Prosecutors stunned defense attorneys Friday when they dropped a charge that an alleged fundraiser for the Palestinian militant group Hamas gave material support to terrorists.

Muhammad Salah, 53, who has been the focus of a high-profile terrorism investigation for nine years, remains charged in U.S. District Court with racketeering conspiracy and lying when he denied membership in Hamas.

But defense attorneys were elated by the government's decision to drop even one of the three counts in the August 2004 indictment, which was announced in Washington by then Attorney General John Ashcroft.

"This is astounding," Salah's chief defense counsel Michael E. Deutsch told reporters after court.

Salah of suburban Bridgeview and Abdelhaleem Ashqar, 48, of Alexandria, Va., are charged in the indictment with conspiracy to raise funds to pay for a Hamas terror campaign against the Israeli government.

Salah served five years in prison after his 1993 arrest in Israel. Police found $97,000 in cash in his East Jerusalem hotel room.

Both men claim they did nothing illegal. Salah says statements he made admitting to Hamas activity at the time of his arrest were tortured out of him by interrogators from Israel's Shin Bet security service.

U.S. District Judge Amy St. Eve has scheduled Oct. 12 for the start of a trial at which extensive secrecy is planned. Shin Bet agents are due to testify wearing disguises in a courtroom cleared of public spectators.

The decision to drop one count of the indictment came at a hearing after Deutsch asked St. Eve to press federal prosecutors to turn over background material on a prospective government witness, Jack Mustafa.

Deutsch asked for information about how much the FBI had paid Mustafa and whether he had an arrest record. He also asked if the prospective witness had met with agents of the Mossad — Israel's intelligence agency.

In a move that left defense attorneys staring, Assistant U.S. Attorney Joseph M. Ferguson then said quietly that the government wanted her to dismiss count 2 of the indictment.

"You want me to dismiss Count 2 with prejudice?" she said. Ferguson indicated that he did.

"Your motion is granted," St. Eve said. With prejudice means that the prosecutors cannot move to reinstate the count.

The move so stunned the courtroom that defense attorney Erica Thompson angrily accused prosecutors of making her waste an enormous amount of preparation time preparing for Mustafa that could have been better used.

"This is outrageous that the government is taking this position now," Thompson said, her voice rising. "They should be sanctioned and the indictment should be dismissed."

St. Eve went on with preparations for the trial.

But after defense attorneys said that Mustafa's testimony could affect count 1 — the racketeering count — she told prosecutors to tell her by Monday how much of the rest of the indictment the would delete because Mustafa was being withdrawn as a potential witness.

Ashqar was not named as a defendant in the dropped count. But his attorney, William Moffitt of Washington, told reporters that he was eager to see how much if any of count 1 the government decides to delete.