Judge Carr was also critical of the limited information provided to the charity by the Treasury Department. He said this information came only after "long, unexplained and inexplicable delay" and repeated requests from the group's lawyers.
KindHearts' founders established the charity in 2002 - after the government shut down a number of other charities - with the express purpose of providing humanitarian aid both abroad and in the United States in full compliance with the law.
Despite the efforts KindHearts took to implement OFAC policies and even seek its guidance, OFAC froze about $1 million of KindHearts' assets in February 2006.
Since 9/11, the government has shut down eight charitable organizations in the U.S. and frozen the assets of hundreds others in other countries.
Last November, five members of the now-defunct Holy Land Foundation for Relief and Development were convicted in federal court in Dallas of funneling money to the Palestinian militant group Hamas and sentenced to prison. The defendants said they only gave much-needed aid to a volatile region.
Two other high-profile terrorism-financing trials, in Chicago and Florida, ended without convictions on the major counts.
The USA PATRIOT Act of 2001 enhanced OFAC's ability to implement sanctions and to coordinate with other agencies by clarifying OFAC's authorities to block assets of suspect entitiesprior to a formal designation in 'aid of an investigation.'
Later amendments to the PATRIOT Act authorized submission of classified information to a court, in camera and ex parte, upon a legal challenge to a designation.
The Treasury Department says, "This new PATRIOT Act authority has greatly enhanced our ability to make and defend designations by making it absolutely clear that OFAC may use classified information in making designations without turning the material over to an entity or individual that challenges its designation."
But civil libertarians contend that changes in the law have greatly enhanced the Department's ability to target and disable organizations and individuals based primarily on suspicion and not on proven evidence of wrong-doing as would be required in a court of law for a conviction of terrorism.
Attorney David Cole, a widely respected Constitutional scholar, sees a correlation between the McCarthy witch-hunts of the 1950s and the government's current policies. He told us, "With our return to a 'preventive paradigm' of preemptively weeding out threats to national security, guilt by association has been resurrected from the McCarthy era. While it was illegal in the 1950s to be a member of the Communist Party, it is now a crime to support an individual or organization on a terror watch list, although the government can designate and freeze assets without a showing of actual ties to terrorism or illegal acts."
"While the House Un-American Activities Committee once relied on the private sector to mete out punishment through the destruction of reputations and careers, today measures such as the Anti-Terrorist Financing Guidelines have turned funders into the new enforcers. In this light, he said the nonprofit sector has an obligation to resist such a partnership with government."
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