Academic journal article Journal of Criminal Law and Criminology

Criminal Prosecution in Sheep's Clothing: The Punitive Effects of OFAC Freezing Sanctions

Academic journal article Journal of Criminal Law and Criminology

Criminal Prosecution in Sheep's Clothing: The Punitive Effects of OFAC Freezing Sanctions

Article excerpt

I. INTRODUCTION

The first response to the September 11, 2001 terrorist attacks on New York and Washington D.C. (9/11) was the financial war on terror. On September 23, 2001, President Bush exercised his authority pursuant to the International Emergency Economic Powers Act (IEEPA) (1) to issue Executive Order 13,224 (2) in which he declared a national emergency and drastically expanded his abilities to freeze assets in order to cut off funding that would support terrorist activity. The Bush Administration used its expanded powers liberally to achieve quick results in its war on terror. While it is not uncommon to hear criticism of the United States' war against terrorism in Afghanistan or Iraq, the United States' financial war on terror has not received much scrutiny. A lack of oversight in the financial war has resulted in the government freezing assets of individuals and entities with minimal supporting evidence, without notice, and without due process.

Prior to 9/11, the IEEPA gave the President authority to designate a person or entity he considered a national security threat, freeze their assets, and block transactions between them and U.S. persons. (3) Executive Order 13,224 and later the USA PATRIOT Act expanded Presidential powers such that the executive branch can freeze assets of persons or entities that supported or otherwise associated with terrorists; the executive branch can submit classified evidence in camera and ex parte; and the executive branch can block assets during the pendency of an investigation. (4) The effects of this expansion of power have been unfairly punitive.

This is not to say that freezing assets is not effective against terrorist funding. This tool can be very effective because it can be quickly deployed without warning. Furthermore, the administration views asset freezing as a preventive measure rather than a punitive measure. (5) Richard Newcomb, OFAC's Director, has stated that "[e]conomic sanctions are intended to deprive the target of the use of its assets and deny the target access to the U.S. financial system and the benefits of trade, transactions and services involving U.S. markets." (6) Once OFAC freezes an entity's or individual's assets, they are no longer accessible for use for any purpose, terrorist or otherwise. In effect, the freezing of assets is immediately punitive to the designated person, entity, or individual or individuals employed by the sanctioned entity.

The punitive effects would not be so controversial if every entity or individual that OFAC sanctioned had demonstrably been shown to be a terrorist or terrorist entity or to be otherwise intentionally financing a terrorist group. However, OFAC has frozen the assets of at least one entity that was later deemed to have no direct link to any terrorist group, a finding made in a monograph on terrorist financing prepared by the staff of the National Commission on Terrorist Attacks Upon the United States (hereinafter 9/11 Commission Financing Monograph). (7) Furthermore, as of this writing the United States has failed to convict any of the individuals targeted in post-9/11 freezing actions of actually financing terrorism. On October 24, 2007, the government's latest criminal prosecution against the largest Islamic charity in the United States, the Holy Land Foundation, resulted in a mistrial. (8) Remarkably, the government's goals may not include winning trials. In response to the Holy Land Foundation trial outcome, former United States Attorney for the Eastern District of Texas Matthew D. Orwig said, "I think the government won when it froze the assets and shut down the organization." (9) Mr. Orwig may be right about the irrelevance of a trial verdict because of the difficulty in reversing an OFAC designation and asset-freeze.

Although a designee may appeal his case by writing to OFAC, he has no access to the information OFAC has used as a basis for freezing and, therefore, no ability to rebut this evidence. …

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