On Dec. 28, 2007, the U.S. Court of Appeals for the Seventh Circuit overturned a $156 million judgment against several U.S.-based charities accused of supporting terrorism. The court ruled that the 2004 award against several charities that required payment of damages to the family of David Boim, who was shot to death in the West Bank in 1996 in an attack attributed to Hamas, must be based on evidence that the charities were directly connected to the murder. The case was sent back to the lower court where there may be a new trial. The case could have a significant impact on the long-term fate of charitable funds seized by the government as part of its financial war on terror.

The Boim family was living in Jerusalem in 1996 when their 17-year-old son David was shot by two men identified as members of the militant Palestinian group Hamas, which the U.S. government has designated as a terrorist organization. In 2000, the Boims filed suit against Muhammad Salah, a former Hamas military director then living outside Chicago, and three U.S.-based Islamic charities suspected of funneling money to terrorist groups. The Boims wanted to make sure that that no money raised in the U.S. by Islamic charities was actually used to support terrorists in the Middle East. In 2004, a jury found the defendants responsible for providing financial support to Hamas, granting $52 million in damages, which was later tripled to $156 million as required under U.S. anti-terrorism law.

The appellate court decision said the trial court did not require the Boims to present credible evidence proving a causal connection between Hamas and the activities of the Holy Land Foundation for Relief and Development (HLF), the American Muslim Society, the Quranic Literacy Institute, and fundraiser Muhammad Salah. Furthermore, the trial court improperly allowed the Boims to rely on hearsay evidence and out-of-court statements, including websites attributed to Hamas.

The ruling also said the lower court should not have held that the links between HLF and Hamas were "incontrovertible" based on classified government evidence used by the Department of Treasury to designate HLF as a supporter of terrorism because HLF never had the opportunity to see or contest the evidence. The court drew a distinction between a civil dispute between private litigants and one involving national security with the government as a party, which are for different purposes and use different standards. In the Boim case, Judge Ilana Diamond Rovner wrote, "Belief, assumption, and speculation are no substitutes for evidence in a court of law."

The opinion went on to state, "The district court mistakenly believed that an organization or individual that contributed money or other support to Hamas with the intent to support its terrorist activities could be liable to the Boims even in the absence of proof that the money or support given to Hamas was a cause in fact of David's death, so long as the murder of David was foreseeable to the donor individual or organization."