Former Columbia Man Pleads Guilty to Violating Federal Sanctions Against Iraq
Former IARA Officer Admits Organization Transferred Money to Iraq

KANSAS CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced that a former Columbia, Mo., man pleaded guilty in federal court today to his role in a conspiracy to illegally transfer funds to Iraq in violation of federal sanctions.

Ali Mohamed Bagegni, 56, a native of Libya who is a naturalized United States citizen and former resident of Columbia, pleaded guilty before U.S. District Judge Nanette K. Laughrey this afternoon to the charge contained in a Jan. 16, 2008, federal indictment.

Bagegni was a member of the board of directors of the Islamic American Relief Agency (IARA), an Islamic charitable organization that was headquartered in Columbia (formerly known as the Islamic African Relief Agency-USA). Bagegni was associated with IARA from 1991 through Oct. 13, 2004, and served as secretary for much of his tenure on the board. IARA was officially formed in 1985 and closed in October 2004, after its funds and assets were frozen by the U.S. Treasury Department.

Under the authority granted by the International Emergency Economic Powers Act, President George H.W. Bush issued an executive order on Aug. 2, 1990, which declared a national emergency with respect to Iraq. The Secretary of Treasury issued the Iraqi Sanctions Regulations, which prohibited unauthorized travel to Iraq and unauthorized transfer of money or goods to Iraq by U.S. persons, including lawful permanent resident aliens. IARA never received authority from the United States government to transfer money to Iraq for any purpose.

During the entire period in which the Iraq sanctions were in effect, IARA solicited donations through various means, requesting contributions to pay for projects in Iraq. Bagegni admitted that IARA accepted monetary contributions specifically designated for projects in Iraq and that IARA used funds received as charitable contributions to engage in prohibited transactions involving Iraq. Bagegni held signature authority to co-sign checks and wire transfers on IARA’s bank accounts in Columbia. All disbursements of funds from IARA accounts, including a series of 22 illegal funds transfers routed through Amman, Jordan, to Iraq, were authorized by Bagegni.

On March 21, 2001, and August 1, 2001, the Department of the Treasury, Office of Foreign Assets Control (OFAC) sent letters to IARA, asking about IARA’s activities in Iraq. According to today’s plea agreement, IARA’s executive director responded to OFAC on Aug. 21, 2001, claiming that IARA did not export any merchandise to Iraq and was only “trying to help Iraqi people outside Iraq.” Bagegni states that he did not know IARA had no permission to transfer funds or aid to Iraq, directly or indirectly, and that IARA’s executive director assured him everything IARA had done was legal. Bagegni further states that IARA’s executive director did not disclose to the IARA board of directors the fact that he had received the letters from OFAC, or that he had replied to them.

 In entering his guilty plea, Bagegni admitted to participating in the conspiracy to violate IEEPA between October 13, 2004, and November 9, 2006, during which time he knew or should have known that IARA had transferred money to Iraq, and falsely stated to government attorneys and agents that it had not been.

USAID Grants to IARA

Beginning in January 1997, IARA entered into a series of written cooperative agreements totaling $1.5 million with the United States Agency for International Development (USAID) for relief projects in Mali, Africa. The agreements were terminated by USAID in December 1999, and IARA was prohibited from obtaining any further USAID contracts. Subsequent to the termination of the agreements, IARA was authorized to expend funds to pay outstanding invoices obligated during the existence of the agreements and specifically related to projects authorized within the terms of the agreements.

Bagegni admitted that, after all outstanding invoices were satisfied, IARA retained approximately $84,922 of USAID money without authorization and failed to return the unexpended funds to USAID. Bagegni also admitted that IARA spent a total of $50,000 from its North Mali and Mali Project bank accounts to hire a former U.S. Congressman to advocate for IARA’s removal from a U.S. Senate Finance Committee list that identified IARA as one of the organizations about which records were sought in a probe being conducted by that committee. IARA also spent an additional $15,000 from its principal bank account to hire a lobbyist, who was also a former U.S. Congressman, to advocate for IARA’s removal from the list and reinstatement as an approved government contractor.

Under federal statutes, Bagegni is subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorneys Anthony P. Gonzalez and Steven M. Mohlhenrich from the U.S. Attorney’s Office for the Western District of Missouri, in conjunction with Trial Attorneys Paul Casey and Joseph Moreno from the National Security Division of the U.S. Department of Justice. This case was investigated by the Federal Bureau of Investigation, IRS-Criminal Investigation, U.S. Immigration and Customs Enforcement, and U.S. AID-Office of Inspector General.