A federal grand jury has indicted an Oregon charity affiliated with the Saudi Arabian government on charges of conspiring to defraud the U.S. government by concealing its alleged efforts to funnel $150,000 to Muslim fighters in Chechnya.
The al Haramain Islamic Foundation and two officers were indicted in Eugene, Ore., late Thursday for allegedly participating in a scheme to misstate the destination of $150,000 from an Egyptian donor. According to the indictment, the funds were intended for guerrillas fighting Russian troops in Chechnya, but the group reported in an income tax return that it went toward the purchase of a building for a mosque in Missouri.
Pirouz Sedaghaty denied wrongdoing.
Based in Ashland, Ore., the al Haramain group, which is now defunct, was the U.S. arm of a huge Islamic charity with the same name headquartered in Saudi Arabia that was shut down by the Saudi government. Both the Oregon branch and the larger organization, which had outlets in 50 countries, have previously been designated by the U.S. government as terrorist groups.
Lawyers for the U.S. al Haramain and its two indicted officers, Soliman Buthe and Pirouz Sedaghaty (also known as Pete Seda), denied that their clients committed any wrongdoing. Both men have been in Saudi Arabia for months, officials say.
"Pete Seda is a man of peace," his lawyer, Lawrence Matasar, said yesterday. "He opposes terrorism everywhere, including in Chechnya. He intends to return to the United States to respond to the charges personally." Matasar declined to say where his client is.
A key part of the indictment focuses on allegations that in 2000, Buthe transported $150,000 in traveler's and cashier's checks from the United States to Saudi Arabia without disclosing to federal officials that he was doing so. Federal law requires notification to the U.S. government when more than $10,000 is dispatched into or out of the country, though travelers typically are warned of the requirement only upon entering the United States.
Buthe's attorney, Tom Nelson, acknowledged that his client carried the funds out of this country, but added that Buthe had no idea he was required to reveal that to U.S. customs officers. "The statute requires a knowing violation," Nelson said. "We don't think he can be found guilty."
Next month marks the five-year anniversary of many of the events asserted in the indictment, and some of the alleged crimes carry a five-year statute of limitations, legal sources said.
Most of the facts alleged in the indictment have been known publicly since February 2004, when the U.S. government ordered banks to freeze the American charity's accounts.
The probe of al Haramain's activities in the United States is part of a sprawling but largely secret investigation by federal agents into a cluster of allied Islamic groups, government officials have said. These include the Islamic Foundation of America, based in Springfield, and the largely inactive Michigan-based Islamic Assembly of North America, they said.
The Saudi-based al Haramain, which was run by the Saudi government's Islamic Affairs Ministry, was for years a leading proponent of Wahhabism, the austere fundamentalist brand of Islam favored in the desert kingdom.
Al Haramain and its American branch, along with the Islamic Foundation and the Islamic Assembly, have distributed millions of dollars' worth of religious tracts and other publications that promote Wahhabi doctrine. With an overall budget of about $50 million, the main al Haramain also supported mosques, clinics and schools around the world.
The indictment said that in 1999, al Haramain's Saudi headquarters instructed an Egyptian donor, who wanted to give $150,000 to the Muslim struggle in Chechnya, to wire the money to the group's Oregon office. Sedaghaty and Buthe, who controlled the group's bank account, then converted the funds into traveler's and cashier's checks, and Buthe carried them to Saudi Arabia, it said.
In 2001 the Oregon foundation's accountant, relying on information provided by Sedaghaty, prepared an income tax return that falsely claimed the $150,000 was used to help buy a building in Springfield, Mo., according to the indictment.
Buthe's lawyer said his client cannot return to this country to fight the charges because the Saudis have confiscated his passport. Last year, Buthe replied by e-mail to a reporter's questions about the investigations.
"I am ready to give myself [up] if I am guilty," he wrote. Asked about Chechen fighters whose movement Washington has linked to terrorism, he replied: "I never met any of these crazy militants or supported them by any means."
Staff writers David B. Ottaway and Susan Schmidt contributed to this report.