The agents arrested the Yemeni proprietor, a naturalized U.S. citizen, who lived three floors above. Based on a tip, they said, they had learned that $20 million had passed through the bank accounts of his business from 1997 until the raid in January.
The proprietor, Abad Elfgeeh, pleaded guilty last month in a proceeding that escaped notice, perhaps because the illegal money-transfer charge against him never mentioned terrorism.
But a review of court files by The Associated Press revealed that prosecutors believe Elfgeeh was an associate of Sheik Mohammed Hasa Al-Moayad, a prominent Yemeni cleric charged with funneling millions to Al Qaeda in the years before the Sept. 11 attacks.
Elfgeeh has denied any connection. Al-Moayad is being held in Germany, where he is fighting extradition to the United States.
The allegations of an illicit connection between the two men stem from the federal government's crackdown on informal money transfer networks known as "hawalas." (search)
But since the Sept. 11 attacks, authorities have worked to dismantle the system, fearing it allows terrorists to raise and launder money. Usama bin Laden has boasted that hawalas created cracks in the Western financial system that "were as familiar to him and his Al Qaeda colleagues as the lines of their own hands," a recent congressional report warned.
Offices of companies providing hawala services have been shuttered in cities around the United States. In Brooklyn alone, more than a dozen Arab or Muslim men have been charged with transferring money without a license. One, an American of Egyptian descent, was convicted in July of trying to smuggle $659,000 in boxes of Ritz crackers, Quaker Oats and baby wipes stuffed in a suitcase on a flight to Egypt.
Defense lawyers call the crackdown overkill and say prosecutors have unfairly linked their clients to extremist causes and subjected them to interrogations and severe jail conditions without actually charging them with terrorism.
Some of the defendants were naturalized U.S. citizens with clean records. Most were guilty only of trying to send money home to loved ones, said Peter Mollo, an attorney for Mohamed Ali Alriany, a Brooklyn man who pleaded guilty in a case in which investigators say he made millions of dollars in unreported transfers to Yemen through his gift shop.
"They're looking for a bigger fish," Mollo said. "There is no bigger fish."
On the surface, Elfgeeh seems an unlikely threat to national security. He arrived in the United States 30 years ago with an eighth grade education and became a citizen five years later. He was in the ice cream business for 20 years and had no previous arrests.
In his plea after the Jan. 18 raid on his ice cream shop, Elfgeeh, 48, said he began informally transferring money for family and friends for a fee in 1995. He said he "intended to get a license, but never got around to it."
Testifying about the morning of his arrest, Elfgeeh told a judge that he was asleep with his pregnant wife when the armed federal agents pounded on his door. The agents, who had a material witness warrant, intimidated him into consenting to a search, he said.
"I was terrified, very scared," he said. "Of course, we are hearing a lot since Sept. 11 about what happened to Arabic men, what happened to Muslims who look like me."
But authorities said documents seized in his shop revealed a pattern of deception.
Tax records showed the shop had average annual revenue of about $185,000, but court papers said that from November 2001 to November 2002 alone, Elfgeeh's bank accounts had deposits of more than $5.3 million — money later transferred to banks in Yemen and elsewhere.
Investigators say they connected Elfgeeh to the Yemeni cleric, Al-Moayad, following a sting operation in Germany in which Al-Moayad told an FBI informant that he supplied $20 million, recruits and weapons to bin Laden.
Al-Moayad allegedly named four men in New York — including Elfgeeh — he claimed had secretly transferred funds to him in Yemen. He also "said he received money for 'jihad' that was collected from the Al Farouq mosque in Brooklyn," court papers said.
Past investigations identified the mosque as a place of worship for terrorists, including the men who bombed the World Trade Center in 1993. Mosque leaders have dismissed any current connection.
During a sealed proceeding in July, Elfgeeh testified he had heard of Al-Moayad, but added: "I do not personally know him."
He is now awaiting sentencing on the illegal money-transfer charge and could face up to 10 years in prison.