Ex-Terror Defendants Face Fraud Charges

Two men whose convictions in the first terrorism trial after Sept. 11 (search) were thrown out because of misconduct by prosecutors were charged Wednesday with insurance and mail fraud.

The new charges are part of a long-running legal saga involving the defendants, Karim Koubriti (search) and Ahmed Hannan (search), who were once accused of being part of a terror cell.

But the terror prosecution was later dropped, serving as an embarrassment to the Justice Department in a case the Bush administration once hailed as a major victory in the war on terror. The lead prosecutor is under investigation over his handling of the case.

The new indictment alleges that Koubriti, 26, and Hannan, 36, devised a scheme to defraud Troy-based Titan Insurance Co. by filing false claims. It says the pair claimed they were injured in a 2001 car accident and submitted fraudulent claims for lost wages, physical therapy and household services.

"Mr. Koubriti will be pleading not guilty to the latest charge, and we are looking forward to his day in court when his name finally will be cleared," Koubriti's lawyer Richard Helfrick said.

An attorney for Hannan did not immediately respond to a telephone message seeking comment.

Koubriti, Hannan and Abdel-Ilah Elmardoudi, 38, were convicted in 2003 of document fraud, but the judge ordered a new trial on those charges after he threw out the terrorism case.

Hannan was convicted only of document fraud, while Koubriti and Elmardoudi were convicted of conspiring to provide material support and resources to terrorists. A fourth man was acquitted.