There were those words again, alluding to terrorism where there was not any evidence whatsoever of material support for terrorism. But strip away the scare tactics, and the prosecution’s case evaporated. Muntasser was indicted not for something false that he said, but, rather, for failing to say something deemed relevant (“material”) by the government, looking back. It’s dangerous to have such an ill-defined concept of “material omission.” Indeed, trial Judge F. Dennis Saylor IV, in throwing out the jury’s guilty verdict, described the indictment as “a somewhat creative approach,” adding that while prosecutors can at times be “creative,” those efforts must be exercised “within reason.”52
New organizations filing for tax-exempt status for the first time might not have a full understanding of all the activities that they will eventually undertake, so what would be considered “material” might require prefiguring the organization’s future. The material omissions statute is even more dire for organizations that are already up and running, and which might carry out myriad administrative, fundraising, and other activities that are secondary and derivative of the primary mission. Since the amount of information and documentation supporting such an application could, in theory, be virtually unlimited (in theory, filers could provide all information to the IRS out of an excess of caution against making a material omission, but this is obviously impracticable and would, in any event, overwhelm the agency), this provision constitutes a veritable slippery slope for applicants and their lawyers. Surely every filer could be found to have left out something that a bureaucrat, or prosecutor, might after the fact deem arguably “material.”
What’s more, Care and its founders and officers clearly had a First Amendment right to voice their political and religious views in their newsletters and on their Website. (This is one reason why the indictment did not charge him, directly, for his and Care’s views.) The IRS is not permitted to deny tax exemption because of the viewpoints expressed in an organization’s newsletters. So an indictment claiming that this “material” information was not provided (note, too, that it was not specifically asked for) is legally dubious.
The conclusion one draws is that the government fashioned the prosecution as a “material omission” tax case because it was unable to find any evidence to justify a “material support of terrorism” prosecution. As Judge Saylor wrote in a post-verdict opinion tossing out all but one of the charges on which the jury found Muntasser guilty (a relatively minor one alleging a tenuously related false statement made by Muntasser in an interview by the FBI, concerning his travel, which Muntasser appealed), there was no evidence presented at the trial that any actual money was given to fighters, let alone to terrorists.53 If the feds could get Muntasser convicted for some fraudulent activity, they would likely achieve what they were trying to do when they interrupted his lawsuit the day before his citizenship hearing. If you’re not yet a citizen when you’re convicted, you may get kicked out of the country and never become a citizen.
One of the defense team’s expert witnesses, Marcus Owens, a tax lawyer and himself a former head of the IRS exempt organizations branch, told Muntasser’s lawyers that Muntasser’s case was the first prosecution of its kind under the material omissions statute. Because of the slippery slope in the “material facts” definition, the unprecedented application of the statute against a non-profit organization that the federal government simply didn’t like should be enough to make any non-profit concerned about what it might not have disclosed to the IRS.
Additionally, Owens, when he took the stand for the defense, explained that, with regard to Care’s newsletters, “the IRS had a rather clear position, that it was not going to probe religious speech. And decisions on whether an organization qualified for a tax exemption would be made on the basis of its activities, in particular, what it did with its money, was the money used for charitable purposes or not.”54
However, the IRS apparently got all the information it needed in order to process Care’s application. The bureaucrats in the IRS regional office covering Boston who initially reviewed Care’s application actually noted the connection to relief activities in Afghanistan and Bosnia, which were considered areas of special foreign policy interest to the United States government, and they asked the national review office in Washington, then headed by Marcus Owens, to review it.55 Thus, the material disclosed in Care’s application was obviously sufficient to trigger this higher and more intensive level of IRS review. Even assuming that the government was correct in alleging that Muntasser had omitted material facts relevant to the IRS’s review process (which Owens disputed), the national Exempt Organizations Division was in fact put on notice by the regional office of possible questions raised due to the nature of the activities and the area of the world in which they were to be carried out. The IRS agents could, obviously, have then asked Care more questions if they were concerned about anything in the filings. But the national-level bureaucrats saw what lower-level reviewers had flagged and concluded that they had seen enough; they decided not to ask Care any additional or clarifying questions.
Since Care’s application was sufficient to trigger a higher level of review for its application, and the IRS staffers in Washington chose not to ask further questions, how can it be said that the application lacked sufficient material disclosures to put the IRS on notice? The case raises in bold relief the question of how a filer is supposed to figure out what would be a material omission in such a filing for tax-exempt status, and when such an application, which contains sufficient information to prompt a special review by, but no further questions from, the IRS, would be deemed criminally misleading. The lawyers on Muntasser’s defense team,56 and the former government officials and other experts consulted by Muntasser’s lawyers, scratched their heads on this question throughout the entire case. The jury nonetheless convicted, and Muntasser was held in prison for five months until Judge Saylor, before sentencing, threw these particular charges out. (The government appealed.)
The government’s use of the tax exemption application in a material omissions indictment was sufficiently worrisome that Owens discussed the issue at a February 2008 Washington Non-profit Legal and Tax Conference. His advice to other non-profits was reported in the widely read Health Law Reporter:The case, Owens continued, raises the stakes for exempt health care organizations, who are faced with completing the new Form 990 and who may inadvertently omit material or make a mistake answering an ambiguous question. “The problem is that we do not know where the government is going to go with this,” he added.57
The challenge facing non-profits is, however, even more perplexing than Owens asserts. As the Muntasser prosecution makes clear, one can be indicted even when one’s omission in failing to answer “an ambiguous question” is not at all “a mistake,” but simply a logical, common, and almost predictable result of seeking to comply, in good faith, with such ambiguous questions and requirements.
“The government,” wrote Judge Saylor with admirable candor when he threw out the conviction, “has had substantial difficulty articulating a clear theory of the case and explaining why the evidence and the law support their theory.”58 One of the most interesting aspects of Judge Saylor’s decision to toss out almost the entirety of the jury’s guilty findings was the primary legal precedent that he cited. Judge Saylor wrote that “a person can only be prosecuted where the person has a duty to disclose a particular matter to the government and failed to do so.”59 This requirement that prosecutors demonstrate that the person accused actually had such a duty was established, wrote Judge Saylor, by the opinion of the Court of Appeals for the First Circuit in United States v. Anzalone.60
This citation of the Anzalone case as the operative precedent was a particularly sweet vindication of the rule of law to two members of the Muntasser defense team who had served on the legal team that more than two decades earlier had convinced the First Circuit to overturn the money-laundering conviction of Theodore Anzalone (see Chapter One, concerning harassme
nt of politicians), namely former Stanford Law School dean Kathleen Sullivan and me. The big question, of course, was whether the Court of Appeals would have the integrity to adhere to its own precedent when faced with the government’s appeal of Judge Saylor’s ruling.
“Although the government undoubtedly has an interest in ensuring national security—an interest that might sometimes entail prosecuting transmitters and recipients of information whose behavior implicates the First Amendment—the Espionage Act, as written, is an unconstitutional vehicle through which to pursue such an interest.” With these words, the Harvard Law Review, that bastion of the academic legal establishment, lambasted a U.S. district judge’s refusal to dismiss a 2005 espionage indictment against two lobbyists for the American Israel Public Affairs Committee (AIPAC), a non-profit advocacy organization. “Much uncertainty,” the Review noted with its characteristic understatement, “surrounds the government’s right to criminally prosecute lobbyists, members of the press, and others who traffic in information deemed harmful to national security.” “This uncertainty,” concluded the editors, “stems largely from the incomprehensible nature of the espionage statutes.”61
The reason why the Department of Justice brought such a strained prosecution was precisely because legal developments of the past quarter century have made it easy to twist old statutes to serve new purposes. Suddenly, activities long considered par for the course for the likes of Beltway insiders morphed into federal felonies of the utmost gravity, all without any action by Congress to change the wording of the Espionage Act.
Steven J. Rosen and Keith Weissman were classic issues specialists and lobbyists. They schmoozed with government sources about the status of issues important to AIPAC, and exchanged information with them as well as with members of the news media in an effort to influence public opinion and government action. There was nothing remarkable about them, except that they ended up indicted for espionage.
As the investigation leading up to their indictment quickened, both Rosen and Weissman left their jobs with AIPAC, an organization that long has been admired (or reviled, as the case may be, in some quarters) for its success in lobbying the United States government regarding the nation’s policies in support of Israel. The highly respected National Journal in 2005 listed AIPAC as the second most powerful and effective lobby, after the National Rifle Association and on a par with the American Association of Retired Persons.62
Unlike many lobbyists who concentrate on influencing congressional opinion, Rosen and Weissman focused on members of the executive branch. In the course of doing their work, they had cultivated relationships with executive branch officials as well as other sources of information concerning the Middle East. One such relationship was with eventual co-defendant Lawrence A. Franklin. Franklin was employed by the Department of Defense and held a Top Secret security clearance with access to sensitive information about, among other matters, Iran, Franklin’s major foreign policy interest and obsession. The indictment describes breakfast and lunch meetings at which policy issues were discussed and information from secret policy documents passed to the lobbyists. Rosen, in turn, passed along some of that information to members of the press, touting it as “a considerable story,” as well as to a couple of Israeli diplomats. Rosen was also alleged to have called a senior fellow at a Washington think tank to discuss some of the information he’d received from Franklin. At one point, alleges the indictment, Franklin disclosed to Rosen and Weissman classified information concerning potential attacks on American forces in Iraq.
The first count of the indictment alleged a conspiracy to transmit information relating to the national defense to people not entitled to receive it. Franklin was charged with conveying information to Rosen and Weissman as well as to a foreign diplomat (said to be an Israeli), while Rosen and Weissman had conveyed information to journalists, diplomats, and others at AIPAC.
The provision of the Espionage Act used to indict Franklin related to the possession of confidential defense-related information by an official authorized to possess it. Franklin’s guilt was fairly clear-cut. He was, after all, a government employee with certain secrecy obligations that he had voluntarily undertaken in connection with this job. He agreed to plead guilty even before he was indicted and to wear a secret “bug” while working with government agents to collect evidence against Rosen and Weissman. It was the portion of the indictment directed against the two non-government employees, Rosen and Weissman, that raised troubling questions about abuse of the statute’s language, intent, and historical application:Whoever having unauthorized possession of [any document] relating to the national defense, or information relating to the national defense which information the possessor has reason to believe could be used to the injury of the United States or to the advantage of any foreign nation, willfully communicates…the same to any person not entitled to receive it…shall be fined…or imprisoned not more than ten years, or both.63
The application of this statute to two private citizens who were not working for the government and who did not have security clearances (and who therefore were not violating the agreed terms of confidentiality agreements such as existed between Franklin and the government) sent shockwaves through the world of private sector security analysts, lobbyists, and others. It is the mother’s milk of lobbying, after all, for otherwise disparate groups of Americans to band together and pressure the government to favor their particular ethnic, racial, religious, occupational, political, or cultural groups. The process involves, in part, an exchange of information—often quite sensitive information. Many Irish-American citizens might recall similar exchanges of information from the days of tension and veritable political and religious warfare in Ireland.
The sudden notion that it constituted espionage to receive and disseminate confidential information on such matters in that cauldron of leaked information known as Washington startled many. Rosen, for one, was thrown for a loop: “I’m being looked at for things I’ve done for twenty-three years, which other foreign-policy groups, hundreds of foreign-policy groups, are doing.”64 A former chief privacy officer of the CIA, Leo Strickland, underscored how central these kinds of leaks were to reporting on the day’s events: “Twice in the Clinton Administration we had proposals to broaden the [espionage] statute to include the recipients, not just the leakers, of classified information. The New York Times and The Washington Post went bat-shit about this legislation.
They saw it as an attempt to shut down leaks.”65 And so Congress did nothing to amend the vague statute.
That didn’t stop the feds from using it to go after Rosen and Weissman, and Virginia-based U.S. District Court judge T.S. Ellis III accepted their interpretation of the Espionage Act. He refused to dismiss the indictment.66
Judge Ellis understood the nature of the defendants’ dilemma. He characterized the first leg of Rosen and Weissman’s “constitutional challenge” as being “based on the principle that the Due Process clause of the Fifth Amendment prohibits punishment pursuant to a statute so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application.” While he agreed that “the phrase ‘information relating to the national defense’” was “potentially quite broad,” he ruled that the phrase “is limited and clarified by the requirements that the information be a government secret, i.e., that it is closely held by the government, and that the information is the type which, if disclosed, could threaten the national security of the United States.” Because of these limitations, he ruled, the phrase actually “provides fair notice of what it encompasses and is also an adequate safeguard against arbitrary enforcement.” One somehow doubts that a poll of typical Washington lobbyists and policy analysts would produce a similar conclusion about “fair notice.”
The second prong of the defendants’ vagueness challenge (“that they lacked constitutionally adequate notice as to who was ‘entitled to receive’ the national defense information”) was similarly disposed of by Judge Ellis
. He admitted, as he had to, that “the statute itself provides no definition of the phrase ‘entitled to receive,’ nor does it expressly delegate to the executive branch the authority to determine who is entitled to receive national defense information.” He ruled, however, that other court decisions somehow clarified the statute by incorporating “the executive branch’s classification regulations.” He cited, as precedent for this conclusion, the 1984 case involving the prosecution of Samuel Loring Morison, a government employee working for Naval Intelligence with a security clearance who had signed a non-disclosure agreement. Morison had recognized that improper disclosure of secret information and documents would open him to prosecution, but nonetheless he had sold clearly classified photographs to the publication Jane’s Defence Weekly.67 Judge Ellis did not make clear how and why it was that two civilian lobbyists, not subject to a government confidentiality agreement or security clearance, were supposed to think that they were bound by the same rules as a government employee working for an intelligence agency pursuant to a clear confidentiality agreement.
Judge Ellis then evaluated Rosen’s and Weissman’s claim that the prosecution violated the First Amendment’s guarantee of free speech. Ellis agreed that the case did raise First Amendment concerns. “In the broadest terms,” he recognized, “the conduct at issue—collecting information about United States’ foreign policy and discussing that information with government officials (both United States and foreign), journalists, and other participants in the foreign policy establishment—is at the core of the First Amendment’s guarantees.” He went even further, admitting that “even under a more precise description of the conduct—the passing of government secrets relating to the national defense to those not entitled to receive them in an attempt to influence United States foreign policy—the application of [the espionage statute] to the defendants is unquestionably still deserving of First Amendment scrutiny.” He agreed that “the analysis of the First Amendment interests” depends upon the class of persons involved. Government employees and defense contractors, the judge noted, possess their access to information as a result of government rules and contractual agreements made known to them. Ellis recognized that Rosen and Weissman belong to quite a different class: “those who have not violated a position of trust with the government to obtain and disclose information, but have obtained the information from one who has.” Astonishingly, however, he still agreed with the government’s argument that the Espionage Act, by implication, could be applied to private citizens such as Rosen and Weissman, and concluded that the two lobbyists were subject to the statute.
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