“I have always felt, and I know my view is widely shared by others working on the Kashmir issue in the Washington area, that Dr. Fai’s Kashmiri American Council was subsidized by the Pakistan government,” said Howard Schaffer, a former U.S. diplomat and Kashmir expert who has known Fai for about 15 years.
The Kashmiri American Council never operated like an ordinary charity, according to nonprofit experts. Money, sometimes large amounts, passed through it in unusual ways.
Several council supporters said they had donated regularly, maybe a few thousand dollars at a time, and were unaware of the ISI’s purported role in funding the group. But the FBI says the largest donations came from a group of at least 13 unnamed “straw donors,” Pakistani-American doctors and businessmen who gave cash to Fai or wrote checks to the Kashmiri American Council. Several received tax write-offs for their contributions.
Zaheer Ahmad, who ran Shifa International Hospital in Islamabad, allegedly reimbursed the straw donors with money he received from the ISI.
At minimum, the write-offs violated U.S. tax laws, experts said. “That’s not allowed,” said Eli Bartov, a research professor of financial accounting at the Stern School of Business at New York University. “You can only get the deduction if you make the contribution.”
But there was a larger mystery.
Internal budget documents confiscated by the FBI show far more money flowing through the Kashmiri American Council than reflected in the group’s annual IRS filings. In its 2008 IRS filing, for example, the group reported spending $291,807, while the budget documents say the amount was more than twice that much, $690,380. In 2009, the council’s reported spending was $332,706, while its internal records said $662,730.
So far, the government has not offered an explanation for these discrepancies. Fai did not answer questions on the matter.
Pablo Eisenberg, an expert on philanthropy and a senior fellow at the Georgetown Public Policy Institute, said there could be several reasons for the conflicting information.
“One is, he wants to downsize for public consumption,” Eisenberg said of Fai. “Or … he’s taking the money to use for his own purposes, whether spending it on himself or giving it to some other organization.”
It’s also possible Fai reported money he received by check but not in cash, particularly cash transferred to him outside the U.S., said Marcus Owens, the former head of the IRS unit that oversees nonprofits.
Fai’s internal budget documents spelled out plans to spend $80,000 to $100,000 a year on campaign contributions to members of Congress, the FBI said.
But donations made by Fai, his associates and board members appear to fall far short of those amounts, campaign finance records show.
5/4/1990 $500 Burton, Dan (R) 9/4/1990 $790 Burton, Dan (R) 5/20/1991 $500 Burton, Dan (R) 9/30/1992 $1,000 Kasten, Bob (R) 10/5/1994 $500 Burton, Dan (R) 6/12/1995 $500 Burton, Dan (R) 6/25/1996 $500 Durbin, Richard J (D) 6/28/1996 $500 Rahall, Nick J II (D) 8/14/1996 $500 Rohrabacher, Dana (R) 3/21/1997 $500 Kucinich, Dennis (D) 5/28/1997 $500 Burton, Dan (R) 2/27/1998 $1,000 Moran, James P Jr (D) 8/9/1999 $250 Gore, Al (D) 9/28/1999 $250 Sununu, John E (R) 9/5/2000 $250 Meeks, Gregory W (D) 7/14/2004 $3,500 National Republican Senatorial Cmte (R) 9/13/2004 $2,000 Pitts, Joe (R) 9/28/2004 $2,000 Burton, Dan (R) 5/2/2005 $1,000 Burton, Dan (R) 10/6/2006 $5,000 National Republican Senatorial Cmte (R) 2/21/2007 $500 Clarke, Yvette D (D) 6/19/2008 $1,000 National Republican Senatorial Cmte (R) 9/15/2008 $2,000 Burton, Dan (R) 11/2/2008 $250 Obama, Barack (D) 6/25/2009 $250 Democratic Senatorial Campaign Cmte (D) 3/23/2010 $2,000 Burton, Dan (R) 4/16/2010 $250 DNC Services Corp (D) 6/9/2011 $375 DNC Services Corp (D) Sources: FEC and OpenSecrets.org
Fai has given $28,165 to federal candidates and political parties since 1990, including $10,290 to Burton and $9,500 to the National Republican Senatorial Committee. Others connected to Fai, Ahmad and the Kashmiri American Council’s board of directors donated at least $93,456 during those years, including $28,551 to Burton.
So far, the FBI has identified only $4,000 in ISI money that went into campaign contributions, from Ahmad and his nephew. Pitts and Burton received $2,000 each, the FBI said.
Ultimately, the affidavit may tell only part of what the FBI was actually investigating.
Agents first learned of the case in 2005 from an informant who wanted to reduce his jail sentence. The counterterrorism division of the FBI’s Washington field office started looking into Fai — and more troubling allegations against Ahmad.
A Pakistani-American physicist, Gul Chughtai, who specializes in cancer treatment and clashed with Ahmad while head of the cancer department at Shifa International Hospital, said he first talked to the FBI about Ahmad four years ago.
Chughtai said he met with four agents at the FBI’s Philadelphia office, including one from Washington’s counterterrorism division already investigating Ahmad. Chughtai said the agent has talked to him since, asking several times about a trip that Ahmad allegedly made to Afghanistan with an eccentric Pakistani nuclear scientist named Sultan Bashiruddin Mahmood.
Mahmood and another colleague had met with Osama bin Laden and Ayman al-Zawahiri in Afghanistan in August 2001, when the al-Qaeda leaders had allegedly inquired about nuclear weapons. Mahmood was later placed under house arrest and has been largely isolated in Islamabad since.