US District Court denies Motion to Dismiss AIG-Shariah lawsuit

(Washington, D.C.) A lawsuit claiming that the U.S. government’s bailout of the American International Group is helping promote Shariah law has won its first victory in court on May 26, 2009.

The lawsuit, which was filed in December 2008 in the U.S. District Court for the Eastern District of Michigan, is a constitutional challenge to that portion of the “Emergency Economic Stabilization Act of 2008” (EESA) that appropriated $40 billion in taxpayer money to fund and financially support the federal government’s majority ownership interest in AIG, which engages in Shariah-based Islamic activities.

In the May 26 filing, Judge Lawrence P. Zatkoff, of the US District Court for the Eastern District Court of Michigan, denied the U.S. government’s motion to dismiss the lawsuit filed by Kevin Murray. (The full opinion may be downloaded here: https://www.saneworks.us/uploads/news/applications/43.pdf) Mr. Murray, who is represented by legal counsel David Yerushalmi and the Thomas More Law Center (Richard Thompson and Robert Muise), filed a federal complaint against the Treasury Secretary, representing the U.S. Treasury, and the Federal Reserve Board alleging that AIG’s promotion of Shariah in its Shariah-compliant insurance products violates the Establishment Clause because the federal government owns and controls 80% of AIG and AIG’s actions have become the government’s.

The government filed its motion to dismiss making two arguments. One, Mr. Murray, as a former combat Marine, practicing Catholic, and tax payer, did not have standing to even bring this lawsuit. Two, even if he did have standing, the government acted in buying AIG without any intent to promote or become involved in religious questions.

The Court spent much of its opinion reciting the law on the narrow exception to the no-tax-payer-standing rule. That exception is triggered in a claim of a violation of the Establishment Clause and when there is a specific legislative grant for spending that implicates the First Amendment. The Court carefully reviewed all of the relevant case law and found the argument made by Messrs. Yerushalmi and Muise in their brief persuasive.

On the second issue, the Court put together all of the facts as presented by the Plaintiff’s brief and concluded:

In this case, the fact that AIG is largely a secular entity is not dispositive: “The question in an as-applied challenge is not whether the entity is of a religious character, but how it spends its grant. Kendrick, 487 U.S. at 624” 25 (Kennedy J., concurring). The circumstances of this case are historic, and the pressure upon the government to navigate this financial crisis is unfathomable. Times of crisis, however, do not justify departure from the Constitution. In this case, the United States government has a majority interest in AIG. AIG utilizes consolidated financing whereby all funds flow through a single port to support all of its activities, including Sharia-compliant financing. Pursuant to the EESA, the government has injected AIG with tens of billions of dollars, without restricting or tracking how this considerable sum of money is spent. At least two of AIG’s subsidiary companies practice Sharia-compliant financing, one of which was unveiled after the influx of government cash. After using the $40 billion from the government to pay down the $85 billion credit facility, the credit facility retained $60 billion in available credit, suggesting that AIG did not use all $40 billion consistent with its press release. Finally, after the government acquired a majority interest in AIG and contributed substantial funds to AIG for operational purposes, the government co-sponsored a forum entitled “Islamic Finance 101.” These facts, taken together, raise a question of whether the government’s involvement with AIG has created the effect of promoting religion and sufficiently raise Plaintiff’s claim beyond the speculative level, warranting dismissal inappropriate at this stage in the proceedings.

In September, the U.S. Treasury and Federal Reserve took a nearly 80-percent stake in AIG when it injected $150 billion to help prop up the troubled company.

In an earlier appearance on FOX News discussing the lawsuit, Frank Gaffney of the Center for Security Policy said “The suit is aimed at persuading the U.S. government it is unconstitutional to engage in the promotion of a faith. In this case, Islam, and its practices, which include among many other things, Shariah.”

Gaffney, who opposes Shariah, said the federal lawsuit sheds light on a problem that is under the radar. “There’s also a host of other aspects of Shariah that are now beginning to be adopted or accommodated in our country. We think far from being frivolous or innocuous or innocent, these represent a form of, what I think [is] best described as stealth Jihad.”

– 30 –