Yassin Abdullah KADI, Plaintiff, v. Timothy GEITHNER, et al.
Civil Action No. 09-0108(JDB)
United States District Court, District of Columbia
March 19, 2012
Jonathan Eli Zimmerman, U.S. Department of Justice, Washington, DC, for Defendants.
MEMORANDUM OPINION
JOHN D. BATES, District Judge.
This case, brought by Yassin Abdullah Kadi,2 a citizen and permanent resident of Saudi Arabia, involves a challenge to the decision of the Office of Foreign Assets Control (“OFAC“) to designate him as a “specially designated global terrorist (“SDGT“).” Presently pending are (1) defendants’3 motion to dismiss or, in the alternative, for summary judgment; (2) Kadi‘s motion for discovery under
BACKGROUND
I. Statutory and Regulatory Background
The listing of SDGTs is governed by the International Emergency Economic Powers Act,
investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States....
After September 11, 2001, the President issued EO 13,224 invoking his authority under IEEPA and the United Nations Participation Act,
II. Procedural History and Designation4
Kadi is a citizen and permanent resident of Saudi Arabia and a self-described “prominent Saudi Arabian businessman and philanthropist.” Compl. ¶ 1; AR 94. On October 12, 2001, OFAC designated Kadi a SDGT pursuant to the IEEPA and EO 13,224, Compl. ¶ 20, which, by operation of law, resulted in the blocking of all of his property and interests in property subject to the jurisdiction of the United States. It is undisputed that OFAC did not give notice to Kadi before blocking his assets. The designation was made known to Kadi and to the public through a press release instructing financial institutions to freeze Kadi‘s assets. Compl. ¶ 20; AR 123-26. A press release was also issued by authorities in the United Kingdom. Compl. ¶ 20. By letter dated October 15, 2001, OFAC also mailed Kadi a “Notice of
Kadi thereafter sought judicial review in the High Court in London. Compl. ¶¶ 22-23. In response to a request for information by the United Kingdom, the United States Treasury Department faxed a two-page document to United Kingdom officials in October 2001 (“two-page fax“), which Kadi learned about during his court proceedings in London. Compl. ¶ 24. Kadi places much emphasis on this two-page fax, which summarized unclassified information relating to Kadi‘s financial support of terrorist activities through a charitable organization known as the Muwafaq Foundation and his other ties to terrorists and terrorism financing. AR 39-40. Kadi claims that around May 23, 2002, he met with OFAC staff at the U.S. Embassy in Saudi Arabia, where OFAC denied knowledge of the two-page fax. Compl. ¶ 25. However, there is no dispute that Kadi received a copy of the two-page fax, reviewed it, and proceeded to refute various contentions as part of his petition for reconsideration. See Compl. ¶ 29.
Kadi petitioned OFAC for reconsideration on December 21, 2001. AR 23. In the months and years thereafter, he has submitted several witness statements and other materials in support of his petition and has engaged in a series of exchanges with OFAC. On March 12, 2004, OFAC issued a twenty-page unclassified memorandum denying Kadi‘s request for reconsideration (“OFAC Memorandum“). Compl. ¶ 30. AR 3-40. Kadi maintains that this is the only formal written statement he has received from the United States government. Compl. ¶ 31. Based on these events, Kadi filed this action on January 16, 2009, challenging the evidentiary basis for his designation and the freezing of his assets, and raising an array of constitutional claims. Specifically, he claims violations under the Administrative Procedure Act,
STANDARD OF REVIEW
All that the Federal Rules of Civil Procedure require of a complaint is that it contain “‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.‘” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); accord Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam). Although “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the “grounds” of “entitle[ment] to relief,” a
The notice pleading rules are not meant to impose a great burden on a plaintiff. Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005); see also Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512-13 (2002). When the sufficiency of a complaint is challenged by a motion to dismiss under
Under
Plaintiffs challenge Kadi‘s designation as a SDGT as violating the requirements of the APA, IEEPA, and EO 13,224. The APA requires that the Court “hold unlawful and set aside agency action, findings, and conclusions” that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
DISCUSSION
I. APA Claim
A. Standard for Motion for Summary Judgment and Discovery
Before addressing the merits of Kadi‘s APA claim, the Court first considers Kadi‘s preliminary argument that summary judgment is inappropriate because there are disputed issues of material fact. Alternatively, he claims that the motion for summary judgment is premature because he has not been provided an opportunity to obtain discovery on his claims. See Opp‘n at 64-69.
In general, summary judgment “is proper only after the plaintiff has been given adequate time for discovery.” First Chicago Int‘l v. United Exch. Co., 836 F.2d 1375, 1380 (D.C. Cir. 1988). However, a party opposing summary judgment and seeking to obtain discovery under
Kadi argues that because the classified record was not made available to him, he is unable to respond to the motion for summary judgment. Moreover, he claims that because subsequent decisions by other countries “vindicated him,” the administrative record is therefore incomplete, and he contends that he should be given an opportunity to supplement it. The Court rejects these arguments. Subsequent to the 2004 decision, Kadi has had several years and opportunities to petition OFAC to supplement the administrative record, but he has not done so. Moreover, absent “evidence that the agency has given a false reason discovery is inappropriate in cases under the APA.” See Nat‘l Treasury Employees Union v. Seidman, 786 F. Supp. 1041, 1046 (D.D.C. 1992). Although Kadi attempts to argue that OFAC has acted in bad faith, nothing in the record supports Kadi‘s contention. Even if the Court permitted discovery, it is doubtful that it would garner additional facts that would help to decide whether the agency action was arbitrary and capricious, given the deferential review of such actions. See Camp, 411 U.S. at 142 (“[T]he focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court.“); Seidman, 786 F. Supp. at 1046 n. 11 (“The Court may not substitute its judgment for that of the decision-making agency.“) (citing Motor Vehicle Mfrs., 463 U.S. at 43). Accordingly, the Court will deny Kadi‘s motion for discovery under
B. Merits of the APA Claim
Kadi‘s APA claim primarily challenges OFAC‘s decision to continue his SDGT designation as arbitrary and capricious, as based on a lack of sufficient procedural safeguards, for insufficiency of the evidence in the administrative record, and for OFAC‘s misplaced reliance on the facts that were in the record. See Compl. ¶¶ 51-54. In considering the merits of the claim, the Court has reviewed the parties’ submissions, the arguments made by the parties at the hearing before the Court, and the entire administrative record, which consists of both the classified and unclassified record.
In reviewing a challenge to the agency‘s decision as arbitrary and capricious, the Court bears several considerations in mind. The D.C. Circuit has stated that “a highly deferential review applies” to examination of a SDGT designation. Islamic Am. Relief Agency v. Gonzales, 477 F.3d 728, 732 (D.C. Cir. 2007); Holy Land Found., 333 F.3d at 162. As previously stated, the “scope of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to substitute its judgment for that of the agency.” Motor Vehicle Mfrs., 463 U.S. at 43. The agency‘s decisions are entitled to a “presumption of regularity,” Citizens to Preserve Overton Park, 401 U.S. at 415, and although “inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one.” Id. at 416. The Court, then, “must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” Id. Courts are particularly mindful that their review is highly deferential when matters of foreign policy and national security are concerned. See Islamic Am. Relief Agency, 477 F.3d at 734 (“[O]ur review—in an area at the intersection of national security, foreign policy, and administrative law—is extreme-
1. Overview of the OFAC Decision and Kadi‘s Arguments6
After petitioning OFAC for reconsideration in December 2001, Kadi and the agency engaged in several meetings and Kadi provided numerous statements and submissions. On March 12, 2004, OFAC notified Kadi that his petition for reconsideration was denied and that his name would remain on the list of SDGTs. AR 1. OFAC emphasized that its determination rested on the “totality of the record” (both classified and unclassified), which showed that Kadi had financial relationships—primarily through the Muwafaq Foundation, but also through other Kadi companies—with many persons and organizations that were designated SDGTs by OFAC:
No one element, no one contact, no one accusation of funding is taken as being determinative of the assessment that AL-QADI has been providing support to terrorists through his actions. Rather, when considering the number of sources, the numbers of activities and length of time, the totality of the evidence, both classified and unclassified, this provides a reason to believe Yasin AL-QADI has funded terrorist and extremist individuals and operations.
AR 22.
In deciding that Kadi‘s continued designation was warranted, OFAC considered an administrative record of over 2800 pages, which included the extensive submissions Kadi made to OFAC during the reconsideration process,7 as well as other documents. OFAC also considered a classified record. Based on its assessment of all this evidence, OFAC determined that “a reasonable basis remains to continue the designation of [Kadi] under E.O. 13224.” AR 1. OFAC invoked each of the three grounds authorized in EO 13,224, finding that there was “reason to believe” that Kadi was:
- acting for or on behalf of al Qaida, Osama Bin Laden, and Makhtab al-Khidamat, persons listed in the Annex to E.O. 13,224;
- assisting in, sponsoring, or providing financial, material, or technological support for, or financial or other
- associated with, among others, al Qaida, Osama Bin Laden, Makhtab al-Khidamat, Hamas, the Revival of Islamic Heritage Society, Al-Haramayn (Bosnia), Chafiq Ayadi, and Wa‘el Julaidan....
AR 22. Although OFAC invoked all three grounds, and emphasized its decision to continue the designation based on the totality of the record, OFAC‘s decision appears to rely primarily on Kadi‘s financial support of terrorism. Neither Kadi nor the Government take the position that all three criteria must be satisfied in order to uphold the designation.8
Kadi acknowledges the highly deferential review accorded to OFAC‘s decision. But he claims that the administrative record, even when viewed in its totality, shows that “there is no ‘substantial evidence’ ... of any sort” to support the designation, see Opp‘n at 48, and he argues that the evidence underlying OFAC‘s decision is unreliable. Specifically, Kadi claims that the administrative record fails to support OFAC‘s findings that he (1) provided support to terrorism through his leadership in the Muwafaq Foundation; (2) provided financial or other support to SDGTs; or (3) had any other ties to justify the sanctions imposed against him. Opp‘n at 49. As part of his attack on the sufficiency of the evidence, Kadi takes issue with OFAC‘s reliance on his own statements as evidenced in the frequent reference to them in the OFAC Memorandum. He also protests OFAC‘s use of classified information to support the continued designation.9 Finally, Kadi continues to dispute the accuracy and reliability of certain pieces of evidence in the record, notably the two-page fax, news articles, and the affidavit submitted by FBI Agent Richard Wright. He also points to subsequent decisions by other countries, with varying procedural postures, as purported indicators of OFAC‘s error in continuing his designation.
Kadi argues that the two-page fax sent by the United States to the United Kingdom contained “substantially erroneous” information. He further claims that the fax‘s reliance on “non-evidential sources” such as news articles and information from websites constituted hearsay. Compl. ¶ 24. But Kadi‘s argument that the Government is categorically foreclosed from considering “hearsay” sources is wrong. Courts, including the D.C. Circuit, have held that hearsay evidence can be considered as part of the administrative record. See Holy Land Found., 333 F.3d at 162 (rejecting the contention that OFAC may
Kadi also alludes to the findings by other investigative bodies around the world that, according to him, have considered the same or similar terrorism allegations against him, and “vindicated” him in every forum. See Opp‘n at 4-5. However, the decisions cited by Kadi all post-date the March 2004 OFAC decision under review and are not part of the administrative record. Notwithstanding the impropriety of considering such decisions, the Court would, in any event, be reluctant to rely on the decisions of other countries based on information that likely differed from the administrative record compiled by and available to OFAC. Moreover, these decisions may have been reached under different standards of proof or review, which further undermines any persuasiveness they would have.
2. Kadi‘s Involvement in the Muwafaq Foundation
The Court now turns to the evidentiary basis for OFAC‘s conclusion that Kadi provided support—particularly financial support—to terrorist causes and to other SDGTs. OFAC emphasizes Kadi‘s leadership in the Muwafaq Foundation in its March 2004 decision. Accordingly, the Court looks first to Kadi‘s relationship with that entity.
The Muwafaq Foundation—Arabic for “Blessed Success” or “Holy Success“—was founded in the Channel Islands on May 31, 1992 as a charitable foundation. Sudan was the first country in which Muwafaq was active; it subsequently operated in Pakistan, Afghanistan, Ethiopia, Somalia, Bosnia/Herzegovina, Albania, Austria, and Germany. AR 707. Kadi refers to Muwafaq as a “highly decentralised operation” that “carried out separate activities in various countries or regions“; therefore, it had “no central administration,” and “no central accounting systems nor any central bank accounts.” AR 1357-58. Muwafaq reportedly terminated operations in 1996 or 1997, but the OFAC Memorandum states that Muwafaq “continued to operate until mid-2001 under the umbrella of Makhtab al-Khidamat ... considered to be the precursor to al-Qaida,” before Makhtab al-Khidamat dissolved and was absorbed into Osama Bin Laden‘s organization, and that “Muwafaq ... joined [al-Qaida].” AR 14-15. Kadi‘s submissions also note that Muwafaq is still registered in Holland and Belgium. AR 708-09.
The administrative record reflects that Kadi played a significant leadership role in Muwafaq. Kadi is one of six trustees, and the others “delegated ... the running and operation of the Foundation” to Kadi, who “was the driving force behind the administration of the foundation.” AR 1357. He effectively conceded that he directly supervised the individual country offices. Kadi “selected the managers responsible for the various countries“; worked with them to determine “which charitable activities to engage in“; helped “raise money for those activities“; and, “[w]henever possible,” he visited the country locations where Muwafaq operated “to meet with the country managers regarding the activities of the
OFAC relied on Kadi‘s involvement in Muwafaq and, in particular, activities claimed to have occurred in Bosnia, Albania, Sudan, and Pakistan, to conclude that Kadi financially supported terrorist activities, primarily through Muwafaq, but also through other Kadi-owned entities. It considered Kadi‘s relationships with, and financial transfers to, designated terrorists Abdul Latif Saleh, Wa‘el Julaidan, and Chariq Ayadi—who were all involved in Muwafaq.
a. Activities in Albania and Bosnia and Kadi‘s Relationship to Saleh
OFAC pointed to Kadi‘s activities in Albania, through Muwafaq and other Kadi-owned entities, as evidence of Kadi‘s financial support of terrorist activities and other SDGTs. OFAC also concluded that “[s]ome involvement in the financing of these activities had also been provided by Osama Bin Laden.” AR 9. According to OFAC‘s findings, Muwafaq gave logistical and financial support to Al-Gama‘at Al-Islamiya, a mujahadin battalion in Bosnia that was designated as a SDGT on October 31, 2001. The organization also transferred $500,000 to terrorist organizations in the Balkans in the mid-1990s. AR 9. OFAC also found that Muwafaq was involved in arms trafficking from Albania to Bosnia. And OFAC concluded that as of late 2001, Kadi had continued to finance institutions and organizations in the Balkans after Muwafaq ceased operations there, including two entities that were designated as SDGTs in early 2002—The Revival of Islamic Heritage Society‘s Pakistan and Afghanistan offices and the Bosnia-Herzegovina branch of the Al-Haramain Foundation. AR 9-10.
Kadi also owned several Albanian companies, which, according to OFAC, “funneled money to extremists or employed extremists in positions where they controlled the firms’ funds.” AR 11. In addition, “Bin Laden allegedly provided the working capital for four or five of AL-QADI‘s companies in Albania.” Id. In 1992, Kadi met Abdul Latif Saleh at a medical conference, and soon thereafter entered into several business ventures with him, including Karavan, an Albanian construction and property development company, and what OFAC characterizes as Kadi‘s main Albanian firm. AR 766-767. According to OFAC, Saleh was general manager of all of Kadi‘s businesses in Albania and held 10% of Kadi Group investments in Albania. AR 10-11. He was also an “official signer” for Karavan and its bank accounts, and had authorization to withdraw money directly from Kadi‘s bank accounts and transfer funds. AR 1367. Saleh was also the head of Muwafaq‘s Albanian operations. AR 10, 737-41.
Kadi himself admits that money was taken from his local businesses “to make payments to support [Muwafaq‘s] activities.” AR 1367. Money was often taken from Karavan‘s accounts to fund Muwafaq, and Karavan‘s accounts were also used to make contributions to other nongovernmental organizations; Kadi would then reimburse Karavan. Id. This arrangement was confirmed by OFAC‘s interviews with two Karavan employees—Violet Spaho, a financial manager, and Amr Al Zainy (aka Amr al-Zaini), who was Karavan‘s director and Kadi‘s financial representative in Albania. According to OFAC, when Karavan was ready to send a large sum of
In 1999, Saleh was deported from Albania. Kadi claimed that Saleh was deported as a matter of mistaken identity—he shared the same name with an Egyptian citizen who was “a member of the Jihad Group.” AR 10 & 739-40. However, OFAC had a different account. It found that Saleh was expelled because of his ties with known terrorists, including Osama Bin Laden, and stated that Saleh‘s number had been found in the phone books of Bin Laden associates who had targeted the U.S. Embassy in Tirana in 1998. OFAC, based on an interview with Al Zainy, noted that when Wa‘el Julaidan, a SDGT characterized by OFAC as a “Bin Laden associate,” visited Albania, Saleh treated Julaidan as his boss. AR 12. OFAC also believed that Saleh had founded and organized the Albanian Islamic Jihad (AIJ). AR 10-11. OFAC claimed that Kadi was an active supporter and fundraiser for AIJ, and noted that Muwafaq operated a school in Kukes in 1997, where several students had been selected for membership in AIJ. AR 9-11. Kadi confirmed that Muwafaq financially supported the school, and that Saleh was involved in running it, but stated that it shut down due to financial problems. AR 743.
b. Involvement in Other Countries and Other Muwafaq Ties
OFAC also considered Muwafaq‘s involvement in other countries such as Pakistan and Sudan, and other connections that indicated that Muwafaq was tied to terrorist activities and SDGTs. Muwafaq‘s Pakistan operation was established in Islamabad in 1992, and Kadi hired Amir Mehdi to be its local director. AR 720 & 723-24. As director, Mehdi‘s responsibilities included handling and distributing Muwafaq funds. Mehdi turned out not to be a good choice. Kadi himself conceded that the Pakistan Government raided Muwafaq‘s office in Islamabad on March 21, 1995, and that subsequently “the officials of the FIA (the Pakistan security services) arrested Amir Mehdi on March 29, 1995.” AR 724. Kadi‘s only explanation was that FIA had also conducted raids and targeted other Muslim charities working in Pakistan. Id. According to OFAC, however, the reason for the raid was Mehdi‘s involvement in terrorist activities. Specifically, one of Mehdi‘s telephone numbers had been used by associates of terrorists in Pakistan and abroad, and open source reporting had indicated that the raid was triggered by Ramzi Yousef‘s arrest for the first World Trade Center bombing. AR 11. Kadi claimed that he terminated Mehdi‘s employment following his release from arrest in 1995. AR 725. The Pakistan offices were permanently closed in 1997. Id.
OFAC also pointed to ties between Muwafaq‘s office in Sudan and Osama Bin Laden, as well as Kadi‘s claimed acknowledgment that Muwafaq‘s Sudan office had “provided assistance to jihad activities in the Middle-East and the Balkans.” AR 12. The administrative record reflects that Sudan was the first country in which Muwafaq was active, and that it had an office in Khartoum. AR 709, 714. OFAC stated that when Muwafaq opened in Sudan, around 1991 to 1993, Osama Bin Laden was based in the country. Kadi closed the office in 1996, apparently having become embroiled in accusations of terrorism. AR 718. The Africa Confidential had implicated Muwafaq in terrorism, but Kadi and the publication eventually settled a
OFAC also considered Muwafaq‘s relationship to Makhtab al-Khidamat, an umbrella organization established in the early 1980s that was believed to be the precursor to al-Qaida. OFAC found that “Muwafaq was part of Makhtab al-Khidamat and continued to operate under the Makhtab al-Khidamat umbrella until mid-2001, when the latter dissolved and was absorbed into Osama Bin Laden‘s organization. Subsequently, a number of Arab [NGOs] and organizations formerly affiliated with Makhtab al-Khidamat ... joined Al-Qaida. These included Muwafaq.” AR 14-15. Kadi denies this claim, noting that Muwafaq had ceased operating by 1998 at the latest. Opp‘n at 51 (citing Defs.’ Mot. at 10).
c. Kadi‘s Arguments
Kadi disputes OFAC‘s findings and maintains that Muwafaq was an organization engaged in charitable activities, not in supporting terrorism. He claims that he provided a legitimate explanation for any expenditures through Muwafaq, which OFAC simply ignored, and accuses OFAC of drawing a conclusory connection between Muwafaq (and by extension, Kadi) and terrorism, by failing to consider “all of the good works done by the Foundation.” Opp‘n at 50-51. Although Kadi admits that he transferred large amounts of cash to certain Muwafaq personnel who were implicated in terrorist activities, Kadi claims no knowledge of their involvement and states that, in any case, his involvement with them predated their designations as SDGTs.
Kadi surmises that the “principal source” for accusations against Muwafaq was likely the October 19, 1999 USA Today article authored by Jack Kelley. Opp‘n at 51. The article, titled “Saudi Money Aiding Bin Laden Businessmen Are Financing Front Groups,” described how prominent businessmen in Saudi Arabia were transferring tens of millions of dollars to Bin Laden-linked bank accounts, and identified “Blessed Relief” as a “front” for Bin Laden. See AR 161-62. Kadi contends that this article was unreliable because USA Today later conceded that it had “several errors” and because Kelley was subsequently found “to have fabricated several high-profile stories.” See Opp‘n at 10, 51; Brown Decl., Ex. I.
To the extent Kadi contends that newspaper articles cannot be relied upon by the Government at all, that proposition is not well-grounded. As already stated, reliance on hearsay is plainly allowed. Furthermore, reliance on newspaper articles has been permitted to “fill in evidentiary gaps when there is corroboration,” as well as to provide background information. See Awad v. Obama, 646 F. Supp. 2d 20, 25 (D.D.C. 2009) (applying this principle in reviewing a habeas petition of a Guantanamo detainee). This is consistent with the generally recognized principle that reliability of evidence and reasonableness are the touchstones of measuring the agency‘s decision, in contrast to Kadi‘s assumption that newspapers are per se unreliable.
More to the point, Kadi does not claim that Kelley fabricated any assertions in the article that would be relevant here. And, although USA Today ultimately corrected some errors that appeared in the article, the published correction post-dated OFAC‘s decision and hence is not part of the administrative record. The same reasoning applies to Kadi‘s reliance on Kelley‘s subsequent resignation. Moreover, OFAC does not appear to rely significantly on Kelley‘s article. And Kadi, as part of his submissions, provided OFAC with his
Contrary to Kadi‘s argument that OFAC “failed to consider” the good works of Muwafaq, both the March 2004 OFAC Memorandum and the administrative record indicate otherwise. OFAC acknowledged that Kadi had provided evidence of Muwafaq‘s involvement “in substantial charitable activities.” Nevertheless, OFAC concluded that this evidence “by no means undermines the determination that the charity was, in addition, used to fund terrorism.” AR 2788. It was not unreasonable for OFAC to conclude that charitable organizations that perform good works could also concurrently act as conduits for terrorist activities. In its Memorandum, OFAC cited to the April 12, 2002 testimony by the Deputy Assistant Secretary for Terrorism and Violent Crime before the House Financial Subcommittee on Oversight and Investigations:
Investigation and analysis by enforcement agencies have yielded information indicating that terrorist organizations sometimes utilize charities to facilitate funding and to funnel money. Charitable donations to non-governmental organizations (NGOs) are commingled and then often diverted or siphoned to groups or organizations that support terrorism.... Though these charities may be offering humanitarian services here or abroad, funds raised by these various charities are sometimes diverted to terrorist causes. This scheme is particularly troubling because of the perverse use of funds donated in good will to fuel terrorist acts.
AR 21. Simply because Muwafaq was a charitable organization or performed charitable deeds does not make it immune to designation by OFAC. Indeed, other courts have upheld OFAC‘s designations of charitable organizations, notwithstanding their status or involvement in good deeds. See Islamic Am. Relief Agency, 477 F.3d at 736-37 (focus is on charitable organization‘s support of terrorism); Holy Land Found., 333 F.3d at 164-65 (same); Humanitarian Law Project v. U.S. Treasury Dep‘t, 578 F.3d 1133, 1139 (9th Cir. 2009) (“Humanitarian Law Project III“)10 (“[M]oney is fungible; giving support intended to aid an organization‘s peaceful activities frees up resources that can be used for terrorist acts.“) (citing Humanitarian Law Project I, 205 F.3d 1130, 1133 (9th Cir. 2000); see also Humanitarian Law Project IV, 130 S. Ct. 2705, 2725 (2010) (citing and relying on evidence provided by government affidavit that concluded the following: “Muddying the waters between its political activism, good works, and terrorist attacks, Hamas is able to use its overt political and charitable organizations as a financial and logistical support network for its terrorist operations.“)).
As for Kadi‘s argument that he did not intend to provide financial support to SDGTs or for terrorist acts through Mu-
The Court has reviewed the evidence both in the classified and unclassified records. The record, taken as a whole, and with references to various sources over different periods of time, confirms Kadi‘s close involvement in Muwafaq and, in turn, Muwafaq‘s involvement in the financing of terrorist activities and support of SDGTs, despite whatever charitable works the foundation may also have undertaken. Evidence in the unclassified record indicates that Kadi was integrally involved in running Muwafaq, including the hiring and placement of SDGTs in key roles in the foundation, who then had the authority and ability to receive money from Kadi, to access Kadi‘s funds, and to designate and divert those funds to other sources and causes. Kadi himself admitted to transferring funds to such Muwafaq personnel, or allowing them access to his personal funds. Although he claimed in every instance that either the funds were accessed for charitable purposes or that he had no knowledge to what ends the funds may have actually been used, OFAC reasonably concluded that Kadi‘s claims were incredible considering all the other evidence in the record. And although the Court cannot cite to any specific information in the classified record, the Court‘s careful review confirms that there is substantial evidence in the record before OFAC that Kadi was involved, through Muwafaq, in providing financial support for terrorists.
3. Financial Support to other SDGTs
Substantial evidence in the record also supports OFAC‘s conclusion that Kadi provided financial support to other SDGTs, including Muhammad Salah, Chafiq Ayadi, and Wa‘el Julaidan.11 In each instance, Kadi claims that his association with these individuals pre-dated their designations and that the transfers of money he provided to them were all for legitimate purposes. He claims that these relationships were benign, that he “worked with individuals who he knew, trusted, and respected, based on their track records in the relevant charitable or humanitarian field,” Opp‘n at 51, and that OFAC had no basis to conclude that any of these individuals “were connected with terrorism in any way” because they were designated years after Kadi had known them. Id. Some of these contentions have already been addressed by the Court, but they are unavailing in all respects and unsupported by the evidence in the record. OFAC‘s findings are briefly summarized below.
a. Wa‘el Julaidan
Julaidan was designated a SDGT on September 6, 2002. Kadi stated that he has known Julaidan as a family friend, and that their relationship predated Julaidan‘s SDGT designation by twenty years. AR 2026. According to Kadi, Julaidan came
Kadi admitted that he provided significant financial benefits to Julaidan. For example, he stated that he gave shares of a business he owned, “KA Stan,” to Julaidan as a “reward for the assistance he provided to [Kadi‘s] charitable activities in Bosnia.” AR 772. The only shareholders in KA Stan were Kadi, Julaidan, and Chariq Ayadi, another SDGT. See id. Kadi also acknowledged that he transferred $1.25 million through Karavan directly to Julaidan‘s personal account between February 24, 1998 and August 3, 1998. AR 2022. Kadi stated that the money was intended to fund the creation of housing units for Al Emam University in Sanaa, Yemen, a project that was being overseen by Julaidan‘s company Maram. AR 2022-23. Kadi also admitted that he transferred the funds at issue to Julaidan‘s personal account, AR 2032, but claimed it was “solely and exclusively for the purpose of supporting the University Housing Project, and not for any other purpose,” AR 2033. He explained that he did not transfer the funds to Maram, because he “had entrusted the University Housing Project to [Julaidan] alone.” Id. This explanation is puzzling, particularly because Maram was Julaidan‘s own company, and Kadi had relied on a table of information purporting to show that Julaidan made payments of substantially the same amounts to his company soon thereafter.
Kadi‘s table was submitted to OFAC to demonstrate that the funds had a legitimate purpose, corroborated by timing. The table shows that after each of the five payments to Julaidan, Julaidan then made a payment to Maram of substantially the same amount, to correspond with construction invoices for the same figures. AR 2034-35. However, there are several problems with Kadi‘s version of events, and with the information he provided to OFAC. For instance, $100,000 appears to be unaccounted for in the table. Id. Although Julaidan received a total of $1.25 million from Kadi, the table reflects that only $1.15 million was transferred to Maram. AR 2035. Footnote 2 to Kadi‘s table also states that “[a]ccording to bank statements of Maram‘s account ... [one] sum [$300,000] was never received in Maram‘s account” Kadi presumably believes this is not a problem because his table still shows “invoices” and “demands” to Maram totaling $1.249 million. But the mere existence of invoices (and “demands“) does not necessarily show that Kadi‘s transfers to Julaidan were used to pay those specific invoices, particularly because “money is fungible.” See Humanitarian Law Project IV, 130 S. Ct. at 2725-26 (agreeing with propositions that “money is fungible” and that “funds raised ostensibly for charitable purposes have in the past been redirected by some terrorist groups to fund the purchase of arms and explosives“) (internal quotations omitted); Regan v. Wald, 468 U.S. 222, 243 (1984) (affirming President‘s decision to ban travel to Cuba on the basis of “curtail[ing] the flow of hard currency to Cuba—currency that could then be used in support of Cuban adventurism“).
OFAC also reasonably discredited Kadi‘s claim that he did not know of Julaidan‘s relationship to Osama Bin Laden. Kadi himself conceded that it was “com-
Kadi also acknowledged that the Saudi Arabian government had frozen Julaidan‘s assets in 2002 based on its finding that Julaidan had supported Osama Bin Laden‘s terrorism network. The administrative record contained a press release from the Saudi Embassy in DC issued on September 10, 2002 that referred to Julaidan as a “Bin Laden operative” and stated: “Julaidan, a Saudi fugitive is believed to have funneled money to al-Qaeda.... Osama Bin Laden and a top al-Qaeda lieutenant, Abu Zubaida, have acknowledged Julaidan as a known associate for their operations. Julaidan, who fought with Bin Laden in Afghanistan during the 1980s, allegedly provided financial and logistical support to the al-Qaeda network.” AR 2690-91. Kadi‘s only response to this evidence was that the incident occurred years after the transaction at issue. That argument is not compelling. See, e.g., Holy Land Found., 333 F.3d at 162 (stating that it was “clearly rational” for OFAC to consider information that predated a SDGT designation and information regarding a SDGT‘s “history and genesis“); Islamic Am. Relief Agency, 477 F.3d at 734 (“An entity‘s genesis and history may properly be considered by OFAC in making the designation or blocking,” at least where there is no indication that ties have been severed) (citing Holy Land Found., 333 F.3d at 162). Kadi also does not rebut OFAC‘s observation that Osama Bin Laden referred to a close relationship with Julaidan in a 1999 interview on Al-Jazeera TV, where Bin Laden reportedly said: “We are all in one boat, as is known to you, including our brother Wa‘el Julaidan,” when referring to the assassination of al-Qaida “co-founder” Abdullah Azzam. AR 5.
Ultimately, OFAC concluded that Kadi‘s explanation for why he transferred $1.25 million to Julaidan, and conveyed other financial benefits to Julaidan, should not be credited, and that his continued designation was warranted on the basis of his support of and relationship with SDGT Julaidan. OFAC also rejected Kadi‘s excuse that he knew Julaidan before he was designated, and his plea that transactions or activities he engaged in with Julaidan prior to Julaidan‘s designation should be disregarded. AR 7-8, 11-12, 14 & 22. OFAC‘s conclusions were substantially supported by the record, both classified and unclassified, and are consistent with the caselaw in this Circuit. See, e.g., Holy Land Found., 333 F.3d at 162; Islamic Am. Relief Agency, 477 F.3d at 734.
b. Chariq Ayadi
Ayadi was designated a SDGT on October 12, 2001—the same day as Kadi. He was hired by Kadi to run Muwafaq‘s European operations, based on Julaidan‘s recommendation. Ayadi oversaw Muwafaq‘s European operations from 1992 to around 1995 or 1996. Kadi acknowledged transferring significant sums to Ayadi‘s personal bank account during that time. As with Julaidan, Kadi maintained that these transfers were solely for charitable purposes. AR 8 & 98-99. Kadi also entrusted Ayadi with other aspects of his business. In early 1996, Kadi purchased a
majority holding in the now-closed Sarajevo-based Depositna Bank. Kadi designated Ayadi the “nominee” for the shares. AR 1377. He explained that he chose Ayadi as his representative because Ayadi was of Bosnian nationality, and under local law, shareholders of a bank must be of Bosnian nationality. AR 770. OFAC regarded Depositna Bank as suspect for other reasons. It “has been associated with Islamic extremists,” including serving as the site for planning sessions for an attack against a U.S. facility in Saudi Arabia in the mid-1990s. AR 11. As previously stated, Ayadi was also one of three shareholders, along with Julaidan and Kadi, in KA Stan. AR 772. OFAC also cited to Ayadi‘s expulsion from Tunisia for his involvement in the Tunisian Islamic Front.As with Julaidan, Kadi admitted to transferring the funds to Ayadi‘s personal accounts, but claimed they were intended for legitimate charitable purposes. He also claimed that he knew Ayadi nine years prior to his designation and had never heard of the Tunisian Islamic Front or any allegations linking Ayadi to the organization until he was designated a SDGT in October 2001. In short, Kadi maintained that he had no knowledge of Ayadi‘s involvement with the Tunisian Islamic Front or terrorist activities. AR 1375, 1388.
c. Muhammad Salah
Kadi also admitted to transferring funds to Muhammad Salah, who was designated a SDT on July 27, 1995 pursuant to
OFAC‘s March 2004 Memorandum and its motion to dismiss focus a great deal on an $820,000 land deal involving Salah. See AR 16-20; Defs.’ Mot. at 21. The details of the land deal are complicated and muddled, but the most salient facts that OFAC considered can be summarized briefly. In July 1991, Kadi, via his company Qadi International, wired $820,000 from the Swiss branch of Faisal Finance to the Quranic Literacy Institute (QLI) in Chicago. The money was used to purchase and develop land in Woodridge, Illinois. Salah, a QLI “employee“/volunteer, was involved in the flow of money that followed the land deal. He was arrested by the Israeli government on January 25, 1993, around the time Kadi was wiring money to him, and pled guilty to illegally channeling funds for Hamas in Israeli military court in January 1995.
Kadi did not dispute that the deal occurred, nor did he dispute that he was transferring money to Salah. See, e.g., AR 299-308. Kadi admitted that although he only met Salah on two or three occasions “at the most,” AR 300, in less than a one-year period he transferred $167,000 directly to Salah‘s personal account. AR 301. He maintained that the money was intended for various QLI expenses “and mainly to support individuals working for QLI.” AR 299. He claimed that he sent the money to Salah personally at the request of another individual, Dr. Zaki, with whom he had longstanding ties. AR 299. Kadi presented extensive documentation (and briefing) in support of his interpretation of the deal as legitimate. He claimed he had no idea that Salah was involved in Hamas.
The breakdown of money transferred by Kadi directly to Salah was as follows: (1) $27,000 on March 16, 1992; (2) $30,000 on July 3, 1992; (3) $50,000 on October 7, 1992; and (4) $60,000 around February 1993. AR 301. Upon learning that Salah
In 1999, the Government brought a civil forfeiture action against QLI, Muhammad Salah, and his wife in federal court in the Northern District of Illinois, which included allegations against Kadi. The proceeds of the land deal were tied up in that litigation. On a motion to dismiss, the district judge concluded, based in part on the 1998 affidavit of FBI Special Agent Robert Wright, that “the circumstances surrounding the Woodridge land deal, the relationship between QLI and Salah, and the efforts of QLI to provide financial support to Salah all raise the inference that QLI ordered Kadi to transmit the money used to purchase the Woodridge land with the intent that it would be used to support Salah in his activities on behalf of Hamas.” United States v. One 1997 E35 Ford Van, 50 F. Supp. 2d 789, 805-06 (N.D. Ill. 1999).
Kadi spent much time refuting the assertions made in the Wright affidavit submitted in the forfeiture action, and maintained that he never intended to obfuscate the details of the land purchase or his involvement in it. AR 310-35. He claimed that in April 2005 Wright “was under investigation for disciplinary conduct, was suspended and his employment was subsequently terminated by the FBI.” Opp‘n at 57-58. However, Kadi did not contend that Wright‘s problems were probative of the reliability of his statements contained within the administrative record. Moreover, those problems occurred in April 2005, subsequent to OFAC‘s March 2004 decision challenged by Kadi here, and are therefore not part of the administrative record. See, e.g., Jifry v. Federal Aviation Admin., 370 F.3d 1174, 1181 (D.C. Cir. 2004) (“The court‘s review is limited ... to the administrative record that was before the [agency].“); Islamic Am. Relief Agency, 477 F.3d at 733 (“we shall limit our review of the designation to the administrative record“); see also Al Haramain I, 585 F. Supp. 2d at 1250 (review of OFAC‘s SDGT determination is limited to the administrative record, subject to narrow exceptions). Once again, Kadi claims that all the transfers he made were to support legitimate charitable objectives, not terrorism. Here too, based on the evidence in the classified and unclassified records, including the findings in the forfeiture action and the Wright affidavit, OFAC reasonably rejected Kadi‘s explanation for why he was transferring funds to SDGT Salah‘s personal accounts, and the overall structuring of the deal, as well as Kadi‘s contention that he had no knowledge of Salah‘s affiliation with Hamas or other terrorist activities.
4. Financial Support and Ties to Bin Laden
Kadi disputed having ties to Osama Bin Laden, and contended that he neither managed money nor businesses for Osama Bin Laden directly, or for his benefit. AR 15; AR 1372. Kadi also asserted that Bin Laden, in turn, had no financial interest in any of Kadi‘s businesses. AR 1372. Kadi claimed that he met Bin Laden on a few occasions ending in 1993, but that those encounters did not involve or concern terrorism. AR 1373-74. However, OFAC reasonably relied on other evidence in the record, which indicated that Kadi‘s ties with Osama Bin Laden may have continued, including reference to a letter found in 2002 that was addressed to Bin Laden and referred to Kadi as “managing money
5. Other Acts of Financial Support and Investment
OFAC pointed to other acts of financial support and investments by Kadi with individuals who have ties to terrorist activities, although OFAC did not appear to rely on these ties directly in applying the criteria of
*
*
*
The Court has carefully reviewed both the classified and unclassified records and finds that the administrative record as a whole amply supports OFAC‘s findings and its determination to continue Kadi‘s designation. OFAC reasonably concluded that Kadi provided financial support—primarily through the Muwafaq Foundation, but also through other means—to many persons who were designated SDGTs. It also had good reason to reject Kadi‘s explanations that his numerous financial transfers to these SDGTs were legitimate, or that they were, in every instance, made without Kadi‘s knowledge of their affiliations with terrorist groups and activities. OFAC reasonably concluded that these claims were simply too incredible, in light of the totality of the evidence before it.
Ultimately, Kadi‘s arguments attacking the sufficiency of the evidence before OFAC are without merit. OFAC relied on more information than Kadi‘s own voluminous statements and submissions, although it is evident that OFAC seriously considered his explanations, asked follow-up questions, and requested additional information in order to address continuing areas of concern. And Kadi‘s claim that the two-page fax, and the articles cited and the sources represented therein, contained deficiencies, is besides the point. While providing Kadi a window into OFAC‘s reasoning, these items do not represent the whole picture—the information relied on by OFAC that Kadi attacks as unsubstantiated is further supported by the classified record, which confirms Kadi‘s financial transactions and relationships with SDGTs.
The Court fully acknowledges and is sympathetic to Kadi‘s argument that he is at somewhat of a disadvantage in being unable to review the whole administrative record, in particular the classified record. See Islamic Am. Relief Agency v. Unidentified FBI Agents, 394 F. Supp. 2d 34, 45 (D.D.C. 2005). And admittedly, OFAC‘s unclassified Memorandum draws heavily from Kadi‘s own statements and submissions, as well as “information available to the U.S. Government,” without elaborating in that public record as to what the source
C. Other APA Arguments
Kadi halfheartedly argues in a footnote in his opposition that “OFAC‘s designation process is arbitrary and capricious because it lacks adequate substantive and procedural safeguards.” Opp‘n at 47 n. 45. He claims that the IEEPA “sets forth no substantive criteria for ‘terrorists’ at all,” and that the criteria in
In reviewing Kadi‘s constitutional claims, the Court has consulted materials outside the pleadings, including the exhibits attached by both parties to their pleadings, as well as the administrative record. Because the parties have been given the opportunity to present additional evidence with their submissions, the Court will convert defendants’ motion to dismiss Kadi‘s constitutional claims into one for summary judgment. See Holy Land Found., 333 F.3d at 165-66 (noting that because the district court reviewed the administrative record in considering constitutional claims relating to a SDGT designation, summary judgment was the applicable standard). Given the Court‘s determination that substantial evidence supports OFAC‘s conclusion that Kadi should remain designated as a SDGT, the merits of Kadi‘s constitutional claims stand on weak footing. Indeed, as previously expressed, some of these constitutional claims—including Kadi‘s argument that OFAC exceeded its statutory authority—parallel the arguments raised by Kadi relating to his APA claim. See Zarmach, 750 F. Supp. 2d at 155 n. 3 (“Because the Court finds that the OFAC‘s actions do not violate the Constitution and thus should not be vacated under the APA, the constitutional claims necessarily must fail as well.“).
A. Ability to Raise Constitutional Claims
To begin with, the Government argues that all of Kadi‘s constitutional claims must be dismissed because Kadi is a non-resident alien with no substantial connections to this country and hence he lacks the ability to assert any rights under the United States Constitution. See Defs.’ Mot. at 26-34.12 In arguing to the contrary, Kadi claims that because the blocking and freezing of his assets in the United States occurred as a result of action initiated by the United States itself, he should be entitled to raise constitutional claims in response to those actions. Opp‘n at 15-17. Alternatively, without conceding the accuracy of OFAC‘s claims as to his contacts with the United States, Kadi argues that he satisfies the standards to raise due process claims.13
There is no clear path to resolving these arguments. The D.C. Circuit has not explicitly addressed what criteria this Court should apply in considering whether a foreign national residing outside the United States can satisfy the “substantial connection” test to raise rights under the U.S. Constitution related to the blocking or freezing of his assets. Nor has the D.C. Circuit addressed whether such rights turn on the presence of property in the United States, or whether Kadi can raise certain constitutional claims, but not others. See, e.g., United States v. Verdugo-Urquidez, 494 U.S. 259, 264-66 (1990) (plurality opinion suggesting that certain rights under the First and Fourth Amendments inure to the benefit of only those with sufficient connections to the United States). Some cases in this jurisdiction provide guidance, but no case provides definitive answers. In several cases, the D.C. Circuit has addressed whether for
In National Council of Resistance of Iran, the D.C. Circuit held that two Iranian organizations designated as FTOs were entitled to due process protections under the Fifth Amendment because they had “developed substantial connections with this country.” Id. at 202. The court pointed to the designated organizations’ “overt presence within the National Press Building” and “claim[][of] an interest in a small bank account.” Id. at 201. In People‘s Mojahedin of Iran, the D.C. Circuit held that “[a] foreign entity without property or presence in this country has no constitutional rights, under the due process clause or otherwise,” 182 F.3d at 22, and that plaintiffs there lacked substantial connection to the United States. The court stated: “We put to one side situations in which an organization‘s bank deposits were seized as a result of the Secretary‘s designation. Neither ... [petitioner] suffered that fate, presumably because no United States financial institutions held any of their property.” 182 F.3d at 22. Hence, the court found that People‘s Mojahedin of Iran could not raise constitutional claims because it had no property in the United States, nor any other substantial connections. Id. Ultimately, events had evolved such that two organizations—National Council of Resistance of Iran and People‘s Mojahedin of Iran—were found to be alter egos. Hence, the D.C. Circuit concluded that People‘s Mojahedin of Iran, via National Council of Resistance of Iran‘s connections, had sufficient connections to bring a constitutional claim. In analyzing “substantial connections” to the United States, the court remained focused on property rather than physical presence, stating:
[T]here is before us at least a colorable allegation that at least one of the petitioners has an interest in a bank account in the United States.... We have no idea of the truth of the allegation ... but for the present purposes, the colorable allegation would seem enough to support their due process claims. Russian Volunteer Fleet v. United States, 282 U.S. 481, 491-92 (1931), makes clear that a foreign organization that acquires or holds property in this country may invoke the protections of the Constitution when that property is placed in jeopardy by government intervention.
Nat‘l Council of Resistance of Iran, 251 F.3d at 204.
In 32 County, which also involved a challenge to an organization‘s FTO designation, the D.C. Circuit concluded that “[t]he Secretary therefore did not have to provide 32 County ... with any process before designating them as [FTOs]” because it was not shown “that either organization possessed any controlling interest in property located within the United States, nor do they demonstrate any other form of presence here.” 292 F.3d at 799. Taken together, then, these cases at least imply that a foreign national with property in the United States has a sufficient connection to the United States to raise at least some constitutional claims.14
Another case, Al-Aqeel v. Paulson, 568 F. Supp. 2d 64 (D.D.C. 2008), also indicates that the ruling in In re Terrorist Attacks on September 11, 2001 does not dispositively address Kadi‘s ability to raise constitutional claims. Al-Aqeel, like Kadi, was a citizen and resident of Saudi Arabia, who sought to challenge his SDGT designation. And like Kadi, Al-Aqeel had also been named in September 11-related litigation in the Southern District of New York. The Government argued that Al-Aqeel lacked insufficient connections to the United States to raise any constitutional claims, and pointed to Al-Aqeel‘s arguments regarding lack of personal jurisdiction in an earlier case then pending in the Southern District of New York, Burnett v. Al Baraka Inv. & Dev. Corp., 03-cv-9849 (S.D.N.Y.). Rejecting those arguments, the court observed that the issue in Burnett was whether Al-Aqeel, as a defendant, had purposefully availed himself of the protections of the law of the forum—the State of New York—for the court there to exercise personal jurisdiction over him. Al-Aqeel, 568 F. Supp. 2d at 70 (emphasis added). The court reasoned that the question before it was whether Al-Aqeel, as a plaintiff, had sufficient connections with the United States as a whole to have standing to raise claims under the United States Constitution. Id. (emphasis added). Ultimately, the court concluded that Al-Aqeel had established sufficient contacts in the United States, through his frequent visits to the United States, his position as an officer of a United States corporation, and his involvement in helping the organization acquire property in the United States, to raise “at least his due process claims under the Fifth Amendment.” Id. However, the court also concluded that Al-Aqeel had no standing to raise a Fourth Amendment claim, because the assets blocked were overseas and he
There is arguably a factual dispute over whether Kadi does, indeed, have sufficient connections to the United States, which may hinge on what importance is placed on the assets which have been blocked here. Kadi‘s complaint does not clearly indicate where his assets have been frozen, and if any of those assets were located in the United States. Instead, he simply complains generally that his assets have been seized. At the hearing, the Government either could not or would not identify whether Kadi had any assets within the United States that had been blocked or frozen. See Tr. 12-13. Kadi also could not enumerate which assets have been, in fact, blocked, although he emphasized that his claim to the $820,000 “loan” he provided to QLI should be considered an asset. Tr. 54:10-17.15
The administrative record indicates that it is likely that Kadi may have had some property in the United States. Kadi recites several connections to the United States, see Opp‘n at 15, including the following: (1) he was a director of Global Diamond Resources, a U.S. company, and his shares and ownership interests in the company were frozen and blocked under the Notice of Blocking sent to Kadi “care of” Global Diamond Resources, see AR 2785; and (2) he wired $820,000 to QLI in 1992, and the proceeds of that transaction had initially been tied up in the civil forfeiture litigation in Illinois. Although Kadi‘s claim to the $820,000 at the time of the challenged action is dubious, he does nevertheless claim that he has property interests in the United States that were frozen as a result of the designation.
Ultimately, the issue of standing regarding Kadi‘s constitutional claims necessarily implicates the validity of OFAC‘s blocking order on which Kadi‘s constitutional claims rest. This goes to the merits question of whether the blocking order itself was valid. In those circumstances, if the jurisdictional facts “are inextricably intertwined with the merits of the case,” the issue of standing need not be conclusively resolved, but instead the court should “defer its jurisdictional decision until the merits are heard.” Zarmach, 750 F. Supp. 2d at 155-56 n. 4 (quoting Herbert v. Nat‘l Acad. of Sciences, 974 F.2d 192, 198 (D.C. Cir. 1992)); see also, Jifry, 370 F.3d at 1183 (“We need not decide whether or not [plaintiffs] are entitled to constitutional protections because, even assuming that they are, they have received all the process that they are due.“). Even assuming Kadi does have standing, all of his arguments on the merits of his constitutional claims are nonetheless unavailing for the reasons explained below.
B. Fifth Amendment Due Process Claim
Kadi makes a host of arguments in support of his claim that defendants violated his right to due process. Specifically, he contends that defendants failed to give him adequate notice of the charges, or a “thorough statement of reasons” for the decision, adequate time to respond, or an
The D.C. Circuit in Holy Land Foundation squarely rejected the proposition that due process requires most of the protections requested by Kadi. The court held that notice and a meaningful opportunity to be heard are satisfied by the provision of a post-deprivation administrative remedy and the opportunity to submit written submissions to OFAC, even where (as here) the initial designation provided no notice or opportunity to be heard. Holy Land Found., 333 F.3d at 163-64; see also Global Relief Found. v. O‘Neill, 315 F.3d 748, 754 (7th Cir. 2002) (concluding that no notice or pre-seizure hearing was required under the Constitution regarding OFAC‘s interim blocking order and designation as SDGT). The Holy Land Foundation court also stated that there was no automatic right to access classified evidence, to confront and cross-examine witnesses, or to obtain procedures which approximate a judicial trial. 333 F.3d at 164.
Here, Kadi was provided with even more post-deprivation process than was provided to Holy Land Foundation. Kadi‘s opportunity to be meaningfully heard is evidenced by the extensive submissions he made to challenge his continued designation. He submitted three lengthy witness statements and numerous exhibits. AR 92-280, 281-505, 689-1067. Moreover, Kadi‘s lawyers had at least four face-to-face meetings with OFAC over the 2002-2003 time frame. AR 4-5, 2752, 2765 (referring to meetings with counsel on January 15, 2002; August 1, 2002; February 28, 2003; and September 8, 2003). OFAC also sent Kadi a five-page letter with detailed questions about twelve continued areas of concern—“the answers to which will help us issue a determination on the petition.” AR 1352-56. Kadi provided a forty-one page response to the questionnaire. AR 1352-1394. He also availed himself of the opportunity to rebut the evidence he considered erroneous, including the allegations in the Wright affidavit regarding Kadi‘s involvement with QLI and the Illinois land deal, sources cited in the two-page fax, and newspaper articles referred to in the record. Accordingly, even if he did not receive the full unclassified administrative record prior to the March 2004 decision, he did receive an opportunity, in substance, to rebut the evidence found in the unclassified administrative record through his own submissions to OFAC, as well as the opportunity to respond robustly to OFAC‘s follow-up questions addressing previous statements Kadi had made and identifying specific facts and areas of concern relevant to the designation decision. This case is unlike People‘s Mojahedin Org. of Iran v. U.S. Dep‘t of State, 613 F.3d 220, 228 (D.C. Cir. 2010), where the court expressed concern that it was unable to discern what facts were relied on and what conclusions Treasury had drawn from the record to support the FTO redesignation. There is no such confusion here. The March 2004 OFAC Memorandum and the administrative record, including the back and forth exchanges with Kadi, show that OFAC considered all of Kadi‘s submissions and explained its assessment of the evidence. Therefore, it is clear that the requirements of due process were satisfied.16
Kadi next contends that OFAC‘s freezing of his assets has deprived him of use of his property, and that the deprivation is “permanent” because “[t]he provisions of IEEPA, E.O. 13,224, and the implementing regulations provide no mechanism for Mr. Kadi to further contest his designation or the blocking of his assets.” Compl. ¶¶ 59-61. As a threshold matter, the allegation that there is no “mechanism ... to further contest his designation” is untrue. OFAC provides for a reconsideration process that Kadi, in fact, used.
In any event, courts in this jurisdiction that have considered similar “takings” challenges under the Fifth Amendment have rejected them. See Islamic Am. Relief Agency, 394 F. Supp. 2d at 51 (“[T]o the extent that the plaintiff seeks to challenge the blocking of assets pursuant to an Executive Order, such an order is not, as a matter of law, a taking within the meaning of the Fifth Amendment.“); Holy Land Found., 219 F. Supp. 2d 57, 78 (D.D.C. 2002) (“The case law is clear that blockings under Executive Orders are temporary deprivations that do not vest the assets in the Government. Therefore, blockings do not, as a matter of law, constitute takings within the meaning of the Fifth Amendment.... [C]ourts have consistently rejected these claims in the IEEPA and TWEA context.“) (citing cases); see also Nielsen v. Sec‘y of the Treasury, 424 F.2d 833, 844 (D.C. Cir. 1970) (“The temporary blocking or freezing of the accounts of aliens within the territory of a state, suspending the right of withdrawal but not affecting ownership, does not appear to have been regarded as a taking of property.“).
Even if the Notice of Blocking constituted a “taking,” pursuant to the Tucker Act,
Accordingly, the Court lacks jurisdiction to resolve Kadi‘s takings claim. And, even if the Court had jurisdiction, the Court agrees with other courts that have found that the blocking of assets does not constitute a taking under the Fifth Amendment.17
D. First Amendment—Speech and Association
Kadi claims that the SDGT designation and blocking order substantially interfere with his rights to freedom of speech and freedom of association. He contends that his designation prohibits him from making humanitarian contributions to “legitimate charitable organizations” and states that he “does not have a knowing affiliation with any terrorist group or individual including Osama Bin Laden or Al-Qaeda ... and does not have a specific intent to further the illegal aims of any terrorist group or individual.” Compl. ¶¶ 62-66; see also Opp‘n at 31. As previously stated, it is doubtful that Kadi, as a non-resident alien with unclear ties to the United States, can even raise a challenge to OFAC‘s action under the First Amendment. But assuming he could, his First Amendment claims fail.
1. Freedom of Speech
The Court‘s starting point in considering Kadi‘s First Amendment claims must address the parties’ arguments over the proper analytical framework. The Government urges intermediate scrutiny because
Intermediate scrutiny has been applied in reviewing First Amendment challenges “when the ‘regulation ... serves purposes unrelated to the content of expression.‘” See Islamic Am. Relief Agency, 394 F. Supp. 2d at 52 (quoting Ward v. Rock Against Racism, 491 U.S. 781, 791 (1989)).
Strict scrutiny is a more exacting standard that applies to content-based regulations of speech. See R.A.V. v. St. Paul, 505 U.S. 377, 385-86 (1992). Whether strict scrutiny applies depends on whether the regulation was issued “to disfavor certain messages or ideas.” See Cablevision Sys. Corp. v. FCC, 649 F.3d 695, 717-18 (D.C. Cir. 2011) (distinguishing between strict and intermediate scrutiny). In order for a content-based regulation to survive strict scrutiny, a statute must be narrowly tailored to advance a compelling government interest. FEC v. Wisconsin Right to Life, Inc., 551 U.S. 449, 464 (2007).
Not many cases have considered what level of scrutiny applies to First Amendment challenges prompted by SDGT designations and blocking orders under
Kadi claims that the recent decision by the Supreme Court in Humanitarian Law Project IV supports his view that strict scrutiny applies. That case involved a challenge to
Nevertheless, the Supreme Court found that the material support statute—as applied to the activities plaintiffs sought to undertake—survived strict scrutiny because the prevention of terrorism was a compelling governmental interest. Id. at 2730-31. Moreover, it found that 2339B was narrowly tailored because even material support that was intended to “promot[e] peaceable, lawful conduct ... can further terrorism by foreign groups in multiple ways.... [S]uch support frees up other resources within the organization that may be put to violent ends.” Id. at 2725. A plurality of the Supreme Court, in finding that the statute was narrowly tailored, also relied on the fact that the statute prevented coordinated advocacy, rather than independent advocacy. Id.
More recently, and after the Supreme Court decided Humanitarian Law Project IV, the Ninth Circuit has applied strict scrutiny in considering a challenge under a different section of
The Court therefore agrees with the Government that intermediate scrutiny is the appropriate test here. Simply put, Kadi complains that he is barred from making financial transfers to organizations or individuals that have been designated as SDGTs. He makes no claim that he seeks to donate to these entities or individuals for political reasons, and he makes no claim that he seeks to engage in any other activities of the type that were at issue in Humanitarian Law Project IV or Al Haramain III. And applying intermediate scrutiny, the Court considers it beyond question that the Government has the authority to designate Kadi as a SDGT and to freeze or block assets that fall under U.S. jurisdiction. See Holy Land Found., 219 F. Supp. 2d at 82. It is also beyond dispute that blocking or freezing assets that may be used to support terrorists and/or terrorist activities furthers an important government interest—“combating terrorism by undermining its financial base.” Holy Land Found., 333 F.3d at 161 (citing Holy Land Found., 219 F. Supp. 2d at 81-82). Moreover, the designation of Kadi as a SDGT and the blocking of his assets merely restricts his ability to make financial transfers to other SDGTs, not his ability to express his views generally. Any incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of the strong governmental interest. See Holy Land Found., 219 F. Supp. 2d at 82 (“Money is fungible, and the Government has no means of ensuring that even charitable contributions to a terrorist organization are actually used for legitimate purposes.“); see also Humanitarian Law Project IV, 130 S. Ct. at 2725-26 (adopting same principle in strict scrutiny analysis).
Kadi has no satisfactory response to the arguments raised by the Government. He also has no good response to the pre-Humanitarian Law Project IV cases that applied intermediate scrutiny or concluded that there was no constitutional right to support terrorism. Instead, Kadi declares them inapposite because those courts “had already determined that the non-movants [i.e., recipients of the funds] provided support to terrorists” while such a judicial finding is lacking here. Opp‘n at 33. But having now held that OFAC‘s SDGT designation of Kadi is valid under the APA, that argument—and the reasoning in
Furthermore, even if the Court found Humanitarian Law Project IV applicable here and applied strict scrutiny review, the same result would still be reached. Given the sensitive interests of national security and foreign affairs at stake, and because all contributions to foreign terrorist organizations (regardless of any benign intent) could further terrorism, the Government has a compelling interest in ensuring that such support not reach these organizations. See Humanitarian Law Project IV, 130 S. Ct. at 2727 (noting its own conclusions based on the evidence that all contributions to FTOs further terrorism, and stating that the Executive‘s views reaching the same conclusion are “entitled to deference“).
2. Freedom of Association
Kadi‘s freedom of association claim fares no better. The Government contends that Kadi‘s designation was not based on mere membership, but instead was based on his financial support of terrorist groups. Defs.’ Mot. at 39. Kadi responds that he “is completely prohibited from making contributions, and thus barred from engaging in a critical form of associational activity.” Opp‘n at 34. He also argues that such a prohibition cannot be sustained “in the absence of a specific intent to further the organization‘s unlawful ends.” Id.
This Circuit comprehensively addressed this issue in Islamic American Relief Agency, and held that a SDGT blocking order does not violate freedom of association because it does not prohibit associational activity; rather, it targets the financial support of terrorism. 477 F.3d at 736-37; see also Humanitarian Law Project IV, 130 S. Ct. at 2730-31 (affirming rejection of freedom of association claim because the material support statute did not penalize mere association, but instead prohibited the act of providing material support). Moreover, the D.C. Circuit has
E. Fourth Amendment
Kadi claims that freezing or blocking his assets “constitute[s] an unreasonable search and seizure without probable cause.” Compl. ¶ 71. He alleges that “[d]efendants initially froze or blocked [Kadi‘s] assets in October 2001, without reasonable suspicion, probable cause or warrant and without specifying their reasons for doing so.” Compl. ¶ 69. He further asserts that “[d]efendants continue to freeze or block [Kadi‘s] assets without providing him with the information in the administrative record upon which OFAC made its determination that [Kadi] is a ‘terrorist,’ any summary of the allegedly ‘classified’ information, or any specification of any charges against him to which he might have responded.” Compl. ¶ 70.
Defendants argue that the Fourth Amendment is inapplicable to blocking and seizure orders of this nature. They also contend that “blocking actions pursuant to
As discussed above, subsequent to the initial briefing in this case Al Haramain III was decided by the Ninth Circuit. Al Haramain III found in relevant part that the Government had violated the Fourth Amendment rights of Al Haramain Islamic Foundation, Oregon (“AHIF-Oregon“).19 There, the Government had also argued that the special needs exception to the warrant and probable cause requirement under the Fourth Amendment applied, and that the blocking orders, in any event, were per se reasonable. The Ninth Circuit rejected those arguments, and concluded that OFAC violated AHIF-Oregon‘s Fourth Amendment right to be free of unreasonable seizures. Al Haramain III, 686 F.3d at 995. The court reasoned that the exigent circumstances exception to the Fourth Amendment‘s warrant requirement may have applied to the initial designation and blocking, but once the Government had blocked the assets to foreclose any asset flight concerns, it could have obtained a warrant with respect to the specific assets identified. Id. at 993. The court rejected the Government‘s argument (also raised here) that obtaining warrants would be unduly burdensome or impractical. Id.; see also Defs.’ Mot., Ex. B, Decl. of Adam J. Szubin (“Szubin Decl.“) ¶¶ 19-20.
However, the Court need not resolve the issue, nor need it decide as a general matter whether blocking orders categorically fall within one of the enumerated exceptions to the Fourth Amendment warrant requirement. Even assuming that the blocking order at issue here constituted a “seizure,” having already concluded above that OFAC‘s decision to maintain the SDGT designation of Kadi was supported by substantial evidence, it follows that the blocking order was not issued unreasonably or without probable cause.21 Indeed, the courts in Islamic American Relief Agency and Holy Land Foundation concluded that because the Government had the authority to issue the blocking order under
Al Haramain III is actually consistent with this ruling. The Ninth Circuit balanced the interests of a domestic organization to be free from blocking orders, and reasoned that “the number of designated persons located within the United States appears to be very small. The warrant requirement will therefore be relevant in only a few cases.” Al Haramain III, 686 F.3d at 993. The court, in fact, explicitly stated: “We address only the facts of this case: OFAC‘s seizure of assets of a United States entity located within the United States. We do not address the requirements under the Fourth Amendment for other situations including, for example, designations of foreign entities or designations by executive order.” Id. at 995 n. 18. Here, of course, a foreign entity/individual was designated pursuant to
Moreover, the Government‘s concerns about the practicability of obtaining warrants seem well-founded. See Szubin Decl. ¶ 20 (“Injecting a requirement that a magistrate judge review the evidentiary memorandum and issue a warrant before each blocking can go forward could significantly prolong and undermine the designation process, curtailing OFAC‘s ability to take immediate action ... and increasing the risk that assets may be exported to dangerous actors abroad.“). Given the concerns raised by the Government in securing warrants, this Court would be reluctant to apply Al Haramain III to the present situation, where the designated person is a foreign national, with significant overseas ties and assets. For all these reasons, Kadi‘s Fourth Amendment claim will be denied.
F. Vagueness and Overbreadth
In Counts Six and Seven, Kadi asserts that the SDGT designation violated his First and Fifth Amendment rights because the designation criteria are unconstitutionally vague and overbroad, both on their face and as applied to him individually. Compl. ¶¶ 72-76. Count Six maintains that the
The Supreme Court has instructed that a statute is unconstitutionally overbroad only where the overbreadth is “substantial ... relative to the statute‘s plainly legitimate sweep.” United States v. Williams, 553 U.S. 285, 292-93 (2008). Moreover, “[i]nvalidation for overbreadth is ‘strong medicine’ that is not to be casually employed.” Id. at 293 (internal quotations and citations omitted). A law that does not reach constitutionally protected conduct, and therefore passes muster under the overbreadth test, may still be challenged on grounds that it is unduly vague in violation of due process. See Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 497 (1982). However, a law is unconstitutionally vague on its face only if it is “impermissibly vague in all its applications.” Id. The Supreme Court has instructed that laws must “give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly.” Id. at 498. Laws must also “provide explicit standards for those who apply them” to prevent “arbitrary and discriminatory enforcement.” Id. “[G]reater tolerance” is given to “enactments with civil rather than criminal penalties because the consequences of imprecision are qualitatively less severe.” Id. at 498-99; see also KindHearts I, 647 F. Supp. 2d at 889. If, however, a law threatens to inhibit the exercise of constitutionally protected rights, such as the right of free speech or of association, then “a more stringent vagueness test should apply.” Village of Hoffman Estates, 455 U.S. at 499. But, still, a plaintiff who “engages in some conduct that is clearly proscribed cannot complain of the vagueness of the law as applied to the conduct of others.” Id. at 495.
Although Kadi‘s complaint mounts both vagueness and overbreadth challenges to
1. “Otherwise Associated With”
Kadi argues that the provision of
Kadi‘s challenge to the term “otherwise associated with“—including the incorporated terms “material support” and “services“—fails. As an initial matter, Kadi cannot bring a facial vagueness challenge to these terms because the basis for his designation was his financial support to other SDGTs—conduct that is “clearly proscribed” under the law. See Village of Hoffman Estates, 455 U.S. at 495 (a plaintiff who “engages in some conduct that is clearly proscribed cannot complain of the vagueness of the law as applied to the conduct of others“). But even if he could raise a facial challenge to
- [t]o own or control; or
- [t]o attempt, or to conspire with one or more persons, to act for or on behalf of or to provide financial, material, or technological support, or financial or other services, to.
The district court in KindHearts I rejected a similar challenge in the context of
The case is even more compelling here, where Kadi‘s conduct involves providing financial support to designated entities and individuals. See Al Haramain III, 686 F.3d at 1148 (“As [
2. “SDGT,” “Terrorist Organization,” and “Any Other Term Related to Terrorism”
Kadi‘s challenges on vagueness grounds to the terms “SDGT,” “terrorist organization” and, as a catch-all, “any other term related to terrorism” are even more attenuated. He argues that the
Kadi is wrong that the regulations fail to define these terms. The term “SDGT” is defined at
argument that the Court should find impermissibly vague “any other term related to terrorism” casts too wide a net for the Court to seriously consider it. Kadi responds that the definition of SDGT at
G. Bill of Attainder
Finally, Kadi contends that
As far as this Court is aware, no case has held that a bill of attainder claim can be maintained on a SDGT designation. The district court in Global Relief Foundation set forth a comprehensive and persuasive analysis of a bill of attainder claim brought by a SDGT and rejected it on two separate grounds: (1) the Constitution‘s prohibition against bills of attainder applies only to legislative acts, “not to regulatory actions of administrative agencies“; and (2) neither the designation of a person as a SDGT nor the blocking of assets constitutes “punishment.” Global Relief Found., 207 F. Supp. 2d at 798-800. The Seventh Circuit affirmed and summarily rejected the bill of attainder claim. See Global Relief Found., 315 F.3d at 755 (“Application of the IEEPA is not a bill of attainder; implementation of the statute is in the hands of the Executive and Judicial Branches, while a bill of attainder is a decision of guilt made by the Legislative Branch.“) (citing United States v. Lovett, 328 U.S. 303, 315 (1946)). The D.C. Circuit has not explicitly addressed whether a SDGT designation or blocking of assets constitutes a bill of attainder, but one district court in this jurisdiction has held that, with respect to an analogous designation (“specially designated narcotics traf
III. Kadi‘s Motions to Amend the Complaint and for Rule 56(f) discovery
Kadi has filed two motions, a motion to amend the complaint and a motion for Rule 56(f) discovery. He seeks to assert an additional cause of action under Bivens v. Six Unknown Named Agents of the Fed. Bureau of Narcotics, 403 U.S. 388 (1971), for violations of the First, Fourth, and Fifth Amendments and to name additional defendants. However, having determined that Kadi‘s constitutional claims fail in their entirety, amendment of the complaint at this point to allow Kadi to raise Bivens claims against defendants in their individual capacities for constitutional violations would be futile. James Madison Ltd. by Hecht v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir. 1996) (“Courts may deny a motion to amend a complaint as futile ... if the proposed claim would not survive a motion to dismiss.“); see also Foman v. Davis, 371 U.S. 178, 182 (1962) (listing “futility of amendment” as a reason for not granting leave to amend). The Court has already denied Kadi‘s motion for Rule 56(f) discovery with respect to the APA claim. Having now considered and rejected all of Kadi‘s constitutional claims as well, the Court finds that the Rule 56(f) claim with respect to discovery on those constitutional claims must also fail.
CONCLUSION
For the foregoing reasons, the Court will grant the defendants’ motion for summary judgment in its entirety and will deny Kadi‘s motion to amend his complaint and for Rule 56(f) discovery. A separate order accompanies this memorandum opinion.
SO ORDERED.
Lestina WALLACE, Plaintiff,
v.
DISTRICT OF COLUMBIA, Defendant.
Civil Action No. 11–175 (ΑΚ).
United States District Court, District of Columbia.
May 16, 2012.
Notes
- Involves a violent act or an act dangerous to human life, property, or infrastructure; and
(b) Appears to be intended: - To intimidate or coerce a civilian population;
- To influence the policy of a government by intimidation or coercion; or
- To affect the conduct of a government by mass destruction, assassination, kidnapping, or hostage-taking.