American authorities are investigating a suspicious money trail that leads from the jungles of South America to the suburbs of Dallas and may shed light on the interlocking finances of some key terrorist networks, including Hamas and Al Qaeda.
Federal and Texas state investigators are seeking clues to the origin and destination of millions of dollars wired from a business in the lawless tri-border area where Paraguay, Brazil and Argentina meet, to apparent shell companies in Texas suspected of serving as fronts for either Al Qaeda, Hamas or both. The FBI is known to be involved, and the state prosecutor’s office in Dallas has asked Paraguayan officials for assistance, according to documents obtained by the Forward.
The main suspect in the investigation is a Lebanese-Paraguayan national named Mohamed Dahroug, who fled Paraguay five years ago after he was charged with aiding Hamas and is now believed to be dividing his time between Lebanon and the Persian Gulf.
The case provides an inside peek at the all-out American effort to root out terrorist operatives along with their financial and logistical networks. It also casts doubt on the traditional view that terrorist groups maintain rigid lines of separation among themselves. The Dahroug case appears to be part of a complex pattern now emerging in which money and men move seamlessly from one group to the other.
Dahroug’s activities first attracted the interest of American authorities last year, after his name and Paraguayan telephone number were found in the date book of Abu Zubaydah, a senior Al Qaeda leader arrested in Pakistan in March 2002.
American officials then launched a major diplomatic and investigative push to locate Dahroug and his suspected associates. That effort could eventually lead to extraditions and terrorism indictments here, sources said.
“The Americans were just like crazy on this,” said a South American investigator, who spoke on condition of anonymity.
Neither the FBI nor the Texas state prosecutor’s office in Dallas would confirm or deny the existence of an investigation.
After American officials learned that the telephone number in Abu Zubaydah’s date book belonged to a small perfume shop called Francia Perfumes in Ciudad del Este in northern Paraguay, the FBI envoy in the region jumped on a plane to Asuncion, the Paraguayan capital, to ask authorities there to investigate the company and its nominal owner, Ali Nizar Dahroug, the nephew of Mohamed Dahroug.
Several weeks later, Paraguayan police arrested Ali Nizar Dahroug and raided Francia Perfumes and another business he was operating, Nizar Import & Export Co.
Paraguayan investigators say they discovered that he transferred at least $5 million and possibly as much as $10 million in 2000 and 2001 to bank accounts around the world. His company reportedly has a declared capital reserve of $800 and paid taxes of around $4,500 a year.
He has been charged with tax evasion, a legal tactic used extensively by Paraguay to arrest terrorism suspects, since the country does not have stringent laws targeting terrorism financing.
His trial is expected to start in a month. The prosecutor, Juan Carlos Duarte, said he would be seeking a 10-year sentence.
Two months ago, Nathan Garrett, the assistant Texas state prosecutor who is reportedly in charge of the case, requested the assistance of Paraguay to obtain information on the individuals sending the funds, according to a copy of the request obtained by the Forward.
Garrett told the Forward he could not confirm or deny the investigation.
According to the letter, however, “The Dallas division of the FBI is currently involved in the investigation of a company in Dallas, Texas, which has received large amounts of money from a business in Ciudad del Este, Paraguay” and is requesting the assistance of the government of Paraguay.
The letter claimed the company, H&S Star Inc., was a perfume import-export business created in 1994 and currently doing business under the name Parfums d’Or. While noting that the firm was at the receiving end of millions of dollars from bank accounts in Paraguay, the letter contended that no physical evidence of an actual perfume business had been found in the Dallas area.
Indeed, it appears that H&S Star has effectively vanished in recent months.
According to the Texas state comptroller’s office, the charter of H&S Star was revoked on February 14 because it failed to pay taxes. Its phone number has been disconnected and there is no listed telephone number for its director, Hasan Sabri.
In addition, one of the Texas bank accounts to which the money was wired has been closed.
Observers noted that the company is located in Richardson, Texas, the home base of the Holy Land Foundation for Relief and Development. The Muslim charity was shut down by American authorities in December 2001 for allegedly serving as a financial conduit for Hamas.
A senior law enforcement source in South America said that Mohamed Dahroug and his nephew were considered Hamas fundraisers in the region and had been suspected of using the Holy Land Foundation as a conduit.
“I believe the front companies in Texas are alternatives that were set up when the foundation came under FBI scrutiny in the late 1990s,” the source told the Forward.
Whether the records seized at the Holy Land Foundation offices showed any links to H&S Star could not be ascertained.
While his nephew Ali Nizar has born the brunt of the investigation, the probers’ real target is Mohamed Dahroug, 39. Born in Lebanon, Dahroug moved to Paraguay in 1988 and acquired a Paraguayan passport. He left the country in September 1998 after being accused of criminal association and international terrorist activity because of his alleged role as a Hamas fundraiser.
“He was one of the main targets of our surveillance and of the disruption campaign we conducted in the late 1990s in cooperation with the Americans,” said a former top Argentinean security official who was in government at the time. “Basically, the [Dahroug] family’s job was to secure the operational details of the investments of terrorist groups in the tri-border area. This included setting up companies, renting space and creating an efficient money laundering and wiring system.”
According to Paraguayan and Argentine intelligence, Dahroug is currently living between Lebanon and Dubai in the United Arab Emirates.
The Dahrougs were part of a close-knit group of Sunni radicals in the tri-border region, who may have divided their loyalties among various terrorist networks, regional investigators say.
Members of the group include Sheikh Khaled Tak el Din, who was charged with Dahroug back in 1998. Currently living in Brazil, he is believed to be a member of the Egyptian Islamic Jihad, which joined forces with Al Qaeda in 1998.
“Tak el Din was the point man for all Sunni radicals establishing themselves in the region, and Dahroug was one of his key aides,” said the former top Argentinean security official.
The level of cooperation between those groups in the region was highlighted by the recent revelations that Khalid Sheikh Mohamed, a senior Al Qaeda operative who was arrested in March in Pakistan, spent several weeks in Brazil and the tri-border area at the end of 1995.
Argentinean intelligence sources say that because the Dahrougs did “a good job” in handling Hamas monies, they eventually were approached by other Islamic terrorist groups eager to generate money in the region.
Mohamed Dahroug’s past sheds light on this pattern of interwoven terrorist groups. A militant Palestinian activist in his native Lebanon, he started out as a Marxist before switching to radical Islam and joining Hamas, intelligence sources said. During the mid-1990s, the sources said, he traveled to war-torn Bosnia to work for an organization called the Arab Legion, which was said by Argentinean security sources to have been bankrolled by Saudi millionaires, including Osama bin Laden.
Originally regarded as a Hamas fundraiser, Dahroug’s possible role as a Hamas-Al Qaeda link has come to light as a result of joint American-Paraguayan efforts. After investigators raided his nephew’s tiny stores in Paraguay, they came across troubling bank transfer documents in a safe, according to Duarte, the prosecutor of the case. Duarte then asked several banks to open their books. They eventually agreed after “crucial American lobbying,” Duarte said.
Duarte said he was able to corroborate the wiring of about $5 million between 1999 and 2002 from Ali Nizar’s businesses to his uncle, family members and others in numerous countries, including Lebanon, Kuwait, Chile, Germany, the United States and more. He said there were likely more transfers.
A top regional official put the number higher, saying at least $7 million was wired in one year, with at least half going to H&S Star, the Texas firm.
“His companies in Paraguay were fronts,” Duarte said. “We believe he was collecting money from the local Arab community and sending it abroad. You don’t sell cheap perfume and make such amounts.”
In early 2001, for instance, Ali Nizar wired some $200,000 from an account at Bank Interbanco in Ciudad del Este to an account controlled by H&S Star at Bank One Texas — $40,000 on January 11, $108,000 on February 12 and $53,000 on February 26, according to copies of Paraguayan bank forms obtained by the Forward.
The Bank One account has since been shut down, the bank said.
In addition, Ali Nizar reportedly wired money to two other Dallas bank accounts — at Bank of America and Guaranty Bank — controlled by Parfums d’Or, which investigators believe is a shell company. While the Bank of America account has been shut, the one at the Guaranty Bank is still open.
Finally, he allegedly wired $50,000 to an account held by his uncle Mohamed Dahroug in the Bank of New York in New York City via a Lebanese bank on August 23, 2001. The existence of that account could not be confirmed independently.
“The Americans want to see the bank documents because they believe that the company in Texas is a front and that the money is then making its way to the Middle East,” Duarte said.
He added that there were indications that the United States may eventually request the extradition of Ali Nizar Dahroug. The senior regional source said he believed there might already be a sealed indictment in the United States against him and his uncle.