Black Market Billions: How Organized Retail Crime Funds Global Terrorists (Gal Zentner's Library) (33 page)

Despite 200 people allegedly funding al Qaeda, they were not convicted because they didn’t fit into RICO’s definition of an “enterprise.” What’s more, the 200 people funded the attack by not using a banking system. This model of financing is being duplicated not only in the U.S. but also internationally, and terrorist organizations engaging in it are not being scrutinized.

The trial of the Hammoud brothers highlights another loophole in the RICO statute, which has to do with how individuals funding a terrorist organization are tried and convicted. Mohamad Hammoud, the Lebanese immigrant based in North Carolina, became involved with Hezbollah at age 15.
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After several years in the U.S., Hammoud recruited friends and family members to create his own cell of
Hezbollah sympathizers. This is when they got involved with cigarette smuggling as a way to generate income for the terrorist organization.

Hammoud also engaged in egregious fraud activities. He applied for a business loan of $1.6 million to build a BP gas station where the stolen cigarettes were to be sold. When the cell members were finally caught, authorities concluded that the cell purchased $7.5 million to $8 million worth of cigarettes for $1.5 million to $2.5 million in profits.
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What’s more, authorities found that Hammoud and his accomplices were also committing immigration fraud by marrying American women just to stay in the country. In some instances, members of the cell had wives and children back in Lebanon.

The men were convicted under the RICO statute but were tried as thieves, not terrorists. Mohamad Hamoud received 155 years in prison for providing material support to Hezbollah. But his brother, Chawki Hammoud, who had just as much involvement in the scheme, was sentenced to 51 months for his role. The other brother, Said Harb, was sentenced to 46 months.
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The estimated cost to the state of Michigan was $20 million a year in tobacco tax.
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Like the Hammoud brothers, Ulises Talevera’s Sony PlayStation 2 ring out of Miami might encounter the same loopholes when it comes to convicting them as a business entity providing material support to a terrorist organization as opposed to thieves. Until the RICO statute and the Patriot Act evolve to include crime rings that engage in theft to fund terrorism, funding on a massive scale will go unnoticed.

Laws That Once Protected Potential Terrorists Have Changed

The Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA) says that ORC ring operatives may not provide “material support” in the form of service, training, explosives, lodging, communications equipment, or expert advice and assistance to a terrorist organization. Section 302 authorizes the Secretary of State to designate a group as a “foreign terrorist organization,” and section 303 makes it a crime to provide “material support or resources” to nonviolent activities of a designated organization.
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Congress passed an amendment to AEDPA known as the Intelligence Reform and Terrorism Prevention Act (IRTPA). It further clarified the Act, stating that individuals must “knowingly provide material support or resources” to violate the Act.

There are two issues when it comes to criminalizing potential terrorists under the RICO statute and the Patriot Act: knowledge of actually funding the act, and providing “material support.” It’s unclear how the terms “material support” and “coordination” are defined, so ultimately it’s unclear what’s legal or illegal according to the U.S. Constitution.

Defining “Material Support” and “Coordination”

In June 2010, the U.S. Supreme Court ruled that the government had the power to criminalize “material support” of a foreign terrorist organization in the decision
Holder v. Humanitarian Law Project
. This included those who provide service, training, expert advice, or assistance to groups designated and defined by the U.S. government as terrorist organizations.
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The court ruling wasn’t unanimous; the justices were divided. They applied “strict scrutiny” (the highest level of judiciary review the Supreme Court can issue) due in part to the
definition of the words “support” and “coordination.” For example, participating in coordinated speech with terrorist organizations might harm national security in the form of giving advice to designated terrorist organizations. Justice Stephen Breyer said the law could be interpreted too broadly for the sake of protecting Americans, asking “Precisely how does application of the statute to protected activities help achieve that important security-related end?” in the ruling.

The case came about when the Humanitarian Law Project, a nonprofit organization “dedicated to protecting human rights and promoting the peaceful resolution of conflict by using established international human rights laws and humanitarian law,” decided to advocate on behalf of two ongoing cases. One case involved a collection of organizations supportive of the humanitarian and political activities of the Liberation Tigers of Tamil Eelam (LTTE) in Sri Lanka. The other involved a group headed by University of California professor Ralph Fertig, who wanted to advise the Kurdistan Workers’ Party (PKK) on how to take its grievances against Turkey to the United Nations.
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According to the Humanitarian Law Project, both activist groups were advocating for human rights and peacemaking. However, the Tamil separatists and the PKK had been designated as terrorist groups by former Secretary of State Madeleine Albright in 1996.

Chief Justice John Roberts Jr. stated in his ruling that “seemingly benign services” to a terrorist organization “bolsters the terrorist activities of that organization” by making it easier for the group to recruit members and raise funds.
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It’s important to note that the Supreme Court ruling comes with a provision: Activities, even if deemed peaceful, can be banned if they are “coordinated with or controlled by foreign terrorist groups.” The Supreme Court does not provide guidance on what “coordinating” specifically means. Also, the ban does not extend to domestic terrorist groups.
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Although many human rights activists deem the ban a violation of their First Amendment rights, Supreme Court Justice Elena Kagan argued before becoming a Chief Justice that any support of terrorist organizations, whether in the name of peace or otherwise, still supports terrorism.

“Hezbollah builds bombs,” she said of the Lebanese militancy group. “Hezbollah also builds homes. What Congress decided was when you help Hezbollah build homes, you are also helping Hezbollah build bombs. That’s the entire theory behind this statute, and it’s a reasonable theory.”
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The ruling puts an entirely new value on communication between ORC groups who collaborate with terrorist organizations. It also extends a ban on those who want to fund terrorism by providing funds through charitable organizations, secret accounts, hawalas, and wire transfers of money. “Providing material support” doesn’t just come in the form of monetary assistance, according to the court ruling. Advice, as shown, can be just as powerful as the transfer of funds. But even with this ruling, the U.S. government must take steps to clarify what the parameters of intent or coordination truly are. In addition, this policy helps protect and bolster homeland security within the U.S., but without international support, protecting what is happening within our borders will be a futile mission.

Even though we know how deep ORC runs and the vast impact it has on our personal and global security, and although we have devised ways to respond to this threat, will the problem ever end?

Epilogue

On May 1, 2011, President Barack Obama announced that a team of Navy SEALs had stormed a compound in Abbottabad, Pakistan and assassinated the FBI’s most wanted fugitive, Osama bin Laden. While the world celebrated, Jeannie Evans from Franklin Square, Long Island sat on her couch and, upon hearing the news, didn’t react. “I thought to myself, ‘So what?’” she said. “There are a million more we need to catch.”

I met Jeannie on the afternoon that President Obama was scheduled to lay a wreath at Ground Zero in New York City. Her brother, Robert E. Evans, had been a firefighter at Engine 33, Ladder 9 in Lower Manhattan. The 36-year-old died while trying to leave the North Tower on 9/11, according to reports. Like any family member, Jeannie went through a range of emotions on that fateful day in 2001. But as she watched streams of people crowd Times Square and Ground Zero chanting “USA! USA! USA!” and holding up signs celebrating bin Laden’s death, she could only describe her feelings as numb. “It’s hard to celebrate when there is so much more work that needs to be done.”

Jeannie’s sentiment has been echoed by many fighting the war against terrorism and terrorist financing. “We cannot relax just because bin Laden is no longer in the picture,” said Rep. Mac Thornberry (R-TX) in an interview with
Politico.
Referring to Anwar al-Awlaki’s thwarted attacks in which he sent suicide bombers on planes and toner cartridges through the mail to blow people up, Thornberry points out that terrorism didn’t begin and end with bin Laden.
Likewise, Pentagon top attorney Jeh Johnson affirmed what so many sources said when I interviewed them for this book: “The conflict against al Qaeda is evolving because that organization is evolving. It is more decentralized than it was ten years ago.”
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Led by Baitullah Mehsud’s Tehreek-e-Taliban, al Qaeda-inspired “independent cells” are spreading “Talibanization” across the Northwest Frontier Province (NWFP) and several of its districts next to the FATA regions. Almost 90 suicide attacks took place in various parts of the area between January and June of 2008. The abduction of the Pakistani ambassador to Afghanistan, the beheadings of suspected spies, and criminal acts in the Waziristan and Mohmand areas, as well as repeated attacks on video and music shops in and outside of the tribal areas, offer ample evidence that, however small in number, the Taliban zealots are out to spread their message and enforce their “code of life” with bombs and guns.
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But the Talibanization of regions of Afghanistan and Pakistan is just the tip of the iceberg. More factions of terrorist cells similar to al Qaeda are gaining momentum worldwide (the al Shabaab in Somalia, for example). Terrorist financing sources from wealthy, high-profile countries such as Saudi Arabia, Qatar, and Yemen are starting to lose interest in floating money to the larger organization and have started looking to more local politically minded cells. In an interview with the
Wall Street Journal
, Jean Charles Brisard, an international expert on terrorism finance, said organizations such as al Qaeda no longer frequently use the traditional financial system. Instead, they rely on couriers to take money to operatives. “[The traditional financial system] is basically useless,” he said.
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Even with countries such as India joining the FATF and imposing more stringent banking regulations, there is no real way to regulate the black market despite tighter controls from the federal and local government. Yes, the U.S. Department of Justice may have been aware that proceeds of black market cigarettes and Viagra were being sent to the Hezbollah,
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but was it tracking where the sale of OTC Prilosec
and Pepcid AC was going? What about the sale of high-end handbags, clothing, and jewelry? My research took me to Mexican border towns, flea markets in less-than-desirable parts of town, Islamic communities in upstate New York, black market rupee exchanges in India, the back of LAPD undercover vehicles, and on tours of secret warehouses where stolen merchandise was being housed. But nothing resonated with me more than when I bought stolen OTC antacid from the Queen of Sheba grocery store. After doing extensive surveillance, the Walgreens organized retail crime division discovered that the store’s owner had an estimated $14.5 million in the bank. And that wasn’t from the sale of 40-ounce cans of beer. Boxes of stolen Prilosec OTC were found in the basement. A stream of potential sellers had been going to the back of the store and dropping off the stolen merchandise. But apart from the obvious charge of selling illicit OTC drugs, the store owner was never charged with money laundering because the Queens district attorney’s office chose not to pursue it. “$14.5 million in the bank, and this guy wasn’t involved in money laundering?” exclaimed a source close to the case. “I can’t imagine how many cases the D.A.’s office allows to slip through the cracks because they don’t feel like chasing down the money trail.”

And therein lies the problem. High-profile busts of notorious terrorists may be good for the American psyche. But unless investigators at both the local and federal level as well as retailers band together to cut off terrorist financing at the grassroots level by regulating the black market, the cycle will continue.

Believe it or not, I was thinking about all this as I hurried down to the Christian Louboutin store on a sunny April day. It was the first really warm day after a bitterly cold winter. I wanted to celebrate not only the dogwoods blooming, but also finishing my second draft of this book. After a year of being holed up in a research library, I had decided to spend a bit of my savings on a pair of shoes I had coveted for nearly four years. The store was unusually crowded, with about 20 people milling about, trying on shoes and waiting to pay for their
merchandise. At 6:42 PM, while most of the customers were near the cash register, a couple dressed in designer duds, sitting near the door (who, by the way, fit in perfectly with the other clientele) got up and walked out with three pairs of shoes. In shock, the manager went running after the couple, who ended up being, of all things, part of a booster ring. The manager returned to the store defeated. The total cost to the store was $3,000. Five members of the NYPD came to the store, joking about the merchandise (“Hey, where are my shoes?” yelled a female officer). They took as many notes as they could. They discussed monitoring web sites such as eBay and Craigslist to potentially track the sale of the shoes. But they all agreed there was pretty much no way to trace who took them.