Staff Report to the Commission

cases and working toward getting their money unfrozen. They hired a lawyer, who made

both men available for interviews with the U.S. Attorney’s Office and federal agents

concerning their involvement in al-Barakaat.72 The lawyer contacted OFAC to try to

resolve the case; for months the calls were unreturned and neither of his clients was told

of the evidentiary basis of the freezing actions. Finally, in April 2002, Farah and Nor

filed suit against the government, alleging that the OFAC action deprived them of their

constitutional rights.

In response to the lawsuits and the concerns of our allies, and in order to forestall more

drastic action, the United States moved to develop a delisting process for those who

claimed that they were designated incorrectly. At the time, there was no procedure to

delist, either at the United Nations or at OFAC. Ultimately, the Policy Coordinating

Committee decided on a set of standards to use. Treasury Under Secretary Jimmy Gurule

went to the UN in the spring of 2002 and presented a whitepaper on delisting, which

included a requirement for an attestation that the individual had severed the link with the

tainted organization and a commitment not to associate with terrorist-related entities

again. The goal was to force behavior changes and to have an orderly process based on

principles, as opposed to requests for delistings based on the “inconvenience” or dislike

of the designations regime.

The OFAC analysts were then required to go back and justify their designations of the

three Swedes and the U.S. al-Barakaat entities and individuals. For the original listing,

the analysts were required to show only that the individual entities were part of the

overall al-Barakaat operation, which they could do through commercial directories such

as the Dun & Bradstreet registry, as well as the list that had been seized in Norway. In the

spring and summer of 2002, however, the analysts were tasked to show that each al-

Barakaat individual was involved in the funding of terrorism, rather than that he or she

simply belonged to an entity that, overall, supported terrorism. There was no such

evidence, although OFAC analysts complained of not having sufficient access to

classified information, as well as being denied information held by the FBI.73

72 Farah was interviewed, but the US Attorney’s Office never arranged to interview Nor.

73 The analysts were hampered in the fact that they did not have access to the records seized in the

November raids. While those records were seized under OFAC authority, it was limited only to seizing and

retaining them. In order to exploit them for evidentiary purposes, the FBI was able to execute a search

warrant, which was then served on OFAC as custodian of the records. Those records were imaged and

made available to the criminal agents and the U.S. Attorney’s Office. According to the OFAC analysts, the

FBI, perhaps burned by what they considered a premature designation, never shared a copy of the seized

records with them.

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On August 27, 2002, OFAC removed the U.S.-based money remitters in Minneapolis and

Columbus, Ohio, as well as two of the three74 Somali Swedes, from its list of designated

entities. Abdullahi Farah, the Minneapolis money remitter, signed an affidavit stating that

he had severed all ties with al-Barakaat, and received his money back. Throughout the

litigation, Nor had maintained that he was unassociated with al-Barakaat, and signed an

affidavit to that effect. He, too, received his money back.

The federal agents working on the al-Barakaat criminal investigation in Minneapolis

spent hundreds of hours reviewing financial records and interviewing witnesses. Despite

this effort, their attempt to make a criminal case simply had no traction. Ultimately,

prosecutors were unable to file charges against any of the al-Barakaat participants, with

the exception of one of the customers in Minneapolis who was charged with low-level

welfare fraud. The FBI supervisor on the criminal case, deciding that their efforts could

be better spent elsewhere, closed their investigation.

74 The third was found to have made false statements to the investigating agents and on his application for

removal from the list.

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Chapter 6

The Illinois Charities Case Study

Two Illinois-based charities, the Global Relief Foundation (GRF) and the Benevolence

International Foundation (BIF), were publicly accused by the federal government shortly

after 9/11 of providing financial support to al Qaeda and international terrorism. The FBI

had already been investigating both GRF and BIF for several years, but only after 9/11

did the government move to shut down these organizations and stop their flow of funds

overseas.75

Introduction

GRF, a nonprofit organization ostensibly devoted to providing humanitarian aid to the

needy, with operations in 25 countries around the world, raised millions of dollars in the

United States in support of its mission. U.S. investigators have long believed that GRF

was devoting a significant percentage of the funds it raised to support Islamic extremist

causes and jihadists with substantial links to international terrorist groups, including al

Qaeda, and the FBI had a very active investigation under way by the time of 9/11. BIF, a

nonprofit organization with offices in at least 10 countries around the world, raised

millions of dollars in the United States, much of which it distributed throughout the world

for purposes of humanitarian aid. As in the case of GRF, the U.S. government believed

BIF had substantial connections to terrorist groups, including al Qaeda, and was sending

a substantial percentage of its funds to support the international jihadist movement. BIF

was also the subject of an active investigation by 9/11.

After 9/11, the Office of Foreign Assets Control (OFAC) froze both charities’ assets,

effectively putting them out of business. The FBI opened a criminal investigation of both

charities, ultimately resulting in the conviction of the leader of BIF for non-terrorismrelated

charges. The Immigration and Naturalization Service (INS) detained and

ultimately deported a major GRF fund-raiser. No criminal charges have been filed against

GRF or its personnel, as of this writing.

The cases of BIF and GRF illustrate the U.S. government’s approach to terrorist fundraising

in the United States before 9/11 and how that approach dramatically changed after

the terrorist attacks, moving from a strategy of merely investigating and monitoring

terrorist financing to one of active disruption through criminal prosecution and the use of

its powers under the International Emergency Economic Powers Act (IEEPA) to block

the assets of suspect entities in the United States. Although effective in shutting down its

75 This chapter is based on interviews with many participants, including FBI agents and supervisors, OFAC

personnel, representatives of BIF and GRF, as well as other witnesses, extensive review of

contemporaneous documents, both classified and unclassified, from a variety of agencies, and the court

filings and judicial opinions from litigation concerning BIF and GRF.

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targets, this aggressive approach raises potential civil liberties concerns. The BIF and

GRF investigations also highlight two fundamental issues that span all aspects of the

government’s efforts to combat al Qaeda financing: the difference between seeing “links”

to terrorists and proving the funding of terrorists, and the problem of defining the

threshold of information necessary to take disruptive action.

FBI Investigations of BIF and GRF before 9/11

Contrary to a common misconception, the FBI did not ignore terrorist financing before

9/11. The intelligence side of the FBI gathered extensive information on terrorist fundraising

in the United States, although the Bureau lacked any strategy for disrupting the

activity. In various field offices around the country, street agents actively investigated

groups and individuals, including GRF and BIF, suspected of raising funds for al Qaeda

or other extremist groups. Working in the face of many obstacles, including what agents

believed to be a dysfunctional FISA (Foreign Intelligence Surveillance Act) process,

these agents aggressively gathered information and tried to coordinate with other field

offices, the intelligence community, and even foreign governments. The FBI lacked a

headquarters unit that focused on terrorist financing before 9/11, however, and also

lacked a coherent national approach to tackling the problem. As Assistant Director,

Counterterrorism John Pistole testified, “there did not exist within the FBI a mechanism

to ensure appropriate focus on terrorist finance issues and provide the necessary expertise

and overall coordination to comprehensively address these matters.”76

Origins of GRF

GRF was incorporated in Bridgeview, Illinois, in 1992. According to the U.S.

government, GRF’s founders had previously been affiliated with the Mektab al Khidmat

(MAK) or “Human Services Office,” cofounded by Abdullah Azzam and Usama Bin

Ladin in the 1980s to recruit and support mujahideen to fight against the Soviets in

Afghanistan. MAK funneled money and fighters to the mujahideen and set up a network

of recruiting offices around the world, including in the United States. The U.S.

government has called MAK the “precursor organization to al Qaeda.”77 One offshoot of

MAK in the United States, the Al Khifa Refugee Center in Brooklyn, facilitated the

movement of jihadist fighters in and out of Afghanistan. After the defeat of the Soviets,

MAK and Al Kifah continued the mission of supporting jihadist fighters throughout the

world. According to the U.S. government, a number of the persons convicted in the first

World Trade Center bombing were associated with the Al Khifa Refugee Center, as was

Sheikh Omar Abdel Rahman, the “Blind Sheikh,”  who is now serving a life sentence for

his role in the foiled plan to bomb New York City tunnels and landmarks. President

76 J. Pistole, July 31, 2003, Prepared Testimony, Senate Governmental Affairs Committee.

77 Treasury Department Statement Regarding the Designation of the Global Relief Foundation, October 18,

2002 (Treasury GRF Statement).

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George W. Bush designated MAK/Al Khifa a specially designated global terrorist in the

original annex to Executive Order 13224 on September 23, 2001.

GRF described itself as a nongovernmental organization (NGO) that provided

humanitarian relief aid to Muslims through overseas offices around the world, especially

in strife-torn regions such as Bosnia, Kashmir, Afghanistan, Lebanon, and Chechnya.

GRF began operating with $700,000 in cash. By 2000, it reported more than $5 million in

annual contributions. According to its Internal Revenue Service (IRS) filings, GRF sent

90 percent of its donations abroad between 1994 and 2000.78 GRF’s numerous offices

overseas received their own contributions in addition to what they received from the U.S.

operation.

The FBI investigation of GRF before 9/11

GRF came to the attention of the FBI’s Chicago Division in the mid-1990s, because of

GRF’s affiliation with Al Khifa and other unsubstantiated allegations about GRF’s

potential involvement in terrorist activity. After lying dormant for some time, the GRF

investigation was assigned to two agents, who began to discover evidence of what they

viewed as suspicious conduct. The Chicago office opened a formal full field investigation

(FFI)79 in late 1997, largely on the strength of a series of telephone calls between GRF

personnel and others with terrorist affiliations, as well as information from the

intelligence community that GRF personnel had undertaken suspicious travel to

Afghanistan and Pakistan. The Chicago agents stepped up the investigation of GRF,

including physical surveillance, review of GRF’s trash, and attempts to get telephone

records through a legal request known as a National Security Letter (NSL). Among other

things, the trash revealed copies of GRF’s newsletter, “Al-Thilal” (“The Shadow”),

which openly advocated a militant interpretation of Islam and armed jihad.

The NSLs yielded very useful information, but the process for their internal approval

frustrated the Chicago agents, who said that the tremendous delays in getting NSLs

authorized by FBI headquarters was the biggest obstacle they had to overcome in their

pre-9/11 investigation of GRF. It routinely took six months to a year to get NSLs

approved for routine documents, such as telephone or bank records. The Chicago agents

believed their contact at the FBI headquarters in the Radical Fundamentalist Unit was

very good at his job, but was overwhelmed with work, which caused a major bottleneck

in getting the NSLs.

The Chicago agents received substantial information about GRF from foreign

government agencies. They worked directly through the relevant FBI legal attaché, or

Legat (an FBI agent posted overseas who acts as a liaison with foreign officials), to get

foreign information. The process could be very slow and somewhat uncertain, but it often

78 For example, GRF sent $3.2 million overseas in 1999; and $3.7 million overseas in 2000.

79 Approval to open an FFI requires some predication that the investigation is being conducted for

legitimate intelligence purposes. Agents, using limited investigative techniques can open a preliminary

investigation (PI) for a limited time to gather evidence to determine whether a FFI is warranted.

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yielded helpful information. One European country where GRF had a substantial office

provided the most useful information in the early stages of the investigation.

By mid-1998, the Chicago agents had evidence that led them to conclude that GRF was

doing much more than providing humanitarian aid. The Chicago office summarized its

views in an August 3, 1998, memorandum: “The FBI believes that GRF, through its

Bridgeview headquarters and satellite offices around the globe, is actively involved in

supplying and raising funds for international terrorism and Islamic militant movements

overseas.” At the time, the FBI suspected the executive director of being a supporter or

member of the Egyptian extremist group Al Gama’a Al Islamiyya (AGAI), which was

affiliated with the Blind Sheikh.

The Chicago office submitted a FISA application for GRF in mid-1998; it was not

approved until mid-1999. According to the Chicago agents, the application posed no

significant problems, although it appeared that the fact that domestic charities were

involved may have slowed the process. In any event, it took a year for the application to

be approved and authorized. After receiving FISA approval, the agents initiated

electronic surveillance, which allowed them to expand the investigation.

By late 1999, the Chicago case agents were comfortable in their conclusion that GRF was

a jihadist organization and that its executive director had connections to both AGIA and

what they called the “Islamic Army organization of international terrorist financier

Usama Bin Ladin.”80 They believed that multiple sources of evidence supported these

conclusions. In the agents’ view, the phone records they had obtained proved a

compelling, although indirect, link between GRF’s executive director and Usama Bin

Ladin. In reviewing intelligence information and the executive director’s phone records,

they concluded that the executive director called a phone used by a mujahideen leader

who was a close associate of Usama Bin Ladin. Phone records also connected GRF,

through its office in Brussels, Belgium, with Bin Ladin’s former personal secretary, Wadi

al Hage, who is now serving a life sentence in the United States for his role in the 1998

embassy bombings.

The Chicago FBI agents were able to get critical information about the persons associated

with international phone numbers because they had a working relationship with the CIA

before 9/11. The Chicago agents said the quality of this relationship varied depending on

the CIA representatives, who tended to be replaced frequently. Although the relationship

was not always smooth, it did succeed in providing important information.

The Chicago agents also conducted “trash covers,”  virtually every week for years, which

provided key intelligence on GRF. In this technique, the agents secretly entered GRF’s

dumpster late at night and took out its trash for review. Among other things, GRF threw

away pictures of communication gear it had shipped overseas, including sophisticated

military-style handheld radios that the agents believed were far beyond what relief

workers would ever need, but valuable to set up a military communications network.

After 9/11, they learned this communication gear was shipped to Chechnya. They also

80 January 20, 1999, FBI Document.

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found in GRF’s trash pro-jihad books and literature, including the writings of Abdullah

Azzam.

The Chicago agents summarized their view of GRF to a foreign government service in a

January 6, 2000, memorandum:

Although the majority of GRF funding goes toward legitimate relief

operations, a significant percentage is diverted to fund extremist causes.

Among the terrorist groups known to have links to the GRF are the

Algerian Armed Islamic Group, the Egyptian Islamic Jihad, Gama’at Al

Islamyia, and the Kashmiri Harakat Al-Jihad El-Islam, as well as the Al

Qaeda organization of Usama Bin Laden. . . . In the past, GRF support to

terrorists and other transnational mujahideen fighters has taken the form of

purchase and shipment of large quantities of sophisticated

communications equipment, provision of humanitarian cover

documentation to suspected terrorists and fund-raising for terrorist groups

under the cover of humanitarian relief.81

By 9/11, the Chicago agents believed that they had uncovered enough information to

conclude that GRF was raising substantial funds in the United States to support

international jihad. Bank records obtained through NSLs revealed large transfers of funds

to the GRF overseas offices. The agents believed GRF distributed the bulk of funds as

humanitarian relief, but also supported armed militants in the strife-torn regions where it

was active.

On January 10, 2001, the Chicago agents wrote that “GRF is a highly organized

fundraising machine, which raises millions of dollars annually” and that GRF’s

“operations have extended all over the globe.”82 The executive director, in his capacity as

head of the organization, “has been and continues to be a supporter of worldwide Islamic

extremist activity” and he “has past and present links and associations with a wide variety

of international Muslim extremists,” including al Qaeda and Usama Bin Ladin. The

agents did not believe GRF was part of the formal al Qaeda network. Instead, they

believed it “free-lanced” to support jihadists around the world, including in Europe,

Bangladesh, India, and Pakistan. They also knew GRF was underwriting substantial

humanitarian aid, which they thought was critical to its pro-jihad mission.83

The Chicago agents believed GRF had two types of donors during this period. People not

in the know thought they were giving money for humanitarian relief. Others clearly knew

the purpose of their donations: When the agents later obtained donors’ checks, they saw

that some donors had actually written pro-jihad statements on their memo lines.

The money trail generally stopped at the U.S. border, and the agents could never trace it

directly to jihadists or terrorists. Before 9/11, they had no means to get foreign bank

81 January 6, 2000 FBI Document.

82 January 10, 2001 FBI Document.

83 January 10, 2001 FBI Document.

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records. A formal request for records, called a mutual legal assistance treaty (MLAT)

request, was impossible because the FBI did not have an open criminal investigation—

the GRF inquiry was an intelligence investigation. The agents did ask one European

country for help, but were told that that country’s restrictive laws prohibited electronic

surveillance and obtaining bank records. The Chicago agents wanted to travel to Europe

to meet with officials who had investigated GRF, but the Chicago FBI office denied

permission because of budgetary constraints.

The Chicago investigation of GRF in turn led to an investigation by the Detroit FBI

agents of GRF subjects within its jurisdiction. In early 2000, Chicago informed Detroit

that GRF’s executive director had been calling two Michigan residents. One of these

subjects was considered GRF’s spiritual leader and the other, Rabih Haddad, was a major

GRF fund-raiser. A Detroit agent went to Chicago and reviewed the extensive

investigative file. Upon his return, the agent prepared a request to open FFIs on the two

subjects; it was approved in late March 2000. The evidence gathered in Chicago made

clear to the Detroit agent that the GRF investigation was potentially “pretty big.”84

The Detroit agents, however, believed themselves to be stymied by the inability to get

FISA coverage. At the same time that the case agent opened the FFIs, he sought FISA

coverage of those two subjects. None of these FISA applications was approved until

after 9/11, some 18 months later. The Detroit agent was never given even an ostensible

reason for the holdup. On the contrary, FBI headquarters told the agent that the

applications looked good. These applications were being actively reviewed by both OIPR

and FBI headquarters. Still, nothing ever happened. When he called FBI headquarters to

check on the status of his applications, the Detroit agent was told only “we’re [the FBI]

working on it.” The Detroit agent was very frustrated and upset by the delay, which he

believes caused him to miss a great opportunity to gather critical intelligence and

substantially limited the Detroit investigation of GRF before 9/11.

Resource limitations also limited Detroit’s role before 9/11. Though many

counterterrorism investigations might have been undertaken, Detroit had only 12 agents

on these cases; and because each agent was working multiple cases, no case could receive

the attention it needed. Because of the lack of FISA coverage, resource limitations, and

the apparent focus GRF’s activities in Chicago, the Detroit investigation was largely a

satellite to the Chicago investigation before 9/11.

The Chicago agents thought that FBI headquarters provided support for their GRF

investigation before 9/11, approving the FISA application, for example, and providing