1

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF MICHIGAN 

KEVIN J. MURRAY, 

 Plaintiff, 

 v. 

TIMOTHY F. GEITHNER, in his official 

capacity as Secretary, U.S. Department of 

Treasury; BOARD OF GOVERNORS OF 

THE FEDERAL RESERVE SYSTEM, 

Defendants. 

Case No. 08-CV-15147 

Hon. Lawrence P. Zatkoff 

Magistrate Mona K. Majzoub

THOMAS MORE LAW CENTER U.S. DEPARTMENT OF JUSTICE 

Robert J. Muise, Esq. (P62849) John R. Coleman, Esq. 

24 Frank Lloyd Wright Drive Julie Straus, Esq. 

P.O. Box 393 Trial Attorneys 

Ann Arbor, MI 48106 Civil Division, Federal Programs Branch 

rmuise@thomasmore.org 20 Massachusetts, Ave., N.W., Rm 6118 

(734) 827-2001 Washington, DC 20530 

Fax: (734) 930-7160 john.coleman3@usdoj.gov 

Co-Counsel for Plaintiff (202) 514-4505 

 Fax: (202) 616-8460 

 Counsel for Defendants 

 

LAW OFFICES OF DAVID YERUSHALMI, P.C. 

David Yerushalmi, Esq. (Ariz. Bar No. 009616; 

DC Bar No. 978179; Cal. Bar No. 132011; NY Bar No. 4632568) 

P.O. Box 6358 

Chandler, AZ 85246 

david.yerushalmi@verizon.net 

(646) 262-0500 

Fax: (801) 760-3901 

Co-Counsel for Plaintiff 

______________________________________________________________________________ 

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT & BRIEF IN SUPPORT 

______________________________________________________________________________ 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 1 of 31
2

 Plaintiff Kevin J. Murray (“Plaintiff”), by and through his undersigned counsel, hereby 

moves this court pursuant to Fed. R. Civ. P. 56 for summary judgment because there is no 

genuine issue of material fact and he is entitled to judgment as a matter of law. 

In support of his motion, Plaintiff relies upon the pleadings and papers of record, as well 

as his brief filed with this motion and the affidavits, declarations, and exhibits attached thereto. 

 As demonstrated more fully in Plaintiff’s brief, the use of taxpayer money to approve, 

endorse, and support Shariah-based Islamic religious activities and religious indoctrination, 

including the use of such funds to acquire government ownership and control in a company that 

engages in such activities, violates the Establishment Clause of the First Amendment to the 

United States Constitution. 

 Pursuant to E.D. Mich. LR 7.1, there was a conference between attorneys for the parties 

in which Plaintiff’s counsel requested but did not obtain concurrence in the relief sought. 

WHEREFORE, Plaintiff respectfully requests that this court grant his motion and enter 

judgment in his favor. 

Respectfully submitted, 

THOMAS MORE LAW CENTER 

/s/Robert J. Muise

Robert J. Muise (P62849) 

 LAW OFFICES OF DAVID YERUSHALMI, P.C. 

 /s/ David Yerushalmi

 David Yerushalmi, Esq. 

Counsel for Plaintiff

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 2 of 31
IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF MICHIGAN 

KEVIN J. MURRAY, 

 Plaintiff, 

 v. 

TIMOTHY F. GEITHNER, in his official 

capacity as Secretary, U.S. Department of 

Treasury; BOARD OF GOVERNORS OF 

THE FEDERAL RESERVE SYSTEM, 

Defendants. 

Case No. 08-CV-15147 

Hon. Lawrence P. Zatkoff 

Magistrate Mona K. Majzoub

PLAINTIFF’S BRIEF IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 3 of 31
i

ISSUES PRESENTED 

I. Whether the use of taxpayer funds to approve, endorse, and support Shariah-based 

Islamic religious activities and religious indoctrination, including the use of such funds to 

acquire government ownership and control of a company that engages in such activities, violates 

the Establishment Clause of the First Amendment to the United States Constitution. 

II. Whether the government’s ownership and control of a company that engages in Islamic 

religious activities and indoctrination violates the Establishment Clause of the First Amendment 

to the United States Constitution. 

III. Whether the government’s approval and support of Shariah-based Islam is sufficiently 

likely to be perceived as conveying a message of endorsement of religion in violation of the 

Establishment Clause of the First Amendment to the United States Constitution. 

 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 4 of 31
ii

CONTROLLING AND MOST APPROPRIATE AUTHORITY 

American Atheists, Inc. v. City of Detroit Downtown Dev. Auth., 567 F.3d 278 (6th Cir. 2009) 

Bowen v. Kendrick, 487 U.S. 589 (1988) 

Commack Self-Service Kosher Meats, Inc. v. Weiss, 294 F.3d 415 (2d Cir. 2002) 

Committee for Pub. Educ. & Religious Liberty v. Nyquist, 413 U.S. 756 (1973) 

Flast v. Cohen, 392 U.S. 83 (1968) 

Hunt v. McNair, 413 U.S. 734 (1973) 

Larson v. Valente, 456 U.S. 228 (1982) 

Lemon v. Kurtzman, 403 U.S. 602 (1971) 

Murray v. Geithner, 624 F. Supp. 2d 667 (E.D. Mich. 2009) 

Tilton v. Richardson, 403 U.S. 672 (1971) 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 5 of 31
iii

TABLE OF CONTENTS 

Page

ISSUES PRESENTED..................................................................................................................... i 

CONTROLLING AND MOST APPROPRIATE AUTHORITY .................................................. ii 

TABLE OF CONTENTS ............................................................................................................... iii 

TABLE OF AUTHORITIES ...........................................................................................................v 

SUMMARY JUDGMENT STANDARD........................................................................................1 

STATEMENT OF MATERIAL FACTS.........................................................................................2 

I. AIG: WORLD LEADER IN SHARIAH-COMPLIANT FINANCIAL PRODUCTS ........2 

A. AIG’s Operations .....................................................................................................2 

B. AIG’s Consolidated Accounting ..............................................................................2 

C. AIG’s Promotion of SCF Products ..........................................................................3 

D. SCF: A Shariah-Based Islamic Religious Activity ..................................................4 

II. IMPLICATIONS OF DEFENDANTS’ OWNERSHIP AND CONTROL OF AIG ...........5 

A. Defendants Take Ownership and Control of AIG ...................................................5 

B. $40 Billion of Credit Facility Funds Replaced by TARP Funds .............................7 

C. Defendants Invest Additional TARP Funds Used to Support SCF .........................9 

D. AIG Promotes SCF without Safeguards ................................................................10 

E. Defendants Officially Endorse SCF.......................................................................12 

ARGUMENT .................................................................................................................................13 

I. THE ESTABLISHMENT CLAUSE PROHIBITS DEFENDANTS FROM 

 APPROVING, ENDORSING, AND SUPPORTING SHARIAH-BASED ISLAM.........13 

 A. “Three Main Evils” and “Three Pence” .................................................................13 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 6 of 31
iv

 B. Prohibition on Perceived Endorsement of Shariah-Based Islam ...........................13 

 C. The Modified Lemon Test ......................................................................................14 

1. The “Purpose” of Promoting Shariah-Based Islam ...................................14 

2. The “Effect” of Promoting Shariah-Based Islam .......................................15 

3. The “Effect” of Funding Shariah-Based Islamic Religious Activities ......16 

4. The Lack of Constitutionally Required “Safeguards” ...............................16 

II. THE MATERIAL FACTS DEMONSTRATE AN ESTABLISHMENT CLAUSE 

VIOLATION AS A MATTER OF LAW ..........................................................................18 

CONCLUSION ..............................................................................................................................20 

CERTIFICATE OF SERVICE ......................................................................................................21

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 7 of 31
v

TABLE OF AUTHORITIES 

Cases Page 

Agostini v. Felton, 

521 U.S. 203 (1997) .................................................................................................................16, 19 

American Atheists, Inc. v. City of Detroit Downtown Dev. Auth., 

567 F.3d 278 (6th Cir. 2009) ...................................................................................................16, 17 

Board of Education v. Mergens, 

496 U.S. 226 (1990) .......................................................................................................................15 

Bowen v. Kendrick, 

487 U.S. 589 (1988) .......................................................................................................................17 

Brentwood Acad. v. Tennessee Secondary Sch. Athletic Assoc., 

531 U.S. 288 (2001) .......................................................................................................................19 

Celotex Corp. v. Catrett, 

477 U.S. 317 (1986) .........................................................................................................................2 

Commack Self-Service Kosher Meats, Inc. v. Weiss, 

294 F.3d 415 (2d Cir. 2002).......................................................................................................1, 20 

Committee for Pub. Educ. & Religious Liberty v. Nyquist, 

413 U.S. 756 (1973) ...........................................................................................................17, 18, 19 

County of Allegheny v. A.C.L.U., 

492 U.S. 573 (1989) .......................................................................................................................14 

Edwards v. Aguillard, 

482 U.S. 578 (1987) .......................................................................................................................14 

Everson v. Board of Educ., 

330 U.S. 1 (1947) ...........................................................................................................................13 

Flast v. Cohen, 

392 U.S. 83 (1968) .........................................................................................................................13 

Hunt v. McNair, 

413 U.S. 734 (1973) .................................................................................................................16, 19 

Larson v. Valente, 

456 U.S. 228 (1982) ...................................................................................................................1, 20 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 8 of 31
vi

Lemon v. Kurtzman, 

403 U.S. 602 (1971) ............................................................................................................... passim

Lynch v. Donnelly, 

465 U.S. 668 (1984) ...........................................................................................................14, 15, 16 

McCreary County v. A.C.L.U., 

545 U.S. 844 (2005) .......................................................................................................................15 

Mitchell v. Helms, 

530 U.S. 793 (2000) .......................................................................................................................17 

Murray v. Geithner, 

624 F. Supp. 2d 667 (E.D. Mich. 2009) .......................................................................................1, 4 

Santa Fe Indep. Sch. Dist. v. Doe, 

530 U.S. 290 (2000) ...........................................................................................................13, 14, 15 

Tilton v. Richardson, 

403 U.S. 672 (1971) .................................................................................................................16, 19 

Walz v. Tax Commission, 

397 U.S. 664 (1970) .......................................................................................................................13 

Constitution

U.S. Const. amend. I .............................................................................................................. passim

Statutes

12 U.S.C. § 342 ................................................................................................................................6 

12 U.S.C. § 343 .........................................................................................................................6, 10 

12 U.S.C. § 5201 et seq. ........................................................................................................ passim 

12 U.S.C. § 5211 ..............................................................................................................................8 

12 U.S.C. § 5235 ..............................................................................................................................8 

Rules

Fed. R. Civ. P. 56(c) .......................................................................................................................2 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 9 of 31
vii

Other Authority

David Yerushalmi, Shariah’s “Black Box”: Civil Liability and Criminal Exposure Surrounding 

Shariah-Compliant Finance, 

2008 Utah L. Rev. 1019 (2008) .......................................................................................................3 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 10 of 31
1

This case challenges the United States government’s approval, endorsement, and support 

of Shariah-based Islam.1 To that end, Plaintiff seeks to enjoin Defendants’ official endorsement 

of Shariah-based Islam and the use of taxpayer funds to support Islamic religious activities. 

In an unprecedented move, Defendant Board of Governors of the Federal Reserve System 

(hereinafter “FED”) authorized the Federal Reserve Bank of New York (“FRBNY”) to loan 

billions of dollars to American International Group, Inc. (“AIG”), a company that engages in 

Islamic religious activities, in exchange for Defendants’ ownership and control of AIG. 

Immediately following this infusion of capital and in further support of the government takeover 

of AIG, Congress, through the “Emergency Economic Stabilization Act of 2008” (“EESA”), 12 

U.S.C. § 5201 et seq., appropriated and authorized billions in taxpayer dollars to further fund 

AIG. These taxpayer dollars were used to fund and financially support Defendants’ ownership 

interest in AIG, and, in addition to the FED loan funds, they were used to support Islamic 

religious activities—religious activities that Defendants officially endorse. 

 In the final analysis, upon review of the undisputed material facts in light of the 

controlling case law, Defendants’ endorsement and support of Shariah-based Islam violates the 

Establishment Clause. See Murray v. Geithner, 624 F. Supp. 2d 667 (E.D. Mich. 2009). 

SUMMARY JUDGMENT STANDARD 

“Summary judgment procedure is properly regarded not as a disfavored procedural 

shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to 

 

1

 Defendants’ actions are particularly egregious here in that they promote a particular sect of 

Islam (i.e., Shariah-based Islam). Larson v. Valente, 456 U.S. 228, 244 (1982) (preferring one 

religious denomination over another violates the Establishment Clause); Commack Self-Service 

Kosher Meats, Inc. v. Weiss, 294 F.3d 415, 425 (2d Cir. 2002) (suggesting a “preference for the 

views of one branch” of a religion violates the First Amendment). 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 11 of 31
2

secure the just, speedy and inexpensive determination of every action.” Celotex Corp. v. Catrett, 

477 U.S. 317, 327 (1986) (internal quotations omitted). Rule 56 provides that a summary 

judgment motion should be granted when “the pleadings, the discovery and disclosure materials 

on file, and any affidavits show that there is no genuine issue as to any material fact and that the 

movant is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). 

STATEMENT OF MATERIAL FACTS

I. AIG: WORLD LEADER IN SHARIAH-COMPLIANT FINANCIAL PRODUCTS. 

 

 A. AIG’s Operations. 

 AIG owns directly and indirectly (through its direct subsidiaries) a myriad of domestic 

and foreign insurance and insurance-related companies. AIG exercises control over these 

subsidiaries through its direct and indirect ownership interests in these companies, represented 

typically by 100% of the equity and voting rights of the subsidiaries. (See AIG GC Aff. at ¶¶ 5 

at Ex.1; AIG 2009 SEC Form 10K filing (period ending Dec. 31, 2009)2 (“AIG 10K”) at 3, 372-

78 at Ex.2; see generally AIG 2010 SEC Form 10Q filing (period ending Mar. 31, 2010)).3

B. AIG’s Consolidated Accounting. 

 AIG employs consolidated accounting, and it “manages liquidity at both the parent and 

subsidiary levels.” This means that AIG provides funds to its subsidiaries when necessary, and 

subsidiaries similarly provide money to AIG and to other AIG subsidiaries as liquidity 

requirements dictate. (AIG 10K at 19 at Ex.2; AIG 2010 SEC Form 10Q filing (“AIG 10Q”) at 

12 at Ex.3; AIG Treas. Aff. at ¶ 5 at Ex.4). Cash flows move from AIG through a single port to 

its subsidiaries and from and through its subsidiaries to AIG. Specifically, the cash flows from 

 

2

 Available at http://www.aigcorporate.com/investors/2654275_15501T04_CNB.pdf. 3

 Available at http://www.aigcorporate.com/investors/2010_May/41301T05_v1.zip.

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 12 of 31
3

AIG to its subsidiaries relevant to this litigation are neither sourced in nor destined for 

segregated accounts. (AIG 10K at Ex.2; AIG Treas. Aff. at ¶¶ 5-7 at Ex.4). 

C. AIG’s Promotion of SCF Products. 

 AIG promotes and provides Shariah-compliant finance (“SCF”) products worldwide, 

with a specific focus on SCF insurance products known as “takaful.” In addition to marketing 

and promoting SCF products as a market leader, AIG itself, through several of its wholly-owned 

subsidiaries, engages in SCF, which subjects aspects of its financial activities to the dictates of 

Islamic law. (Defs.’ Admis. at No. 110 at Ex.5; AIG Takaful (Defs.’ Ex.I at Doc. No. 6-11) at 1 

at Ex.6; AIG GC Aff. at ¶¶ 2, 4, 6 at Ex.1; AIA Takaful Aff. at ¶¶ 7, 9-10 at Ex.7; ALICO Aff. at 

¶ 5 at Ex.8; AIA Financial Aff. at ¶ 7 at Ex.9; Takaful-Enaya Aff. at ¶ 5 at Ex.10; Lexington-A.I. 

Risk Aff. at ¶ 5 at Ex.11). SCF products and finance in general, and AIG’s SCF activities in 

particular, are different from other financial products and activities in that they are developed, 

funded, and maintained according to the religious tenets and dictates of Islamic law.4

 (Coughlin 

Decl., Ex.A at ¶¶ 7-9 at Ex.12; Spencer Decl., Ex.A at ¶¶ 1, 5, 17 at Ex.13). AIG, through its 

wholly-owned subsidiaries, complies with Shariah by employing or otherwise engaging Shariah 

authorities who collectively act as “Shariah Supervisory Committees” for their SCF subsidiaries. 

These Shariah authorities issue authoritative legal rulings (fatawa, singular fatwa) pursuant to 

Islamic legal tenets, which mandate certain behavior by AIG (or by AIG’s Shariah-compliant 

subsidiaries). (AIG GC Aff. at ¶ 4 at Ex.1; AIA Takaful Aff. at ¶¶ 9-10 at Ex.7; ALICO Aff. at ¶ 

7 at Ex.8; AIA Financial Aff. at ¶ 9 at Ex.9; Takaful-Enaya Aff. at ¶ 7 at Ex.10; Lexington-A.I. 

Risk Aff. at ¶ 7 at Ex.11; Spencer Decl., Ex.A at ¶¶ 15-16 at Ex.13). The role of Shariah 

 

4 See generally David Yerushalmi, Shariah’s “Black Box”: Civil Liability and Criminal 

Exposure Surrounding Shariah-Compliant Finance, 2008 Utah L. Rev. 1019 (2008).

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 13 of 31
4

authorities is central to all Shariah adherents. Indeed, the role of AIG’s Shariah authorities “is to 

review [AIG’s] operations, supervise its development of Islamic products, and determine Shariah 

compliance of these products and [AIG’s] investments.” (AIG Takaful-FAQs (Defs.’ Ex.H at 

Doc. No. 6-10) at 3 at Ex.14; AIG GC Aff. at ¶ 4 at Ex.1; AIA Takaful Aff. at ¶¶ 9-10 at Ex.7; 

ALICO Aff. at ¶ 7 at Ex.8; AIA Financial Aff. at ¶ 9 at Ex.9; Takaful-Enaya Aff. at ¶ 7 at Ex.10; 

Lexington-A.I. Risk Aff. at ¶ 7 at Ex.11; Spencer Decl., Ex.A at ¶¶ 15-16 at Ex.13). Thus, 

AIG’s SCF business is pervasively sectarian in that its “secular” business purposes and its 

Islamic religious mission are inextricably intertwined. (Coughlin Decl. at Ex.A at ¶ 13 at Ex.12). 

 D. SCF: A Shariah-Based Islamic Religious Activity. 

AIG’s Shariah-compliant financial activities and products are religious and Islamic in 

content and in practice. More particularly, they serve the theological purposes of a Shariahbased Islam. When AIG chooses to engage in Sharia-based Islamic practices, it is by necessity 

selecting among competing theological perspectives on Shariah and on the role of Shariah in 

Islam. (Coughlin Decl., Ex.A at ¶¶ 4-13 at Ex.12; Spencer Decl., Ex.A at ¶¶ 1-21 at Ex.13). 

Thus, AIG describes “Sharia” as “Islamic law based on Quran [sic] and the teachings of the 

Prophet (PBUH).”5 (AIG Takaful-FAQs at 1 at Ex.14; Defs.’ Admis. at No. 131 at Ex.5). This 

in itself is taking a theological position on an ongoing debate among Muslims and between 

Muslims and non-Muslims—notably including Plaintiff. (Coughlin Decl., Ex.A at ¶¶ 4-13 at 

Ex.12; Spencer Decl., Ex.A at ¶¶ 1-21 at Ex.13; Murray Decl. at ¶¶ 1-5 at Ex.15). Specifically, 

the Quran is considered by the majority but not all of Islamic adherents to be the perfect 

expression of Allah’s will for man. Presumably, most non-Muslims, and this is certainly true of 

 

5

 An acronym for “Peace Be Upon Him.” See Murray, 624 F. Supp. 2d at 670, n.1. 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 14 of 31
5

Plaintiff, don’t accept the Quran as divine or as an expression—perfect or otherwise—of Allah 

or of any divinity. (Coughlin Decl., Ex.A at ¶¶ 4-13 at Ex.12; Spencer Decl., Ex.A at ¶¶ 1-21 at 

Ex.13; Murray Decl. at ¶¶ 1-5 at Ex.15). Further, AIG states that Shariah is also based upon the 

“teachings of the Prophet,” which is a reference to the canonized Sunnah. Again, many Muslims 

and non-Muslims, including Plaintiff, do not consider the Sunnah as authentic teachings of 

Mohammed or of any other purported prophet. (Coughlin Decl., Ex.A at ¶¶ 4-13 at Ex.12; 

Spencer Decl., Ex.A at ¶¶ 1-21 at Ex.13; Murray Decl. at ¶¶ 1-5 at Ex.15). AIG, and by clear 

extension and implication Defendants on behalf of the government, are taking a particular 

theological position by supporting a specific interpretation of Shariah-based Islam.6

 

II. IMPLICATIONS OF DEFENDANTS’ OWNERSHIP AND CONTROL OF AIG. 

A. Defendants Take Ownership and Control of AIG. 

 In mid-September 2008, in response generally to a crisis in the financial markets in 2008 

and, in particular, to AIG’s impending debt- and liquidity-driven demise, Defendant Geithner, as 

then-President of FRBNY, met and consulted with Henry Paulson, who was at the time the 

Secretary of the U.S. Department of the Treasury (“Treasury Department”), and Ben Bernanke, 

who was and is the Chairman of the FED. Defendant Geithner, Paulson, and Bernanke agreed 

that the government must prevent AIG’s collapse. (FED § 129 EESA Rep.7

 (“FED Rep.”) at 1-2 

 

6

 Defendants in effect concede that AIG is fully engaged in theologically-driven behavior in their 

numerous responses to Plaintiff’s Request for Admissions. Specifically, for every request for 

admission that sought a response relating to AIG’s Shariah-based business practices and to 

AIG’s own statements about its SCF products and financial activities, Defendants responded by 

objecting to the request by stating that the request was “seeking to establish a theological 

proposition.” (Defs.’ Admis. at Nos. 110-15; 130; 132-38; 140-52; 158-69 at Ex.5). Indeed, 

AIG—and by extension the government—establishes theological propositions by word and by 

deed every day they engage in SCF business practices. 

7

 Available at http://www.federalreserve.gov/monetarypolicy/files/129aigsecborrowfacility.pdf. 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 15 of 31
6

at Ex.16; FED Mins. of Sep. 16, 2008 (“FED Mins.”) at 3-4 at Ex.17; Millstein Dep. at 10-11 at 

Ex.18; Bernanke Ltr. to Paulson of Nov. 9, 2008 (Greenlee Dep. Ex.8) (“Bernanke Ltr.”) at 

Ex.19). At the time, there was no statutory or other legal authority for the Treasury Department 

to provide debt or equity financing to AIG. (Millstein Dep. at 20-21 at Ex.18). 

Thus, at the FED meeting on September 16, 2008, Defendant Geithner formally proposed 

to the FED that AIG be provided massive financial assistance by having the FED invoke the 

“unusual and exigent circumstances clause” of Section 13(3) of the Federal Reserve Act 

(“FRA”) in order to permit AIG to obtain “discount” (i.e., loan) funds from the FRBNY.8

 

(Greenlee Dep. at 31-32 at Ex.20). As a result, the FED immediately authorized the FRBNY to 

(1) provide a credit facility of up to $85 billion; (2) secure collateralization through all of AIG’s 

assets; (3) obtain a 79.9 % equity interest in AIG; and (4) reserve for itself the right to veto the 

payment of dividends to common and preferred shareholders. (FED Mins. at 3-4 at Ex.17). By 

September 22, 2008, the FRBNY had implemented the FED’s directives by negotiating, drafting, 

and executing the Credit Agreement. (See Credit Agreement at Defs.’ Ex.A (Doc. No. 6-3); see 

also Credit Agreement (excerpts) at Ex.21).

The Credit Agreement tracked the FED’s mandate and provided for the FRBNY to 

provide AIG with an $85 billion loan (“Credit Facility”). In exchange, the FRBNY obtained 

 

8

 Sections 13(1) and (2) of the FRA provide that only “member banks” may obtain loan funds 

from one of the regional Federal reserve banks through discounted commercial paper. 12 U.S.C. 

§§ 342 & 343. AIG was not and is not a member bank. Section 13(3) provides, in relevant part, 

that under “unusual and exigent circumstances” the FED may “authorize any Federal reserve 

bank” to provide funds to “any individual, partnership, or corporation . . . [p]rovided, that 

before” providing such funds, “the Federal reserve bank shall obtain evidence that such 

individual, partnership, or corporation is unable to secure adequate credit accommodations from 

other banking institutions. All such [funds] shall be subject to such limitations, restrictions, and 

regulations as [the FED] may prescribe.” 12 U.S.C. § 343 (emphasis added). 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 16 of 31
7

collateral in the form of a security interest in effectively all of AIG’s assets and AIG agreed to 

issue preferred shares (“Series C Preferred Shares”), providing equity upon conversion equal to 

79.9% of the total equity in AIG and voting rights in AIG equal to 79.9% of the total voting 

rights allotted to the common shareholders. (Subsequent amendments to the Credit Agreement 

reduced the total amount available under the Credit Facility to $60 billion and reduced the 79.9% 

equity and voting rights to 77.9%.).9

Under the Credit Agreement, however, AIG did not issue the Series C Preferred Shares to 

the FRBNY. Instead, AIG issued the legal ownership interest of the Series C Preferred Shares to 

a trust (“Trust”) established pursuant to the AIG Credit Facility Trust Agreement (“Trust 

Agreement”) and issued the beneficial interest to the U.S. Treasury.10 According to the Trust 

Agreement, the FED (not the FRBNY) retains absolute and unilateral control over the existence 

of the Trust itself and the terms of the Trust Agreement.11 (Trust Agreement at Ex.22). Thus, 

the federal government acquired a majority interest in AIG and effectively took control of the 

company. 

B. $40 Billion of Credit Facility Funds Replaced by TARP Funds. 

As a result of the failures and impending failures of several major financial institutions, 

including AIG, Congress exercised its authority under the Taxing and Spending Clause and 

 

9 See list of amendments to Credit Agreement and references to respective SEC filings in which 

they appear at AIG 10K at 352 at Ex.2. 

10 The Trust was required because there is no authority under the FRA for the FED or the Federal 

reserve regional banks to provide equity financing or to obtain equity as consideration for 

discount funds. In addition, there are conflict-of-interest issues for a Federal reserve regional 

bank acting as both lender through a credit facility and controlling shareholder. (Bernanke Ltr. 

at 2 at Ex.19; Geithner Test. to Senate Banking Comm. at 13 at Ex.23; Millstein Dep. at 50-51 at 

Ex.18; Greenlee Dep. at 91-92 at Ex.20). 

11 Section 1.03 of the Trust Agreement expressly permits the FED to terminate or amend the 

Trust pursuant to its Section 13(3) authority of the FRA. (Trust Agreement at 3 at Ex.22). 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 17 of 31
8

passed EESA on October 3, 2008.12 EESA established legislative authority for the Troubled 

Asset Relief Program (“TARP”), which authorized the Treasury Secretary to expend up to $700 

billion in taxpayer funds “to purchase, and to make fund commitments to purchase, troubled 

assets from any financial institution.” 12 U.S.C. §5211(a)(1). Pursuant to this express 

congressional mandate and specific congressional appropriation, AIG, as the single largest 

recipient of TARP funds, received $40 billion in November 2008. These funds were used to 

replace $40 billion of the Credit Facility funds provided to AIG just a few weeks earlier—funds 

that were used to support SCF. At that time, AIG had already drawn down approximately $62 

billion.13 As a result, AIG’s debt to the FRBNY under the Credit Facility was reduced by $40 

billion and AIG issued the Treasury Department non-voting, preferred shares (“Series D 

Preferred Shares”). (AIG 10K at 309 at Ex.2). As a result of the Series D Preferred Shares and 

the replacement of $40 billion of the Credit Facility funds with TARP funds, the federal 

government as a whole, using both FED funds and EESA funds, became the majority and 

controlling owner of AIG. As such, the federal government has a vested interest in ensuring the 

success of AIG and stands to profit by that success, creating a government entanglement with 

AIG. And by supporting its ownership interest with taxpayer money, maintaining a vested 

interest in the success of AIG, and standing to profit from that success, the federal government 

 

12 When Congress passed the EESA, it understood that AIG was in financial trouble and would 

be a direct beneficiary of the EESA funds. (See, e.g., Legislative History at Ex.24). EESA itself 

(§ 129) required the FED to report the exercise of its Section 13(3) authority as it applied to 

AIG. 12 U.S.C. § 5235(a) & (d); (see also FED Rep. at Ex.16; AIG Nov. 2008 Press Release 

(Defs.’ Ex.D at Doc. No. 6-6) at 1 at Ex.25; see generally SIGTARP Rep. at Ex.26). 

13 Prior to the execution of the Credit Agreement on Sept. 22, 2008, the FED loaned AIG 

approximately $37 billion in four traunches evidenced by four separate demand promissory 

notes. Pursuant to the Credit Agreement, this sum of $37 billion was converted to debt under the 

Credit Facility. (Credit Agreement (excerpts) at Ex.21).

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 18 of 31
9

has insinuated itself into a position of interdependence so that it is in effect a joint participant in 

AIG’s activities, thereby creating a symbiotic relationship such that AIG’s activities can be fairly 

attributed to the government. (See Millstein Dep. at 48-49 at Ex.18; see also Test. of Foshee 

(Trustee) at 1 at Ex.27; Test. of Feldberg (Trustee) at 3, 5 at Ex.28; Test. of Liddy on May 13, 

2009, at 5-6 at Ex.29 (“The infusion of substantial U.S. government capital to AIG brought with 

it a substantial new set of relationships for the company: first and foremost, with the American 

taxpayer as AIG’s largest single shareholder; with the taxpayers’ representatives here in 

Congress; with the Federal Reserve and U.S. Treasury as our primary day-to-day partners in 

government; and more recently, with the trustees also appearing today.”) (emphasis added)). 

Moreover, the federal government’s insinuation into the day-to-day management of AIG 

is evidenced not only by the shareholder control the FED exercises through the Trust it controls, 

but also by the fact that federal officials, including certain Defendants, acted directly to force the 

resignation of board members and the appointment of other board members (See, e.g., Defs.’ 

Admis. at Nos. 74-75 at Ex.5; Test. of Liddy on March 18, 2009, at 1 at Ex.30). 

C. Defendants Invest Additional TARP Funds Used to Support SCF. 

On April 17, 2009, AIG and the Treasury Department entered into the Securities 

Purchase Agreement, which, inter alia, provided that the Treasury Department would provide 

AIG with up to $30 billion in equity financing.14 AIG would be able to draw down on this equity 

line as needed. While the Securities Purchase Agreement requires that AIG provide an 

“expected uses” for each drawdown, there is no requirement that AIG in fact use the drawdown 

 

14 The exact sum available under the Securities Purchase Agreement is $29.835 billion. 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 19 of 31
10

proceeds as “expected”—nor any prohibition on using the funds to support SCF. AIG has to 

date drawn down more than $7.5 billion under the Securities Purchase Agreement.15

D. AIG Promotes SCF without Safeguards. 

As set forth above, AIG, through its wholly-owned subsidiaries, engages in, practices, 

and promotes SCF, which is a form of Islamic religious observance. AIG would not have 

survived its financial crisis without the financial support provided by Defendants on behalf of the 

federal government. This financial “life-support” included, inter alia, (1) FED funds (authorized 

by the FED) provided by the FRBNY through the Credit Facility, which provided the federal 

government with its majority and controlling ownership interest in AIG (Credit Facility-Series C 

Preferred Shares transaction); (2) the replacement of $40 billion of Credit Facility funds with 

TARP funds (Series D Preferred Shares transaction), which further supported the federal 

government’s ownership interest in AIG and AIG’s SCF activities; and (3) the most recent $30 

billion TARP funds equity draw down agreement. Each of these transactions was and continues 

to be essential and necessary for AIG’s continued survival.16 Without the direct support of the 

federal government through the investment of taxpayer funds, AIG would not and could not 

survive as a corporate entity—consequently, AIG could not engage in its SCF businesses. Thus, 

taxpayer funds have been and continue to be used to support AIG’s Shariah-based Islamic 

religious activities. 

 

15 For the dates and amounts for the specific drawdowns see AIG Treas. Aff. at ¶ 11 at Ex.4. 

16 There can be no credible argument that AIG would have survived without financial support 

from the government. This is demonstrated at every level of government involvement and by 

AIG’s government filings. Defendants concede this point. (Greenlee Dep. at 110 at Ex.20; 

Millstein Dep. at 13-16, 25, 28-29, 45-47 at Ex.18; see also Bernanke Ltr. at Ex.19). Indeed, 

pursuant to Section 13(3) of the FRA, the FED may only open its discount window to nonmember banks after a determination that the financial institution has no private financing 

available. 12 U.S.C. § 343. 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 20 of 31
11

Further, to date AIG has directly and indirectly provided financial support in excess of 

one billion dollars to its SCF businesses while receiving taxpayer funds.17 Because AIG uses 

consolidated accounting and receives and funnels money through an unsegregated single port, 

taxpayer funds have been effectively diverted to support AIG’s Shariah-based Islamic activities 

and are divertible in the future for such uses with no meaningful restrictions or safeguards. 

The future diversion of taxpayer funds in support of AIG’s SCF businesses and Shariahbased Islamic practices is more than theoretical for two reasons. One, the TARP program 

continues. In fact, there remains approximately $215 billion available to distribute, of which the 

Treasury Department has contractually committed to providing AIG with an additional $22.5 

billion under the $30 billion Securities Purchase Agreement. (See Defs.’ Admis. at No. 69 at 

Ex.5). And two, there are absolutely no statutory, regulatory, or contractual safeguards in place 

to prevent such diversions. Nothing in EESA, the TARP regulations, or the $30 billion 

Securities Purchase Agreement prohibits AIG from applying the TARP money to support AIG’s 

Shariah-based Islamic activities. Indeed, AIG has provided extensive testimony that there are 

“no [AIG] policies, whether required by the U.S. government or otherwise, created or 

implemented to prevent the use of any government funds from promoting, supporting, or 

funding [AIG’s Shariah-based Islamic practices].” (Lexington-A.I. Risk Aff. at ¶ 10 at Ex.11; 

ALICO Aff. at ¶ 11 at Ex.8; AIA Takaful Aff. at ¶ 15 at Ex.7; AIA Financial Aff. at ¶ 14 at Ex.9; 

and Takaful-Enaya Aff. at ¶ 10 at Ex.10). 

 

17 The details of AIG’s financial transactions are covered by a protective order. For specific 

examples of transactions funding SCF, see Exhibit 36, which was filed under seal. 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 21 of 31
12

E. Defendants Officially Endorse SCF. 

Beyond financial support, Defendants actively promote and endorse both SCF generally 

and in particular AIG’s involvement in SCF. This is evidenced by the Treasury Department’s 

active endorsement of SCF through published writings posted on its website (publications 

actually edited with updates by Treasury Department Staff);18 providing for and publicly 

announcing the official position at the Treasury Department of the “Islamic Finance Scholar-inResidence Program”;19 published presentations by senior Treasury Department officials lauding 

SCF and stating explicitly that the U.S. government “places significant importance on 

promoting . . . Islamic finance” and has “recently deepened our engagement in Islamic finance 

in a number of ways,” including a “call[] for harmonization of Shari’a standards at the 

national and international levels.”

20 All of this was followed by a promotion of SCF through a 

Treasury Department sponsored conference entitled “Islamic Finance 101.” The program, which 

took place immediately following the acquisition of AIG by Defendants, was specifically 

designated for government policy makers, and the published materials are replete with 

theological propositions that implicitly and explicitly inform the objective audience that the U.S. 

government is promoting, endorsing, and encouraging the religious premises of Shariah-based 

Islam.21

 

18 “Overview of Islamic Finance: Occasional Paper No. 4 (August 2006)” published by the 

Treasury Department and posted at its Web site at http://www.ustreas.gov/offices/internationalaffairs/occasional-paper-series/08042006_OccasionalPaper4.pdf. (See Ex.31). 

19 June 2, 2004, Treasury Department Press Release posted at the Treasury Department Web site 

at http://www.ustreas.gov/press/releases/js1706.htm. (See Ex.32). 

20 May 8, 2004, Treasury Department Press Release posted at the Treasury Department’s Web 

site at http://www.ustreas.gov/press/releases/js1543.htm. (See Ex.33) (emphasis added). 

21 (Defs.’ Admis. at Nos. 170-72 at Ex.5; Kiwan Dep. at 32-33 at Ex.34; see also Islamic Finance 

101 presentation materials (Kiwan Dep. Ex.21) at Ex.35).

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 22 of 31
13

ARGUMENT 

I. THE ESTABLISHMENT CLAUSE PROHIBITS DEFENDANTS FROM 

 APPROVING, ENDORSING, AND SUPPORTING SHARIAH-BASED ISLAM. 

A. “Three Main Evils” and “Three Pence.” 

The Establishment Clause famously states, “Congress shall make no law respecting an 

establishment of religion.” U.S. Const. amend. I. Despite the absence of precisely stated 

prohibitions, it was intended to protect against “three main evils”: ‘‘[1] sponsorship, [2] financial 

support, and [3] active involvement of the sovereign in religious activity.’” Lemon v. Kurtzman, 

403 U.S. 602, 612 (1971) (quoting Walz v. Tax Commission, 397 U.S. 664, 668 (1970)). 

In Everson v. Board of Educ., 330 U.S. 1 (1947), the Court further emphasized: 

No tax in any amount, large or small, can be levied to support any religious 

activities or institutions, whatever they may be called, or whatever form they may 

adopt to teach or practice religion. 

Id. at 16 (emphasis added). This is consistent with James Madison’s objection to even “three 

pence” being used for religion. See Flast v. Cohen, 392 U.S. 83 (1968) (quoting James 

Madison’s famous Memorial and Remonstrance Against Religious Assessments). 

 All of the “main evils” are present in this case, which involves not just “three pence,” but 

billions of dollars of federal government support. 

B. Prohibition on Perceived Endorsement of Shariah-Based Islam. 

 The Supreme Court has warned that “the Constitution . . . requires that [courts] keep in 

mind the myriad, subtle ways in which Establishment Clause values can be eroded, and guard 

against other different, yet equally important, constitutional injuries.” Santa Fe Indep. Sch. Dist. 

v. Doe, 530 U.S. 290, 314 (2000) (internal citation omitted). In fact, “[e]very government 

practice must be judged in its unique circumstances to determine whether it constitutes an 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 23 of 31
14

endorsement or disapproval of religion.” Lynch v. Donnelly, 465 U.S. 668, 694 (1984) 

(O’Connor J., concurring) (emphasis added). Consequently, another way in which 

Establishment Clause “values” are eroded—a way that is not so subtle—is when the government 

uses taxpayer money to not only fund religious activities, but to take de facto control of a private 

entity that engages in religious activities. And this “unique circumstance” is further worsened 

when the government favorably endorses the religious activities in question, as in this case. 

Indeed, as controlling case law makes plain, the Establishment Clause prohibits the government 

from engaging in any activity that “is sufficiently likely to be perceived” as an endorsement of a 

particular religion. See County of Allegheny v. A.C.L.U., 492 U.S. 573, 597 (1989). 

C. The Modified Lemon Test. 

While the Supreme Court has struggled with creating a single test for determining when 

the government has violated the Establishment Clause, the test set forth in Lemon v. Kurtzman, 

403 U.S. 602 (1971), remains the starting point for the court’s analysis. Under the Lemon test, a 

governmental action is unconstitutional if any one of the following applies: (1) it does not have a 

valid secular purpose; (2) its primary effect either advances or inhibits religion; or (3) it 

excessively entangles government with religion. Id. at 612-13. 

1. The “Purpose” of Promoting Shariah-Based Islam. 

When evaluating the “purpose” of governmental acts under Lemon, the reviewing court 

must not simply accept the government’s self-serving statements in its defense. See Edwards v. 

Aguillard, 482 U.S. 578 (1987); Santa Fe Indep. Sch. Dist., 530 U.S. at 290. As the Supreme 

Court stated recently, “The eyes that look to purpose belong to an ‘objective observer,’ one who 

takes account of the traditional external signs that show up in the ‘text, legislative history, and 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 24 of 31
15

implementation of the statute,’ or comparable official act.” McCreary County v. A.C.L.U., 545 

U.S. 844, 862 (2005) (citation omitted). In fact, the Court admonished in McCreary County that 

a reviewing court should not treat the “purpose enquiry” as if it “were so naive that any 

transparent claim to secularity would satisfy it, and [should not] cut context out of the enquiry, to 

the point of ignoring history, no matter what bearing it actually had on the significance of current 

circumstances.”22 Id. at 863-64. 

2. The “Effect” of Promoting Shariah-Based Islam. 

When evaluating the “effect” of the challenged acts under Lemon, the reviewing court is 

required to do so irrespective of the government’s purpose. Indeed, “the Establishment Clause 

forbids a State to hide behind the application of formally neutral criteria and remain studiously 

oblivious to the effects of its actions.” Santa Fe Indep. Sch. Dist., 530 U.S. at 307, n.21 (internal 

quotations and citations omitted). While “[t]he purpose prong of the Lemon test asks whether 

government’s actual purpose is to endorse or disapprove of religion[, t]he effect prong asks 

whether, irrespective of the government’s actual purpose, the practice under review in fact 

conveys a message of endorsement or disapproval. An affirmative answer to either question 

should render the challenged practice invalid.” See Lynch, 465 U.S. at 690 (O’Connor J., 

concurring) (emphasis added). As Justice O’Connor explained in Lynch, “Endorsement sends a 

message to nonadherents that they are outsiders, not full members of the political community, 

and an accompanying message to adherents that they are insiders, favored members of the 

 

22 It should be noted that the “purpose” of a challenged act need not be nefarious, just 

impermissible, from an objective observer’s perspective. Thus, Plaintiff need only prove that the 

“purpose” of the challenged acts, which extend beyond a facial challenge to EESA to include 

Defendants’ endorsement and support of Shariah-based Islam, is impermissible. He is not 

required to prove that Defendants had a bad “motive.” See Board of Education v. Mergens, 496 

U.S. 226, 249 (1990). 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 25 of 31
16

political community.” Id. at 688 (O’Connor, J., concurring). The inquiry as to whether the 

challenged acts are “sufficiently likely to be perceived” as “convey[ing] a message of 

endorsement” of religion is from the perspective of a “reasonable” and “reasonably informed 

observer.” See American Atheists, Inc. v. City of Detroit Downtown Dev. Auth., 567 F.3d 278, 

292 (6th Cir. 2009) (applying “endorsement” test to a funding scheme); Agostini v. Felton, 521 

U.S. 203, 235 (1997) (same). 

3. The “Effect” of Funding Shariah-Based Islamic Religious Activities. 

In Hunt v. McNair, 413 U.S. 734, 743 (1973), the Court made clear that federal aid will 

have “a primary effect of advancing religion . . . when it funds a specifically religious activity in 

an otherwise substantially secular setting,” as in this case. In Agostini v. Felton, 521 U.S. 203, 

218, 232-33 (1997), the Court further modified Lemon by folding the entanglement inquiry into 

the primary effect inquiry for funding cases since both inquiries tended to rely on the same 

evidence. The Court suggested three factors for determining whether government funding has 

the impermissible effect of advancing religion: (1) whether it results in the indoctrination of 

religion; (2) whether it defines its recipients by reference to religion; or (3) whether it creates an 

excessive entanglement. Agostini, 521 U.S. at 234. The first and third factors are present here. 

4. The Lack of Constitutionally Required “Safeguards.” 

 When the government provides open-ended money grants without effective safeguards 

against the diversion of such funds for religious purposes, as in this case, the government 

violates the Establishment Clause. See Tilton v. Richardson, 403 U.S. 672, 682-84 (1971) 

(finding that “the statute’s enforcement provisions are inadequate to ensure that the impact of the 

federal aid will not advance religion”); American Atheists, Inc. 567 F.3d at 293 (“[A] program 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 26 of 31
17

may have the primary effect of advancing religion if the recipient diverts secular aid to further its 

religious mission.”) (quotations and citation omitted). In American Atheists, Inc. v. City of 

Detroit Downtown Dev. Auth., 567 F.3d 278, 296 (6th Cir. 2009), for example, the court upheld 

the funding program, but did so upon finding that there was “ample reason to think that the 

distributed aid did not (and will not) result in government-sponsored faith-based activities” 

because “the mechanics of the program ensured that the aid would go just to the approved 

uses.”23 See also Mitchell v. Helms, 530 U.S. 793, 861 (2000) (O’Connor J., concurring) 

(concluding that “[t]he safeguards employed by the [funding] program are constitutionally 

sufficient”); cf. Bowen v. Kendrick, 487 U.S. 589, 621-22 (1988) (remanding to determine 

whether funds in particular cases were being used in violation of the Establishment Clause even 

though Congress “expressed the view that the use of [government] funds by grantees to promote 

religion, or to teach religious doctrines of a particular sect, would be contrary to the intent of the 

statute” and the Secretary had “promulgated a series of conditions to each grant, including a 

prohibition against teaching or promoting religion”). In Committee for Pub. Educ. & Religious 

Liberty v. Nyquist, 413 U.S. 756, 774 (1973), the Court struck down, inter alia, the “maintenance 

 

23 In American Atheists, Inc., the court observed: 

Not only did eligible recipients have to satisfy three levels of review verifying 

that the project conformed to the program’s guidelines and criteria, [which 

restricted the use of funds to purely secular purposes,] but they also had to 

finance 100% of the project on their own at the outset and 50% of the program by 

the end. Whatever “special dangers” exist when [the government] makes openended money grants to religious recipients, which may spend the funds on 

whatever they wish, those dangers do not exist when [the government] releases 

funds for completed work on approved projects that the recipient initially finances 

on its own. 

American Atheists, Inc., 567 F.3d at 296 (internal citation omitted). 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 27 of 31
18

and repair” provisions of a New York statute that permitted aid to nonpublic schools. The Court 

found that the grants were “given largely without restriction on usage,” stating that 

[n]othing in the statute, for instance, bars a qualifying school from paying out of 

state funds the salaries of employees who maintain the school chapel, or the cost 

of renovating classrooms in which religion is taught, or the cost of heating and 

lighting those same facilities. Absent appropriate restrictions on expenditures for 

these and similar purposes, it simply cannot be denied that this section has a 

primary effect that advances religion in that it subsidizes directly the religious 

activities of sectarian elementary and secondary schools. 

Id. (emphasis added). Similarly here, there is “nothing in the statute” that prohibits AIG from 

using government (taxpayer) funds to support its religious activities. Absent appropriate 

safeguards, “it simply cannot be denied” that the use of government funds has the primary effect 

of advancing religion in that they subsidize directly AIG’s religious activities. 

II. THE MATERIAL FACTS DEMONSTRATE AN ESTABLISHMENT CLAUSE 

 VIOLATION AS A MATTER OF LAW. 

 A review of the material facts in light of established legal principles leads to the firm 

conclusion that Defendants violated the Establishment Clause. In 2008, the federal government, 

through the FED, took unprecedented action by acquiring a majority ownership interest in AIG. 

The funds used to acquire this ownership were also used to support AIG’s religious activities. 

Through EESA, the government then provided further support for its investment by granting 

AIG $40 billion in taxpayer money, which replaced a portion of the FED funds and allowed AIG 

to continue its operations, including its Islamic religious activities. This disbursement of EESA 

funds was followed within a few months by an additional $30 billion of taxpayer funds. The 

funds provided pursuant to EESA are unrestricted (except for executive compensation), openended grants of taxpayer money. Moreover, AIG employs consolidated financing; all of its 

funds are fungible and flow through a single port. Consequently, all funds going to AIG are used 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 28 of 31
19

to financially support AIG’s activities, including its religious activities. Because there are no 

restrictions or safeguards in EESA that bar the use of the funds to support AIG’s religious 

activities, and there is no true mechanism in EESA by which the government could police this 

impermissible use of funds, it “simply cannot be denied” that disbursement of EESA funds to 

AIG “has a primary effect that advances religion.” Nyquist, 413 U.S. at 774. Thus, the lack of 

any constitutionally sufficient safeguards regarding the use of the billions of taxpayer dollars 

going to AIG is sufficient to find a constitutional violation. Id.; Tilton, 403 U.S. at 682-84. 

The Supreme Court has also made clear that when taxpayer money is being used to fund 

a religious activity, even when the activity occurs in an otherwise secular setting, as in this case, 

the “effect” of such funding violates the Establishment Clause. Hunt, 413 U.S. at 743. The 

Court has similarly made clear that funding resulting in either religious indoctrination or 

excessive government entanglement with religion, as in this case, has an unconstitutional 

“effect.” Agostini, 521 U.S. at 234. And this “effect” is worsened by the “symbolic” union 

between the government and AIG as a result of the government’s ownership and control of AIG. 

See id. at 223-28. Consequently, this union creates a further “excessive entanglement” problem 

in that the “sovereign” itself is engaging in religious activities. See Lemon, 403 U.S. at 612; see 

also Brentwood Acad. v. Tennessee Secondary Sch. Athletic Assoc., 531 U.S. 288, 296 (2001) 

(identifying factors for holding that a challenged activity is government action for constitutional 

purposes, including, inter alia, “entwinement” between the government and the private actor). 

 Indeed, the taxpayer funding of AIG was not done in a vacuum. As noted above, at the 

time of this funding, the federal government had a majority ownership interest in and de facto

control over AIG. Furthermore, AIG was publicly known as the world leader in SCF. In fact, 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 29 of 31
20

shortly after receiving the first grant of EESA money, AIG publicly announced that it was 

expanding its SCF activities in the United States. (Coughlin Decl., Ex.C at Ex.12). Moreover, 

near the time of EESA funding, the Treasury Department itself held a forum on SCF for 

government policy makers, giving this religious practice the federal government’s stamp of 

approval. And that official approval is further endorsed by Defendants through documents found 

on the Treasury Department’s website. Indeed, it is a clear violation of the Establishment Clause 

when the government throws its weight in support of a particular religious doctrine, such as 

Shariah-based Islam. Larson, 456 U.S. at 244 (“The clearest command of the Establishment 

Clause is that one religious denomination cannot be officially preferred over another.”); 

Commack Self-Service Kosher Meats, Inc., 294 F.3d at 425 (holding that the government 

violated the First Amendment because it suggested a “preference for the views of one branch of 

Judaism”). 

 In sum, the totality of the undisputed facts in light of the controlling law compels one 

conclusion: Defendants’ approval and support of Shariah-based Islam is sufficiently likely to be 

perceived as conveying a message of endorsement of religion in violation of the Establishment 

Clause. 

CONCLUSION 

 Plaintiff respectfully requests that the court grant his motion. 

Respectfully submitted, 

THOMAS MORE LAW CENTER LAW OFFICES OF DAVID YERUSHALMI, P.C. 

/s/ Robert J. Muise /s/ David Yerushalmi

Robert J. Muise, Esq. (P62849) David Yerushalmi, Esq. 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 30 of 31
21

CERTIFICATE OF SERVICE

I hereby certify that on June 7, 2010, a copy of the foregoing PLAINTIFF’S MOTION 

FOR SUMMARY JUDGMENT & BRIEF IN SUPPORT with index of exhibits and exhibits was 

filed electronically. Certain exhibits were filed under seal pursuant to a protective order entered 

in this case. Notice of this filing will be sent to all parties for whom counsel has entered an 

appearance by operation of the Court’s electronic filing system. Parties may access this filing 

through the Court’s system. I further certify that a copy of the foregoing has been served by 

ordinary U.S. mail upon all parties for whom counsel has not yet entered an appearance 

electronically: None. Furthermore, I certify that a copy of the exhibits filed under seal have been 

served upon the following via email per the written agreement and stipulation of the parties: 

 John R. Coleman, Esq. 

 Julie Straus, Esq. 

 U.S. DEPARTMENT OF JUSTICE 

 Trial Attorney 

 Civil Division, Federal Programs Branch 

 20 Massachusetts Ave., N.W., Room 6118 

 Washington, DC 20530 

 john.coleman3@usdoj.gov 

 julie.straus@usdoj.gov 

 Counsel for Defendants 

THOMAS MORE LAW CENTER 

/s/ Robert J. Muise

Robert J. Muise, Esq. (P62849) 

Case 2:08-cv-15147-LPZ-MKM Document 57 Filed 06/07/10 Page 31 of 31