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Saudi Is Focus of Money-Laundering Investigation

Finance: Businessman denies he used banks and a charity to channel funds to Hamas and Bin Laden's Al Qaeda.


CHICAGO — FBI agents investigating a Muslim organization in Chicago three years ago found that a Saudi businessman had wired $820,000 to the United States.

The Quranic Literacy Institute invested the money in suburban Chicago real estate--part of a complex process by which, federal officials say, the funds were laundered and ultimately sent to Hamas, the Palestinian militant group.

The same Saudi businessman has now emerged in a U.S. Treasury Department investigation as an alleged source of funds for Osama bin Laden.

Government officials say Yassin Al Qadi controlled the bank accounts of a Saudi charity that gave financial aid to Bin Laden. They assert that at least $3 million flowed through the bank accounts of the charity, Muwafaq, which is Arabic for "blessed relief."

Qadi has vigorously disputed that he has supported Bin Laden or other terrorists in any way.

Government officials portray him as a financier for both Hamas and Al Qaeda, Bin Laden's international terrorist network.

Evidence of a money man linked to both groups suggests that Hamas and Al Qaeda "have had some kind of partial fusion," perhaps in Israel, said Daniel Benjamin, who helped coordinate U.S. counter-terrorism policy while serving on the National Security Council in the Clinton administration.

Benjamin said it could also mean that Qadi was merely someone who sympathized with the views of both groups. "Either way, he's someone of note if he's sending amounts like that," Benjamin said.

Qadi's name surfaced in 1998 in an investigation into the Quranic Literacy Institute, an Islamic nonprofit group in Chicago that translates and publishes Muslim religious texts.

During legal proceedings to seize money belonging to the institute, the FBI alleged in court papers that the institute was laundering money for Hamas.

The government's case is one of the few instances in which details about how nonprofits allegedly funnel money to terrorists have been made public.

The scheme involved a complicated 1991 real estate deal financed by Qadi that was supposed to generate cash to help fund Hamas activities, court papers state.

Qadi's $820,000, which he wired from a Swiss bank, was used to buy land in the Chicago suburbs, the FBI alleged. The purchase was part of a series of financial maneuvers intended to obscure the role of the institute in financing Hamas, the government contended.

"The land deal was entered into and conducted with multiple elements of subterfuge, ranging from the mundane and perfectly legal to the unconventional and likely illegal, the common element in all of which was public concealment of the group's involvement," federal prosecutor Joseph M. Ferguson wrote in court papers.

Prosecutors described a complex money trail that snaked around the world. The FBI alleged that the institute provided a "cover" job as a computer analyst for a Hamas operative, Muhammad Salah, who was later jailed as a terrorist in Israel. While in jail, Salah allegedly confessed to his role in Hamas.

U.S. investigators traced money linked to the institute and Salah to weapons purchased on the West Bank. The money bought an M-16 rifle, two Uzis, two AK-47 assault rifles, some 9-millimeter pistols and hundreds of rounds of ammunition, the FBI said. The rifle was allegedly used in the 1992 murder of an Israeli soldier.

The government seized $1.4 million belonging to the institute and Salah in 1998. But the institute and Salah are still trying to get their money back.

Salah's American lawyer, Matthew Piers, said his client had no ties to Hamas. He dismissed the confession as lies uttered under torture.

John Beal, a lawyer for the institute, said the center was never a source of funds for Hamas and has no links to the organization.

Beal described the money from Qadi as a "charitable transaction" and said that center officials "believe he is a reputable and legitimate Saudi philanthropist."

Qadi, in an interview with the Chicago Tribune, said his loan to the Quranic Literary Institute was purely charitable.

"There is no $3 million going to Osama bin Laden, never," Qadi said. Nevertheless, Treasury officials asked banks around the world to freeze Qadi's assets on Oct. 12, as part of the Bush administration's financial war on terrorism.

Government officials think that wealthy Middle Eastern businessmen paid protection money to Bin Laden though Muwafaq, the Saudi charity that Qadi allegedly operated.

Bin Laden is reported to have said in interviews that he received funds from Muwafaq. In 1996, a Paris-based Arab newspaper quoted Bin Laden as saying that Muwafaq was among the humanitarian organizations he supported.


Times staff writer Robert J. Lopez contributed to this report.

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