The sheikh was a devout Muslim whose lifelong ambition was caring for the poor in Yemen, one of the world's most underdeveloped nations. Yet now he needed help himself. His health was deteriorating, and no facilities in his country were sophisticated enough to treat him.

So he turned to his new friend, "Yussef," a wealthy but disillusioned young African-American. Yussef had converted to Islam and traveled to Yemen to become more devout, like the now infamous John Walker Lindh.

The young convert suggested a trip to Germany, where the sheikh could both visit experienced doctors and raise money for his causes.

But Yussef wasn't the person he seemed. As an American undercover agent, he was trying to trap the Muslim leader, who is alleged by the US to be a key financier of terrorism. What followed is a tale of deception, betrayal, and intrigue - and of the clashing international interests and viewpoints that make the pursuit of terrorists so complex.

The fallout has created a behind-the-scenes rift between the US and two of its key partners in the war on terror - Germany and Yemen. Germany is now holding the sheikh and his personal secretary. But both the US and Yemen want them, for different reasons.

A German court must rule on the disposition of the men by mid-March - a decision that is likely to have a crucial impact on how well Germany and Yemen work with the US in the future. Both countries have provided essential intelligence and assistance in tracking down Al Qaeda members worldwide.

But both countries also have domestic populations increasingly at odds with US foreign policy, which is complicating the Yemeni case and shows the difficult politics of conducting any global dragnet on terrorism.

"There is a lot more under way operationally, and American patience is much less than it once was," says Daniel Benjamin, an expert on terrorism at the Center for Strategic and International Studies in Washington. "This kind of operation gets people very exercised, and it demonstrates just how freighted these operations have become."

In the mid-1990s, Sheikh Mohammed Ali Hassan al-Mouyad founded the Al Ehsan Mosque and Community Center in the dusty outskirts of Sana, Yemen's capital. The center feeds about 9,000 families a day, and provides free educational and medical care as well. Besides his work with the poor, the sheikh also serves as a consultant to Yemen's Ministry of Endowments and is a top leader in the opposition Islamic party, Al-Islah.

But it was at the mosque and community center where Yussef turned up. By demonstrating his dedication to the cause of furthering Islam, he eventually became a confidant of Sheikh Mouyad, according to foreign intelligence sources.

It was Yussef who suggested the sheikh travel to Germany, where he would receive the most advanced treatment for asthma and diabetes, and gain something even more valuable: Yussef would introduce the sheikh to an "investor" who would make a handsome donation to the sheikh's charity to help care for the poor - and, he assumed, to help finance terrorist attacks.

The young American took prodigious care of all the arrangements. In early January, Sheikh Mouyad and his personal secretary, Mohammed Moshen Yahya Zayed, flew to Frankfurt, where Yussef had arranged for a room at the airport's Sheraton Hotel. He also organized transportation - a black Mercedes in which to travel to and from their appointments.

But Yussef provided more than met the sheikh's eye. Hidden cameras and speakers were embedded in both the Sheraton hotel room and the Mercedes, and Yussef was "wired," according to officials familiar with the case. All the conversations among the sheikh, Yussef, and the investor concerning the transfer of money for alleged nefarious activities - including meetings in the hotel and a Frankfurt restaurant - were recorded.

On the evening of Jan. 9, the men sealed their deal in Mouyad's Sheraton hotel room with a handshake. The investor agreed to provide $25 million to the sheikh's charity the next day for both humanitarian assistance and for terrorist attacks to be carried out by the Palestinian Hamas and Al Qaeda network, foreign officials say. The sheikh was also to provide the bank account numbers to expedite the wire transfer.

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