Co-founder of Islamic charity to face tax fraud and money-laundering charges

The gates are rusted and the American flags are gone from the house on the outskirts of this small tourist town that once served as U.S. headquarters for an Islamic charity that was declared a terrorist organization by the U.S. government.

But despite six years of trying, federal investigators have not brought terrorism charges against the Iranian-born tree trimmer and naturalized American citizen who co-founded the American branch of Al-Haramain Islamic Foundation, Inc., or his fellow foundation officer living in Saudi Arabia.

The government will instead put Pete Seda, also known as Pirouz Sedaghaty, on trial Monday in U.S. District Court in Eugene on charges of conspiracy, tax fraud and failing to report taking $150,000 out of the country.

The indictment alleges that the money came from an unnamed Egyptian benefactor through a London bank to Ashland in 2000, where Seda and Soliman Hamd Al-Buthe, arranged to take it out of the country, filing a phony tax return to show the money going toward the purchase of a prayer house in Springfield, Mo.

Court documents show the government will argue that Seda and Al-Buthe intended the money to go to Muslim separatists in the Russian republic of Chechnya who have fought two wars with government forces since 1994, but will not be offering any evidence the money actually went to terrorists.

The strength of any government terrorism case against Seda has been questioned.

"There was a kind of rush of those kinds of cases at one point" after the Sept. 11, 2001 terrorism attacks, said Ibrahim Hooper, national communications director for the Council on American-Islamic Relations in Washington, D.C., a Muslim civil rights and advocacy group. "It's always a concern when the initial allegations don't match up with the ultimate charges."

Assistant U.S. Attorney Chris Cardani declined to discuss the prosecution's case, but at a 2007 bail hearing he argued that Seda had promoted a radical form of Islam based in Saudi Arabia known as Wahabbism.

In a ruling on what evidence and witnesses will be allowed in the tightly controlled case, Judge Michael Hogan wrote, "As the government sees it, the main issue to be decided at trial is whether defendant Sedaghaty conspired to prevent the United States from discovering Al-Haramain's attempt to fund the mujahideen in Chechnya and whether he later attempted to cover it up by signing a return with the IRS that he knew to be false.

"Defendant will seek to rebut the government's evidence regarding the funding of the Chechnyan Mujahideen by showing his concern regarding Russian brutality and that such concern was mainstream and shared by high government officials," the judge wrote.

Al-Buthe was indicted along with Seda, but cannot be extradited from Saudi Arabia.

In the course of the government going after Al-Haramain, a federal judge ruled in another case involving the charity that the government's program of wiretapping suspected terrorists without getting permission from a judge was illegal.

Seda, 52, came to Ashland as a college student and stayed on, taking U.S. citizenship.

As an arborist, he became well-known for his ability to save ailing or damaged trees.

He was also something of a public figure, regularly leading his pet camel in the Fourth of July parade, speaking on panels with local religious leaders and a local radio talk show about the peaceful side of Islam, handing out copies of the Quran to Muslims in prison, and writing a pamphlet titled, "Islam Is..."

Retired attorney and former Peace Corps volunteer David Berger met Seda when he needed some trees moved, and became a friend, giving him legal advice, attending gatherings at the Al-Haramain house, and later watching over federal agents who seized records and computers from it after Seda left the country in the midst of their investigation.

"There is no doubt in my mind he is a very, not just law-abiding, but very decent and honest person," said Berger. "But Pete was not one to automatically ask himself, 'Gee, is there something illegal about this?'"

In the pamphlet, Seda wrote, "Terrorism is clearly rejected by Islam and can never be called jihad (holy war)."

Things changed for Seda after the 9/11 attacks. Berger recalls Seda asking him to the house, and taking him down the driveway and across the road, where he showed him a hidden camera trained on the driveway.

Berger said Seda thought the camera had been placed by a government agency.

The camel died. Seda suspected it was poisoned, Berger said.

Seda left the country in 2003, and was indicted in 2005 while still living in the Middle East. He returned three years ago to face the charges, and has been free on bail, living in Portland.

Wearing a security bracelet on his ankle, Seda visited friends in Ashland during the latest July 4 holiday, Berger said.

Hogan has also ruled that the jury can hear testimony from Daveed Gartenstein-Ross, who worked with Seda at Al-Haramain and has testified in a bail hearing that Seda distributed a version of the Quran that advocates violent holy war. But the jury will not hear the title of Gartensein-Ross's book about the experience, "My Year Inside Radical Islam."