WASHINGTON (CN) - The U.S. Treasury has long turned a blind eye to nonprofits that funnel up to $1 billion a year to Israeli settlements, several activists claim in a federal complaint.
"Treasury claims that it takes a very vigorous and active role in terms of monitoring the activities of" entities that fund settlements in Israel occupied Palestine, according to the Dec. 16 complaint.
"If it does so, it missed $1 billion in total transfers to the settlements in 2015 and at least $60 million in tax-deductible contributions to the IDF in a single month, December 2014," the 72-page complaint states.
Far from engaging in "charitable activities," the complaint alleges that these nonprofits are fueling land theft, forcible expulsion of hundreds of thousands of Palestinians from their land, demolition of Palestinian homes and paramilitary activities carried out by armed Israeli settlers against Palestinian civilians.
U.S.-based donations support these practices, which violate both U.S. and Israeli law, according to the complaint.
"I want a court, somewhere, somehow, to hold accountable those who have financed my pain of dispossession and exile; to hold accountable the financiers of Israel's wholesale theft of another people's historic, material, spiritual, and emotional presence in the world," the complaint says, quoting one of the plaintiffs, Palestinian-American writer Susan Abulhawa.
Michael Several, a Jewish-American co-plaintiff, says he has done extensive research on the financial contributions to nonprofits like Friends of the Israeli Defense Forces, a U.S.-based nonprofit that received $60 million in donations in a single month lat year.
In addition to entrenching Israel's occupation of Palestine, these organizations have undermined U.S. foreign policy in support of a Palestinian state and helped breed the conditions from which Palestinian violent resistance emerges, according to the complaint.
Although the tax-exempt entities themselves are not named as defendants in the case, the complaint alleges that the Treasury's "double standard" in enforcing its own regulations has led to the proliferation of the Israeli settlement enterprise, and has resulted in up to $1 trillion in lost U.S. tax revenue.
"Huge tax deductions are being taken that support ethnic cleansing of Palestinians," Martin McMahon, an attorney for the plaintiffs, said in an interview. "Guess who picks up the tab? The American taxpayer. There's something wrong with that. "
The numbers could be a gross underestimation of the money actually flowing into the settlements, McMahon added.
The complaint alleges that the Treasury Department's policy has turned a blind eye as up to 150 exempt entities encourage donors to take illegal tax write-offs, violating at least eight federal criminal statutes and five Treasury regulations, including money laundering and supporting terrorist activity.
"U.S. tax-exempt entities and their donors, settlement leaders, and the construction companies they hired to build housing developments and shopping malls can all be criminally prosecuted because they have conspired to fund, facilitate, trespass on, demolish and/or confiscate private Palestinian property, all in the name of settlement expansion," the complaint says.
McMahon says proving the allegations could lead the U.S. to designate these entities as "special designated global terrorists," stripping them of their tax-exempt status and freezing their assets.
"There are huge penalties that go with that," but it remains uncertain how the Treasury will react now that it faces pressure to enforce the laws, the attorney said.