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<DIV><STRONG><FONT size=5>Ordinary Customers Flagged as
Terrorists<BR></FONT></STRONG>
<P><FONT size=-1>By Ellen Nakashima<BR>Washington Post Staff Writer<BR>Tuesday,
March 27, 2007; D01<BR></FONT></P>
<P></P>
<P>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.</P>
<P>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.</P>
<P>"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."</P>
<P>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.</P>
<P>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.</P>
<P>"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."</P>
<P>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.</P>
<P>"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."</P>
<P>Tom Kubbany is neither a terrorist nor a drug trafficker, has average credit
and has owned homes in the past, so the Northern California 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."</P>
<P>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.</P>
<P>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.' "</P>
<P>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."</P>
<P>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.</P>
<P>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.</P>
<P>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.</P>
<P>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.</P>
<P>James Maclin, a vice president at <A
href="http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=MAA&nav=el"
target="">Mid-America Apartment Communities</A> 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.</P>
<P>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."</P>
<P>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.</P>
<P><I>Staff researchers Bob Lyford and Richard Drezen contributed to this
report.</I></P></DIV></BODY></HTML>