Washington, July 19--The U.S. government relied on a seriously flawed and biased investigative record in deciding last year to raid a Texas-based Muslim charity and seize millions of dollars in assets, the organization's attorneys charged Thursday in federal court.

Lawyers for the Holy Land Foundation for Relief and Development, shut down last year amid accusations that it was a financial front for the terrorist group Hamas, argued that the government ignored evidence beneficial to the organization. They also said the Treasury Department's Office of Foreign Assets Control leaned heavily on information provided by the Israeli government - some of which might have been obtained through torture. "We have made a significant showing that the administrative record is full of falsehoods," said John Boyd, an attorney for the now-dormant Holy Land, which was based in Richardson, Texas, near Dallas.

Representatives of Holy Land, which was under FBI scrutiny throughout most of the 1990s and beyond, staunchly deny that the charity has links to Hamas. Government lawyers rejected the assertion that the investigative record was biased and urged U.S. District Judge Gladys Kessler at a daylong hearing Thursday to dismiss Holy Land's effort to reclaim $4 million to $5 million frozen last year by the government.

The decision to designate Holy Land a terrorist organization and freeze its assets was an administrative act based on a complete record, said Justice Department lawyer Elizabeth Shapiro. "We firmly believe, looking at the totality of the record, it was plainly reasonable for the agency to act as it did," she said.

Shapiro argued that courts have only a limited right to set aside that administrative record and consider other evidence. First, she said, the plaintiffs must prove serious fault - a test that she said Holy Land failed to meet. "They have to come in with a very, very substantial and egregious showing of bias," Shapiro said. "Nothing has been established."

In response, the Holy Land attorneys argued that federal officials jumped to the worst interpretation of evidence and omitted from the record information provided by the charity. They also claim that the record is incomplete because the Treasury Department relied on summaries prepared by the FBI and Israel of intercepted conversations and interrogations. They say some of that information was taken out of context.

Holy Land, once the largest Muslim charity in the United States with $13.3 million in receipts in 2000, sued this year to lift the asset freeze, reclaim its other property and require the government to pay its legal costs. The attorneys contend that the organization's constitutional rights were trampled when the government imposed the terrorist designation, froze its funds and raided its offices in Texas, California, Illinois and New Jersey in warrantless searches.

They also are challenging the actions on the grounds that Holy Land was given no opportunity to rebut or challenge any of the government's evidence beforehand. "Holy Land was a vibrant, functioning organization. . It was doing a lot of good," attorney John Cline said during the hearing. "And one day, it just got shut down."

While not dismissing the claim that Holy Land's money went for charitable purposes, the government contends that the charity dispersed funds to families of suicide bombers, showing a preference in giving to organizations or people with links to Hamas.

Cline denied that claim, saying Holy Land records seized by federal agents show that only a fraction of giving went to any families linked to Hamas, which the charity considers an unavoidable outcome in Palestinian territories where Hamas is popular. "I think the government's case against Holy Land is a house of cards and it's in the process of collapsing," he said.

Thousands of pages filed in court by the government reflect that much of the case against Holy Land is built on information compiled by the FBI and other agencies pre-1995, before Hamas was designated a terrorist organization by the United States.

While acknowledging that the government does not have much recent information about possible Holy Land-Hamas ties in the public record, Shapiro rattled off a number of instances where Holy Land officers were at gatherings with Hamas officials and instances of Hamas literature directing contributions to the foundation. "There's no reason to think that Holy Land has changed in any way," she said.

Pressed by Judge Kessler about whether there's any evidence linking Holy Land to Hamas after 1995, Shapiro repeatedly urged her to examine classified evidence the government has submitted to the court. The Holy Land lawyers, who are not permitted to see the secret evidence, are challenging its introduction in the case.

The judge, who has yet issue any rulings in the case, said she has not examined any of the classified evidence--and indicated a reluctance to do so. "You can tell I'm not a fan of secret evidence," she said.

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