WASHINGTON FBI operation sent money to Hamas

WASHINGTON (AP) -- In an undercover operation run in the shadow of Mideast peace talks, the FBI secretly sent money to suspected Hamas figures to see if the militant Palestinian group would divert it from charitable purposes to terrorist attacks, according to interviews and court documents.
The counterterrorism operation in 1998 and 1999 was run out of the FBI's Phoenix office in cooperation with Israeli intelligence and was approved by Attorney General Janet Reno, FBI officials told The Associated Press.
The money, usually just a couple of thousand dollars, was sent to suspected terror supporters during the operation as the FBI tried to track the flow of cash through terror organizations, the FBI said in a rare acknowledgment of an undercover sting.
"This was done in conjunction with permission from the attorney general for an ongoing operation, and Israeli authorities were aware of it," the bureau said.
The FBI said the money was given through one of its operative's charities to see if it would be diverted for terrorism, and the amounts were kept small so they couldn't be used to fund a major attack. Court testimony indicates that in one case a Hamas figure used the sting money to help orphans.
A key FBI operative who had a falling-out with the bureau provided an account of the operation. The AP obtained and reviewed the court documents.
Arizona businessman Harry Ellen testified he permitted the FBI to bug his home, car and office, allowed his Muslim foundation's activities in the Gaza Strip to be monitored by agents, arranged a peace meeting between major Palestinian activists and gained personal access to Yasser Arafat during more than four years of cooperation with the FBI.
Ellen's FBI handler in the late 1990s was Kenneth Williams, an agent who later became famous for writing a pre-Sept. 11, 2001, memo to FBI headquarters warning that there were Arab pilots training at U.S. flight schools. The warning went unheeded.
Ellen, a Muslim convert, testified he was taking a trip to the Gaza Strip to bring doctors to the region in summer 1998 when Williams asked him to provide money to a Hamas figure.
Williams wanted "the transfer of American funds to some of the terrorist groups for violent purposes," Ellen testified to the immigration court in a closed June 2001 session.
At the same time, President Clinton and his negotiators were trying to reinvigorate stalled Mideast peace talks, an effort that culminated in the Wye Accords in October 1998.
Clinton's national security adviser, Sandy Berger, said in an interview that the White House wasn't informed of the FBI activities. "We were not aware of any such operation," Berger said.
Clinton's anti-terror czar, Richard Clarke, said he too was unaware of the operation. "I never heard of it, but it's creative," he said.
End of work
Ellen testified the operation ended abruptly in early 1999 when he and Williams had a series of disagreements over the operation, disputes that began when Ellen angered the FBI by having an affair with a Chinese woman suspected of espionage.
FBI officials said they tried to get Ellen to end the relationship, and his work was terminated for failing to follow rules.
Melvin McDonald, the former U.S. attorney in Phoenix who has championed Ellen's cause, said the FBI's abrupt end to the investigation squandered an important intelligence opportunity.
"Harry had been a tremendous resource to the bureau," McDonald said. "We did not have that many people like him with connections like that to the Middle East."
Former Senate Intelligence Committee Chairman Dennis DeConcini, D-Ariz., another Ellen supporter, said Ellen's work could have greatly assisted the FBI.
"I know some of the wonderful cases and sheer positives the FBI has done. But when it comes to spying and espionage they really screwed up, and I think Harry is one of those cases," DeConcini said.
Moonlighting investigation
The Justice Department inspector general is investigating some allegations that came to light in Ellen's case, including that FBI agents in sensitive probes moonlighted at private companies that were using FBI assets or investigative subjects to assist their personal interests.
Ellen, stepson of an Air Force intelligence officer, had worked for U.S. intelligence since the 1970s as an "asset," a private citizen paid to provide information or conduct specific tasks. His work started in Latin America and also involved China and the Middle East.
Ellen, whose step-grandfather was Jewish, converted to Islam in the 1980s and began helping poor Palestinians.
In 1994, he began assisting the FBI Phoenix office, which had become a hotbed of cases involving terrorism and intelligence because of a large, active Muslim population, the proximity to the southern U.S. border and a large concentration of aerospace companies.
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