Earlier Somali money transfer case went nowhere

(AP) - Searches by federal agents at three money-transfer businesses in Minneapolis that cater to the Somali community last week recall another time similar businesses came under scrutiny here, a major international investigation that produced few results.

In November 2001, about two months after the Sept. 11 attacks, federal agents shut down several other money-transfer offices in Minneapolis and other cities as part of a probe into the sources of terrorist money.

Money was frozen; records and equipment were seized. But the investigation never resulted in terrorism charges, and the FBI quietly closed the case, a report by the 9/11 Commission staff shows.

FBI spokesman E.K. Wilson said he couldn't comment on why the three businesses were searched last week.

But if agents are trying to pursue a new terrorism case, the earlier investigation suggests it will be difficult - although they might have learned from that probe.

The earlier case focused on a company called al-Barakaat, one of several money-transfer businesses set up to funnel money from the U.S. to Somalia after the collapse of the war-torn east African country's central government left it without a formal banking system.

The staff of the 9/11 Commission took a detailed look at the case before the independent commission disbanded in 2004.

In announcing the November 2001 raids, authorities said they believed some of the tens of millions of dollars flowing through the al-Barakaat network were being skimmed for use by al-Qaeda and other terrorist groups.

"By shutting these networks down, we disrupt the murderers' work," President George W. Bush proclaimed.

But the FBI ultimately was never able to substantiate any links between al-Barakaat and terrorism, said the 2004 staff report, which was a supplement to the 9/11 Commission's final report.

"The federal agents working on the al-Barakaat criminal investigation in Minneapolis spent hundreds of hours reviewing financial records and interviewing witnesses," the staff report concluded.

"Despite this effort, their attempt to make a criminal case simply had no traction. Ultimately, prosecutors were unable to file charges against any of the al-Barakaat participants, with the exception of one of the customers in Minneapolis who was charged with low-level welfare fraud. The FBI supervisor on the criminal case, deciding that their efforts could be better spent elsewhere, closed their investigation."

Two al-Barakaat employees in Alexandria, Va., and one in Boston were eventually convicted of relatively minor violations of state banking regulations, but not on terrorism charges.

Somali money remitters in Minneapolis had attracted official attention as early as 1996, the report said. The FBI opened a criminal money-laundering case file on al-Barakaat in May 1997 but closed it in August 1998 after it was unable to find any unlawful activity, the report said.

But FBI and other federal agents in Minneapolis kept looking, the report showed. Those leads didn't always pan out either.

A Minneapolis agent developed a source with information on the Somali community in December 1998 who indicated the Somali Islamist movement Al-Itihaad Al-Islamiya (AIAI) had a cell in Minneapolis that "supported radical Islamic activities against the United States," the report said.

That investigation focused on a person in the U.S. who allegedly plotted to bomb U.S. embassies in Uganda and Ethiopia and raised money in Minneapolis to support AIAI activities overseas.

"After further inquiry, including searches and an interview, the investigations were closed when it was found that the FBI's original source lacked credibility regarding this specific threat and that other reliable sources had no knowledge of the suspected plotter," the report said.

But the unnamed Minneapolis FBI intelligence agent kept developing sources. By July 1999, the report said, the agent opened a "full field investigation" into AIAI as a group, in hopes of determining whether AIAI was operating in the U.S. and the nature of its activities.

This intelligence agent knew about intelligence reports that tied al-Barakaat to AIAI and Osama Bin Laden, so the agent thought it would be useful to open a criminal case on al-Barakaat.

The report said that idea caused some friction due to a fairly rigid rule within the FBI and Department of Justice known as "the wall" against mingling intelligence and law enforcement cases.

As a result, it took 13 months for the agent to get permission to brief an unnamed assistant U.S. attorney in Minneapolis on the intelligence investigation.

The Minneapolis FBI finally opened the criminal investigation in November 1999 and got approval to brief the prosecutor in December 2000, the report said.

One difficulty the FBI initially encountered in the criminal case was that it was almost impossible then to follow the money once the transfers went from al-Barakaat to the Emirates Bank International in Dubai, one of the United Arab Emirates - where al-Barakaat kept several accounts to facilitate money transfers. So it was difficult to determine whether the money supported terrorism, the report said.

By early 2001, al-Barakaat was moving more money through its Minneapolis facilities than the FBI's criminal case agent thought the large but relatively poor local Somali community could have amassed legitimately, the report said.

The report detailed how the pace of the investigation picked up after 9/11. On Nov. 7, 2001, federal agents shut down eight al-Barakaat offices in Minneapolis; Columbus, Ohio; Alexandria, Va.; Seattle and Boston. They seized money and records in the U.S. and about $1 million from al-Barakaat's accounts at Emirates Bank International.

Some other money-transfer companies in Minnesota were also caught up in the investigation. Most eventually reopened.

In the meantime, Somalis in the U.S. often found themselves unable to transfer money home, which caused a humanitarian problem serious enough that the United Nations sent staff to intervene.

The report said the FBI later came to enjoy "unprecedented cooperation" from the United Arab Emirates, which allowed U.S. investigators to comb through millions of pages of documents at its central bank.

The FBI interviewed principal players involved in al-Barakaat including its founder. And the FBI had "complete and unfettered access to al-Barakaat's financial records," the report said.

But the clampdown had little lasting effect, the report said. AIAI developed alternative funding mechanisms and al-Barakaat moved its offices to other locations in Dubai and Somalia and changed its name, the report said. The commission staff said it uncovered no evidence that closing the al-Barakaat network hurt al-Qaeda financially.

Thomas Heffelfinger, who became U.S. attorney for Minnesota right after 9/11, said Monday that even though no criminal indictments were returned, such investigations have value as an intelligence tool in helping to understand the flow of money in and out of the country and preventing future terrorist acts.

The FBI probably has better expertise now on how these informal money transfer operations work, said Coleen Rowley, who was the legal counsel in the Minneapolis FBI office back then and was named a Time Magazine person of the year in 2002 for blowing the whistle on the FBI's pre-9/11 intelligence failures.

"You're going to be learning from every case that happened," Rowley said. "Certainly after 9/11 the learning curve was great. Now it's going to be less so."

(Copyright 2009 by The Associated Press. All Rights Reserved.)

Gallery

Fullscreen SlideshowPrevious Slide

1 of 1

Next Slide