[Infowarrior] - Ordinary Customers Flagged as Terrorists

[Richard Forno]

Ordinary Customers Flagged as Terrorists

By Ellen Nakashima
Washington Post Staff Writer
Tuesday, March 27, 2007; A01
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/26/AR2007032602
088_pf.html

Private businesses such as rental and mortgage companies and car dealers are
checking the names of customers against a list of suspected terrorists and
drug traffickers made publicly available by the Treasury Department,
sometimes denying services to ordinary people whose names are similar to
those on the list.

The Office of Foreign Asset Control's list of "specially designated
nationals" has long been used by banks and other financial institutions to
block financial transactions of drug dealers and other criminals. But an
executive order issued by President Bush after the Sept. 11, 2001, attacks
has expanded the list and its consequences in unforeseen ways. Businesses
have used it to screen applicants for home and car loans, apartments and
even exercise equipment, according to interviews and a report by the
Lawyers' Committee for Civil Rights of the San Francisco Bay area to be
issued today.

"The way in which the list is being used goes far beyond contexts in which
it has a link to national security," said Shirin Sinnar, the report's
author. "The government is effectively conscripting private businesses into
the war on terrorism but doing so without making sure that businesses don't
trample on individual rights."

The lawyers' committee has documented at least a dozen cases in which U.S.
customers have had transactions denied or delayed because their names were a
partial match with a name on the list, which runs more than 250 pages and
includes 3,300 groups and individuals. No more than a handful of people on
the list, available online, are U.S. citizens.

Yet anyone who does business with a person or group on the list risks
penalties of up to $10 million and 10 to 30 years in prison, a powerful
incentive for businesses to comply. The law's scope is so broad and guidance
so limited that some businesses would rather deny a transaction than risk
criminal penalties, the report finds.

"The law is ridiculous," said Tom Hudson, a lawyer in Hanover, Md., who
advises car dealers to use the list to avoid penalties. "It prohibits anyone
from doing business with anyone who's on the list. It does not have a
minimum dollar amount. . . . The local deli, if it sells a sandwich to
someone whose name appears on the list, has violated the law."

Molly Millerwise, a Treasury Department spokeswomen, acknowledged that there
are "challenges" in complying with the rules but said that the department
has extensive guidance on compliance, both on the OFAC Web site and in
workshops with industry representatives. She also said most businesses can
root out "false positives" on their own. If not, OFAC suggests contacting
the firm that provided the screening software or calling an OFAC hotline.

"So the company is not only sure that they are complying with the law," she
said, "but they're also being good corporate citizens to make sure they're
doing their part to protect the U.S. financial system from abuse by
terrorists or [weapons] proliferators or drug traffickers."

Tom Kubbany is neither a terrorist nor a drug trafficker, has average credit
and has owned homes in the past, so the Northern Californian mental health
worker was baffled when his mortgage broker said lenders were not interested
in him. Reviewing his loan file, he discovered something shocking. At the
top of his credit report was an OFAC alert provided by credit bureau
TransUnion that showed that his middle name, Hassan, is an alias for Ali
Saddam Hussein, purportedly a "son of Saddam Hussein."

The record is not clear on whether Ali Saddam Hussein was a Hussein
offspring, but the OFAC list stated he was born in 1980 or 1983. Kubbany was
born in Detroit in 1949.

Under OFAC guidance, the date discrepancy signals a false match. Still,
Kubbany said, the broker decided not to proceed. "She just talked with a
bunch of lenders over the phone and they said, 'No,' " he said. "So we said,
'The heck with it. We'll just go somewhere else.' "

Kubbany and his wife are applying for another loan, though he worries that
the stigma lingers. "There's a dark cloud over us," he said. "We will never
know if we had qualified for the mortgage last summer, then we might have
been in a house now."

Saad Ali Muhammad is an African American who was born in Chicago and
converted to Islam in 1980. When he tried to buy a used car from a Chevrolet
dealership three years ago, a salesman ran his credit report and at the top
saw a reference to "OFAC search," followed by the names of terrorists
including Osama bin Laden. The only apparent connection was the name
Muhammad. The credit report, also by TransUnion, did not explain what OFAC
was or what the credit report user should do with the information. Muhammad
wrote to TransUnion and filed a complaint with a state human rights agency,
but the alert remains on his report, Sinnar said.

Colleen Tunney-Ryan, a TransUnion spokeswoman, said in an e-mail that
clients using the firm's credit reports are solely responsible for any
action required by federal law as a result of a potential match and that
they must agree they will not take any adverse action against a consumer
based solely on the report.

The lawyers' committee documented other cases, including that of a couple in
Phoenix who were about to close on their first home, only to be told the
sale could not proceed because the husband's first and last names -- common
Hispanic names -- matched an entry on the OFAC list. The entry did not
include a date or place of birth, which could have helped distinguish the
individuals.

In another case, a Roseville, Calif., couple wanted to buy a treadmill from
a home fitness store on a financing plan. A bank representative told the
salesperson that because the husband's first name was Hussein, the couple
would have to wait 72 hours while they were investigated. Though the couple
eventually received the treadmill, they were so embarrassed by the incident
they did not want their names in the report, Sinnar said.

James Maclin, a vice president at Mid-America Apartment Communities in
Memphis, which owns 39,000 apartment units in the Southeast, said the
screening has become "industry standard" in the apartment rental business.
It began about three years ago, he said, spurred by banks that wanted
companies they worked with to comply with the law.

David Cole, a Georgetown University law professor, has studied the list and
at one point found only one U.S. citizen on it. "It sounds like overly
cautious companies have started checking the list in situations where
there's no obligation they do so and virtually no chance that anyone they
deal with would actually be on the list," he said. "For all practical
purposes, landlords do not need to check the list."

Still, Neil Leverenz, chief executive of Automotive Compliance Center in
Phoenix, a firm that helps auto dealers comply with federal law, said he
spoke to the general manager of a Tucson dealership who tearfully told him
that if he had known to check the OFAC list in late summer of 2001, he would
not have sold the car used by Mohamed Atta, who went on to fly a plane into
the World Trade Center.

Staff researchers Bob Lyford and Richard Drezen contributed to this report.