The Islamic American Relief Agency (IARA-USA) and five of its leaders have been charged with engaging in prohibited transactions with Gulbuddin Hekmatyar, an Afghan rebel leader who was designated as a terrorist in 2003. IARA-USA, which was shut down in October 2004, was funding an orphanage in the Shamshatu Refugee Camp in Pakistan that is located on land belonging to Hekmatyar. The defendants are not charged with supporting terrorism. The leaders, along with a former member of Congress, Mark J. Siljander, have also been charged with misappropriating funds from a federal grant to pay for Siljander to lobby for IARA-USA's removal from a Senate list of organizations suspected of supporting terrorism. The trial is scheduled for November.

IARA-USA, its former executive director, and other leaders were originally indicted in March 2007 for violating economic sanctions against Iraq. The new indictment, issued by a federal grand jury in the Western District of Missouri on Jan. 16, adds eight new charges relating to the orphanage in Pakistan, as well as charges of money laundering, conspiracy, and obstruction of justice relating to the alleged lobbying payments to Siljander.

The indictment says IARA-USA provided financial support to the orphanage between 2002 and 2004 by sending payments to the Pakistan account of the Islamic Relief Agency (ISRA). A Department of Justice (DOJ) press release said the payments to ISRA were "purportedly for an orphanage housed in buildings owned and controlled by Hekmatyar." After Hekmatyar was designated as a terrorist in early 2003, eight more payments were sent to ISRA, from March 2003 to August 2004, totaling $130,000. The indictment says these payments were "for the benefit of Gulbuddin Hekmatyar…"

DOJ's announcement included the following statement: "It is important to note that the indictment does not charge any of the defendants with material support of terrorism, nor does it allege that they knowingly financed acts of terror. Instead, the indictment alleges that some of the defendants engaged in financial transactions that benefited property controlled by a designated terrorist, in violation of the International Emergency Economic Powers Act." This raises the question of when a nonprofit must withdraw support for a charitable project when someone with an indirect relationship is designated as a terrorist. In this case, Hekmatyar appears to have owned the land the orphanage and refugee camp are located on, but payments did not go to him.

The indictment also alleges that IARA-USA failed to return $84,922 from a United States Agency for International Development (USAID) grant that was cancelled in December 1999. It further charges that IARA-USA officials used $50,000 of these funds to pay Siljander, a Republican member of Congress from Michigan between 1981 and 1987, to lobby the Senate Finance Committee to take IARA-USA off a list of charities being investigated so it could have its USAID funding reinstated. In interviews with the FBI, Siljander denied the payments were for lobbying, leading to an additional charge of obstruction of justice. Siljander said the payment was to support a book, due for publication in June, on Muslim-Christian relations.