Terror finance: two high-stakes cases

Coming trials for a sheikh and an ice cream shop owner show how complex it can be to follow a global money trail.

As soon as the man walked into the Carnival French Ice Cream Shop in Brooklyn, owner Abad Elfgeeh said he felt something was "very wrong."

The stranger wanted to give Mr. Elfgeeh $100,000 to send to a sheikh in Yemen who ran a charity bakery that makes bread for the poor. But the man couldn't explain where he got the money.

"He looked stupid, like he might rob you," says Elfgeeh, who for years has informally helped family, friends, and neighbors send money to Yemen. "I told him to go to Western Union."

The man turned out to be Mohamed Alanssi, an FBI informant who is now recovering after setting himself on fire in front of the White House to protest what he says is the FBI's betrayal of him, a charge investigators deny.

And Elfgeeh, whose home was later searched as a result of an Alanssi tip, is now facing trial for running an illegal money transfer business, a crime that could put him behind bars for 14 years.

Elfgeeh is one of 20 people implicated by Mr. Alanssi, including a prominent Yemeni sheikh, Sheikh Mohammed Ali Hassan al-Mouyad, who was nabbed in a sting operation in Germany. The sheikh is now in jail in Brooklyn on charges that he provided millions of dollars to Al Qaeda and the Palestinian terrorist group Hamas.

At the time case broke in early 2003, it was considered to be the government's biggest domestic terrorism-finance probe. Now as prosecutors prepare for the sheikh's Jan. 10 trial and Elfgeeh's March trial, Alanssi's bizarre behavior and other revelations surrounding the cases offer an inside look at the complexity of following the money trail in the worldwide war on terror - and the difficulty of proving alleged wrongdoing.

Indeed, defense lawyers in the two cases believe they are textbook examples of what can go wrong when law-enforcement authorities rely on unreliable informants and stage risky undercover operations.

But government prosecutors are confident enough in their evidence to move ahead with the cases, despite the questions surrounding the informant Alanssi.

Some outside terror experts, in fact, laud the government for pressing such cases at all, saying they represent "new territory" in the war on terror.

"It's a sign that the war against terrorism is moving to a new level," says Lee Wolosky, former director for transnational threats at the National Security Council under Presidents Clinton and George W. Bush. "What you're seeing now is a focus on something that's really hard to get at - the nonstructured modes of terrorist financing, which means they exist outside of an organized charity."

The FBI informant

At the core of the cases is the mysterious and mercurial Alanssi, who told the FBI that he had known Sheikh Mouyad when he had lived in Yemen and that the sheikh regularly supported Islamic terrorists.

Alanssi eventually set up a meeting with Mouyad in Germany with another FBI informant. The second informant pretended to be a former Black Panther who wanted to donate $2.5 million to arm and train Islamist terrorists.

When the three men finally met in a hotel room in Germany, Alanssi asked the sheikh directly if the money would go to arm Islamic fighters. The sheikh talked primarily about feeding the poor and his charity bakery, which he referred to as "the oven." When pressed again about whether the money would finance a holy war, he responded that with God's will he would "work in these fields, as they are my fields."

In their indictment, prosecutors argue the talk of the "charity" and the "oven" were code words for terrorist activities.

Mouyad and his attorney dispute that. They say that Alanssi knew all along the money was for the sheikh's charity bakery. They also contend that Alanssi had coached the sheikh to agree with whatever the donor, the pseudo Black Panther, said to ensure that he would be given the money.

Alanssi, the sheikh's attorneys say, duped not only their client but the FBI as well. Lawyer Howard Jacobs also disputes government assertions that the sheikh had "bragged" to Alanssi about sending $20 million, as well as arms and communications equipment, to Osama bin Laden.

For its part, the US Attorney's office in Brooklyn, which is prosecuting the case, refuses comment. Government officials will only say that they stand by their case.

The money-transfer case

Elfgeeh, the ice cream shop owner, is charged with a very different offense - operating a money transfer business without a license. He was well known in the Yemeni community in Brooklyn for helping friends and associates send money overseas.

That prompted FBI informant Alanssi's first visit to his ice cream shop, in which Elfgeeh turned him away. Alanssi returned a second time. Elfgeeh says he again refused to help him. More than a year later, FBI agents arrived at his home and asked if they could search it. His telephone number had allegedly been found among Mouyad's things. Elfgeeh allowed them in, even though they didn't have a warrant. He had "nothing to hide," he says. "I hadn't done anything wrong."

The FBI agents found bank records dating back to 1995. They indicated that while the Carnival Ice Cream Shop revenues amounted to less than $200,000 a year, more than $20 million had been transferred through the shop's account over six years. Most of the transactions were with people in Yemen, but several large sums had been wired to Thailand, China, and Italy.

Elfgeeh, now an American citizen, readily admits he used his business account to help Yemeni immigrants send money back home. He says it's common in their close-knit community, particularly for people with families that live in remote villages. Several neighbors and friends in Brooklyn say that Elfgeeh is a respected businessman in the community, and therefore someone to be trusted with people's money.

He says he was not running an unlicensed money-transfer business, but providing a "community service." And because he used his bank accounts, he says, all the transactions were above board and wired through a licensed bank. According to Elfgeeh, the large transactions were favors done for friends with businesses in Yemen that needed the money to pay for auto parts and building materials. He says he has receipts and letters to prove it was all legitimate.

His lawyers are challenging the constitutionality of the statute under which Elfgeeh is being charged. They're also asking that the case be dismissed because it was based on a tainted informer's information. "There's no contention he [Elfgeeh] ever sent a dime to a questionable person, let alone a terrorist," says Burt Pugach, a paralegal working on the case. "This has nothing to do with terrorism."

The US Attorney's office wouldn't comment on the specifics of this case either. Robert Nardoza, a spokesman for the Brooklyn office, simply said of both investigations: "We're prepared to go to trial."

Federal prosecutors have, however, shifted strategies somewhat. Earlier this month, they filed a new indictment charging that the defendants in both cases "attempted" to provide material support to terrorists, as opposed to actually doing it.

More recently, they filed a motion indicating they will not call Alanssi as a witness in the sheikh's trial, relying instead on tape recordings made during the sting operation in Germany. That way his protests about the FBI's treatment of him, and charges of criminal wrongdoing, won't have to be introduced to the jury.

In the Elfgeeh case, too, the government, according to its indictment, relies primarily on the ice cream shop owner's own bank records, rather than on information provided by Alanssi, to support its charges.

Whatever the strength of the government's cases, some terror-finance experts believe it's important for authorities to monitor all types of informal money-transfer operations, whether there's direct evidence of ties to terrorists or not, since Al Qaeda has used them in the past.

"I'm not sympathetic to somebody not registering [their money-transfer activities]," says Jonathan Winer, a terrorism expert referring to Elfgeeh's lack of a license, "because it's not costly to register and the implication of registering is that you've got to be on the lookout not to be facilitating any illegal activity just as you were a broker, banker, or an insurance company."

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