On Feb. 19 the Treasury Department froze the assets of KindHearts USA, padlocking the doors of the Toledo-based charity "pending an investigation." The Treasury Department claims the group has connections to Hamas, but KindHearts officials vigorously denied the allegations. The official closure of KindHearts makes it unlawful for U.S. citizens, businesses, and organizations to carry out transactions with the organization. In response, a coalition of Muslim groups sent a letter to Treasury Department Secretary John Snowe on Feb. 28 requesting a meeting to discuss "the continued targeting of Muslim charities without due process of law." The Treasury Department announcement stated, "KindHearts officials and fund-raisers have coordinated with Hamas leaders and made contributions to Hamas affiliated organizations." Hamas has been designated as a terrorist organization by the U.S. government. Stuart Levey, Treasury Under Secretary for Terrorism and Financial Intelligence, said, "KindHearts is the progeny of Holy Land Foundation (HLF) and Global Relief Foundation (GRF)," groups that were shut down by Treasury in 2001. The announcement says "former GRF official Khaled Smaili established KindHearts from his residence in January 2002... KindHearts leaders and fundraisers once held leadership or other positions with HLF and GRF." KindHearts describes itself as a humanitarian aid organization. KindHearts raised $5.1 million in 2004 and has branches in Lebanon, the Gaza Strip and Pakistan. The Treasury Department alleges it gave more than $250,000 to the Sanabil Association for Relief and Development, which was designated as a terrorist organization in August 2003. KinderHearts board chair Dr. Hatem Elhady told the Toledo Blade, however, that it contracted with Sanabil to provide aid in refugee camps before the designation was made, and the amount was no more than $115,000, saying, "We did not just give money. We gave it for specific projects, and we saw the results, and we have the receipts." The Treasury Department also cites a KindHearts "connection" to a former employee of HLF who was indicted by a federal grand jury in Texas for providing material support to Hamas. Mohammed El-Mezain had been retained to raise funds for the organization, but Smaili said the contract was voided as soon as KindHearts learned about the indictment. The case has not yet come to trial. Jihad Smaili, an attorney and KindHearts board member, rejected the Treasury Department's allegations: "I know the government has listened to every conversation that we've made and traced every wire sent from KindHearts USA to Lebanon or Palestine," he said. "They know exactly what's going on and that we have not done anything wrong." Smaili noted that by using its authority under Executive Order 13224, the Treasury Department does not have to prove its allegations in court. There is no deadline for the Treasury Department to complete its investigation, making it likely that the organization will go out of business even if it is ultimately cleared. A statement from KindHearts explains that over $1 million was frozen, most of which had been earmarked for earthquake victims in Pakistan and for a new office in Indonesia. It called on the Treasury Department to ensure the funds are used for humanitarian aid, stating:

KindHearts is prepared to agree to the distribution of the funds currently held by our Government, except for those funds that will be expended on payment to employees for past services provided and for upcoming legal fees, to be spent under the auspices and administration of the USAID Program (of which KindHearts is a member) or any other NGO (United Nations, Red Crescent, etc.) on KindHearts programs, or any other humanitarian program that it deems justified. However, KindHearts requests that special consideration be given to the refugees in the earthquake ravaged areas of Pakistan since the overwhelming majority of frozen funds were earmarked for projects therein.

The statement notes that KindHearts was among the Muslim organizations investigated by the Senate Finance Committee, which found no wrongdoing. The response in the Muslim community to KindHearts' closure was decidedly and not surprisingly negative. A coalition of 10 national Muslim groups, the American Muslim Taskforce on Civil Rights and Elections (AMT), sent a letter to Treasury Secretary John Snowe stating, "As leading American Muslim organizations, we note that although we understand the political climate of our country and support our government's efforts to thwart terrorist financing; we find it unfair that our government has yet made another extrajudicial decision to effectively wipe-out more than five years of humanitarian assistance to the world's needy by the mere stroke of a pen. The immediate effects of KindHearts' closure have already been felt in orphanages, schools, shelters, and medical centers around the world." A Treasury spokeswoman would not comment on the meeting request.