DEARBORN — The strife of thousands of Arab Americans being discriminated against by government entities since 9/11, as well as by some Trump-inspired individuals, is nothing new to the immigrant community.
Recently, cases of banks abruptly closing the accounts of their Arab Americans customers without explanation have begun to surface in district courts.
Financial institutions like Chase, Bank of America and Huntington are seeing their days in court as local small business owners, doctors and educators who have banked with them for decades have stepped up to – at least – demand an explanation.
Most of these cases have been dismissed or have concluded in favor of the banks, which reject allegations of discriminatory practices, as in the recent trial involving Bank of America and Life for Relief and Development, a charity organization ran by Middle Easterners.
However, few trials involving account closures have come as far as a class action lawsuit against Huntington National Bank, a case brewing for more than two years.
Last week, settlement negotiations begun between Huntington and the more than 20 plaintiffs representing hundreds of victims.
The talks signal a victory for thousands of Arab Americans whose accounts were closed and an implied acknowledgment of discrimination by the bank, said Nabih Ayad, the plaintiffs’ lawyer and executive director of the Arab American Civil Rights League (ACRL).
About the case
In October 2013, Ali El-Hallani and Mark Manuaeel filed a class action lawsuit in U.S. District Court in the Eastern District of Michigan, alleging the decision to close their accounts in March of that year were based on their ethnicity and religion. As Ayad took the case, thousands of complaints from Arab Americans nationwide flooded both his offices and those of the ACRL.
The case was dismissed in the District Court by then Chief Judge Gerald Rosen in 2014. After Ayad re-filed it a few more times, the U.S. Sixth Circuit Court of Appeals in Cincinnati reversed Judge Rosen’s decision on the basis of a plausible case of discrimination.
Along with a wave of complaints to ACRL’s hotline from thousands of Arabs Americans of varying religious backgrounds, Hussein Dabaja, a former Huntington Bank manager in Dearborn, testified that while working at the branch from 2008 to 2009, the bank’s headquarters would send a quarterly list of Arab-owned business accounts to be closed.
During that time, the employee estimated more than 200 account closures took place.
The Court of Appeals stated Dabaja’s affidavit “supports an inference that race may have been a factor in these account closings.”
Ayad said the Dearborn Huntington branch is one of the most profitable in the state. Its victims include gas station and party store owners, doctors and engineers – even a 5-year-old child.
“They are benefiting and profiting from this community, yet they are harassing, intimidating and discriminating against this community,” he said.
Dennis Lormel, a former long-time FBI special agent focused on anti-terrorism financing, who served as Bank of America’s expert in court, told The AANews that banks often close the accounts of businesses and organizations that work in “high risk” countries known for terrorism or transnational crime, more often than they close individuals’ accounts.
Lormel explained that terrorist groups have historically benefited financially from charity organizations.
In the wake of 9/11, the U.S. began cracking down on these groups.
In 2009, five leaders of the Holy Land Foundation for Relief and Development, a Texas charity, were sentenced to up to 65 years in prison for funneling more than $12 million in material support to Hamas.
A year later, a Sudanese American was convicted in federal court for using the Islamic American Relief Agency, a Missouri-based charity, to donate more than $1 million dollars to Iraq, violating U.S. economic sanctions against the country. The charity director conspired with a designated global terrorist living in Jordan.
De-risking
Lormel added that banks employ a “de-risking” method to weed out funds provided to terrorist groups through a charity front.
“A lot of institutions decide the risk is not worth the reward in maintaining those accounts,” he said.
In the case of Life for Relief vs. Bank of America, a jury decided the bank was justified in closing the account, partly because the charity had multiple accounts with different banks.
For Life, having multiple accounts was a safety net in case one was closed, as had happened in the past.
However, Lormel said the bank only saw only a fraction of Life’s activity, raising money-laundering concerns. The bank does not see a full picture, so there is a lack of transparency.
He added that legally, the bank is justified in closing the account, although he said such action might be unfair.
“When in doubt, close”
Lormel said the discriminatory practice of closing the accounts arise from a lack of leadership between federal financial regulators and the banks. Essentially, regulators give banks the upper hand in determining what is a risk, and whether to “err on the side of omission” rather than keeping businesses as customers.
Consequently, the banks are under the impression that the regulators would penalize them if they keep these accounts open, he added.
Ayad said the banks’ decisions to close thousands of Arab Americans’ accounts transcend perceived risk and that they are “painting with a very wide brush.”
He related the closures to wide-spread instances of bigotry where African Americans walk into shops, only to be kicked out due to fear of theft.
To him, saying “when in doubt, close” is like saying “when in doubt, do not rent a home to an African American or a Mexican.”
“These are financial institutions, not national security institutions,” Ayad said. “If banks act as our national security, then they’re in the wrong field.”
He added that the plaintiffs’ hold clean financial records with no late fees and have not dealt with international wire transfers.
Ayad said a possible settlement involving multiple plaintiffs and a large financial institution on the basis of alleged discrimination is a major feat in the battle for Arab Americans’ civil rights.
“Justice is never given, you have to fight for it,” he said.
