Judiciary Committee is going to be very active. I have 

already given instructions, Mr. Lewin, to followup on the hearing 

we had 3 years ago. It is just not right that the Justice Department 

has not acted. I have discussed those matters with the Israeli 

Prime Minister, Prime Minister Netanyahu, back in 1996, and 

Chairman Arafat. There ought to be extradition; there definitely 

should be extradition. There ought to be teeth there. 

44

We are available to legislate in the field. We appreciate your suggestions and we are going to be pursuing this matter further so 

that people are on notice we are dealing with Al-Qaeda or Hamas 

or Hizballah. When money goes there and it is known what the 

purposes are, people can be responsible as accessories before the 

fact to murder, or as the suggestion was made, for reckless 

endangerment, which would not require the same specific intent 

that is equal to malice which would support a prosecution for second-degree murder. 

So thank you all and that concludes our hearing. 

[Whereupon, at 12:30 p.m., the Committee was adjourned.] 

[Questions and answers and submissions for the record follow.] 

[Additional material is being retained in the Committee files.]

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