Related topics

Fraud, drug trafficking and charities in U.S. help finance terrorists

May 25, 1997 GMT

EDITOR’S NOTE _ America has long been the immigrant’s golden land _ and today, terrorists are exploiting that gold to finance their operations around the world. The second of a three-part series, ``Jihad USA,″ examines the many ways _ from charity to crime _ in which this country has become a cash cow for terror.

___

By RICHARD COLE

Associated Press Writer

WASHINGTON (AP) _ When A.C. Nielsen, the nation’s largest coupon redemption company, hired a private investigator to track $400 million in annual industry losses to fraud, a surprise awaited.

ADVERTISEMENT

Among the culprits were Palestinian merchants who redeemed coupons for products never purchased, then sent $100 million of that cash back to the Middle East.

Who benefited from that money?

At least two of the major coupon fraud groups were headed by terrorists, says Nielsen’s investigator, Ben Jacobson.

In St. Louis, he says, the ringleader was Zein Isa, a U.S. commander of the Abu Nidal Organization, a group responsible for terrorist attacks that killed or injured 900 people in 20 nations. Isa later was indicted for terrorist activities and convicted of murder.

In Brooklyn, Jacobson found a phony coupon redemption center run by Mahumud Abouhalima _ now serving 240 years in prison for his role in the 1993 World Trade Center bombing.

``Before the bombing, we couldn’t get the U.S. attorney’s office interested,″ Jacobson says. ``After the bombing, they just wanted us to keep our mouths shut.″

Justice Department officials would not comment, but the case makes it clear Middle East terrorists use the United States as a cash cow, and that coupon fraud is only one way to milk their enemy.

Other U.S. crimes also fill terrorist pockets, the Drug Enforcement Administration discovered.

Undercover agents say $500 million from the sale of heroin in the United States and Europe goes to leaders of the PKK, a Kurdish separatist group identified by the State Department as the world’s deadliest terrorist organization. The PKK controls drug-processing labs in eastern Turkey that sit astride the drug routes from Afghanistan to the West, investigators say.

While crime is the most spectacular source, money also flows to terrorists through sleight-of-hand schemes and from legal charities.

``It’s a big concern for us,″ says Philip Wilcox, counter-terrorism coordinator for the State Department. ``Money that is collected for charitable purposes is diverted for military and terrorist activities.″

Tracing that money is difficult. A 1995 presidential order froze $800,000 in funds for a list of terrorist organizations _ but few fund-raisers label their bank accounts ``Hezbollah″ or ``Hamas.″

In congressional testimony, FBI director Louis Freeh has conceded that Hamas _ whose suicide bombings helped derail the Middle East peace process _ continues to raise substantial funds in the United States. Hamas leaders say the money goes to schools and clinics.

Congressional analyst Kenneth Katzman says estimates of how much money Hamas receives from the United States run from 30 percent to 80 percent of its budget.

A far easier target for authorities are fraudulent activities like the coupon fraud scam uncovered by Jacobson for A.C. Neilsen.

That money, Jacobson says, was often smuggled out of the country through travel agents and Dominican Republic banks to offshore Channel Islands financial institutions, and then to the Middle East.

Jacobson said the conspirators stole coupons from printing plants and recycling centers, then set up centers where the coupons were wrinkled, crumpled and sometimes stuck in driers to make them look used.

They then delivered them to the manufacturers and claimed refunds in the name of cooperating grocers. Many of the rings also ran parallel food stamp fraud scams.

Jacobson said it is virtually impossible to know the final destination of the money. But he notes that Miami-area grocers arrested for food stamp fraud said their money was headed to George Habash, mastermind of the 1985 Achille Lauro hijacking.

Jacobson believes the flow continues unabated.

``It will never get cleaned up until two things happen _ the industry gets control of the process and law enforcement takes it seriously,″ he says.

Colorado authorities were able to close down a fraud operation run by Al-Fuqra, a group of African-American Muslims devoted to Sheik Mubarak Jilani Hashemi, a Pakistani cleric with ties to radical Muslim organizations and Pakistan military intelligence.

Six people were charged in a 1993 state racketeering indictment that included allegations of arson and murder aimed at Jews, Hindus and moderate Muslims. Four men were sentenced to lengthy prison terms. Another two fled authorities. One was recently captured and is scheduled to go on trial in September.

Susan Fenger, an investigator for the Colorado Department of Labor, uncovered a wide-ranging conspiracy of bogus worker compensation claims that used welfare fraud, tax evasion and submission of duplicate X-ray charges. She traced $100,000 of the money back to Pakistan.

``They ripped off more than $500,000,″ she said. ``Some of the money went to buy land where they did terrorist training.″

Beyond issues of fraud and felony lies the gray area of foundation money and charities providing help to terrorist-linked groups.

The U.S. Customs Service is looking into the Tampa-based World and Islam Studies Enterprise foundation, or WISE, after one of its leaders left Florida in 1995 only to surface in Syria as the new head of Islamic Jihad.

Customs suspects that WISE, under the cover of its affiliation with the unsuspecting University of South Florida, was at the center of an international ring financing Islamic terrorists. But frustrated Customs investigators have failed to find a shred of evidence that WISE or its top officials did anything illegal.

Linked to WISE was a Saudi Arabian-financed think tank called the International Institute of Islamic Thought, or IIIT.

U.S. immigration officials deported one IIIT official in July after discovering he was an Islamic Jihad leader.

The foundations insist the money they raise is legally collected for orphans and the families of ``martyrs″ to the Islamic cause. In practice, investigators suspect _ but so far cannot prove _ that means organized terrorist groups in the Middle East.

The Tampa investigation points to a key problem for authorities: It is often impossible to tell which charities are legitimate or what happens to that money when it crosses the U.S. border.

In recent years, federal agencies have vastly improved their ability to track those funds, but banking secrecy laws, complexity and the sheer volume of transaction makes the task daunting.

One suspect charitable organization is the Holy Land Foundation of Richardson, Texas, shut down in Israel as a fund-raising tool of Hamas.

Holy Land’s U.S. branch denied any connections to Hamas and continued to raise funds in the United States.

Yet IRS records show that its single biggest contribution in the United States between 1989 and 1994 was $210,000 from a quiet Virginia businessman named Mousa Abu Marzook _ who emerged as Hamas’ political leader.

MORE