Operating Under a Cloud

Scrutiny of Muslim charities raises knotty questions

A document on a bulletin board at KinderUSA, a Muslim charity here, outlines what employees should do if police or

federal investigators knock on the door. If they arrive with a warrant, it says, employees should exercise their legal right and resist answering their questions.

“If agents try to question you, it is important not to answer or make any statements,” the two-page document says.

The memo is just one sign of the mistrust KinderUSA and many other Muslim charities feel toward law-enforcement authorities. A growing number of Muslim organizations — as well as other nonprofit experts — say federal investigators are wrongly interfering with legitimate charitable programs as they seek to ferret out organizations that support terrorists.

Since the attacks of September 11, 2001, federal authorities have shut down three of the largest Islamic charities in the United States, as well as two others, for alleged links to Al Qaeda and other terrorist groups. The U.S. Treasury Department, which is in charge of cutting off monetary support for terrorists, has named at least 40 charitable organizations worldwide as having connections to violent and militant groups or individuals.

Concern About Terrorism

At KinderUSA, the charity’s leaders are sympathetic to concerns about terrorism. KinderUSA was founded a year after the terrorist attacks at a time when hostility and suspicion of Muslim causes were at a high. Its leaders say they made a deliberate effort to do everything they could to prove that the organization, which provides aid to poor families in the West Bank and Gaza, is accountable. For example, the charity gives vouchers, instead of cash, to Palestinians to use for food, clothing, and school supplies as a way to decrease the chance that its charitable aid could be diverted for nefarious purposes.

Dalell D. Mohmed, KinderUSA’s executive director, says she believes authorities are paying attention to the group simply because of its Muslim beliefs. “It’s totally sinister, totally un-American,” she says, comparing the situation to The Trial, the novel by Franz Kafka about totalitarianism. “Where’s the Constitution in all this?”

Seeking Information

But despite KinderUSA’s assurances, the organization also demonstrates what makes it so tricky for donors, government officials, and the public to figure out which charities are trustworthy and which ones could have ties to overseas groups that promote violence.

Last fall, federal investigators issued KinderUSA — also known as Kids in Need of Development, Education, and Relief — a federal grand jury subpoena and forced it to hand over tax records and other documents. The government has not said what it is looking for, but KinderUSA’s connections to another charity — the Holy Land Foundation for Relief and Development, one of the charities the government closed three and a half years ago — may have been what prompted federal agents to take an interest in the charity.

KinderUSA’s leaders deny that those ties, or any other of the group’s actions, warrant scrutiny by the government — scrutiny that the charity says has involved wiretaps of its offices and harassment of its employees.

Federal officials will not confirm what action they have taken toward KinderUSA beyond seeking a court order for information, but they say the threat of violence makes it vital that the government put charities under a microscope to be certain none are funneling money to terrorists.

“The unfortunate reality of the post-9/11 world is that Al Qaeda, Hamas, and like-minded terrorist groups have abused nonprofits to support their terrorist agendas, often misappropriating religion to justify their actions,” Juan C. Zarate, the Treasury Department’s assistant secretary who oversees its terrorist-financing office, said in a speech in March to Muslim charitable groups. “Terrorists establish charitable fronts and seek out corrupt or vulnerable charities to raise and move money, to transport operatives and material, to recruit and indoctrinate new members, and to support family members of operatives or deceased suicide bombers.”

Financial Disclosure

KinderUSA’s leaders say they have taken many steps to assuage the government’s concerns. It posts its financial statements online, keep its administrative costs to less than 20 percent of its income, and followed the Treasury Department’s suggestion that the group check the names of donors, aid recipients, and its charitable and business partners against lists of terrorist suspects. KinderUSA even avoids asking the Palestinian orphans it helps how their parents died to make sure it is not seen as giving preferential treatment to families of militants or suicide bombers who have died attacking Israel.

Donors have shown their appreciation for the group’s efforts — they have contributed more than $4-million to the organization in the last three years.

The donations have come mainly from individuals who attend fund-raising dinners or make gifts through the charity’s Web site. The projects the money has paid for include a psychological-counseling center in the West Bank, playgrounds in Gaza, and two bulletproof buses that drive Palestinian children to school.

While KinderUSA attributes its fund-raising success to its high standards and the appeal of its cause, it also has benefited from its board members’ connections within Muslim-American circles. Laila Al-Marayati, the group’s chairwoman, for example, is married to the executive director of the Muslim Public Affairs Council, one of the nation’s leading Muslim advocacy groups.

The charity was so successful at raising money that last year it started to expand operations outside the Middle East. “A big area we’re interested in is the AIDS crisis in Africa,” says Ms. Al-Marayati.

But last fall, those plans were temporarily put on hold. On the day before Thanksgiving, two FBI agents served the group a federal grand jury subpoena that requested board minutes, tax returns, and other documents. The charity turned over the information in December.

The subpoena so unnerved KinderUSA’s officials that they sent letters to the group’s 6,800 donors to tell them to stop giving out of concern that its offices would be raided and its assets frozen. They also posted the text of the letter on the charity’s Web site. Donors who still wanted to support Palestinian children were encouraged to give to Islamic Relief USA, in Burbank, Calif., and to contact government officials to complain about the treatment of the organization.

“I don’t think in good conscience any of us could have gone out and asked for a single penny without telling the donors what was going on,” says Ms. Al-Marayati.

Resuming Fund Raising

After four months with no additional information from the government, the charity in April resumed fund raising after many of its donors urged it to do so.

Hedab Tarifi, a donor who lives in Los Angeles and who has family in the West Bank and Gaza, says the group’s openness about the investigation has strengthened her support.

However, Ms. Tarifi, an information-technology manager who donates between $5,000 and $10,000 to charity each year, would like more reassurance from federal officials about the charity’s future. “People are wondering, If we give to a group today, will tomorrow the administration close it?”

Despite Ms. Tarifi’s concerns, contributors to Muslim groups appear to gaining new confidence. When it first opened, KinderUSA, like other Islamic charities, received many donations anonymously — usually cash sent through the mail — because donors feared the government was tracking such gifts. In the last two years, that practice has decreased, and Muslim nonprofit groups say they are getting a growing number of contributions by check or credit card. The charities say this is a sign that donors have more faith in them and have less trust in the government’s accusations.

Even so, KinderUSA officials worry that the subpoena has put the organization under a cloud of suspicion, and it may be months or even years before the charity can learn its focus. “It could be part of any other case, it could be a fishing expedition,” says John P. Kilroy, KinderUSA’s lawyer.

Beyond the subpoena, officials of KinderUSA say federal agents have intruded on their work in other ways.

According to Ms. Mohmed and Ms. Al-Marayati, an employee told them she was approached by federal agents in October and asked to provide information about the charity. They say the employee — whom KinderUSA would not identify and who has since resigned — told them that the agents tried to win the employee’s cooperation by saying KinderUSA officials had concerns about this employee’s performance. KinderUSA’s officials believe the personnel information cited by the agents was obtained through a phone tap of a conversation between the executive director and board members.

Ms. Mohmed says the FBI asked the former employee to find out what kinds of documents the charity shreds. To show that the charity did not have any secrets, Ms. Mohmed says she has since stopped destroying documents, such as lists with the names of donors and their addresses, which she routinely shredded due to privacy concerns. “I have a box sitting in my office of things that should be shredded,” she says. “We have nothing to hide.”

The Federal Bureau of Investigation and the U.S. attorney’s office in Dallas acknowledge they are aware of KinderUSA’s complaints, but they say they cannot comment on whether the charity is being investigated or on the merit of its allegations. “We’re aware of the accusations, but we have no comment,” says Kathy Colvin, a spokeswoman for the U.S. attorney’s office in Dallas.

Ties to Another Charity

KinderUSA’s connection to the Holy Land Foundation and other facts may have prompted federal agents to take an interest in the charity.

Last year a federal grand jury in Dallas issued a 42-count indictment against Holy Land and seven of its leaders for allegedly funneling $12.4-million to Palestinian terrorists and their families.

Ms. Mohmed worked as an emergency relief coordinator at the Holy Land Foundation, and Riad Abdelkarim, one of KinderUSA’s co-founders, was a board member with the group. Neither of them is named in the indictment.

Ms. Mohmed says she has no knowledge of any wrongdoing by the organization or its officials. “Just like an Enron employee, I was surprised when they closed it down,” she says. “Honestly, based on what I did, I had no knowledge of them doing anything illegal.”

In addition, the Israeli government detained Ms. Mohmed in 2002 for 10 days to interrogate her for allegedly helping terrorists. Mr. Abdelkarim was detained by Israel as well for a few days on similar accusations.

Ms. Mohmed, who is a U.S. citizen, says she was wrongly detained and even held a hunger strike to protest her treatment. She says the Israelis released her after she took a lie-detector test to prove her innocence. The Israeli Embassy in Washington did not reply to The Chronicle’s request for information on her claims.

‘Lack of Courage’

Charitable organizations that work alongside KinderUSA in the Middle East vouch for its officials. “We know the people at KinderUSA. We know they’re good people,” says Arif Shaikh, a spokesman for Islamic Relief USA.

Other observers also defend KinderUSA and have criticized the nonprofit world for not doing more to help it and other Muslim charities respond to investigations by the federal government.

“There has been a terrible lack of courage on the part of nonprofits and foundations generally to the closure of Islamic charities, their harassment, and a general profiling by the government,” Teresa Odendahl, a visiting professor at the Center for Public and Nonprofit Leadership at Georgetown University, in Washington, wrote in an e-mail message.

But Matthew A. Levitt, a former FBI agent who is an expert on terrorist financing and a senior fellow at the Washington Institute for Near East Policy, in Washington, defends the government’s actions. “The use of charities for fund raising and logistics is very longstanding” by terrorists, he says.

While he would not comment on KinderUSA’s situation specifically, he says some suspect Muslim nonprofit groups have previously tried to portray themselves as victims of overzealous investigators. “Who would not support a desperate charity helping Palestinians who are legitimately in need?” he asks. “But that’s the heart of the fraud.”

Dealing With Suspicions

Along with KinderUSA, other Islamic organizations say they have been unfairly caught in the government’s international dragnet to find charities that support Islamic militants.

One such group, Kind Hearts, in Toledo, Ohio, fell under suspicion when members of Congress listed the organization as part of an inquiry into groups with possible ties to terrorists.

In December 2003, the leaders of the Senate Finance Committee — Sen. Charles E. Grassley, an Iowa Republican, and Sen. Max S. Baucus, a Democrat from Montana — sent a letter to the Internal Revenue Service asking for tax information on 24 nonprofit groups, including Kind Hearts.

“Many of these groups not only enjoy tax-exempt status, but their reputations as charities and foundations often allows them to escape scrutiny, making it easier to hide and move their funds to other groups and individuals who threaten our national security,” the senators wrote in the letter, which was the subject of articles in several newspapers.

Jihad M. Smaili, Kind Hearts’s lawyer, says the group has committed no wrongdoing. He wrote a letter to the senators last year that said Kind Hearts welcomed any questions about its operations and would comply with lawmakers’ inquiry. But Mr. Smaili says he never received a response.

According to an aide to Mr. Grassley, the investigation is continuing, but personnel changes among the committee’s staff has slowed its progress.

Mr. Smaili says he resents the organization being singled out in such a public way. “We had a lot of people who called to inquire,” he says. “Words can hurt a Muslim charity these days more than bullets can.”

However, Kind Hearts, which provides emergency relief, as well as education and health programs in the Middle East, faced only a slight drop in donations thanks to its efforts to reassure donors of its innocence, Mr. Smaili says.

Watchdog Group

In March, Kind Hearts joined with other Muslim nonprofit organizations to form a watchdog group to set standards for Muslim charities as a way to further rebuild the confidence of contributors in their programs. The new National Council of American Muslim Nonprofits will issue reports on a Web site it will create and in periodical newsletters about its members, says Mr. Smaili, who is helping to establish the association.

However, at least one observer questions whether a new watchdog can really solve the problem. “What is the credibility of this organization?” asks Arun Khanna, a professor of finance at Butler University, in Indianapolis, who has called for greater scrutiny of Muslim charities.

Even with a private watchdog group, Muslim charities will still run a risk of being investigated by the U.S. government. The Treasury Department has said there is no legal “safe harbor” for any nonprofit group, no matter what standards they meet or accreditation process they undergo.

For KinderUSA, its officials are now trying to figure out how to continue doing business and even expand their charitable programs, knowing that they may face continuing scrutiny.

“As for the FBI surveillance issue, some of us accept that as a reality in a post-9/11 world,” says Ms. Al-Marayati, the group’s chairwoman. “All we know is that we haven’t done anything wrong. If we’re guilty of wanting to help children who are suffering, then so be it.”

KinderUSA

Purpose: To provide food, school supplies, and other aid to children and their families in Palestine and in other poor areas of the world.

History: The charity — also known as Kids in Need of Development, Education, and Relief — was formed in 2002 by Dalell D. Mohmed, a relief worker, and two Muslim physicians, Laila Al-Marayati and Riad Abdelkarim. The co-founders wanted the charity to serve poor families in Palestine and to replace the charitable work of Islamic groups that were closed in 2001 by the U.S. government for suspected ties to terrorists. Mr. Abdelkarim served on the board of directors of KinderUSA until last month, when he stepped down from that position.

Finances: The nonprofit group has raised more than $4-million, mostly from individuals, since 2002.

Key officials: Dalell D. Mohmed, executive director; Laila Al-Marayati, chairwoman

Contact information: P.O. Box 224846, Dallas, Tex. 75222-9785; (972) 664-1991

Web site: http://www.kinderusa.org