China Power

http://www.defense.gov/pubs/pdfs/2010_CMPR_Final.pdf

In 2005, Gen. Chi Haotian of China, its “minister of national defense” since 1993 to 2003, revealed in his speeches that in China’s war on the United States, from one-third to two-thirds of Americans would be poisoned or infected biologically by the Chinese, and their homes and property would be transferred over to Chinese settlers, since the Chinese (and not the Germans, as Chi stipulated in his speech) are the superior race and must have everything best in the world. http://www.newsmax.com/navrozov/china-worldwarIII-alberteinstein-hitler/2010/01/14/id/346373

http://www.rense.com/general85/China'sPlanToConquer.htm

http://www.rand.org/pubs/testimonies/2010/RAND_CT346.pdf
http://www.softwar.net/plaaf.html
http://www.china-defense-mashup.com/
http://china-pla.blogspot.com/
http://www.chinasecurityblog.com/tag/pla-navy/
http://www.theepochtimes.com/news/5-8-8/31055.html

China Quietly Prepares for World Domination
Thursday, 02 Sep 2010 07:54 AM Article Font Size
By: Lev Navrozov

Four facts pertaining to the People’s Republic of China, as Mao named his China in 1949, suggest China’s conquest of the world:

The population of China is 1.3 billion, that is, 1 billion people more than the population of the United States.
The rulers of the post-1949 China have the unlimited possibilities to convert their over 1 billion people, minus little children and sick adults, into top-level military officers and creators of advanced weapons.
China has sympathizers such as President Obama in the United States and some Muslims in other countries. The fight against the so-called racist policies and attempts to anticipate terrorist attacks with which the governments of France, Britain, the United States, and some other Western countries are preoccupied only serve to divert the countries’ attention and resources from China’s aggressive behavior.
The Western view that the China is or recently was a “big village” overlooks the facts. (Some of these facts I listed in my earlier columns.) For example, China anticipated Newton’s mathematics and physics. China’s global conquest will probably begin with its neighbor Russia, whose rulers are terrified by the China. If Russia is conquered by the China, China will obtain Russia's enormous natural resources and will thereby strengthen its military potential even further in its unstoppable advance to grab the entire world.

At this point it is perhaps worthwhile to ask why so many people who come to this country (and others) attach such great importance to their “national origins.”

The sad fact is that many people have nothing to be interested in: they are spiritually naked, so to speak. Great artists, poets, and musicians have their living interests in their vocations. But many people have nothing to preoccupy themselves with spiritually.

My advice to them is to learn the official language of the country to which you came to live, like English in the United States, and enjoy your native language at home.

The development of post-nuclear superweapons in China including molecular superweapons is steady, relentless, and growing in scale in accordance with Chinese dictators’ will and money. It is anything but suicidal. On the contrary, it is to safeguard, via world domination, the dictators’ absolute power, along with their wealth and longevity.

The behavior of the Western political establishment is suicidal. But this will be a quiet suicide. As the Chinese military authors of “Unrestricted Warfare” (Qiao Liang and Wang Xiangsui) conjectured, the United States will perish “not with a rumble, but a snicker.”

Is it possible to anticipate a terrorist attack? And how would you know if someone is plotting an attack? This has always been a problem. I cannot help recalling one Russian satirical piece of the 19th century: The police chief says that his subordinates should pay special attention to apprehending “terrorists,” in contrast to hate murderers in general. “But how would we know who is who?” he was asked. “Easy!” explained the police chief, “The terrorists wear Greek hats.”

Nowadays the problem does not seem to be as simple as it was for the Russian police chief of old. Unlimited resources and time are being spent in search for terrorists. And as is well known, the suicidal terrorist strikes according to his/her own design.

To quote Dostoyevsky, “Suicidally inclined person is the freest individual on earth. He craves no wealth and fears no legal retribution, for he has sentenced himself to death.”

One of my readers noted in his e-mail to me: “So I just want to say that I enjoy reading your articles, for they are very thought-provoking, and at least I am not now the only person that sees China for what it is and the danger it poses to the West as we feed the dragon.”

The countries that do not wish to be converted by China into graveyards or into its perfect slave-state appendages must form a World Union of Global Defense against China. The free countries must stop China in its tracks while still there is time.

All that the “war on terrorism” demonstrates is that the mental level of the Western political establishment, including the mainstream media, is so low that the West as it is today is not fit to survive the annihilation by post-nuclear superweapons being developed in China since 1986.

The destiny of the world is being decided NOW. The past of global civilization and its future are at stake. The Nazi wars would pale in comparison with what China would inflict upon the world.

Lev Navrozov can be reached at levnavrozov@gmail.com

http://archive.newsmax.com/archives/articles/2001/2/21/181251.shtml

• According to the New York Times, Clinton removed $2 billion in trade with China from national security scrutiny. Among the results: 77 supercomputers – capable of 13 billion calculations per second – that could scramble and unscramble secret data and design nuclear weapons. These were purchased by the Chinese without a peep stateside. At least some of them would be used by the Chinese military.

• With the transfer of the Panama Canal, four of Panama's ports ended up being controlled by a company partially owned by Hutchison-Whampoa Ltd., which in turn was owned by Li Ka-Shing, a billionaire so close to the Chinese power structure that he was offered the governorship of Hong Kong.

Another owner of the Panamanian ports was China Resources Enterprise, called an "agent of espionage" by Senator Fred Thompson. CRE was also a partner of the Lippo Group, owned by the Riady family that played a central if mysterious role in the rise of William Clinton. According to congressional testimony by ex-JCS [Joint Chiefs of Staff] chief Admiral Thomas Moorer, Hutchison-Whampoa won the right to pilot all ships through the Panama Canal, including U.S. naval vessels.

• President Clinton signed national security waivers to allow four U.S. commercial satellites to be launched in China, despite evidence that China was exporting nuclear and missile technology to Pakistan and Iran, among other nations. One of these satellites belonged to Loral. Nine days later a Chinese Long March rocket carrying a $200 million satellite belonging to Loral failed in mid-flight.

A subsequent lawsuit charged that the circuit board from the highly classified encryption device in the satellite was found to be missing when the Chinese returned debris from the explosion to U.S. authorities, even though a control box containing the circuit board was recovered intact. After the crash, NSA reportedly changed the encoded algorithms used by U.S. satellites because of the apparent release of highly classified information.

• President Clinton approved a waiver allowing the launch of another satellite on board a Chinese rocket, despite a recommendation by the Department of Justice that the waiver would have a significant adverse impact on any prosecution arising from its pending investigation of Loral.

• The New York Times reported in 1998 that the Defense Technology Security Administration said Loral's unauthorized release of sensitive technology to the Chinese gave rise to at least three "major" violations of U.S. national security, three medium violations and 12 "minor" infractions.

• Throughout these dealings, the CEO of Loral, Bernard Schwartz, contributed at least $1.5 million to the Democrats, making him the single largest contributor to these groups during the period in question.

• Softwar newsletter reported that that some of the radios and cell phones being used by Chinese police in their campaign against dissidents were those sold to the Chinese by Motorola after Clinton overrode human rights objections by the State Department.

• In the end, the brunt of the evidence was that the Chinese had obtained more American military secrets over the past two decades than had all the previous spies in American history put together. They had basic information on all nuclear weapons systems, they got our most advanced supercomputers, they gained extraordinarily important information about satellite systems. Some of this knowledge they used for themselves; some they retrofitted and repackaged and sold to other countries like Iraq, where it was used against our own fighter planes.

While the problem occurred under both Republican and Democratic administrations, it got completely out of hand under Clinton. Some of the information was stolen, some was given to China in the classic manner of spies, but a stunning proportion was obtained either as a direct result of political and economic decisions by the Clinton administration or as a result of what can best be described as premeditated indifference.

• Three major players in the China scandal – John Huang, Charlie Trie and Johnny Chung – were all allowed by the Justice Department to cop pleas.

• Carol Cameron of Fox News reported that cover stories provided by Chinese operatives to hide China's illegal campaign contributions may have come from or been approved by President Jiang Zemin. Transcripts of FBI wiretaps obtained by Fox News also pointed to the possibility that President Clinton may have known of both the illegal donations and what was to be said if they were discovered.

Johnny Chung told Congress he was under orders from the Chinese to keep the whole thing quiet. His orders, he said, came from a suspected Chinese intelligence operative named Robert Luu, who worked for a Los Angeles law firm. In a phone conversation tapped by the FBI, Chung was told by Luu to say the campaign money came from the so-called princelings: Chinese leaders' grown sons, who live, study and often live lavishly in the West.

A transcript of the wiretap, obtained by Fox News, contains the following:

LUU: "Shove the blame on the shoulders of the princelings."

CHUNG: "So blame it on the princelings. Do not implicate the Chinese government."

LUU: "Yes. Chairman Jiang agreed to handle it like this; the president over here also agreed."

• Newsweek quoted intelligence officials as saying that the Chinese "penetration is total. They are deep into the [U.S. nuclear weapons] labs' black programs."

• In an AP story ignored by major media, former CIA Director R. James Woolsey accused the Clinton administration of pursuing a policy of appeasement toward China and likened it to the way Britain and France dealt with Nazi Germany on Czechoslovakia before World War II.

• Last year, the Wall Street Journal wrote: "Top business executives are issuing a blunt warning to federal lawmakers: Vote against the trade deal with China, and we will hold it against you when writing campaign checks. Phil Condit, chairman of Boeing Co., and Robert N. Burt, chairman and chief executive of FMC Corp., said a coming vote to facilitate China's entry into the World Trade Organization will be a measure of every lawmaker's friendliness to business.

• Operating with an interim top secret clearance (but without FBI investigation or foreign security check) Commerce official Huang requested several top secret files on China just before a meeting with the Chinese ambassador. Huang and the Riadys then held a meeting with Clinton. Not long after, Huang went to work as a Democratic fund-raiser, but remained on Commerce's payroll as a $10,000-a-month consultant. Huang raised $5 million for the campaign. About a third of that was returned as having come from illegal sources. Among the problem contributions: $250,000 to the DNC from five Chinese businessmen in order to have a brief meeting with Clinton at a fund raiser.

• Macao businessman Ng Lap Seng, closely linked to a couple of major Chinese-owned enterprises, was regularly bringing in large sums of money to the United States, according to customs records. On one occasion, he arrived with $175,000 and then two days later met with Charlie Trie and Mark Middleton at the White House. That evening Ng sat at Clinton's table at a DNC fund raiser.

This is just a sample – not of treason, but of politics as it has been practiced. Now, let's turn to the recently arrested Agent Hanssen. So far there is no evidence that he helped the Russians build a missile, suppress dissidents, or buy U.S. politicians. Instead, in the FBI's own words, "The affidavit alleges that Hanssen compromised numerous human sources of the U.S. Intelligence Community, dozens of classified U.S. Government documents, including 'Top Secret' and 'code word' documents, and technical operations of extraordinary importance and value. It also alleges that Hanssen compromised FBI counterintelligence investigative techniques, sources, methods and operations, and disclosed to the KGB the FBI's secret investigation of Felix Bloch, a foreign service officer, for espionage."

Hanssen's major alleged crime, in other words, is not the betrayal of America but of the (note capitals) U.S. Intelligence Community, its personnel, its manuals, and its tricks of the trade. Open up Robert Hanssen and – as with a Russian doll – you just get another spy who is busily betraying another spy, all of whom are keeping secrets not so much from some foreign country as from the citizens of their own.

It is all bizarre, incestuous, of little known purpose, and, in the best postmodern manner, flexible. Just as American politicians and lawyers have redefined bribery so that the official bribee can escape punishment for the same crime for which the citizen bribee is punished, so the rules of loyalty to one's country now vary immensely not according to the nature of one's action but according to one's position. Hanssen will probably go to prison and may even be executed. Marc Rich's more acceptable foreign entanglements are used to justify his pardon.

China Prepares for World War
Thursday, 09 Sep 2010 02:28 PM Article Font Size
By: Lev Navrozov

One of the origins of human society can be traced to slavery. Yes, it is the physical ability of one part of society to order another part of it to “do what the rulers want to be done.”

Only a language can explain well to another human being what he or she is expected to do. Slavery thus originated at a certain level of mental development: that of conversation in a mutually understood human tongue.

This level of human development made it possible for humans to wage wars instead of pursuing and killing animals. Gradually, there originated fortresses and fortifications as well as combat vehicles, including ships and aircraft. But slavery could perfectly combine with technological or strategic achievements.

Hitler’s Germany, which attacked Russia, was a slave state, as was Stalin’s Russia, though the word “slave” had ceased to be used officially whether applied to “our heroic troops” or to “our despised enemy.”

The existence of a slave state such as Hitler’s Germany or Stalin’s Russia, and Hitler’s defeat in Russia, could account for the fact that Stalin’s Russia had more military slaves than Hitler’s Germany.

We are now approaching the period when the People’s Republic of China will possess more military slaves than any other country or any alliance of countries acting as a single force.

Indeed, the People’s Republic of China will be able to induct the military slaves of the countries it will conquer into their invasion army.

Let us recall that Stalin’s Russia and thus the Russian army, consisted of different nations, some of which had nothing to do with the Russians. Yet Stalin’s army routed Hitler’s invaders.

So too the foreign military slaves in the People’s Republic of China will fight even better than those Soviet troops whose nationalities had nothing to do with the Russians (or with Stalin, who was a Georgian, not a Russian).

In other words, in the war of the People’s Republic of China for its world domination, we may see military slaves of conquered nations which will have nothing to do with the People’s Republic of China, yet who would be forced to fight on China’s side as its loyal military slaves.

We are possibly on the verge of a real world war, that is global war; and fighting on the side of the world conqueror, China, will be nations as different as were Soviet nations under the Georgian Stalin.

It has to be admitted that though the People’s Republic of China officially originated in 1949, practically nothing alarming was heard about it in the West till the end of the 20th century. It simply was one of the countries becoming known in the world. All the more reason for the world to wake up to the globally dangerous reality now.

But was the globalism of the People’s Republic of China an unexpected paradox? Mao was a disciple of Marx and Lenin. Certainly both of them were globalists! Said the Internationale, the Communist Party hymn:

The two worlds are in the final fight!
Our slogan: One Soviet World is right!

It has to be admitted that the rulers of the former Soviet Union were more philosophically minded rather than war minded, while the rulers of the People Republic of China behave more like world warriors rather than philosophers like Marx or Lenin or Stalin.

They are busy preparing the world takeover, not a glamorous picture of the paradise on earth for Western observers.

The Soviet rulers were philosophically convinced that the observance of the new Soviet Union, like the Moscow subway made out of marble, would lead to similar revolutions in all other countries.

The rulers of the People’s Republic of China are more experienced in the Western life to realize that the world war, not the tourist displays, will decide the destiny of the world.

This begs the question, Will the West understand what is going on in the world before it is too late?

The Western press and radio materials are concentrating on injustices inside the People’s Republic of China, as though the country has sworn on “socialism” and it is necessary to watch its performance.

On the other hand, no crucial documents of top world policy of the People’s Republic of China and its allies are known outside their top secret Cabinets.

The People’s Republic of China is not a democracy, where the crucial elements of its domestic policy become publicly known.

It is the murder of participants of the Tiananmen Square movement, who dared to suggest elections of some elements of the government, that attracted the public attention to the political nature of the People’s Republic of China.

Da Gunny and his election picks

PA: Joe Sestak v. Pat Toomey (Vote For Pat Toomey)
CO: Michael Bennet v. Ken Buck (Vote For Ken Buck)
WA: Patty Murray v. Dino Rossi (Vote For Dino Rossi)

Rossi said the true scope of the unemployment rate was close to 17.4 percent.

“That’s like two out of 10 people you know aren’t making it for their families. And so the conversations we’re having, a lot of folks are they’re really concerned about, at least the business owners I’m talking to, they don’t know what their government is going to do to them next week,” said Dino Rossi.

NV: Harry Reid v. Sharron Angle (Vote For Sharron Angle)
CA: Barbara Boxer v. Carly Fiorina (Vote For Carly Fiorina)
WI: Russ Feingold v. Ron Johnson

Conn. Senate Blumenthal (D)Da Gunny says Blumenthal can't be trusted
McMahon (R)(Vote For McMahon)

The Register Citizen
Serving Litchfield County, CT
Monday, May 17, 2010
At a rally in Bridgeport in 2003, Blumenthal was quoted as saying, “When we returned, we saw nothing like this,”

In 2008, in Shelton, Blumenthal spoke at a veterans’ memorial dedication saying, “I served during the Vietnam era. … I remember the taunts, the insults, sometimes even physical abuse.”

“As a veteran myself, anyone who lies about their service should be ashamed of themselves,” City Councilor Rick Dalla Valle, himself a veteran said. “People give their lives every day, and anyone that lies about their service should be ashamed.”

Bob Hunter, Commander of the Veterans of Foreign Wars, Post 9086, and a Navy Veteran beleives that anyone that may have lied about their service should do whatever is necessary to make it right.

Calif. Senate Boxer (D)
Fiorina (R)(Vote For Fiorina)

Ohio Senate Portman (R)(Vote For Republican Rob Portman)
Fisher (D)

Ohio has lost nearly 400,000 jobs and our unemployment rate has more than doubled. Even for those who are working, paychecks are not stretching as far as they used to, and the value of homes and retirement accounts have declined, putting more pressure on working families.

We are at a moment of truth for Ohio. Now is the time for bold action and decisions to turn things around. The Portman Plan for Ohio Jobs offers specific proposals to get Ohio and our nation back on the path to prosperity:

Carnahan (D)
Mo. Senate Blunt (R))(Vote For Republican Roy Blunt)
Roy Blunt believes the way to real prosperity is to count on free people to make their own decisions – what to buy, how much to save, when to borrow or lend, and how much. In the present crisis, for example, if we want more consumer spending and job creation, then let’s reduce people’s taxes.

Ellsworth (D)
Ind. Senate Coats (R)(Vote For Republican Roy Blunt)
Indiana's unemployment rate in August was 10.2 percent. Frustration is high.

"Where's the recovery happening?" asked Bill Hurley, a businessman and self-described conservative who has donated to Coats. "Because it's not here."
Read more: http://www.kansascity.com/2010/09/25/2248624/in-indiana-ellsworth-struggles.html#ixzz11de4rv9h

We have to look at tax reductions for businesses, simplifying our tax code and creating tax incentives for innovation. We must grow our way out of the recession, not spend our way out as President Obama has repeatedly insisted we do.

Finally, it’s important to remember that this crisis is so deep, so devastating, that the solution must rise above politics. Difficult, and perhaps unpopular, decisions must be made today in order to ensure a better tomorrow.

I think we have to ask ourselves an important question: Are you willing to make the tough decisions for the future of our county and for the sake of your children and grandchildren?

N.Y. Senate B Gillibrand (D)
DioGuardi (R)(Vote For Republican Joe DioGuardi for US Senate)

"There are nearly one million New Yorkers who are unemployed, and Sen. Gillibrand's only attempt at a remedy is more government spending," said DioGuardi. "While she's working to shore up the support of Washington insiders, I am talking to the people - the people who create the jobs and the people who need the jobs. Big government spending will not solve our problems, because jobs are created by the private sector. Helping businesses grow, encouraging entrepreneurship, promoting education, and lifting the burden of excessive government regulation - this is my agenda, and this is what I will devote myself to in the U.S. Senate."
Nev. Senate Angle (R)
42%Reid (D)

Del. Senate Coons (D)
O'Donnell (R))(Vote For Republican Christine O`Donnell)

Christine O`Donnell on Tax Reform: Deal With Delaware: I will never vote to increase taxes.
ANNUAL REPORT TO CONGRESS: Military and Security Developments; Involving the People’s Republic of China 2010 Office of the Secretary of Defense Read Report on China: Click here .

W.Va. Senate Raese (R))(Vote For Republican John Raese)
Manchin (D)

John Raese-Besides robbing your family of basic medical care choice, the new ObamaCare health plan passed by the Democratic congress is expected to employ thousands of new IRS agents to track down Americans for payment of health care taxes. The cost of the greatest social spending program in the nation’s history is still under debate, but since the inception of Medicare in 1965 the cost of the program has grown 2.7% faster the economy and should reach 20% of America’s GDP within the decade.
John Raese-The jobless rate across the nation, and especially here in West Virginia, is spiraling upward. At just 3.6% in November of 2007 the unemployment rate in West Virginia has more than doubled ballooning to 8.6% by this summer. West Virginia’s engine to growth is small and medium sized businesses that are encouraged to innovate and create. More government, more regulation and more taxes are never the answer.

The Largest Tax Hikes in History Coming Under Democrates
From Ryan Ellis Americans for Tax Reform

Largest tax hikes in U.S. history begin soon under Obama who signed Obamacare into law (creating many of these tax hikes in the process). It's also 28 days until Election Day.

***New January 2011 tax hike added this week***

Homeowner Paperwork Tax Burden. Congress this week will send to President Obama a bill which has several tax hikes and tax breaks. One of the tax hikes requires the 10 million homeowners who rent out second homes and vacation homes to issue burdensome “1099-MISC” forms to everyone with whom they do more than a small amount of business. This will result in millions of wasted hours filling out paperwork and being chased by the IRS. 90% of people who rent out homes make less than $200,000 per year.

First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:

- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care tax credit will be cut.

The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors. The top capital gains tax will rise from 15 percent this year to 20 percent in 2011. The top dividends tax rate will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.

Second Wave: Obamacare

There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

The Tanning Tax. This went into effect on July 1st of this year. It imposes a new, 10% excise tax on getting a tan at a tanning salon. There is no exemption for tanners making less than $250,000 per year.

The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Brand Name Drug Tax. Starting next year, there will be a multi-billion dollar tax assessment imposed on name-brand drug manufacturers. This tax, like all excise taxes, will raise the price of medicine, hurting everyone.

Economic Substance Doctrine. The IRS is now empowered to disallow perfectly-legal tax deductions and maneuvers merely because it judges that the deduction or action lacks “economic substance.” This is obviously an arbitrary empowerment of IRS agents.

Employer Reporting of Health Insurance Costs on a W-2. This will start for W-2s in the 2011 tax year. While not a tax increase in itself, it makes it very easy for Congress to tax employer-provided healthcare benefits later.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

Vote Republican
Senate races in 2010:
AK:Miller(R) vs.McAdams(D) vs.Murkowski(I)
AL:Shelby(R) vs.Barnes(D)
AR:Lincoln(D) vs.Boozman(R)
AZ:McCain(R) vs.Glassman(D)
CA:Boxer(D) vs.Fiorina(R) vs.Lightfoot(L)
CO:Bennet(D) vs.Buck(R)
CT:Blumenthal(D) vs.McMahon(R)
DE:Coons(D) vs.O`Donnell(R)
FL:Rubio(R) vs.Crist(I) vs.Meek(D) vs.DeCastro(C) vs.Snitker(L)
GA:Isakson(R) vs.Thurmond(D)
HI:Inouye(D) vs.Cavasso(R)
IA:Grassley(R) vs.Conlin(D)
ID:Crapo(R) vs.Sullivan(D)
IL:Giannoulias(D) vs.Kirk(R)
IN:Ellsworth(D) vs.Coats(R)
KS:Johnston(D) vs.Moran(R)
KY:Conway(D) vs.Paul(R)
LA:Vitter(R) vs.Melancon(D)
MO:Carnahan(R) vs.Blunt(D)
MD:Mikulski(D) vs.Wargotz(R)
NC:Burr(R) vs.Marshall(D)
ND:Potter(D) vs.Hoeven(R)
NH:Ayotte(R) vs.Hodes(D)
NV:Reid(D) vs.Angle(R)
NY6:Schumer(D) vs.Townsend(R)
NY2:Gillibrand(D) vs.DioGuardi(R)
OH:Fisher(R) vs.Portman(D) vs.Deaton(C)
OK:Coburn(R) vs.Myles(D)
OR:Wyden(D) vs.Huffman(R)
PA:Toomey(R) vs.Sestak(D)
SC:DeMint(R) vs.Greene(D)
SD:Thune(R) vs.Berry(D)
UT:Lee(R) vs.Granato(D)
VT:Leahy(D) vs.Britton(R) vs.Freilich(I)
WA:Murray(D) vs.Rossi(R)
WI:Feingold(D) vs.Johnson(D)
WV:Manchin(D) vs.Raese(R)
Vote Republican

Cut off all money to Terrorists in the United States

REVIEW OF CURRENT AND EVOLVING TRENDS IN TERRORISM FINANCING
Written Testimony Submitted to the House Committee on Financial Services, Subcommittee on Oversight and Investigations
Tuesday, September 28, 2010
Stephen I. Landman
Director, National Security Law and Policy
The Investigative Project on Terrorism

http://www.investigativeproject.org/about.php
Chairman Moore, Ranking Member Biggert, and distinguished Members of the Committee: thank you for holding today’s hearing for “A Review of Current and Evolving Trends in Terrorism Financing.” My name is Stephen I. Landman, and I am the Director of National Security Law and Policy at the Investigative Project on Terrorism (IPT). I am honored to speak before you today, and hope that the work we have done at the IPT will be useful as this committee looks to combat the evolving threat of terrorist financing.

In the past decade, the speed with which the United States has developed, implemented, and fine-tuned a national counter-terrorist financing strategy has been nothing if not impressive. To date, the government has convicted over 420 terrorism suspects, with many of these cases relying upon evidence of terrorist financing. Financially, terrorist groups from al Qaida in the Arabian Peninsula (AQAP) to Hamas in the Gaza Strip and al-Shabaab in Somalia are on the ropes. By one account, al Qaida is in the “worst financial shape it has been in years.”1

Despite these successes, much work remains to be done. Foreign Terrorist Organizations (FTOs)2 continue to raise and move money for the purposes of recruitment, indoctrination, logistical support, training, and for their murderous acts. In part, this is due to the fact that terrorist financing—the provision of something of value to persons or groups engaged in terrorist activity—is exceedingly difficult to track. Like the terrorist groups themselves, terrorist financing crosses both geographic borders and technological boundaries.

The topic of today’s hearing is monumentally important. In the ongoing effort to combat terrorism, the ability to keep money out of the coffers of these groups not only means the difference between a group undertaking an attack or not, but may have an impact on the long-term viability of the organization. Effectively responding to this threat requires a two-pronged approach: (i) understanding the means by which terrorist organizations raise money, and (ii) identifying the methods by which they move money around the globe to fund acts of violence. My testimony today, while touching upon the first issue, will deal primarily with the movement of funds. I would ask that the Committee consider this an extension of earlier testimony provided to Congress by the IPT’s Executive Director, Steven Emerson.3

American-based operatives of terrorist groups have increasingly turned to criminal endeavors to finance their murderous actions. Whether through drug trafficking,4 or organized retail theft.

1 Assistant Secretary for Terrorist Financing David S. Cohen, Remarks to the Washington Institute for Near East Policy, U.S. Dep’t of the Treasury (April 7, 2010) available at http://www.ustreas.gov/press/releases/tg632.htm.
2 For the purposes of my testimony the term “terrorist organization” refers to those entities and individuals designated by the United States government as either a “Foreign Terrorist Organization” (FTO) or “Specially Designated Global Terrorist” (SDGT). See Specially Designated Nationals and Blocked Persons, United States Department of Treasury: Office of Foreign Assets Control, available at http://www.treas.gov/offices/enforcement/ofac/sdn/t11sdn.pdf (compilation of all U.S. designation lists) (last updated September 10, 2010).
3 See Money Laundering and Terror Financing Issues in the Middle East: Hearing before the S. Comm. On Banking, Housing, and Urban Affairs (July 13, 2005) (Statement of Steven Emerson, Executive Director, The Investigative Project on Terrorism) available at http://www.investigativeproject.org/documents/testimony/19.pdf.
4 See e.g., Fact Sheet: Dawood Ibrahim, United States Department of the Treasury, available at http://www.ustreas.gov/press/releases/reports/fact_sheet.pdf. 1
market smuggling,5 the production and sale of counterfeit name-brand goods,6 or car theft rings,7 terrorists have demonstrated that they are willing and able to resort to the types of activities normally reserved for ordinary street gangs for financial support. U.S. law enforcement has and should continue to stop these activities with the same tried and true techniques that it has always relied upon to combat illicit financial activity. Those efforts, however, must be accompanied by measures aimed at preventing the actual flow of money supporting terrorism.

The United States and its international partners have effectively closed off the formal financial sector to terrorist groups. Through a combination of criminal prosecutions, regulatory enforcement, and civil litigation, traditional banking methods are no longer open to terrorist dollars. But these actions have not stopped the movement of funds by terrorist groups and their financial supporters. Instead, like water on concrete, terrorist dollars have found the cracks.
Terrorist groups have fallen back on traditional methods of financing their activities. As they did a decade ago, terrorists continue to abuse the charitable sector by raising funds under the guise of zakat (Islamic tithing) and surreptitiously funnel money to terrorist groups around the world. While this is most brazenly seen today in the form of British-based Viva Palestina’s support for Hamas, we have recently seen Somalia-based al-Shabaab and Pakistan-based Lashkar-e Tayyiba do the same. Relying upon the extensive and largely unregulated hawalanetwork in the United States,8 terrorist groups are believed to have secretly funneled hundreds of thousands of dollars over the last decade; demonstrated most recently by the September 2010 arrest of Mohammad Younis for using the technique to transfer money to Faisal Shahzad, the failed Times Square bomber.

Rather than simply rest on their laurels, terrorist groups have shown an incredible ability to adapt and apply changing technologies to their needs and stay one step ahead of our regulatory and law enforcement officers. The creation of Stored Value Cards (SVCs) and the expansion of the Internet are just two of the problems that those tasked with countering terrorist financing will face over the next decade.
I.
KEEPING THE FORMAL FINANCIAL SECTOR CLOSED TO TERRORIST DOLLARS
Since 2001, the United States and its international partners have effectively closed off the formal financial sector to terrorist groups. Through a combination of criminal prosecution, regulatory enforcement, and civil litigation, traditional banking methods are no longer open to terrorist dollars.

5 See e.g., Leader of Organized Retail Theft Ring Convicted, U.S. Dep’t of Justice (April 6, 2004) available at http://web.archive.org/web/20051106025523/http://www.usdoj.gov/usao/txn/PressRel04/ghali_convict_pr.html. 6 See e.g., Id.
7 See e.g., United States v. Amawi, Superseding Indictment (Feb. 27, 2007) available at http://www.investigativeproject.org/case/105.
8 Hawala is an underground “ancient banking system originating, and still used widely in the Middle East and Southeast Asia” See Hawala and Underground Terrorist Financing Mechanisms: Hearing Before the S. Subcomm. On Int’l Trade and Fin, 107th Cong. 45-49 (2001) (statement of Patrick Jost, SRA International). See also Terrorist Financing Typologies Report, Financial Action Task Force, at 21 (Feb. 29, 2008) available at http://www.fatf-gafi.org/dataoecd/28/43/40285899.pdf (explaining that terrorists exploit hawala and other alternative remittance systems in order to move money). 2

However, as I will discuss, there are still significant gaps that must be improved upon to truly make the formal financial sector off limits to terrorist organizations.
A.
Regulating Formal Financial Institutions
Five years ago, Barry Sabin, then head of the Counterterrorism Section at the Department of Justice told the Senate Judiciary Committee that in order to ensure continued survival, “terrorists need to raise funds, open and use bank accounts, and transfer money.”9 Since that time, in concert with the Department of the Treasury, the Justice Department has implemented a comprehensive enforcement scheme. Although the government has not obtained a single conviction against financial institutions for terrorist financing, regulatory efforts have been both robust and effective.

At the forefront of the regulatory reforms were the amendments to the Bank Secrecy Act that accompanied the USA PATRIOT Act.10 The updated rules and regulations have increased exponentially the breadth and depth of financial intelligence available to law enforcement officials. Today, through Currency Transaction Reports (CTRs), Cross Border Currency and Monetary Instrument Reports (CMIRs), and Suspicious Activity Reports (SARs), investigators can effectively undertake both reactive and proactive terror finance investigations.11 Two recent examples of the applicability of these tools are the criminal prosecutions of Abdurahman Alamoudi and Pete Seda.

In 2004, Alamoudi, the former head of the American Muslim Council, pled guilty to illegal financial dealings with Libya to his involvement in a plot to assassinate then Crown Prince Abdullah of Saudi Arabia.12 The investigation, which was triggered in part by Alamoudi’s failure to file a CMIR, resulted in his receiving a 23-year prison sentence. Pleading guilty, Alamoudi admitted that he had provided hundreds of thousands of dollars to men who had been hired by the Libyan government to assassinate Crown Prince Abdullah.13

Earlier this month, a jury in Eugene, Oregon convicted Pete Seda, the former head of the U.S. branch of al Haramain Islamic Foundation of conspiring to move money out of the United States without declaring it, and with filing false tax returns to hide the fact that the money ever existed.14 According to evidence presented at his trial, Seda accepted a large donation intended to support “our Muslim brothers in Chychnia,” [sic] and then surreptitiously shifted the money to Saudi Arabia in the form of difficult to trace traveler’s checks. Seda’s co-conspirator, Soliman al-Buthe, a Specially Designated Global Terrorist, failed to file a CMIR on his way from New York to Saudi Arabia.15

9 A Review of the Material Support to Terrorism Prohibition: Hearing Before the S. Comm. on the Judiciary, 109th Cong. (April 20, 2005) (statement of Barry Sabin, Chief, Counterterrorism Section of the Criminal Division, Department of Justice).
10 United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272.
11 See generally Bank Secrecy Act Forms and Filing Requirements, Financial Crimes Enforcement Network, available at http://www.fincen.gov/forms/bsa_forms/.
12 United States v. Alamoudi, Plea Agreement (E.D.Va. 2004) available at http://www.investigativeproject.org/documents/case_docs/167.pdf.
13 United States v. Alamoudi, Statement of Facts (E.D.Va 2004) available at http://www.investigativeproject.org/documents/case_docs/220.pdf.
14 Defendant Convicted of Lying About Funds Bound for Religious Extremist Militants, Department of Justice (Sept. 10, 2010) available at http://portland.fbi.gov/dojpressrel/pressrel10/pd091010.htm
15 Id. 3

While the cases against Seda and Alamoudi are representative of the effectiveness of these expanded reporting and recordkeeping requirements, they are not exhaustive. Rather, they are in addition to presumably countless investigations that were triggered by the filings of CTRs and SARs.

The result of these extensive reporting requirements has been a more secure financial system. Recognizing the central role bankers play in inhibiting terrorist financing, and the difficulty associated with monitoring individual transactions to determine the final destination of otherwise innocuous funds, financial institutions have implemented these more rigid oversight systems.16
Despite these successes, more can and should be done to increase cooperation between law enforcement and the private sector. Although the idea has been proposed in the past, I would urge the Committee to consider working to increase information sharing with banks by granting bankers access to classified records. The inherent risks in such a proposal are obvious, but through careful monitoring I believe such a move would increase the effectiveness of terror finance investigations.

B. Holding Banks Liable for Terrorist Financing.
While the Executive branch has cracked down on terror finance through increased regulatory enforcement, there have been parallel efforts undertaken in federal courts by American citizens injured in foreign terrorist attacks.17 Relying on the Anti Terrorism Act of 1990 (ATA), these plaintiffs have looked to courts to hold accountable those individuals and entities that make acts of international terrorism possible.18 Although these lawsuits remain in their infancy—at least in the legal sense that in most cases they have not progressed past discovery—the future effectiveness of similar suits is at risk due to judicial interpretations of statutory provisions.
The plain language of the “material support” statute proscribes the provision of “financial services” to FTOs.19 While intuitively, this may be a clear and unambiguous term, it has been the subject of much debate at district courts litigating the ATA claims of victims of terrorism. In a string of lawsuits filed in New York and the District of Columbia, courts were tasked with interpreting the scope of “financial services” as applied to financial institutions.20 In each case, the institutions responded to charges that they acted as bankers to terrorist groups by contending that they were simply providing “routine banking services,” conduct that they argued was not covered by the

16.See, Joseph M. Myers, The Silent Struggle Against Terrorist Financing, 6 GEO. J. INT’L AFF. 33, 35 (2005) (“The financial services sector, which had previously opposed many of the PATRIOT Act provisions, was extraordinary cooperative and patient with the United States and other countries trying to unravel the financial trail left by the 9/11 hijackers”).
17 See e.g., In re Terrorist Attacks on September 11, 2001, 349 F. Supp. 2d 765, 780 (S.D.N.Y. 2005); Linde v. Arab Bank, 384 F. Supp. 2d 571 (E.D.N.Y. 2005); and Weiss v. National Westminster Bank PLC, 453 F. Supp. 2d 609 (E.D.N.Y. 2006). See also Jennifer A. Rosenfeld, The Antiterrorism Act of 1990: Bringing International Terrorists to Justice the American Way, 15 Suffolk Transnational Law Journal 726 (Spring 1992) (discussing attempts by American citizens to file private lawsuits against terrorist groups, and the effect that the Anti-Terrorism Act of 1990 had on those efforts).
18 The Anti Terrorism Act of 1990, 18 U.S.C. § 2333 (2002).
19 18 U.S.C. 2339A(b)(1).
20 See e.g., In re Terrorist Attacks, 349 F. Supp. 2d 765; Linde, 384 F. Supp. 2d 571; and Weiss, 453 F. Supp. 2d 609. 4 statute.21

And while most courts have properly rejected this argument as purely semantics, this is an area where statutory authority can be easily amended for clarity.

In bringing their claims under the ATA, victims of terrorism alleged that a number of financial institutions should be held liable for providing “financial services” to foreign terrorist organizations in violation of the material support statutes. Arguably the most insidious of the allegations involving banks were those made in Linde v. Arab Bank, which claimed that the financial institution had conspired to finance terrorist groups by knowingly administering what amounted to a “death insurance plan” for the families of suicide bombers in Israel.22 On approximately October 16, 2000, the Saudi Committee in Support of the Intifada al Quds (Saudi Committee) was established as a private charity registered with the Kingdom of Saudi Arabia, whose purpose was to support the second Palestinian Intifada.

According to the complaint, in furtherance of this goal, Arab Bank in consultation with the Saudi Committee publicly announced plans to pay out 20,000 Saudi Riyals (the equivalent of about USD $5,316) to the families of terrorists killed or captured by the Israeli Defense Forces during the Intifada.

The maintenance of the “death insurance plan” was relatively straightforward. Following a terrorist attack, the Arab Bank and or the Saudi Committee would be provided the names and personal information of the individuals who were responsible. The financial institution, in consultation with the Saudi Committee and local representatives of Hamas and other terrorist groups, would then compile a finalized database of persons eligible for payments. The family of the terrorist could then present the bank with a death certificate and a transfer would be made to the family’s account. According to plaintiffs, the Saudi Committee paid death benefits to the families of at least 200 “martyrs” in the first year of its existence.

While it may be clear that running a “death insurance plan” is the type of activity that would inculpate a financial institution, what about more benign practices? In Terrorist Attacks on September 11, 2001, family members of victims of the September 11 attacks filed a class action lawsuit under the ATA claiming that over two hundred defendants directly or indirectly provided material support to Osama bin Laden and the al Qaida terrorists.23 Among the financial institutions sued were al Rajhi Bank, Saudi American Bank, Arab Bank, and Al Baraka Investment & Development Corporation. Although each bank was alleged to have provided specific services, the general claim was that all of the banking defendants had “provided essential support to the al Qaida organization and operations.”24 The court granted the defendant banks’ motions to dismiss, explaining that there is “no basis for a bank’s liability for injuries funded by money passing through it on routine banking business.”25 It is simply inexcusable to allow financial institutions that solicited and transferred funds to terrorist groups to continue operating on the grounds that their support was “routine.”

As the recent Supreme Court decision Holder v. Humanitarian Law Project concluded, the material support law was meant to cast a wide net over the types of support and services that keep terrorist organizations functioning. While it seems clear that Congress did not intend to incorporate an

21 See e.g., Weiss, 453 F. Supp.2d at 624 (defining “routine banking services” as “opening and maintaining bank accounts, collecting funds, transmitting funds, and providing merchant account credit card services”).
22 Linde v. Arab Bank, 384 F. Supp. 2d 571 (E.D.N.Y. 2005).
23 In re Terrorist Attacks, 349 F. Supp. 2d at 780.
24 Id. at 831.
25 Id. at 833. 5

exception for the provision of “routine” services to terrorist groups, these cases reveal a potential weakness in future enforcement of the statute. Efforts to amend the statute and explicitly reject this attempt to narrow the interpretation of “financial services,” should be taken up immediately. To paraphrase one court interpreting the statute, there is nothing routine about the provision of financial services to a terrorist group.26

II.
TRADITIONAL TERRORIST FINANCING METHODS
Despite the United States’ successes at limiting the access of the formal financial sector to terrorist groups, terror financing has not completely abated. FTOs continue to utilize long-established schemes to finance their existence and operations, including abuse of the charitable sector and informal value transfer systems such as hawala.

A. Abuse of the Charitable Sector
Perhaps one of the most common methods by which terrorist groups have and continue to raise and move money is through the abuse of the charitable sector. And while the case of the Holy Land Foundation is certainly the most public example of a charity being hijacked to finance terrorist operations, “charities” continue to funnel money to Hamas, al-Shabaab, and others under the guise of “humanitarian assistance.”

1. Hamas has and continues to raise funds under the guise of “humanitarian efforts”
By now, the illegal activities of the Holy Land Foundation for Relief and Development (HLF) have been well documented. In 2004, HLF was charged with serving as the U.S. fundraising arm for Hamas. The Richardson, Texas-based charity funneled over $12 million to Hamas under the guise of “humanitarian relief efforts.”

Four years later, a federal jury convicted five former officials for providing financial assistance that was used to build Hamas-run schools, to recruit suicide bombers, and to compensate the families of “martyrs.”

U.S. District Judge Jorge Solis sentenced former HLF Chief Executive Officer Shukri Abu Baker and co-founder Ghassan Elashi to 65 years in prison. Longtime HLF chairman, Mohamed el-Mezain, who was convicted on one count of conspiring to provide material support to terrorists, received the maximum 15-year sentence. Explaining the sentence, Judge Solis said “the purpose of creating the Holy Land Foundation was as a fundraising arm for Hamas.”

With HLF shut down and the curtain pulled back on Hamas’ abuse of the charitable sector, this FTO has had to look to other “charities” to finance its vicious crackdown on the Palestinian territories. Taking the lead has been Viva Palestina (VP).

VP, a British-based “charity” with an American branch, was established in January 2009, with the expressed purpose of providing “humanitarian assistance” to the Palestinian people. But despite this laudatory mission statement, the organization has openly used its resources to prop up the terrorist organization’s government in the Gaza Strip. During a March 2009 Hamas rally in Gaza City

26 See, Linde, 384 F. Supp. 2d 571.
6

attended by leaders from Hamas and VP, George Galloway, the head of VP handed a bag full of cash to Hamas Prime Minister Ismail Haniyeh and announced:

“We are giving you now 100 vehicles and all of the contents, and we make no apology for what I am about to say: We are giving them to the elected government of Palestine [Hamas]. Just in case the British government or the European Union want to face me in any court, let me tell them live on television: I personally am about to break the sanctions on the elected government of Palestine. Many of my friends have to give their cash to charities. By Allah, we carried a lot of cash here. You thought we were all fat. We are not fat. This is money that we have around our waists. And we have to give this... Some of my friends have to give this money to charities, and they will do this in private later this evening, because they need receipts and it's not practical to do it here.”

“But I, now, here, on behalf of myself, my sister Yvonne Ridley, and the two Respect councilors – Muhammad Ishtiaq and Naim Khan – are giving three cars and £25,000 in cash to Prime Minister Ismail Haniyeh. Here is the money. This is not charity. This is politics.”27

While primarily operating out of the United Kingdom, VP conducts fundraising efforts in the United States where the organization benefits from neither corporate nor charitable status. In order to ensure these funds—which will inevitably make their way into the hands of Hamas—remain tax deductible, VP has partnered with the Interreligious Foundation for Community Organizations/Pastors for Peace (IFCO), a recognized 501(c)(3) organization. Explaining this arrangement, Galloway said:

“You can do it online, we will not be crossing into Gaza until the 13th. Any penny you can send between now and then, which incidentally is not coming to us but to the respected Christian organization, Pastors for Peace, who are our sponsors, no breaking of the law here, all US laws have been observed here, and complied with here.”28

Over the past two years, VP has continued to flout U.S. terror-financing laws, raising over $200,000 for “humanitarian efforts” at events in Dallas, Texas;29 Houston, Texas;30 Orlando, Florida;31 Brooklyn, New York;32 Washington D.C.;33 Boston, Massachusetts;34 and Overland Park, Kansas;35
27 British MP George Galloway Defies International Sanctions Against Hamas and Compares Tony Blair to Caligula’s Horse, al-Jazeera TV (Qatar) (March 8-9, 2009) available at http://www.memritv.org/clip/en/2060.htm (emphasis added).
28 Viva Palestina: A Lifeline from the United States to Gaza, Fundraiser at American University (Washington, D.C., June 28, 2009).
29 See Gaza Solidarity Day Event in Dallas, Texas, YouTube (June 15, 2009) available at http://www.youtube.com/watch?v=YY3Vo7g29p4.
30 See George Galloway Speech in Houston, YouTube (June 16, 2009) available at http://www.youtube.com/watch?v=mMILGEoVQaQ (In this video, Mahdi Bray, Executive Director of Muslim American Society-Freedom Foundation, suggests that donors route money through MAS).
31 See Busted: Orlando Mosque Finances Hamas Fundraiser, YouTube (June 14, 2010) available at http://www.youtube.com/watch?v=f-HIQQMUrLc.
32 See Join George Galloway in Brooklyn in an Evening for Gaza, Al-Awda NY ((Jan. 31, 2010) available at http://www.al-awdany.org/newsite/index.php?option=com_content&view=article&id=81:the-siege-continues-the-struggle-goes-on-the-honorable-george-galloway&catid=1:events&Itemid=2.
33 See George Galloway Champions a Free Palestine, YouTube (June 28, 2009) available at http://www.youtube.com/watch?v=93DEUvpSchM.among others. And while the American branch of VP denies that it provides financial support to Hamas, there is overwhelming evidence that the organization has donated funds raised on American soil to a non-governmental organization tied to a designated Hamas support entity.
VP-USA has said that the donations from its July 2009 convoy to Gaza were were “given to a non-governmental consortium in Gaza called Expertise in Consulting and Development (CODE), which was, in turn, responsible for distributing the aid in a manner consistent with our goals, as well as with the community’s needs.”36 CODE, however, has received significant funding from the Union of Good, an organization headed by Qatar-based Muslim Brotherhood spiritual advisor, Yusuf al-Qaradawi, and designated in 2008 by the Treasury Department as an organization created by Hamas to “transfer funds to the terrorist organization.” As the Treasury announcement noted:

“in addition to providing cover for Hamas financial transfers, some of the funds transferred by the Union of Good have compensated Hamas terrorists by providing payments to the families of suicide bombers.”37

The third “convoy” undertaken by VP arrived in Gaza in January of this year and raised funds at events in both the United States and the United Kingdom. In Britain, VP officially partnered with the Palestine Solidarity Campaign (PSC) whose stated mission includes campaigning for “the right of return of the Palestinian people,” and opposing “racism, including anti-Jewish prejudice and the apartheid and Zionist nature of the Israeli state.”38 PSC has also rebutted the “myth” that “Hamas is an illegal terrorist organization bent on Israel’s destruction,” claiming instead that “Hamas is a nationalist, Islamist organization consisting of political party, with a military wing, which for years was largely responsible for running hospitals and schools in Gaza, in a situation of military occupation.”39

Another major partner of VP during its third convoy was Foundation for Human Rights and Freedoms and Humanitarian Relief (IHH), the Turkish organization behind the deadly May flotilla raid in the Mediterranean Sea. While the raid remains under investigation by the United Nations, Israeli intelligence officials have confirmed that IHH planned the violent encounter with the Israeli Defense Forces prior to embarking on the flotilla, and that seven out of the nine men killed expressed their desires to die as martyrs.40 The U.S. government has already recognized IHH’s ties to Hamas, with the State Department reportedly debating designating the organization as a Specially

34 See Protesting George Galloway in Boston, YouTube (Feb. 1, 2010) available at http://www.youtube.com/watch?v=FJeI_yJyRDk&feature=related.
35 See 103,000 pledged to Palestinian relief; largest event of its type in Kansas or Missouri, Citizens for Justice in the Middle East (July 5, 2009) available at http://www.cjme.org/newsrelease-viva-palestina-benefit3.htm.
36 Viva Palestina Addresses Concerns, Viva Palestina-USA (Oct. 31, 2009) available at http://www.investigativeproject.org/documents/misc/389.pdf.
37 Treasury Designates Union of Good, United States Department of the Treasury (Nov. 12, 2008) available at http://treas.gov/press/releases/hp1267.htm.
38 PSC Aims, Palestine Solidarity Campaign, available at 38 PSC Aims, Palestine Solidarity Campaign, available at http://www.palestinecampaign.org/Index5b.asp?m_id=1&l1_id=2&l2_id=10.
39 The Truth About Gaza, Palestine Solidarity Campaign, available at 39 The Truth About Gaza, Palestine Solidarity Campaign, available at http://www.palestinecampaign.org/files/FAQ%20Gaza%20sheet%20final.pdf.
40 See Video Statements from Mavi Marmara Crew Members about Preparations Made by IHH Operatives for the Violent Confrontation with IDF Soldiers,” Intelligence and Terrorism Information Center (June 9, 2010) available at http://www.terrorism-info.org.il/malam_multimedia/English/eng_n/html/hamas_e112.htm. 8

Designated Global Terrorist.41 VP is currently en route to Gaza for its fifth land convoy, and has once again partnered with IHH. Despite compelling evidence that VP and its American partners are raising and providing money to Hamas, a designated FTO, the organization continues to operate largely unimpeded in the United States. And while the risks posed by VP’s continuing operation are grave, as recent investigations demonstrate, Hamas does not maintain a monopoly on the abuse of the charitable sector for the financing of terrorism.

2. Abuse of the charitable sector is not limited to Hamas
American authorities have uncovered an extensive support network in the United States for Somali-based al Qaida affiliate, al-Shabaab.

In August of 2010, federal prosecutors released an indictment charging 14 people with providing money, services, and personnel to al-Shabaab.42 While the case is ongoing, court records provide incredible insight into the lengths to which al-Shabaab’s supporters have gone to funnel money to the terrorist group in Somalia.

Two of those indicted—Amina Farah Ali and Hawo Mohamed Hassan—of Rochester, Minnesota, stand accused of raising funds for the group while claiming it was for humanitarian purposes. According to public records, Ali and Hassan lied to both local media and law enforcement officials about the ultimate destination of the finances they were raising. In July 2009, they told FBI agents that they were only interested in providing “suffering people” in Somalia with food, clothing, and shelter.43 Similarly, prior to her arrest, Ali told Minneapolis Public Radio that she sent money and “mails shipments of donated clothing to penniless refugees who are scrambling to escape the violence of her homeland.” Declaring it was “my duty to help out the Somali poor people who left everything behind,” Ali said she would never support any group that would carry out violent attacks in Somalia or the United States.

The indictment unsealed against the women paints a very different picture. It alleges that the pair raised money for al-Shabaab through door-to-door solicitation in Rochester, Minneapolis, and elsewhere in the United States and Canada. It states that on October 26, 2008, Ali hosted an al-Shabaab fundraising teleconference in which a co-conspirator “told the listeners that it was not time to help the poor and needy in Somalia; rather, the priority was to give to the mujahidin [holy warriors].”44

Ali was involved in collecting funds from people who pledged money in the Minneapolis-St. Paul area. In January 2009, she allegedly directed an unindicted co-conspirator to “always collect in the name of the poor” so the funds could go to the mujahidin. On other occasions, she directed colleagues to send the funds in order to conceal that the money was going to al-Shabaab.

41 Press Briefing, United States Dep’t of State (July 7, 2010) available at http://www.state.gov/r/pa/prs/dpb/2010/07/144116.htm.
42 Fourteen Charged with Providing Material Support to Somalia-based terrorist organization al-Shabaab, U.S. Dep’t of Justice (Aug. 5, 2010) available at http://www.investigativeproject.org/documents/case_docs/1360.pdf.
43 United States v. Ali, Indictment (D. Minn. Aug. 2010) available at http://www.investigativeproject.org/documents/case_docs/1355.pdf.
44 Minneapolis Somalis Played Key Role in al-Shabaab Investigation, IPT News (Aug. 6, 2010) available at http://www.investigativeproject.org/2092/minneapolis-somalis-played-key-role-in-al-shabaab. 9

At the Investigative Project on Terrorism, we have been carefully following al-Shabaab fundraising activities in North America for some time. From interviews with community residents in Minneapolis, our organization learned that the recent indictments only confirmed what many local Somalis had long suspected: that al-Shabaab operatives have been raising money from them under the false pretense by “playing the victim card.”45

3. Refining efforts to protect the charitable sector
Each of these cases is demonstrative of the fact that terrorist groups continue to abuse the charitable sector by raising funds under the guise of “humanitarian efforts.” Recognizing these abuses, it is important to redouble efforts to ensure the sanctity of the charitable sector. While law enforcement officials have made tremendous strides in protecting the charitable sector from abuse, more can and must be done. Existing statutory authorities must be protected from attempts to weaken their effectiveness, and officials should expand enforcement of existing laws.
Critics of American efforts at countering terrorist financing frequently argue that some terrorist groups maintain both charitable and militant wings, and that while support to the militant wing should be proscribed, it should be legal to provide “humanitarian assistance.” While these critics have had limited success in convincing federal courts of these efforts, they were dealt a major blow in Holder v. Humanitarian Law Project. Prior to the ruling, critics of the material support law had argued that:

“Allowing charities to provide humanitarian aid to individuals trapped in conflict zones in the Middle East and Central Asia, for example, would go a long way towards countering negative perceptions of America….Requiring a showing of specific intent to support illegal act prevents squandering limited prosecutorial resources on pro-peace charities such as the Humanitarian Law Project.”46

This argument was roundly rejected by the majority of the Court, with Justice Antonin Scalia explaining: "The theory of the legislation is that when you aid any of their enterprises, you’re aiding the organization. Hamas, for example, gained support among—among the Palestinians by activities that are perfectly lawful, perhaps running hospitals, all sorts of things.”47
Having failed to convince the Supreme Court that the law itself was unconstitutional, challengers have promised to seek legislative amendments that would allow for humanitarian aid. Such efforts would have the effect of dramatically undermining efforts at keeping money out of the hands of terrorists, and should be rejected if and when they arise. “Humanitarian assistance,” to the charitable, social service, and educational activities provided by FTOs can be just as dangerous as weapons.

45 See Id.
46 Sahar Aziz, Protecting Speech, Preserving Charity: Why the High Court Should Refine “Material Support” Provision, American Constitution Society (April 2, 2010) available at http://www.americanconstitutionsociety.org/node/15739.
47 Holder v. Humanitarian Law Project, Oral Arguments, at 17 (U.S., Feb. 23, 2010) available at http://www.supremecourt.gov/oral_arguments/argument_transcripts/08-1498.pdf. 10

In addition to rejecting efforts to water down the material support statute, steps should be taken to expand current enforcement of terror-finance laws as they apply to charitable institutions.

The IRS must expand its review and verification of information provided in applications for charitable status; increase the frequency of audits of charitable filings; and impose stiffer sanctions for noncompliance. To assist in these efforts, more manpower should be allocated, with an effort made to draw upon the skills of criminal investigators.

Finally, with regards to Viva Palestina, efforts must be made to investigate the organization and its U.S. branch partners. Representative Brad Sherman (D-CA) urged the Justice Department, the IRS, and the Secretary of State to investigate whether Viva Palestina is raising money for Hamas in December, 2009. Similarly, in January of 2010, in a letter sent to the Treasury Secretary, Timothy Geithner, Representative Sue Myrick (R-NC) stated that the Treasury Department should designate VP under Executive Order 13224 for its support of Hamas. These efforts should be supported to ensure that money doesn’t continue flowing to Hamas under the guise of humanitarian assistance.

B. Continuing Failure to Regulate Hawalas
Another tried and true method of moving terrorist finances has been underground banking. Since terrorist organizations can no longer safely use the international banking system, terrorist financiers have turned to these underground banking systems, specifically hawala. Although one obvious benefit of hawala for terrorist financiers is that it operates outside the bounds of the traditional financial system, there are many other reasons why hawala may be preferred to ordinary banks. They are reliable, efficient, anonymous, and available 24 hours a day, seven days a week.

The true extent of terrorist use of these systems is unknown, a result of both the criminal nature of the activity and the lack of systematic data collection and analysis.48 Estimates regarding the annual flow of transactions through informal banking systems range from “tens of billions” to $200 billion.49

Groups like al Qaida have systematically used hawala because, unlike formal financial institutions, they neither were traditionally subject to potential government oversight nor did they keep detailed records.50 Evidence shows “the hawala network has been used to funnel money to terrorist groups in the disputed Kashmir valley . . . [and] as a conduit for funding the 1998 bombings of U.S. embassies in Kenya and Tanzania.”51 Even more recently, reports have now surfaced that the failed Times Square bombing was financed, at least in part, through hawala transactions.

48 See U.S. GEN. ACCOUNTING OFFICE, TERRORIST FINANCING: U.S. AGENCIES SHOULD SYSTEMATICALLY ASSESS TERRORIST’ USE OF ALTERNATIVE FINANCING MECHANISMS, at 3 (2003) available at http://www.gao.gov/new.items/d04163.pdf (“[The FBI] do[es] not systematically collect and analyze data on alternative financing mechanisms.”).
49 Id. at 24.
50 See JOHN ROTH, DOUGLAS GREENBURG & SERANA WILLE, NAT’L COMM’N ON TERRORIST ATTACKS UPON THE U.S., MONOGRAPH ON TERRORIST FINANCING, at 25 available at http://www.9-11commission.gov/staff_statements/911_TerrFin_Monograph.pdf.
51 Alan Lambert, Underground Banking and Financing of Terrorism, 15 FLA. J. INT’L L. 3, 12 (2002) (emphasis added). 11

Immediately following the failed bombing in Manhattan, investigators began unraveling the money trail to identify co-conspirators in the attack planned and financed by Tehrik-e-Taliban Pakistan (the Pakistani Taliban). As part of that investigation, questioning of Faisal Shahzad hinted that the plot had been funded through hawala. On September 15, prosecutors announced they had arrested and charged Mohammad Younis with helping finance the attack by serving as a hawaladar.52 Prosecutors say Younis had engaged in unlicensed hawala transactions with Shahzad. Younis has been charged with the operation of an unlicensed money transfer business between the United States and Pakistan.

As the investigation into the failed Times Square bombing shows, the use of hawala remains a viable method for movement of terrorist finances. And while expanded application of Bank Secrecy Act reporting and recordkeeping requirements to hawala was a strong first step, the statute must be more aggressively enforced. Younis’ prosecution is a reminder of the importance of financial investigations as part of a broader counterterrorism policy. Every terrorism investigation should include a concomitant terror-finance component.

III. POTENTIAL FOR ABUSE OF DEVELOPING TECHNOLOGIES
As I’ve explained, the United States has undertaken extensive efforts aimed at curbing the abuse of the formal and “traditional” informal financial networks. And yet, one need only open a newspaper to see that groups such as al Qaida, Hizballah, Hamas, and their ilk still retain the ability to effectively plan, finance, and carry out attacks. This is due, at least in part, to the fact that rather than simply rest on their laurels, terrorist groups have shown an incredible ability to adapt changing technologies to their needs and stay one step ahead of our regulatory and law enforcement officers. The creation of Stored Value Cards (SVCs) and the expansion of the Internet are just two of the problems that those tasked with countering terrorist financing will face over the next decade.

As a word of caution, in this area, we are largely talking about suspected vulnerability, rather than demonstrated vulnerabilities. But, as the title of today’s hearing suggests, we must review the evolving nature of the threat.

A. Stored Value Cards
Historically, if a terrorist group wanted to move large sums of money from one location to another, they would need to rely upon the methods we have already discussed or resort to techniques like bulk cash smuggling. Increased recordkeeping and reporting requirements have made those all risky ventures. Technology, however, has now made bulk cash smuggling easier in the form of stored value cards (SVCs).

As the Treasury Department has explained, SVCs are “smart cards with electronic value….The technology eliminates coin, currency, scrip, vouchers, money orders, and other labor-intensive payment mechanisms.”53 Similar to gift cards, SVCs can be obtained in a variety of locations, often

52 Manhattan U.S. Attorney Charges Long Island Man with Engaging in Hawala Activity that Funded Attempted Times Square Bombing, United States Attorney for the Southern District of New York (Sept. 15, 2010) available at http://www.investigativeproject.org/documents/case_docs/1375.pdf.
53 See Stored Value Cards, United States Department of the Treasury, available at http://www.fms.treas.gov/storedvalue/. 12

without verification of identities, making them ideal as conduits for the global movement of funds. The implications of this development in terms of terror financing and our government's ability to combat it are simply daunting. This threat is exacerbated by the fact that while the Treasury Department is currently reviewing these new products, SVCs are not currently considered “monetary instruments” for reporting and recordkeeping purposes.

Under the current anti-money laundering and counter-terrorist financing regime, individuals must file Currency and Monetary Instrument Reports (CMIRs), whenever transporting, mailing, or shipping over $10,000 in “monetary instruments.”54 Covered instruments include: (i) coin or currency of the United States or of any other country, (ii) traveler’s checks in any form, (iii) negotiable instruments including checks, promissory notes, and money orders) in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery; (iv) incomplete instruments (including checks, promissory notes, and money orders) that are signed but on which the name of the payee has been omitted, and (v) securities or stock in bearer form or otherwise in such form that title thereto passes upon delivery.55

SVCs are not covered under this regime, and as demonstrated by a recent case, that could be a glaring blind spot in preventing terrorists from moving money across international borders. In September 2010, a federal court in Eugene, Oregon found Pete Seda, the founder of al Haramain Islamic Foundation, guilty of conspiring to move money out of the United States without declaring it, and with filing false tax returns to hide the fact that the money ever existed.

According to federal officials, Seda accepted a large donation intended to support “our Muslim brothers in Chychnia,” [sic] and then surreptitiously shifted the money to Saudi Arabia in the form of difficult to trace traveler’s checks. Seda’s co-conspirator, Soliman al-Buthe, a Specially Designated Global Terrorist, took the funds in the form of traveler’s checks and traveled from JFK International Airport in New York City to Riyadh, Saudi Arabia, failing to declare the money before leaving. Because traveler’s checks were covered by the statute and considered reportable “monetary instruments,” al-Buthe committed a federal crime the moment he failed to report the money. Had he been traveling with $150,000 in SVCs rather than traveler’s checks, he would not have been criminally liable.

The exclusion of SVCs as reportable “monetary instruments” is the result of financial instruments developing faster than financial regulations. And while to date there hasn’t been a reported case of terrorist groups utilizing these instruments, the Treasury Department should act fast to plug this gap before terrorist financiers take advantage of it.

B. The Virtualization of Terrorist Financing
More worrisome than the occasional new financial instrument or method of transferring money, the Internet has the potential to revolutionize the process of terrorist financing. It has already been utilized to expand nearly every facet of FTO operations, from the spread of propaganda, to the planning and preparation of attacks; and as law enforcement continues to identify existing methods of financing, terrorist groups will likely adapt by exploiting many of the attributes for which the

54 See FinCEN form 105, available at http://www.fincen.gov/forms/files/fin105_cmir.pdf.
55 See FinCEN form 105, available at http://www.fincen.gov/forms/files/fin105_cmir.pdf.
13

Internet has become so popular—its ease of access, fast flow of information, anonymity of communications, and dearth of regulations. Of particular concern, should be virtual worlds, which have the capacity to serve as the hawala of the 21st century. They provide many of the same characteristics as the existing IVTS networks: they are fast, inexpensive, reliable, convenient, and—most notably—discreet. Moreover, financiers no longer need to leave the comfort of their own homes to successfully transfer large sums of money to those looking to carry out horrific attacks. The development of virtual economies, along with the dearth of regulation, makes virtual worlds the new frontier in IVTS.

The ability to conduct real-time, in-world transactions in virtual currency that can then be exchanged for U.S. Dollars or other regional currencies has made virtual worlds widely popular. Virtual worlds allow users to transfer real funds in a variety of ways, including credit cards, traditional bank accounts, pre-paid debit cards, and PayPal accounts. Despite the obvious benefits of an expanding virtual economy, officials must acknowledge that this economy is no different than the real-world economy when it comes to financial crime. Virtual worlds are especially susceptible to manipulation by terrorist financiers because they escape regulation and observation by law enforcement.

The primary concern is paltry customer identification rules associated with virtual worlds. In traditional banking, customer identification procedures are implemented both during account origination and in subsequent transactions.56 However, the nature of virtual worlds limits the ability to accurately identify customers at each of these stages, rendering all customers more vulnerable to financial crimes.

Virtual worlds are also limited in their ability to monitor individual financial transactions. Residents can buy, sell, and exchange currency in nearly unlimited amounts without any questions asked. Moreover, once a resident seeks to move funds from the virtual world and back into the real world, there are limits on the ability to properly identify the recipient of those funds.

Although a number of companies running virtual worlds have taken action to regulate their websites, it has largely been on an ad-hoc basis. Consequently, existing regulations must be updated to curb the future potential for abuse as new sites develop. Bringing virtual worlds under the umbrella of institutions covered by the Bank Secrecy Act would be the most effective. Consequently, I would recommend the following:

 Declare Virtual Worlds with economies to be “money services businesses,” and require registration with the Treasury Department. The present interpretation of MSB includes “any person doing business, whether or not on a regular basis or as an organized business, which engaged in the transfer of funds.”57
 Implement know-your-customer procedures within virtual worlds as required of other MSBs under the

56 FED. FIN. INST. EXAMINATION COUNCIL, AUTHENTICATION IN AN INTERNET BANKING ENVIRONMENT 4 (Oct. 12, 2005), available at http://www.ffiec.gov/ffiecinfobase/resources/info_sec/2006/occ-bul_2005-35.pdf (“[C]ustomer identity verification during account origination . . . is important to reducing the risk of identity theft, fraudulent account applications, and unenforceable account agreements or transactions”).
57 31 C.F.R. § 103.11(uu)(5) (2008) (defining “Money Transmitters”). 14 58

Such compliance programs are required of brick-and-mortar financial institutions and, while admittedly more complicated, expanding them to virtual worlds will reduce criminal abuse of these systems. Like their brick-and-mortar counterparts, virtual worlds must ensure that every avatar with virtual currency can be linked back to a verifiable name, address, and rea
These customer identification and verification procedures, while potentially costly and time-consuming, are a necessary expense for virtual worlds looking to profit from the spread of their economies. Although this is a developing area of regulation, traditional banks implemented similar programs when shifting to online banking.59 Once existing BSA regulations are expanded to cover virtual worlds, law enforcement and intelligence officials can begin cracking down on one of the last remaining methods.

IV. We have come a long way since September 24, 2001, when President George W. Bush launched the first crackdown of terrorist finances in the form of Executive Order 13224.60 Former President Bush laid out the mission ahead in very stark terms: “you are with us or you are with the terrorists. And if you are with the terrorists, you will face the consequences.”61 True to that mission, American efforts to disrupt terrorist financing schemes have put organizations such as al Qaida in dire financial straits. These successes, however, have been tempered by continuing blind-spots in the enforcement of existing regulations.

 Increase cooperation between law enforcement unlimited access to classified records .
 Refine the term “financial services” in 18 U.S.C. § 2339A(b)(1) to include “routine
58 See U.S. DEP’T OF THE TREASURY, FINANCIAL CRIMES ENFORCEMENT NETWORK, MONEY SERVICES BUSINESSES REGISTRATION FACT SHEET n. 1, available at http://www.msb.gov/pdf/FinCENfactsheet.pdf (last visited Jan. 25, 2009). 59

FED. FIN. INST. EXAMINATION COUNCIL, AUTHENTICATION IN AN INTERNET BANKING ENVIRONMENT (Oct. 12, 2005), www.ffiec.gov/pdf/authentication_guidance.pdf (discussing the rise in online banking and the application of the BSA requirements to such new technology).
60 President George W. Bush, President Freezes Terrorists’ Assets: Remarks by the President, Secretary of the Treasury O’Neill, and Secretary of State Powell on Executive Order 13224, The Rose Garden, The White House (Sept. 24, 2001).
61 Exec. Order No. 13,224, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, (2001). See also President George W. Bush, President Announces Crackdown on Terrorist Financial Network, Remarks by the President in Announcement on Financial Aspects of Terrorism Financial Crimes Enforcement Network, Vienna, VA (Nov. 7, 2001) 15 16

 Recognize that there is no distinction between the political and militant “wings” of terrorist group, and resist any efforts—in the form of a “humanitarian exception”—to water down the “material support” statute.
 Ensure the sanctity of the charitable sector by expanding audit proceedings to ensure that terrorist groups do not hijack charities.
 Investigate Viva Palestina and its American partners for their role in funneling money to Hamas in violation of federal law.
 Expand enforcement of 18 U.S.C. § 1960, and ensure that any and all individuals operating as hawaladars be registered.
 Insure that technology doesn’t make it easier for terrorists to move money by finding Stored Value Cards (SVCs) to be “monetary instruments” subject to reporting and recordkeeping requirements.
 Stay one step ahead of terrorist financiers by declaring virtual worlds with real world economies to be “money services businesses” for purposes of Bank Secrecy Act regulations.
Many of the recommendations proposed today will be neither easy nor popular. But that doesn’t mean they cannot assist in combating terror financing. Admittedly, we will never get this 100% right. Anybody that comes to this Committee and says that there is a fool-proof counter-terrorist financing program in place is simply being disingenuous. But despite the successes that have been registered in starving terrorists of money, more can and needs to be done.
Chairman Moore, Ranking Member Biggert, thank you very much for inviting me to testify before you today, and I look forward to your questions about this critical issue.

Workers in Iowa thank Obama

http://www.kcrg.com/news/local/Principal-To-Cut-Jobs-End-Medical-Insurance-Business-104081139.html

DES MOINES, Iowa - Principal Financial Group said Thursday that it plans to exit the medical insurance business, resulting in some job cuts.

Company officials said that as the company makes the change positions will be eliminated. There are around 1,500 employees in the company's medical insurance area. Officials said they hope to move some employees into open positions and cut other positions through attrition.

Immediate cuts of around 150 jobs are expected as some functions are cease more quickly, officials said.

Impacted employees will be considered for other positions and will be given severance and outplacement assistance if they are unable to find a position within the company.

Obama College Tour: Hay, College Kids here is what Obama is not saying on his College Tour

Starting in 2014, most Americans will be required to buy health insurance or pay a penalty. The penalty will be phased in, starting at $95 or 1 percent of income in 2014, whichever is higher, and rising to $695 or 2.5 percent of income in 2016. But families would not pay more than $2,085.

American Indians don’t have to buy insurance. Those with religious objections or a financial hardship can also avoid the requirement. And if you would pay more than 8 percent of your income for the cheapest available plan, you will not be penalized for failing to buy coverage.

Those who are exempt, or under 30, can buy a policy that only pays for catastrophic medical costs. It must allow for three primary care visits a year as well.

Premiums for individual policies will be 10 to 13 percent higher by 2016 than the average premium that year under current law, according to Congressional estimates. But most people would qualify for subsidies, meaning they might pay less than they do now. http://www.nytimes.com/interactive/2010/03/21/us/health-care-reform.html

Health overhaul centerpiece endures growing pains
By RICARDO ALONSO-ZALDIVAR (AP) http://www.google.com/hostednews/ap/article/ALeqM5hEgRtk0mHPYZXphVrzr8Cf41vUZAD9IKC9U82?docId=D9IKC9U82
Premiums may be out of reach. In many states, people in their 40s and 50s face monthly premiums ranging from $400 to $600 and higher. "I think there's some sticker shock going on," said Sabrina Corlette, a Georgetown University research professor. "People who may be eligible are finding out that even if they can get the insurance, the price is too high." Pennsylvania, which set a premium of $283 for all ages, has had no problem getting applicants.

_A barrier may include requirements that people be uninsured for at least six months and that people provide documentation that they've been turned down by an insurer. "There are many people who don't meet the criteria for the federal pool, particularly the six months without coverage," said Goldman.

_In states where the federal government runs the program directly, the insurance plan doesn't provide coverage for prescription drugs until people have met a $2,500 annual deductible. "Applying this high ... deductible to the pharmacy benefit is a real barrier to consumer access to medications," Steven Browning, a Texas official, wrote HHS last week.

Insurer Cuts Health Plans as New Law Takes Hold
Published: Friday, 1 Oct 2010
By: Reed Abelson

The Principal Financial Group announced on Thursday that it planned to stop selling health insurance, another sign of upheaval emerging among insurers as the new federal health law starts to take effect.

The company, based in Iowa, provides coverage to about 840,000 people who receive their insurance through an employer.

Principal’s decision closely tracks moves by other insurers that have indicated in recent weeks that they plan to drop out of certain segments of the market, like the business of selling child-only policies. State regulators say some insurance companies are already threatening to leave particular markets because of the new law. And some regulators in states like Maine and Iowa have asked the Obama administration to give insurers more time to comply with some of the new rules.

“What you’re seeing is the beginning of some serious math and some posturing,” said Len Nichols, a health economist and policy expert at George Mason University. While some insurers, like Principal, are choosing to leave the business rather than make the necessary investments to stay, others may be simply trying to delay some of the new rules or overturn them, he said.

McDonald’s recently asked federal officials for an exemption to rules that would ban the kind of health plans many of its restaurant workers have, because the existing policies sharply limit coverage. The McDonald’s push was first reported by The Wall Street Journal on Wednesday night. A McDonald’s spokeswoman declined to comment on that report, and the company has denied any intention of dropping coverage for its employees.

So far, the administration has signaled at least some willingness to listen. In the case of McDonald’s, federal health officials told the insurer responsible for providing these plans that it would not be affected by new rules prohibiting annual limits on coverage. The new waiver will allow McDonald’s and other companies to continue offering such plans, which cap benefits, to their workers.


Medtronic CEO on OpportunitySanofi Close to Genzyme BidNew Financial Risk Council
The administration has already issued dozens of such waivers, as insurers and companies try to influence proposals for regulations to put the law in place. As far as giving insurers continued leeway to sell more restrictive coverage than the legislation intended, administration officials say they are trying to ensure that people do not lose their benefits before 2014, when the law is fully in effect.

“It’s the best some people can do right now, and we don’t want to disrupt it,” said Nancy-Ann DeParle, who heads the Office of Health Reform at the White House. She emphasized that the administration had been working closely with insurers and employers to deal with their concerns and objections to some of the rules. “I think we’re working together very constructively,” she said.

McDonald’s, which confirmed that its insurance carrier received a waiver from the government on annual limits, says it is negotiating with federal officials and others to determine how best to maintain employee coverage. Many of its restaurant workers are covered under plans that do not provide broad protections and limit individual insurance coverage to a few thousand dollars a year. Such plans are known as mini-med or limited benefit policies. Medical bills beyond those limits have to be paid out of pocket by employees.

The company and its franchises “are committed to finding a solution whereby we can continue to provide health care options,” said Danya Proud, McDonald’s spokeswoman.

At the Principal Financial Group, the company’s decision reflected its assessment of its ability to compete in the environment created by the new law. “Now scale really matters,” said Daniel J. Houston, a senior executive at Principal, which is headquartered in Des Moines. “We don’t have a significant concentration in any one market.”

Because Principal Financial is primarily in the business of asset management, it decided not to make the investments needed to remain competitive as a health insurer, Mr. Houston said. The company, which focused on plans sold to small businesses for their employees, does not participate in other markets, like selling policies to individuals or for people enrolled in Medicare or Medicaid.

Other aspects of the health care regulations are worrying some state insurance commissioners, who fear that insurers are going to stop selling policies in some areas of coverage. For example, in the case of child-only policies, the new rules require insurers to offer coverage to even those children who are seriously ill, leading some insurers to balk at the idea that they will be forced to cover too many sick children. Aetna, Cigna and WellPoint, among others, have said they will stop selling new policies in some states.

“Disruption in our marketplaces is a concern for insurance commissioners,” said Jane L. Cline, the president of the National Association of Insurance Commissioners, who is also a West Virginia regulator.

In the case of Principal Financial, UnitedHealth Group’s insurance plans have agreed to offer coverage to Principal’s customers. “They are clearly going to be a long-term player in this market,” Mr. Houston said.


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More insurers are likely to follow Principal’s lead, especially as they try to meet the new rules that require plans to spend at least 80 cents of every dollar they collect in premiums on the welfare of their customers. Many of the big insurers have been lobbying federal officials to forestall or drastically alter those rules.

“It’s just going to drive the little guys out,” said Robert Laszewski, a health policy consultant in Alexandria, Va. Smaller players like Principal in states like Iowa, Missouri and elsewhere will not be able to compete because they do not have the resources and economies of scale of players like UnitedHealth, which is among the nation’s largest health insurers.

Mr. Laszewski is worried that the ensuing concentration is likely to lead to higher prices because large players will no longer face the competition from the smaller plans. “It’s just the UnitedHealthcare full employment act,” he said.

This story originally appeared in the The New York Times

Rauf, the leader of the Ground Zero Mosque effort, filed a false federal tax form

IPT News
October 1, 2010

http://www.investigativeproject.org/2216/gzm-imam-filed-false-tax-form
Feisal Abdul Rauf, the leader of the Ground Zero Mosque effort, filed a false federal tax form when he created the Cordoba Initiative, claiming that group had no ties to any other organization although Rauf and his wife led another nonprofit that shared the same directors.

On June 14, 2004, IRS records show, the executive director of The Cordoba Initiative, the Rauf-led group that is pushing the effort to build the mosque and community center near the site of the 9/11 attacks, filed an application seeking nonprofit status for Cordoba. In that form, executive director John Bennett said that Cordoba was not "the outgrowth of (or successor to) another organization" and did not have "a special relationship with another organization by reason of interlocking directorates."

However, by June 2004, Rauf and his wife, Daisy Khan, had run what is now called the American Society for Muslim Advancement (ASMA) for seven years, federal and New York records show.

Incorporation papers for ASMA filed with the state of New York in 1997 list Rauf and Khan as the group's president and secretary, respectively. ASMA was granted church status by the IRS a year later after the group filed another form that listed Rauf as its leader. Khan is now ASMA's executive director, according to the group's website, and Rauf is listed as its founder.

ASMA and Cordoba each have interfaith outreach as part of their missions. ASMA is "dedicated to strengthening an authentic expression of Islam" through collaboration and by empowering women and young people. Cordoba serves as Rauf's outreach arm and engages in interfaith dialogue and related outreach programs.

The Cordoba tax document, known as a 1023 form, also was checked "no" in answer to another question: "Is the organization financially accountable to any other organization." But that assertion is contradicted by a 2009 financial statement found on ASMA's website that says "ASMA is acting as a fiscal agent and is developing Cordoba's ability to function independently."

The applications for non-profit status are signed under the penalty of perjury. But the IRS rarely pursues cases of false statements because it lacks the resources to do so, said Bruce Hopkins, a tax law expert and senior partner at the law firm Polsinelli Shughart.

Organizations seeking federal approval to operate as nonprofit groups free from the need to pay taxes must file the 1023 form. Along with answering questions about ties to other groups, the leaders of the prospective nonprofit must also outline their planned activities. Cordoba's leaders said they would spend about 60% of their money in 2004 and 2005 developing and running a series of "dialogues" that would "explore new approaches to peace in the Middle East" and be aimed at "improving relations between the United States and Muslim nations and strengthening democratic institutions within Middle Eastern nations."

The June 2004 form listed Rauf as Cordoba's director and board chairman, while Khan was named as a director. Bennett, a former mayor of Aspen, Colo., was named as executive director and a board member.

Cordoba officials reported in the 2004 form that they planned to bring in $1.1 million between 2004 and 2006 to pay for their various programs. However, Cordoba's tax filings for those years show it collected only $80,000 in that period.

The false 2004 IRS form is part of a pattern of questionable tax filings by Rauf and his two main organizations – ASMA and Cordoba. Other examples include:

ASMA's 1998 form seeking religious "church" status said the group was conducting services five times a day for between 450 and 500 people in a New York City apartment building that has no room for such services. That building at 201 W. 85th St., happens to be where Khan has a one-bedroom apartment. Khan's apartment address was given as ASMA's office on the form and was also listed on the original Cordoba articles of incorporation.

ASMA said in 1998 that it planned to build a mosque to hold up to 1,000 worshipers. So far, however, that has not been built, and ASMA's website includes no references to the group conducting religious services. Rauf has been the imam for a lower Manhattan mosque, Masjid al-Farah, since 1983, but that mosque has no affiliation with ASMA. Rauf now says he plans to raise $100 million for the Ground Zero Mosque.

Donations to Cordoba that were reported by two charitable foundations were not reported in Cordoba's tax filings, records show. Between 2006 and 2008, the Rye, N.Y.-based Deak Family Foundation reported that it gave Cordoba $98,000. Cordoba didn't report those donations in its tax filings. The William and Mary Greve Foundation of New York said it gave Cordoba $37,000 in 2007; that contribution was also not reported by Cordoba.

R. Leslie Deak, the director of the Deak Family Foundation, told IPT that his group's donations to Cordoba were given through ASMA. That's another sign of the financial connection between ASMA and Cordoba that is not reflected in Cordoba's 2004 IRS filing. Cordoba did not report any money from ASMA in its tax filings between 2005 and 2008.

Because it has church status, ASMA is not required to pay federal taxes or report where its money comes from or how it spends it. That includes the salaries paid to any of its officials or board members, such as Rauf or Khan.

There's no clear benefit to withholding information about ASMA on Cordoba's IRS application, Hopkins said. Still, "It makes the application easier" if the answer to those questions is no.

That's because "the IRS wouldn't have to investigate the affairs of the other entity" if the Cordoba disclosed its connection to ASMA, Hopkins said. If ASMA hadn't followed through on many of its 1998 promises, such a review would have been unwelcome.

"There's nothing wrong with having an affiliation or interlocking directorates. But, acknowledging those are out there could prompt scrutiny of their activities."

Rauf, Khan and Sharif el-Gamal, the developer who owns the land where the Ground Zero Mosque could be built, have said they will create another nonprofit group to coordinate the mosque's finances. If that group gets nonprofit status, it will not be required to disclose its contributors. If the group receives church status, it will not have to disclose even its donors.

Read more at: http://www.investigativeproject.org/2216/gzm-imam-filed-false-tax-form