1st Circuit Hears Appeal Over Concealment of Islamic Charity's Ties to Militants

On Oct. 4, a day of heightened concerns about international terrorism, the 1st U.S. Circuit Court of Appeals heard a multipronged appeal concerning three men charged with giving false information to the Internal Revenue Service about a charity allegedly connected to jihadist fighters and the mujahedeen. Although the charges stem from tax law, the case has drawn national attention, because of concerns about terrorism, and attracted major legal talent: One of the defendants is represented by Kathleen Sullivan, a name partner and head of the national appellate practice at Quinn Emanuel Urquhart & Sullivan. 

Sullivan represents Emadeddin Muntasser, who founded Care International Inc., a Massachusetts charity, in 1993. At the time, it billed itself as assisting victims such as widows and orphans of "man-made disasters" or wars, in such countries or regions as Afghanistan, Bosnia and Kashmir. The indictment accused the defendants of hiding Care's solicitations of funds for, and publications supporting, Islamic holy war -- "jihad" -- and holy warriors -- "mujahedeen" -- from 1993 to 2003. Sullivan said that her firm has represented Muntasser since 2008 in all post-trial proceedings in this matter as part of its white-collar defense practice: "My Quinn Emanuel partners Faith Gay and Susan Estrich worked with me to win Mr. Muntasser's successful post-verdict judgment of acquittal from Judge Saylor on all the tax counts. Today we defended that victory and sought to overturn the remaining conviction and sentence on the one false statement count." 

Harvey Silverglate, of counsel to Boston's Zalkind, Rodriquez Lunt & Duncan, argued the pretrial motions to dismiss at the lower court. He said he brought Sullivan into the case for the appellate argument because it was "partly a constitutional case." 

"It involved incredible overreaching by the government and twisting of a vague statute," Silverglate said. 

In a 75-minute hearing, the court considered appeals of three related cases: U.S. v. Muntasser; U.S. v. Mubayyid; andU.S. v. Al-Monla. Muhamed Mubayyid and Muntasser appealed their convictions. The government cross-appealed their sentences and their acquittals on conspiracy charges. The government also appealed the lower court's judgment of acquittal for Samir Al-Monla. 

Muntasser ran Care until 1996. Mubayyid served as the organization's volunteer treasurer from 1998 to 2002. Al-Monla was president of Care in 1996 and 1997 and treasurer in 1998. 

Mubayyid was sentenced in June 2008 to 11 months in prison and three years of supervised release for a scheme to conceal information from the IRS, three counts of filing of false tax returns and one count of obstruction of the IRS. A jury also convicted Mubayyid of conspiracy to defraud and impede the IRS, but Judge Dennis Saylor IV of the District of Massachusetts granted his motion for acquittal on that count. 

Also in June 2008, Saylor sentenced Muntasser to a year in prison, plus three years of supervised release for making a false statement to an FBI agent -- that he never traveled to Afghanistan. Saylor also granted Muntasser's motion for acquittal after the jury convicted him of a scheme to conceal material facts and conspiracy to defraud the IRS. 

A jury acquitted Al-Monla of making false statements to the FBI and convicted him for scheme to conceal and conspiracy to defraud the IRS. In June 2008, Saylor entered a judgment of acquittal for Al-Monla on those charges. 

Sullivan argued that the government was advancing a new theory on appeal. The government's new argument, Sullivan said, is that the defendants were guilty of a conspiracy to maintain tax-exempt status. The government's earlier theory was that the defendants engaged in a conspiracy to first fraudulently obtain, then maintain, tax-exempt status. 

Circuit Judge Kermit Lipez said the maintaining argument relates to four Form 990s, which are tax forms filed by tax-exempt organizations, at issue in the case, and related false statements. "Those charges were front and center throughout the trial," Lipez said. "It seems to me that the maintaining portion [of the case] was front and center throughout the trial." 

Sullivan countered by noting that Care's efforts relating to obtaining tax-exempt status "dominates the discussion of conspiracy." Even if the change in theory is a nonprejudicial variance, the government's evidence is insufficient for its case against Muntasser, Sullivan said. 

Sullivan said there's only one page in the entire transcript linking Muntasser to the conspiracy to maintain Care's tax-exempt status. "The count 6 false statement charge for Mr. Muntasser is not a slam dunk for government," Sullivan said. 

Mubayyid's lawyer, Michael Andrews, a Boston solo practitioner, said his client wasn't involved with the formation of Care. Mubayyid was a volunteer treasurer several years later and there's no proof he knew what was in Care's application for tax-exempt status in 1993. 

The government's case asks the court to create a duty, Andrews said. "This nation has thousands of small charities," he said. "What the government seeks to do to impose a rule, on penalty of criminal incarceration, that if you volunteer, you have an obligation to go back and look at the founding documents and see what is declared and [also look at] any other correspondence to the IRS." 

"What is wrong with that?," countered Judge William Smith of the U.S. District Court for the District of Rhode Island, who sat by designation on the panel. "[Without such rules], if you want to avoid disclosing that you've converted your nonprofit into a different kind of entity, all you have to do is get a volunteer treasurer," Smith said. "I don't see what's so bad that someone who signs those forms [and attests] that they're true has an obligation to go back and ensure it." 

It will have "an incredibly chilling effect on charities," Andrews said. "Who would want to risk prosecution?" he asked. "If the government had evidence that someone was told 'Don't look at prior filings,' there's room for [charges of] willful blindness and room for [charges of] intentional deceit. That's not what happened here." 

The government's lawyer, S. Robert Lyons, a Justice Department tax attorney, said Care solicited donations and promised the money would be used for jihad and the mujahideen. 

"Supporting jihad and mujahideen permeated Care's activities and purpose, but if you look at the IRS tax forms Care filed, the words jihad and mujahideen appear not once," Lyons said. 

Lyons noted that the jury found that forms were false because there was a conspiracy to deceive the IRS. He also said Care deceived the IRS by not disclosing that it was an outgrowth of the Al-Kifah Refugee Center, which supported jihad and mujahideen and published a pro-jihad newsletter. "They hid the fact that the only thing Care was [was] Al-Kifah under a different name with a request for tax-exempt status," Lyons said. 

Lipez asked Lyons if the government complicated its case by building so much of its case on the deception in Care's initial filing for tax-exempt status. "Why did you, knowing of the statue of limitations problem?," Lipez asked. 

Lyons responded that it was the government's position that it proved the conspiracy continued beyond the initial filing for Care's tax-exempt status. He also said that although the court found that Muntasser acted alone when he filed for Care's tax-exempt status, the government accepts it as a matter of appeal but not as a matter of fact 

Smith asked Lyons to respond to Sullivan's point that a defendant is entitled to construct a defense that anticipates and takes into account what the government has actually charged. 

Lyons replied that the government would have put on the exact same evidence in the case if the indictment had been written to indicate the conspiracy to deceive the IRS began some time after Care filed to obtain tax exempt status. 

Later, Smith asked Al-Monla's lawyer, Judith Mizner, the chief of the appeals unit at the Federal Public Defender's Office in Boston, to address the government's argument that the case "wouldn't have been different if it charged [defendants] with a conspiracy to maintain a previously falsely obtained tax exempt status." 

Mizner replied its not clear all of the evidence would have been in the same format and that it's up to the government to make its best case at the outset. 

"This court has said in the past it's not for the court to rescue the government from it's bad choices," Mizner said. "It's a question of the sufficiency of the evidence to prove what they charged."