Conviction overturned in U.S. Islamic charity case

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A federal appeals court Friday overturned the conviction of a founder of the U.S. branch of an Islamic charity on charges he smuggled money out of the country to help Chechen rebels fight Russian forces.

The ruling Friday from the ninth U.S. Circuit Court of Appeals in San Francisco said the government turned what was really a tax fraud case into a terrorism case.

In ruling for Pete Seda, the founder of the now defunct Al-Haramain Islamic Foundation in Ashland, Oregon, the court said the government failed to provide a fair and complete summary of classified material to the defense, failed to disclose that a key prosecution witness had been paid, and exceeded the scope of a search warrant used to search computers seized from the foundation.

“The opinion includes important reminders to the government about the prejudice that arises when it injects Osama bin Laden’s name, and other evidence of terrorism, in a case that is, as the court said, essentially a tax case,” Portland defense attorney Steve Wax said.

Also known as Pirouz Sedaghaty, Seda is an Iranian-born U.S. citizen who worked for many years as a tree surgeon in Ashland, where he promoted the peaceful aspects of Islam. During the trial he blamed the tax return on his accountant, and maintained the money was for humanitarian aid.

Seda was convicted in 2010 of tax fraud and conspiracy to defraud the government for helping Saudi Arabian national Soliman Al-Buthe convert a contribution from a doctor in England into traveler’s checks, which Al-Buthe took with him on a flight to Saudi Arabia without declaring it to authorities. Prosecutors have been unable to force Al-Buthe to return to the U.S. to face the same charges as Seda.

Seda was released Friday from a halfway house in Portland, where he was staying after serving two years in federal prison in Colorado.

Wax said his client’s release had been scheduled to take place Friday and wasn’t prompted by the court ruling.

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