AIG Bailout Promotes Shariah Law, Lawsuit Claims

The U.S. government's bailout of the American International Group is helping promote Shariah law, a lawsuit filed in federal court in Michigan alleges.

The suit — brought with the support of the Thomas More Law Center, a non-profit law firm that promotes conservative Christian values — claims that making U.S. taxpayers comply with Shariah, the Islamic legal framework based on the Koran, is unconstitutional.

This month, AIG announced that it would offer Shariah-compliant homeowner insurance policies, known as takaful, to U.S. customers through one of its subsidiaries. To be Shariah compliant, companies cannot earn interest and must agree to send a percentage of their revenue to Islamic charitable groups.

The lawsuit — by Iraq war veteran Kevin Murray, on behalf of U.S. taxpayers, against Treasury Secretary Henry Paulson and the Federal Reserve — claims that by subsidizing AIG, the federal government is conveying "...a message of endorsement and promotion of Shariah-based Islam ... and [a] message of disfavor of and hostility toward Christianity and Judaism."

In September, the U.S. Treasury and Federal Reserve took a nearly 80-percent stake in AIG when it injected $150 billion to help prop up the troubled company.

"The suit is aimed at persuading the U.S. government it is unconstitutional to engage in the promotion of a faith," Frank Gaffney of the Center for Security Policy told FOX News. "In this case, Islam, and its practices, which include among many other things, Shariah."

While takaful insurance is more common in Europe and Southeast Asia, it is relatively unknown in the U.S. The Ernst and Young professional services firm earlier this year called takaful insurance a growth industry, in part because it is perceived as more stable than conventional insurance, which allows for elements of speculation, interest and gambling.

Gaffney, who opposes Shariah, said the federal lawsuit sheds light on a problem that is under the radar. "There's also a host of other aspects of Shariah that are now beginning to be adopted or accommodated in our country. We think far from being frivolous or innocuous or innocent, these represent a form of, what I think [is] best described as stealth Jihad."

A constitutional law expert who reviewed the court documents for FOX News said he questioned whether the case will ever get to trial.

"The plaintiff is going to have a very hard time in showing they have standing under the establishment clause," said Robert Tuttle, who specializes in religion, law and the establishment clause of the Constitution at George Washington University. The establishment clause, part of the First Amendment, prohibits the establishment of a national faith.

"The question is whether the government has funded religion, not whether the religion is good or bad that the government has funded. Then the next question is whether the government is responsible for what AIG has done."

While the case raises interesting legal questions about the use of federal bailout money, Tuttle adds: "I can't imagine any court saying, under existing law, that the government will be responsible for what AIG does. And I think there's an interesting law professor question there."

Neither AIG nor the Treasury Department would comment on pending litigation, though a spokesman for AIG told FOX News that takaful insurance has been available in non-U.S. markets since 2006, and AIG has never had any problems.