Shariah’s Black Box

[271] Prosecutions for the “material support of terrorism” are notoriously difficult cases to try before a jury because they often require reams of financial data evidence, circumstantial evidence of associational links, and the defense often raised by defendants that they had no specific knowledge that the money they contributed was going to support illegal activities. A recent case with these dynamics, the largest federal terror-financing case to date, ended in mistrial on the bulk of the charges. See the court filings (organized and with commentary) in the criminal prosecution U.S. v. Holy Land Foundation for Relief and Development, Criminal Action No. 3:04-CR-240-G, 2007 U.S. Dist. LEXIS 50239 (N.D. Tex. July 11, 2007), available at https://www.nefafoundation.org/hlfdocs.html (last visited Jan. 31, 2008).

[272] One of the leading Shariah authorities recommends that Shariah-compliant mutual funds calculate the Shariah-based religious tax called zakat for the investors and withhold it at source as a value added. See generally supra note 22 and accompanying text. The assumption for this memorandum has been that if a reporting mutual fund does not disclose that it has the authority to gift zakat contributions on behalf of the individual investors, then the mutual fund has left that for the individual investors.

[273] Id.; see also Yaquby, supra note 39; Islamic Financial Services Board, Exposure Draft: Guiding Principles on Governance for Islamic Collective Investment Schemes 14-17 (Dec. 2007), available at https://www.ifsb.org/view.php?ch=4&pg=140&ac=31&fname=file&dbIndex=0&ex=1201805784&md=%EB%FA%AF%F7%DD%E3%80%1F%9C%DC%ED%9F%07%EE%E7%23 (last visited Jan. 31, 2008).

[274] See supra note 270.

[275] Id.

[276] While it does not appear that the DJII calculates the “purification” requirement for its index of funds with a concomitant reduction in the stated values and returns for its universe of stocks, one index actually promotes this feature:

Incorporates Dividend Purification: In addition, the application of a dividend adjustment factor in the creation of the MSCI Islamic Index Series results in more relevant benchmarks, as they reflect the total return to an Islamic portfolio net of dividend purification.

MSCI Global Islamic Indices, https://www.mscibarra.com/products/indices/islamic/ (last visited Jan. 31, 2008).

[277] 18 U.S.C. §1956(a)(2)(A) (2006).

[278] As one commentator began an analysis into the problem of Muslim charities being used to funnel funds to Islamic terrorists:

On December 4, 2001, nearly three months after the terrorist attacks of September 11th and barely three days after a pair of terrorist suicide bombings killed 25 and injured 200 in Israel, President Bush declared the Holy Land Foundation for Relief and Development (“HLF”) of Richardson, Texas, a terrorist organization, its assets frozen, and announced that its offices had been raided by the FBI. Purportedly the largest Muslim charity in theUnited States, HLF had been under investigation by the FBI for its alleged financing of the Islamic Resistance movement, or Hamas, for nine years. Ten days later, the Bush Administration acted again, freezing the assets and raiding the offices of two more Muslim charities, the Benevolence International Foundation (“BIF”) and the Global Relief Foundation (“GRF”), both located in the Chicago, Illinois area.

Engel, supra note 270, at 251 (footnotes omitted).

[279] For a case study of Caribou Coffee, see infra notes 323-338 and accompanying text.

[280] Or, as set out supra note 223 and accompanying text, was this fact willfully or recklessly avoided?