Federal judge allows AIG bailout case to proceed

By Linda Bentley | June 17, 2009

‘… the war to stop the federal government from funding Islam and Shariah-compliant financing is far from over’
ANN ARBOR, MI – On May 26, U.S. District Court Judge Lawrence P. Zatkof denied the government’s motion to dismiss a case challenging the constitutionality of the Emergency Economic Stabilization Act of 2008 (EESA) that funds and financially supports the federal government’s majority interest in American International Group (AIG), a company that boasts being the market leader in Shariah-compliant financing products, which comply with the dictates of Islamic law.

In December, the Thomas Moore Law Center filed the complaint against then Secretary of the Treasury Henry Paulson, Jr. and the Federal Reserve Board, later amended to include current Treasury Secretary Timothy Geithner.

The lawsuit was filed on behalf of Kevin Murray, a former Marine who served honorably in Iraq and objects, as a taxpayer, to being forced to contribute to the spread of Islam and Shariah law, which is hostile to his Christian religion.

The Thomas Moore Law Center (Center) is a nonprofit public interest law firm “dedicated to the defense and promotion of the religious freedom of Christians, time-honored family values, and the sanctity of human life.”

Robert Muise, the Center’s trial counsel, is representing Murray along with Attorney David Yerushalmi, an expert in Shariah law and Shariah-compliant financing.

Through the use of taxpayer funds, the federal government obtained 80 percent ownership interest in AIG and then, as part of the EESA bailout, appropriated an additional $40 billion in taxpayer money to support AIG’s operations and financial activities.

Now, as a government-owned company, AIG continues to engage in Shariah-compliant financing, which the complaint asserts subjects certain financial activities to the dictates of Islamic law and the Islamic religion.

AIG defines “Shariah” as “Islamic law based on the Quran and the teachings of the Prophet [Mohammed].”

In Shariah-complaint financing, a Shariah authority issues a legal ruling or “fatwa,” either approving or rejecting particular investments or transactions. AIG delegates that authority to its Shariah Supervisory Committee, which reviews AIG's operations, supervises its development of Islamic products and determines Shariah compliance of those products and investments.

According to the Center, members of AIG’s Shariah Supervisory Committee include Muhammed Imran Ashraf Usmani from Pakistan.

It states, “Usmani is the son, student and dedicated disciple of Mufti Taqi Usmani, the leading Shariah authority for Shariah-compliant finance in the world and author of a book translated into English in 1999 that includes an entire chapter dedicated to why a Western Muslim must engage in violent jihad against his own country or government.”

A significant element of Shariah compliance involves “purification” of finances, accomplished by an obligatory charitable contribution or “zakat,” in essence, a religious tax, to assist those who “struggle for Allah,” and disgorgement of “tainted” funds (associated with entities forbidden under Islamic law) by donating them to acceptable Islamic charities.

However, some of those qualifying “charities” have ties to terrorist organizations hostile to the United States, Christians, Jews and all other “infidels,” including the Holy Land Foundation for Relief and Development, which a federal court recently determined had been providing millions of dollars to Islamic terrorist organizations.

The Center explains, “As a direct consequence of the taxpayer funds appropriated and expended to purchase and financially support AIG, the federal government is now the owner of a corporation engaged in the business of collecting religious taxes to fund interests adverse to the United States, Christians, Jews and all other ‘infidels’ under Islamic law.”

In November 2008, the Department of the Treasury hosted an “Islamic Finance 101” forum in conjunction with Harvard Law School’s Islamic Finance Project.

In December 2008, an AIG subsidiary introduced the creation of a “Takaful Homeowners Policy,” touted as AIG’s first in a “series of Shari’ah-compliant (Takaful) product offerings in the U.S.” as part of its “global expansion strategy.”

Murray, a practicing member of the Catholic faith, claims, as a taxpayer, “appropriated funds are being used to finance Shariah-based Islamic religious activities in violation of the Establishment Clause," deeming the EESA constitutionally impermissible.

Addressing the issue of standing, Zatkof noted the challenge was not whether AIG is of a religious character, but how it spends its grant, calling the circumstances surrounding the case historic and the pressure upon the government to navigate the financial crisis “unfathomable.”

Zatkof added, “Times of crisis, however, do not justify departure from the Constitution. In this case the United States government has a majority interest in AIG. AIG utilizes consolidated financing whereby all funds flow through a single port to support all of its activities, including Shariah-compliant financing.”

Because at least two of AIG’s subsidiary companies practice Shariah-compliant financing, and, following the government’s acquisition of a majority interest in AIG, it co-sponsored a forum entitled “Islamic Finance 101,” Zatkof said, “These facts, taken together, raise a question of whether the government’s involvement with AIG has created the effect of promoting religion and sufficiently raise Plaintiff’s claim beyond the speculative level, warranting dismissal inappropriate at this stage in the proceedings.”

Richard Thompson, president and chief counsel of the Center, commented, “It is outrageous that AIG has been using taxpayer money to promote Islam and Shariah law, which potentially provides support for terrorist activities aimed at killing Americans. Shariah law is the same law championed by Osama bin Laden and the Taliban. It is the same law that prompted the 9/11 terrorist attacks on our soil that killed thousands of innocent Americans.

We won this skirmish. But the war to stop the federal government from funding Islam and Shariah-compliant financing is far from over.”