For years, the Pakistani spy agency funneled millions of dollars to a Washington nonprofit group in a secret effort to influence Congress and the White House, the Justice Department said Tuesday in court documents that are certain to complicate already strained relations between the U.S. and Pakistan.

FBI agents arrested Syed Ghulam Nabi Fai, the executive director of the Kashmiri American Council, on Tuesday and charged him with being an unregistered agent of a foreign government. Under the supervision of a senior member of Pakistan's spy agency, Inter-Services Intelligence, Fai donated money to political campaigns, wrote newspaper op-eds, organized congressional trips and met with White House and State Department officials.

"I believe that Fai has received approximately $500,000 to $700,000 per year from the government of Pakistan," FBI agent Sarah Webb Linden said in documents filed in federal court in Alexandria, Va.

Officially, the Kashmiri American Council had a much smaller budget and told the U.S. government that it received no foreign grants, according to Internal Revenue Service documents. Pakistan was financing similar operations in London and Brussels, the Justice Department said.

The Pakistani Embassy quickly issued a statement saying the government had no knowledge of such an arrangement.

A second man, Zaheer Ahmad, was also charged. Prosecutors said he recruited people to act as straw donors who would give money to the Kashmiri American Council that really was coming from the Pakistani government. Ahmad is not under arrest and is in Pakistan, prosecutors said. Both men are U.S. citizens.

Prosecutors said the Kashmiri American Council was being run in secret by the Pakistani government. Fai coordinated his activities with his ISI handlers and often communicated in coded emails, the FBI said. Pakistani officials reviewed Fai's budget and told him what to do and with whom to meet.

"You are aware that we have been working together for the cause for over a decade now," Fai wrote in an email to a senior ISI official in 1995. "All these years, I have closely worked with you and others who came before you. It has taken us much time, energy, dedication, strategy and planning to achieve our common cause."

Fai, 62, appeared before a federal magistrate judge, who ordered him jailed until a detention hearing Thursday afternoon. Prosecutor Gordon Kromberg said Fai faces up to five years in prison if convicted.

A soft-spoken father of two, Fai is a leading voice in the debate over the future of Kashmir, the mountainous border area that India and Pakistan have fought over for years. He supports the pro-Pakistan viewpoint that Kashmiris should vote on whether to be part of Pakistan or India. India claims the territory as its own.

He is perhaps best known in Washington for organizing the annual Kashmir Peace Conference on Capitol Hill. The event is billed as an independent forum for Indian and Pakistani voices, but the Justice Department said the Pakistani government approved the speakers and gave Fai talking points to highlight. Photo galleries on the group's website include images of him alongside Pakistani Prime Minister Yousuf Raza Gilani.

Israr Mirza, the former president of the Pakistani Student Association at George Mason University, recalled hearing Fai speak at a February event his organization hosted on India-Pakistan relations.

"I don't see him as a spy or anything. He's an old gentleman," said Mirza, who has since graduated from George Mason. "He seemed like a very collected guy. He was speaking just to promote peace."

Though the charges are not related to espionage, the arrest adds another strain to the already difficult relationship between the U.S. and Pakistan, which suffered after the U.S. found Osama bin Laden hiding inside Pakistan and killed him without telling the government there.

ISI has a complicated relationship with U.S. intelligence. The agency is a crucial ally in the war on terrorism but also works against the U.S. at times, including running double agents against the CIA.

"Dr. Fai and the Kashmiri freedom movement have nothing to do with the ISI," said Nadim Malik, a close associate of Fai and the executive director of the advocacy group Kashmir Mission USA.

Fai has donated to congressional campaigns of both parties for years. His donations include $250 to President Barack Obama in 2008; a total of $4,500 to the National Republican Senatorial Committee in 2004 and 2008; and $250 to the Democratic Senatorial Campaign Committee in 2009. Prosecutors said none of the recipients knew the organization was a front for money from Pakistan.

Zahid Bukhari, the president of the Islamic Circle of North America who says he's known Fai for years and used to teach at Georgetown University, said he found the accusations stunning.

"It doesn't make any sense," Bukhari said. "He's dedicated his whole life on that cause."