NEW YORK (AP) — A prosecutor on Monday accused an accountant charged with conspiring to modernize al-Qaida of using code words and encrypted software to speak with a co-defendant who bought digital watches that could be used as timing devices in explosives.

Assistant U.S. Attorney John P. Cronan made the allegations as he successfully argued that Sabirhan Hasanoff be held without bail on charges that he provided material support to al-Qaida.

"He poses a grave risk to the community," Cronan said.

The prosecutor added that Hasanoff "embraced the extremist ideology and radical goals" of al-Qaida and sought to modernize it with his computer skills.

Hasanoff, in U.S. District Court in Manhattan, pleaded not guilty to charges in an indictment accusing him and co-defendant Wesam El-Hanafi of conspiring to give computer advice, buy wristwatches and do other tasks to help al-Qaida.

It was the first appearance in Manhattan for Hasanoff, who was arrested in Dubai, along with El-Hanafi, and later was brought to the United States. They both had already appeared in federal court in Virginia, where they first arrived in the U.S. and waived their rights to a hearing.

Cronan said El-Hanafi was being brought to New York as well.

Hasanoff attorney Anthony Ricco argued that his client be held under house arrest, saying 15 close relatives would vouch for his reliability and he could be kept from communicating over the Internet. He said Hasanoff, 34, came to the U.S. at age 17, graduated from Baruch College with an accounting degree and lived with his wife and two children.

Magistrate Judge James C. Francis, though, said prosecutors had proved no bail package could be counted on to protect the community and prevent the flight of a man who had traveled extensively while working as a highly paid accountant in the United States and abroad.

He cited in particular the fact that prosecutors had accused Hasanoff's co-defendant of aiding the conspiracy by buying seven digital watches over the Internet last year on behalf of al-Qaida and having them delivered to his Brooklyn home.

Cronan said the watches were "very valuable to al-Qaida because they can be modified to provide the timing device in explosives."

The magistrate judge noted "the level of sophistication" of the defendants and the fact Hasanoff was accused of aiding the transfer of money to al-Qaida.

"Were this an individual with minimal skills who perhaps bought digital watches from a street vendor to support al-Qaida, it might be a different story," he said.

Cronan, though, portrayed Hasanoff as a highly successful professional, who had in recent years traveled to countries including Pakistan, Saudi Arabia, Turkey, Syria, Malaysia, Yemen and Oman. He said Hasanoff sought in 2006 to go to Iraq to fight a holy war but was unsuccessful.

He said Hasanoff used code words on Internet chats between January and July 2009 with his co-defendant as they spoke of fighting jihad and finding other al-Qaida contacts.

In their coded language, "safari" was used in place of "jihad" and saying a friend was "hospitalized" meant that he was "in prison," Cronan said.

Cronan said Hasanoff, a dual citizen of the U.S. and Australia, lived in Brooklyn, where he owned a $750,000 home with a small mortgage.

As Hasanoff was led out of court by a U.S. marshal, he gave a quick wave to his wife and family seated among the spectators.