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4 of 15DOCUMENTS

UNITED STATES OF AMERICA, Plaintiff, v. ENAAM M. ARNAOUT, Defendant.

No. 02 CR 892

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OFILLINOIS, EASTERN DIVISION

282 F. Supp. 2d 838; 2003 U.S. Dist. LEXIS 12375

July 17, 2003, DecidedJuly 18, 2003, Docketed

PRIOR HISTORY: United States v. Arnaout, 2003U.S. Dist. LEXIS 1635 (N.D. 111., Feb. 3, 2003)

DISPOSITION: [**1] Defendant's objection toincludingChechen foot and hand warmers in calculatingloss sustained. Defendant's objection to includingBosnian storage items sustained in part. Defendant'sobjectionsto application of 3A1.4 sustained.

LexisNexis (TM) HEADNOTES - Core Concepts:

COUNSEL: Fo r ENAAM M ARNAOUT, defendant:John T. Theis, La w Office of John T. Theis, Joseph J.Duffy, William Paul Ziegelmueller, Stetler & Duffy,Ltd., Chicago, IL .

U. S. Attorneys: John C Kocoras, United StatesAttorney's Office, Chicago, IL .

U. S. Attorneys: Pretrial Services, Probation Department.

JUDGES: Suzanne B. Conlon, United States DistrictJudge.

OPINIONBY: Suzanne B. Conlon

OPINION:

[*840]ORDER

MEMORANDUM OPINION AND

O n the morning trial was to begin, Enaam Amaoutentered a guilty plea to a charge of racketeering fraudconspiracy committed in his operation of a charity,Benevolence International Foundation ("BIF"). The

agreed facts submitted in a written plea agreement andthe government's evidentiary proffer during the pleahearing specified the fraud consisted of Arnaout'sundisclosed use of aportion of BIF's funds, raised forhumanitarianpurposes only, to provide aid to militia inBosnia and Chechnya. The government agreed to dismissother charges against Arnaout [**2] relating to moneylaunderingan d providing support to terrorist groups.

During the initial sentencing hearing on June 16,2003, all claimed factual errors in the presentenceinvestigation report ("PSI") and all but two issues

pertaining to application of the sentencing guidelineswere resolved. Th e court invited counsel to submitadditional evidence and citations of authority on tworemaining guideline issues: calculation of loss andapplication of theiterrorism enhancement. These issuesare now ripe fordecision! "

I. Loss calculations

Hand an d foot warmers. It is undisputed thatArnaout is accountable for $ .196,653 in losses due toimproper diversion of BIF '"humanitarian funds topurchase Chechen military boots, uniforms and anambulance;and Bosnian boots, blankets and tents, nl Atthe June 16th hearing, the court overruled Arnaout'sobjectionsto including Chechen shoes ($ 34,500), an x-ray machine ($ 6,755), cash ($ 3,225) and anotherambulance forBosnian fighters ($ 7,500). This broughtthe total loss to $ 248,633.

nl Amaout candidly admitted responsibilityfor the Bosnian blankets an d tents. These items,


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6 of 15DOCUMENTS

UNITED STATES OF AMERICA, Plaintiff, v. ENAAM M. ARNAOUT, Defendant.

No. 02 CR 892


2003 U.S. Dist. LEXIS 1635

February 3, 2003, DecidedFebruary 4, 2003, Docketed

SUBSEQUENT HISTORY: Objection sustained by ,Objection sustainedby, in part United Statesv. Arnaout,2003 U.S. Dist. LEXIS 12375 (N.D.111., July 17, 2003)

PRIOR HISTORY: United States v. Arnaout, 236 F.Supp. 2d 916, 2003 U.S. Dist. LEXIS41 (N.D. 111.,2003)

DISPOSITION: Government's proffered materialsfound inadmissible.


COUNSEL: [*1] Fo r ENAAM M ARNAOUT,defendant: Joseph J. Duffy, William Paul Ziegelmueller,Stetler & Duffy, Ltd., Chicago, IL.

U. S. Attorneys: John C Kocoras, United StatesAttorney's Office, Chicago, IL.

U. S. Attorneys: Pretrial Services.

U. S. Attorneys: Probation Department.

JUDGES: Suzanne B. Conlon, United States DistrictJudge.

OPINIONBY: Suzanne B. Conlon

OPINION:

MEMORANDUM OPINION AN D ORDER

The government has submitted a 101-pageprofferand 248 exhibits nl to support its request for a pretrial

determinationthat the proffered materials are admissibleunder the co-conspirator exception to thehearsay rule.See Fed. R. Evid. 801(d)(2)(E); United States v.Santiago, 582 F.2d 1128, 1134 (7th Cir. 1978).Defendant Enaam Arnaout objects to the proffer.

nl In its reply to objections to its proffer, thegovernment has withdrawn a substantial portionof its exhibits.

The ConspiraciesThree distinct conspiracies are presented in the

\ d su pers edng indictment)There are significdifferences in the nature and goals of the three chargedconspiracies. Count One alleges a racketeeringconspiracy under 18 U.S.C. 1962(c). The allegedracketeering acts are mailfraud, wire fraud, obstructionof justice and money laundering. This conspiracyallegedly began in 1992, ended in May 2002, and tookplace in Palos Hills, Worth, other locations in theNorthern Districtof Illinois and "elsewhere." The allegedco-conspirators are Adel Batterjee "and others"associated with the BIF [Benevolence International

Foundation] enterprise.Count Two alleges a conspiracy under 18 U.S.C.

371 to provide material resources to groups that includeal Qaeda, Hezb e Islami, the Sudanese Popular DefenseForce "and others" engagedin violent confrontationsinChechnya and Sudan, in violation of 18 U.S.C. 956(a)(l) and 2339A. This conspiracy allegedly beganinSeptember 1994, ended in May 2002, and took place in


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10 of 12 DOCUMENTS

UNITED STATES OF AMERICA, Plaintiff, v. BENEVOLENCEINTERNATIONAL FOUNDATION, INC., an d ENAAM M. ARNAOUT a/ k/ a

ABU MAHMOUD a/ k/ a ABDEL SAMIA, Defendant.

Case No. 02 CR 414


2002 U.S. Dist. LEXIS 17223

September 13, 2002, DecidedSeptember 13, 2002, Docketed

DISPOSITION: [*1] Defen dants' motion to dismissthe indictment granted.


COUNSEL: Fo r BENEVOLENCEINTERNATIONAL FOUNDATION, INC., defendant:Mary L Rowland, Gessler, Hughes & Socol, Ltd.,Matthew J. Piers, Kopka, Pinkus& Dolin, P.C., Chicago,IL.

For ENAAM M ARNAOUT, defendant: Joseph J.Duffy, William Paul Ziegelmueller, Stetler & Duffy,Ltd., Chicago, IL.

U. S. Attorneys: AUSA, UnitedStates Attorney's Office,Chicago, IL.

U. S. Attorneys: Pretrial Services.

U. S. Attorneys: Probation Department.

JUDGES: JOAN B. GOTTSCHALL, United StatesDistrict Judge.

OPINIONBY: JOAN B. GOTTSCHALL

OPINION:

MEMORANDUM OPINION AND ORDER

Defendants Benevolence InternationalFoundation, Inc. ("BIF") and Enaam Arnaout, BIF's

Chief Executive Officer, are charged with making andusing false declarations signedby Arnaout under penaltyof perjury, in violation of 18 U.S.C. 1623. Defendantshave moved to dismiss the indictment. For the reasonsset forth below, the motion is granted.

Background

Defendant BIF is an Illinois not-for-profit charitableorganization incorporated in 1992. Defendant Arnaouthas been employed withBIF since 1993. He has been theCEO since 1998. [*2] On December 14, 2001, pursuantto the emergency search provisions of the ForeignIntelligence Surveillance Act,50 U.S.C. 1801 et seq.,the FBI seized financial and business records from BIF'sPalos Hills, Illinois office. The FBI also searchedArnaout's homeand seized certain of his and his family'spersonal effects. On the same date, acting pursuant to theInternational Emergency Economic Powers Act,50U.S.C. 1701 et seq., the Treasury Department issuedan order blocking BIF's assets and records pendingfurther investigation.

On January 30, 2002, BIF filed suit against federalgovernment officials, charging that their actions violatedthe United States Constitution and other federal laws.SeeBenevolence Int'l Found., Inc. v. Ashcroft, No. 02 C 763(N.D. 111. filed Jan. 30, 2002). On March 26, 2002, BIFfiled a motion for preliminary injunction seeking thereturn of its seized assets and a lifting of the blockingorder. This motion included a supporting memorandumand several exhibits, one of which was an unsworndeclaration signed by Arnaout "under penalty ofperjury." On April 5, 2002, BIF filed a corrected


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W I T H D R A W A L N O T I C E

RG: 148Box: 00002 Folder: 0005 Document: 1

Series: Team 4 Files

Copies: 1 Pages: 36

ACCESS RESTRICTED

The item identified below has been withdrawn from this file:

Folder Title: U .S. v Arna out(BIF)

Document Date: 04-29-2002Document Type: Legal DocumentSpecial Media:From:To:

Subject: document filed under seal

In the review of this file this item was removed because access to it isrestricted. Restrictions on records in the National Archives are stated ingeneral and specific record group restriction statements which are availablefor examination.

NND: 401Withdrawn: 09-30-2008 by

RETRIEVAL#: 401 00002 0005 1System DocID: 4660

c


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U. S. Department of Justice

United States AttorneyNorthern District of Illinois

Patrick J. FitzgeraldUnited States Attorney

FO R IMMEDIATE RELEASEWEDNESDAY OCTOBER 9, 2002

Federal Building219 South Dearborn Street, Fifth FloorChicago, Illinois 60604(312) 353-5300

PRESS CONTACTS:Randall Samborn, U.S.?Attorney's Office(312)353-5318 ^

DOJ Public Affairs(202) 514-2008

BENEVOLENCE DIRECTOR INDICTED FOR RACKETEERING CONSPIRACY;PROVIDING MATERIAL SUPPORT TO AL O A E D A AND OTHER VIOLENT GROUPS

CHICAGO - The executive director of Benevolence International Foundation, Inc. (BIF),

a purportedly charitable organization based in south suburban Chicago, was indicted on racketeering

and other charges for conspiracy to fraudulently obtain charitable donations to provide financial

assistance to al Qaeda and other organizations engaged in violent activities, the Justice Department

announced. A federal grand jury today returned a seven-count indictment against Enaam M.

Arnaout, 40, of Justice, 111.,a Syrian-born naturalized U.S. citizen. Arnao iu|has twice been ordered

detained in federal custody since he was arrested on April 30. The indictment describes a multi-

national criminal enterprise that for at least a decade used charitable contributions of innocent

Americans - Muslim, non-Muslim and corporations alike - to support al Qaeda , the Chechen

mujahideen and armed violence in Bosnia.

Arnaout, also known as "Abu Mahmoud," "Abu Mahmoud al Suri," "Abu Mahmoud al

Hamawi," and "Abdel Samia," was charged with one count each of racketeering conspiracy,

conspiracy to provide material support to terrorists, conspiracy to launder money, money laundering,


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f ft O V I K F. 0 B V - -

TlndLowW W W . F I N D L A W . C O M

UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UNITED STATES OF AMERICA ))

vs. ) No. 02 CR 892) Hon. Suzanne B. : Conlon

ENAAM M. ARNAOUT )

PLEA AGREEMENT

This Plea Agreement between the United States Attorney for the

Northern District of Illinois, PATRICK J. FITZGERALD, and the

defendant, ENAAM M. ARNAOUT, and his attorneys, JOSEPH J. DUFFY and

WILLIAM P. ZIEGELMUELLER, is made pursuant to Rule 11 of the Federal

Rules of Criminal Procedure.

This Plea Agreement is entirely voluntary and represents the

entire agreement between the United States Attorney and defendant

regarding defendant's criminal liability in case 02 CR 892.

This Plea Agreement concerns criminal liability only, and nothing

herein shall limit or in any way waive or release any administrative or

judicial civil claim, demand or cause of action, whatsoever, of the

United States or its agencies. Moreover, this Agreement is limited to

the United States Attorney's Office for the Northern District of

Illinois and cannot bind any other federal, state or local prosecuting,

administrative or regulatory authorities except as expressly set forth

in this Agreement.

By this Plea Agreement, PATRICK J. FITZGERALD, United States

Attorney for the Northern District of Illinois, and the defendant.


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F I L E DNITED STATES DISTRICT COURTNORTHERN DISTRICT Or ILLINOIS

EASTERN DrVTSrON jU N 0 9

UNITED STATES OF AMERICA )

v. ) No. 02 CR 892 ****"*

ENAAMM.ARNAOUT - **/? ) Hon. Suzanne B. Conlon

GOVERNMENTS ALIERNATIVEA1OTTO1S FOR UPWARD DEPARTURE

TheUNTTED STATES OF AMERICA, by its attorney, PATRICK J, FITZGERALD, United

States Attorney for the Northern District of Illinois, respectfully moves Ihia Court to depart upward

at least six levels from die total offense level determined uodcr the US. Sentencing Guidelines

("U.S.S.G.") if the Court finds that the enhancement in U.S.S.G. 3A1.4 doe* not apply. 1 To be

clear, the government maintains that 3 A 1 .4 applies in this case and anticipates that the defendant

will challenge the Pre-Sentence Report ("PSR") in this regard . The government is filing this motion

consistent with the Court's order that motions for departure be filed by June 9, 2003. IftheCotrrt

applies U.S.S.G, 3 At .4 as the government advocates, then this motion will be moot because

3A 1 .4 adequately addresses the wnceais raised in this motion. However, if (he Court declines to

1 The government has one minor objection to the JPSR,namely, to an error on page 15,lines 505-509. The PSR states there that the defendantentered a plea of guilty six days prior to tfcedate trial was scheduled to begin, whan in facthe pled gui Ityon the day trial was scheduled to begin.Moreover, the government does not curreatly object to a wo-level reduction for acceptance ofresponsibility, as the PSR provides. However, when the PSR was written, defendantacknowledgedthat the obstruction of justice enhancement applied. Defense counsel informed the government ina letterdated June 7,2003, that defeadantwas changing his position on the obstruction enhancement,although the reason fo r this change is unclear. If defendantnow denies that he knowingly submittedtwo false, sworn declarations to the U.S. District Court in an effort to regain control of BIF's moneyMunichwas blocked pending investigation, among other obstructive conduct, then the governmentwill object to any deduction fo r acceptance of responsibility. See U.S.S.G- 3E1.1, Note l(a) ("[A]defendant who falsely denies, or frivolously contests, relevant conduct that the court determines tobe true has acted in a manner inconsistent with acceptance of responsibility"*).


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UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UNITED STATES OF AMERICA

v. ) No. 02 CR 892

ENAAM M. ARNAOUT,a/k/a "Abu Mahmoud",a/k/a "Abu Mahmoud al Suri",a/k/a "Abu Mahmoud al Hamawi", ) and 2339Aa/k/a "Abdel Samia" )

) Violations: Title 18, United) States Code, Sections 2,) 1341, 1343, 1956, 1962,

COUNT O NE

The SPECIAL APRIL 2002 GRAND JURY charges:

1. At all times material to this indictment:

R E L E VA N T O R G A N I Z AT I O N S

M e k h t a b a l K h i d e m a t

A. In the latter part of the 1980's, an organization

known as "mekhtab al khidemat" (the "Services Office") maintained

offices and facilities in various parts of the world, including

Afghanistan, Pakistan and the United States. The organization was

operated principally by Sheik Abdallah Azzam and Usama Bin Laden

for purposes including the providing of logistical support to the

mujahideen (fighters) in Afghanistan. The support provided

included financial assistance for military training as well as

assistance with obtaining travel and identity documents and

immigration status in Pakistan.

B. Until his death in or about 1989, Sheik Abdallah

Azzam continued to work with mekhtab al khidemat to provide


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FindLowW W W . F I N D L A W . C O M

UNITED STATES DISTRICT COQRTNORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UNITED STATES OF AMERICA

v.

ENAAM M. ARNAOUT,a /k / a "Abu Mahmoud",a /k /a "Abu Mahmoud al Suri",a /k /a "Abu Mahmoud al Hamawi",a/k/a "Abdel Sanaa"

No. 02 CR 892

Violations: Title 16, UnitedStates Code, Sections 2,1341, 1343, 1956, 1962,and 2339A

COUNT OM B

The SPECIAL APRIL 2002 GRAND JURY charges:

1. At all times material to this indictment:

RELEVANT ORGANIZATIONS

A, In the latter part of the 1980' , an organization

known as " n e k h t a b al kh idemat" (the "Services Office") maintained

offices and facilities in various parts of the world, including

Afghanista n, Pakistan and the United States. The organizatio n was

operated principally by Sheik Abdallah Azzam and Usama Bin Laden

for purposes including the providing of logistical support to the

m u j a h i d e e n (fighters) in Afghanistan. The support provided

included financial assistance for military training as well as

assistance with obtaining travel and identity documents and

immigration status in Pakistan.

B. Until his death in or about 1989, Sheik Abdallah

Azzam continued to work with m s k h t a b a l k h i d e m t to provide

logistical and financial support to the mujahideen. After Azzam' s


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ONTTEDSTATES DISTRICT COURT ,_NORTHERN DISTRICT OF ILLINOIS v ' ' -

EASTERN DIVISION , - .

UNITED STATES OF AMERICA ))

v. ) No. 02 CR 892 SEP 1 2 2003

ENAAM M ARNAOUT ) Hon. Suzanne B. ConJott

NQTJCE OF APPEAL

Notice is hereby given that the UNITED STATES OF AMERICA appeals to die United

States Court of Appeals for the Seventh Circuit from this Court's final judgment and sentence

entered on the Clerk's docket on August 19, 2003.

Respectfully submitted,

PATRICK, /. FITZGERALDUnited States Attorney

By:JS P. FLEISSNER

Assistant United States Attorney

C.KOCORAS'Assistant United States Attorney219 South Dearborn Street, 5th FloorChicago, Dlinois 60604(312) 353-5300


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CBRTgffCATE O ff SERVICE

The undersigned attorney, John C. Kocoras, certifies thathe is employed in the Office of the

United States Attorney for the Northero District of Illinois; that on the Hth day of September 2003

he served a copy of the foregoing NO TICEOF APPEAL via messenger to:

Mr. Joseph J, Duffy, Esq.Mr. William P. Ziegclmuclier, Esq.Stetlcr& DuffyLtd,140 South DearbornStreetSuite 400Chicago, Illinois 60603

KOCORASU.S. Attorney


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Tte&suryDesignatesBenevolence InternationalFoundation and Related Entities Page 1 of 2

FROM THE OFFICE OF PUBLIC AFFAIRS

November 19,2002PO-3632

Treasury Designates Benevolence International Foundation and RelatedEntities as Financiers of Terrorism

Today the US Treasury designated three entities as financiers of terrorism underExecutive Order 13224 and will ask the United Nations to add these names to thelist of those whose assets must be blocked by all member nations under UNSCR1390. The financial accounts of the principal entity, Benevolence InternationalFoundation, were blocked pending investigation in December 2001. The threeclosely linked but separately incorporated entities designated today areBenevolence International Foundation, Benevolence International Fund (Canada),Bosanska Idealna Futura (Bosnia), and their branch offices.

"UN designation of these financiers of terror will cut off their access to the globalfinancial system and strip them of their ability to fund evil," said Treasury SecretaryPaul O'Neill.

Benevolence International Foundation ("BIF") is a U.S. tax-exempt not-ior-profitorganization whose stated purpose is to conduct humanitarian relief projectsthroughout the world. BIF was incorporated in the State of Illinois on March 30,1992. Although BIF is incorporated in the United States, it operates around theworld, in Bosnia, Chechnya, Pakistan, China, Ingushetia, Russia, and othernations. BIF operates as Benevolence International Fund in Canada and asBosanska Idealna Futura in Bosnia.

Enaam Amaout, BIF's Chief Executive Officer and a member of the Board ofDirectors, recently was indicted in the United States for operating BIF as a

racketeering enterprise and providing material support to organizations, including alQaida, that are engaged in violent activities.

Substantial evidence documents the close relationship between Arnaout andUsama bin Laden, dating from the mid-1980s. An article in the Arab News from1988, reporting on bin Laden's activities at the "al Masada" mujahideen camp inAfghanistan, included a photograph of Arnaout and bin Laden walking together. Ina March 2002 search of BIF's offices, Bosnian law enforcement authoritiesdiscovered a host of evidence linking Arnaout to bin Laden and al Qaida. Amongthe files were scanned letters between Arnaout and bin Laden, under their aliases.

In one handwritten letter, bin Laden indicates that Arnaout is authorized, to sign onbin Laden's behalf. I

"- it \s documents also established that Arnaout wor

members of al Qaida - to purchase rockets, mortars, rifles, and offensive anddefensive bombs, and to distribute them to various mujahideen camps, includingcamps operated by al Qaida.

Arnaout claimed to the Chicago Tribune last winter that he did not know bin Ladenpersonally, that he had never been to the "al Masada" camp (at which he had beenphotographed walking with bin Laden), and that he was working in a restaurant inthe Persian Gulf area during the relevant time frame. BIF's counsel lateracknowledged in court that "it would appear that the nature of [Arnaout's] contacts[with bin Laden] may have been of a deeper nature than what he described to theTribune."

http://www.ustreas.gov/press/releases/po3632.htm6/20/03


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, #10-09-02: Prepared Remarks of Attorney General John Ashcroft - Press Conference Page 1 of 3

Prepared Remarks of Attorney General John AshcroftPress Conference

Chicago, Illinois

October 9, 2002

(No te : The A t t o r n e y Genera l Of ten Devia tes From Prepared Remarks)

Good afternoon.

This afternoon, in the United States District Court for the Northern District ofIllinois, a grand jury indicted the director of the Illinois-based BenevolenceInternational Foundation. Enaam Arnaout is charged with conspiracy to obtainfraudulently charitable donations in order to provide financial assistance to alQaeda and other organizations engaged in violence and terrorism.

The grand jury charges Arnaout with operating Benevolence InternationalFoundation as a racketeering enterprise. Benevolence International Foundation, orBIF, is a tax-exempt, purportedly charitable organization with offices in Illinois,Pakistan, Bosnia-Herzegovina, and elsewhere. The indictment charges that Arnaoutoperated BIF for more than a decade in order to use fraudulently the charitablecontributions of Muslim-Americans, U.S. Corporations, and other donors to supportterrorism and other violence overseas.

The grand jury charges Arnaout with seven counts:

One count of conspiracy to engage in a racketeering enterprise.

One count of conspiracy to provide material support to terrorists.

Two counts of money laundering.

Two counts of mail fraud, and~/ c

> k !

One count of wire fraud.

If convicted of these crimes, Arnaout will face a maximum punishment of 90 yearsin prison without the possibility of parole.

Arnaout is accused of defrauding charitable contributors by falsely claiming thatthe Benevolence International Foundation used donated funds solely for humanitarianrelief. In fact, funds were being used to support al Qaeda and other groups engagedin armed violence overseas. In addition, in an effort to conceal donors whoknowingly supported terrorism, Arnaout is charged with commingling charitablecontributions intended for humanitarian purposes with contributions intended tosupport armed violence.

In order to deceive donors, and to guarantee the success of his operation,Arnaout is charged with concealing at all times from the government, the generalpublic and a considerable number of donors his relationships with al Qaeda, its

http://www.usdoi.gov/ag/speeches/2002/100902agremarksbifmdictment.htm 6/20/03

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