EUGENE, Ore. - Prosecutors neared completion of their case Thursday in the prosecution of Pete Seda, accused of hiding $150,000 sent out of the country with the intent of benefiting Chechen mujahideen.
Government witnesses described how the money started with a donation to Seda's organization, the al Haramain Islamic Foundation. It came from London, then moved to Oregon and New York and ultimately to Saudi Arabia, where it possibly made its way to Chechen mujahideen. "A bizarre financial transaction," is how federal investigators described it.
The donation came from a wealthy Egyptian named Mahmoud el-Fiki. El-Fiki contacted al Haramain with the intention of making a donation "as Zakat [charity] in order to participate in your noble support to our Muslim brothers in Chychnia." The donation itself would not have raised any eyebrows; it was what Seda did with the money that attracted scrutiny.
Assistant U.S. Attorney Chris Cardani told jurors in his opening statement about Seda's attempts to withdraw the money. He said that "if everything was on the up and up, this would have been a very simply transaction." But as a string of witnesses described, it was anything but.
Debra Ingram, the manager of the Ashland branch, told jurors that Seda and a colleague, Soliman Hamd al-Buthe contacted the bank about withdrawing $130,000 of the funds in the form of travelers checks. After explaining that the branch was too small for such a request, Ingrahm suggested other options including a wire transfer, or cash. They were insistent on travelers checks, and asked the bank to special order them. Seda also drew a $21,000 cashiers check payable to al-Buthe.
Three days after arriving in the United States, al-Buthe returned to Saudi Arabia with the money, failing to declare it to officials as required by law.
The entire exchange struck Ingrahm as strange. For only $15, the men could have used a wire transfer. That's how the money came into the Oregon account. Or they could have received a cashier's check for $10. Instead, they choose American Express travelers checks, which cost $1,300. Not only did the travelers checks cost almost 100 times more than the alternatives, but Seda and al-Buthe had to sit at the bank and sign each.
Though the bank activity was suspicious, it wasn't until al Haramain tried to account for the money at tax time that it became clear Seda was hiding something.
As a non-profit charity, al Haramain was required to file an annual Form 990, essentially a tax return for charitable organizations. Tom Wilcox, a CPA who was hired by al Haramain to do the organization's taxes, told jurors that he had numerous conversations with Seda about donations and expenditures. In one such conversation, according to Wilcox, Seda told him that the $130,000 was used to purchase a mosque in Springfield, Missouri. Wilcox told jurors that he relied on Seda to provide accurate information, but if he was lied to, then the Form 990 was indeed false.
During cross-examination, however, defense attorneys gave jurors a reason to question the accounting abilities and accuracy of Wilcox's testimony. Upon repeated questioning about his errors in bookkeeping, Wilcox conceded, "I didn't get it nailed down perfectly."
Wilcox said he was sure Seda, also known as Pirouz Sedaghaty, never told him the true nature of the donation and its use:
Q: At any time when you were filling out the 990, did Mr. Sedaghaty ever mention Chechnya?
Q: Ever mention providing money to mujahideen?
Q: Providing humanitarian relief in Chechnya?
It was the failure to properly account for the funds that concerned the IRS. As Greg Wooten, a Supervisory Agent for the IRS specializing in exempt non-profits explained, "if you were going to hide a transaction you would put it in an innocuous location on the tax return."
The failure to report humanitarian relief would have been a problem because it "demonstrates that the organization may not have proper controls in place to track their funds," Wooten said. But "if a charity was sending money to promote acts of violence, it would be contrary to public policy."
Through its questions of prosecution witnesses, defense attorneys argued that el-Fiki simply thought that the money was going to the Saudi branch of al Haramain via the U.S. account. Under such a scenario, a number of the government's witnesses agreed, Seda would not have had to account for the funds, because they were never donated to or spent by the Ashland branch. But, as Wooten explained, "it sounds like the local organization exercised some control over the funds as if they were their own."