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In An Unusual Criminal Case, the U.S. Points the Finger at Pakistan's Top Spy Agency Again

In an indictment unsealed Tuesday, the FBI accused two men of funneling millions of dollars from the Inter-Services Intelligence Directorate, or ISI, into political campaign donations and other activities meant to influence American policy on Kashmir.

In a move that could add to the tension between the United States and Pakistan, the FBI Tuesday accused a Pakistani-American of secretly funneling at least $4 million from Pakistan's top spy agency into American political activities, aiming to influence U.S. policy on Kashmir.

The U.S. attorney's office in the Eastern District of Virginia announced the one-count criminal complaint shortly after the arrest of Syed Ghulam Nabi Fai, 62, who ran the Kashmiri American Council, also known as the Kashmir Center.

It's not clear where all the money went—much seemed to go to setting up conferences—but some was funneled into campaign contributions to members of Congress and other political candidates. The supporting affidavit says the money has been coming in from Pakistan's Inter-Services Intelligence Directorate, or ISI, since 1995.

Fai and Zaheer Ahmad, 63, a Pakistani-American now believed to be in Pakistan, were charged with conspiring to act as unregistered agents of the government of Pakistan. On its website, the Kashmiri American Council, set up in 1990, purports to be a group of Kashmiri Americans advocating for an independent Kashmir but says nothing about Pakistani government support.

"Mr. Fai is accused of a decades-long scheme with one purpose—to hide Pakistan's involvement behind his efforts to influence the U.S. government's position on Kashmir," said U.S. Attorney Neil MacBride of the Eastern District of Virginia in a prepared statement. "His handlers in Pakistan allegedly funneled millions through the Kashmir Center to contribute to U.S. elected officials, fund high-profile conferences, and pay for other efforts that promoted the Kashmiri cause to decision-makers in Washington."

The charges could be the first implicating Pakistan's main intelligence service in a case involving political influence by foreign agents, a U.S. law enforcement official said.

"This charge is extremely rare," said the official, who spoke on condition of anonymity. "They don't happen very often. The government generally works to get someone into compliance rather than charging. I am not aware of any other cases that have involved Pakistan."

In March 2010, after Indian news reports referred to Fai as a Pakistan agent, the U.S. Justice Department sent Fai a letter asking him to register the council as a foreign agent if the claim was true. He denied acting for Pakistan's government, the affidavit says. In 2007, he had told the FBI that he never had met anyone he believed to be in the ISI and didn't believe the ISI was operating in the United States.

The case is striking not necessarily for its severity—the charges against Fai and Ahmad would mean a maximum of only five years in prison—but for its depth. The supporting affidavit from an FBI agent is 44 pages long. The investigation appears to have started six years ago, when a jail inmate offered to trade information for a reduced jail sentence. More than anything, the case highlights how, after years of U.S. officials publicly treating the ISI like a close ally in the war on terror, their relationship has fallen apart.

Since the raid that killed Osama Bin Laden in early May, which the United States pointedly did not coordinate with the ISI or the Pakistani military, the United States has publicly criticized the ISI several times. The trial of Tahawwur Rana, accused of playing a role in the 2008 Mumbai attacks, ended up focusing also on the role of a serving ISI officer in those attacks. This month, the United States withheld about $800 million in military assistance to Pakistan. Unnamed American officials also linked the ISI to the death of a Pakistani journalist. And now, the ISI is mentioned at least 25 times in the affidavit laying out the case against Fai and Ahmad.

Contrast that with the original federal case against Rana: In the indictment and numerous supporting documents describing terrorist activities the ISI was never mentioned, even though it was later revealed at trial that the activities were funded and directed by Pakistani intelligence.

Despite the timing, U.S. officials denied that the case announced Tuesday reflected any change in the U.S. approach to Pakistan.

"The timing had nothing to do with anything but the facts of the case," said Justice Department spokesman Dean Boyd. "This is a long-term investigation and it predates recent developments in Pakistan and in relations with Pakistan. It was solely driven by the facts of the case."

In the supporting affidavit, the FBI agent, Sarah Webb Linden, a member of the counterterrorism squad in the Washington field office, says four people directed Fai's activities for the government of Pakistan. She names Fai's primary handler in the ISI—Javeed Aziz Khan—and reveals phone numbers and email addresses for him and another ISI officer. All told, Fai was in touch with his handlers more than 4,000 times since June 2008, the affidavit says.

The Justice Department's case also outlines a network of straw donors, including at least two who appear to be Pakistani-American doctors, who helped Fai and Ahmad funnel the money into the council. Once, in June 2010, New York police stopped Fai and found him with a bag of $35,000 in cash.

In 2009, documents quoted by the affidavit say that the council planned to spend $100,000 on campaign donations to members of Congress. But it's not clear how those donations were made.

Over the years, Fai himself has contributed more than $23,000 to candidates, campaign finance records show. His biggest donations went to Rep. Dan Burton, R-Ind., who got $7,500, and the National Republican Senatorial Committee, which got $9,500. He also donated $2,000 to Rep. Joe Pitts, R-Pa., who with Burton has criticized how India handles Kashmir. Fai also made smaller contributions to several Democratic representatives. He donated $250 to Obama in 2008. These contributions are separate from those mentioned in the indictment.

Burton told the New York Times he was shocked by Fai's arrest. He said he had known Fai for 20 years, and "in that time I had no inkling of his involvement with any foreign intelligence operation and had presumed our correspondence was legitimate." He said he would donate the funds provided to his campaign to the Boy Scouts of America. A spokesman for Pitts told the Times he had given an amount equal to the donations his campaign received from Fai and Ahmad to local charities in Pennsylvania on Tuesday.

It's also not clear that any of the politicians knew where the money originated. Foreign governments are prohibited from donating to candidates for federal office, but no campaign-finance violations have yet been filed against Fai or the council.

Linden's affidavit describes recorded conversations and emails in which Fai and his associates allegedly used code words to describe their transactions. "Brylcreem" was among code words for cash, the affidavit says. In some instances, one Brylcreem appeared to equal $10,000; "Brylcreem, 75 milligrams" appeared to equal $75,000. The affidavit also says that "fifteen copies" seems to have meant $15,000 and "157 pages draft" likely meant $157,000. "The doctor" probably referred to Ahmad. And "the library in Islamabad" likely referred to the ISI Security Directorate.

The affidavit also quotes from emails illustrating the dynamics between Fai and Khan, his main handler. Fai pushes for more money for the council; Khan says he might get more money, but not as much as he wants.

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