Former Governing Council member Ahmad Chalabi (search) and his nephew Salem dismissed charges filed against them by Iraq's chief investigating judge, calling the allegations part of a political conspiracy against them and their family.

Ahmad Chalabi, once a Pentagon favorite to take leadership of the new Iraq, was charged with counterfeiting. A warrant for his arrest issued Saturday pushed him futher from the center of power, over which he seemed to have a firm grip until he fell out with the Americans in the weeks before the U.S. occupation ended in June.

The one-time Iraqi exile opposition leader was in Tehran, Iran (search), for an economic conference and said that despite his doubts about the Iraqi criminal system, he would return.

"I'm now mobilized on all fronts to rebuff all these charges," Ahmad Chalabi told a cable news outlet. "Nobody's above the law, and I submit to the law in Iraq ... despite my serious and grave reservations about this court."

Salem Chalabi, head of the tribunal trying Saddam Hussein, was charged with murder after having been named as a suspect in the June murder of Haithem Fadhil, director general of the finance ministry. He said he too did not fear conviction.

"I don't think ... that I had anything to do with the charges so I'm not actually worried about it," Salem Chalabi told a cable network, speaking from London. "It's a ridiculous charge, that I threatened somebody ... there's no proof there."

If convicted, Salem Chalabi, 41, could face the death penalty, which was restored by Iraqi officials on Sunday, judge Zuhair al-Maliky said. His uncle, who is in his late 50s, would face a sentence determined by trial judges.

"They should be arrested and then questioned and ... if there is enough evidence, they will be sent to trial," al-Maliky said about the warrants against each, which he disclosed Sunday.

Ahmad Chalabi was somewhat marginalized when he was left out of the new interim government that took power June 28 but has since worked to reposition himself as a Shiite populist. At the helm of the war crimes tribunal for Saddam, the Ivy League-educated Salem Chalabi remains a central figure in Iraq.

In Washington, the Bush administration had no comment about the charges against the Chalabis. "This is a matter for the Iraqi authorities to resolve and they are taking steps to do so," White House spokeswoman Suzy DeFrancis (search).

Ahmad Chalabi is accused of counterfeiting old Iraqi dinars, which were removed from circulation after the ouster of Saddam's regime last year.

Iraqi police backed by U.S. troops found counterfeit money along with old dinars during a raid on Chalabi's house in Baghdad in May, al-Maliky said. He apparently was mixing counterfeit and real money and changing them into new dinars on the street, the judge said.

The accusation is not Ahmad Chalabi's first brush with legal problems. He is wanted in Jordan for a 1991 conviction in absentia for fraud in a banking scandal. He was sentenced to 22 years in jail, but has denied all allegations.

Born in Baghdad, the younger Chalabi studied at Yale, Columbia and Northwestern, and holds degrees in law and international affairs. He served as a legal adviser to the interim Iraqi Governing Council and was a member of the 10-member committee framing the basic transitional law for the new interim government.

Ahmad Chalabi's star has steadily declined. He was once considered Washington's most likely choice for Iraqi president after Saddam's fall, but he was never popular in Iraq and ended up without a job in the new government.

A frequent guest on news talk shows in the United States, Ahmad Chalabi had significant, and controversial, influence on America's Iraq policy before the war. His network of Iraqi exiles in the Iraqi National Congress provided the Bush administration, and some news organizations, with reports on Saddam's purported weapons of mass destruction programs.

Those weapons were cited by the United States and Britain as the primary justification for the Iraq war. When no significant weapons stocks were found, Chalabi became a liability. He has continued to insist that the weapons exist.

Chalabi also was accused recently of informing Iran that the United States had broken its secret intelligence codes, a charge he branded as "stupid." And around the time of the raid on his house, U.S. officials privately complained that Chalabi was interfering with a U.S. inquiry into money skimmed from the U.N. oil-for-food program by pursuing his own probe.

As relations with his American backers soured, he has tried use the fallout to enhance his stature among Iraqis, many of whom saw him as an American puppet.

"I've risen higher in the esteem of my people and I'm now much better positioned politically in the country, because I'm in sympathy with my people. This is what it is all about," Chalabi said Sunday.

Among his campaigns to win favor with Iraqis have been purging Baath party members from the Iraqi government and attempting to set up an exclusively Shiite political party. He recently played peacemaker in ending violence in the Shiite holy city of Najaf in June.