A federal appeals court Friday overturned the 2010 criminal conviction of Pete Seda, a key figure in an Ashland charity accused of supporting terrorism by smuggling money 10 years earlier to Chechen guerrillas at war with the Russian Federation.

The 9th U.S. Circuit Court of Appeals opinion accuses federal prosecutors of improperly influencing the outcome of Seda’s trial by concealing that they had paid a witness. The government also exceeded the scope of a search warrant and omitted facts that might have helped the defense, the court ruled.

“This is a tax fraud case that was transformed into a trial on terrorism,” Circuit Judge M. Margaret McKeown wrote in the panel’s 2-1 opinion.

The Iranian-born Seda, whose formal name is Pirouz Sedaghaty, was charged with falsifying a 2000 tax form filed on behalf of the U.S. wing of the Al-Haramain Islamic Foundation Inc., a Saudi Arabian charity. The U.S. government accused the charity of sending $150,000 through Saudi Arabia to fund terrorist activities and support the Chechen mujahideen “under the guise of humanitarian aid,” McKeown wrote.

Seda’s defense team, headed by Federal Public Defender Steven T. Wax, argued that Seda’s accountant caused the discrepancy in his client’s 2001 tax form and that Seda had a long, fruitful history as a man peacefully advancing the word of Islam.

A jury in Eugene’s U.S. District Court found Seda guilty of defrauding the U.S. government by making false statements on the tax return. He was later sentenced to 33 months in prison.

Wax told The Oregonian that he and Seda had waited nervously for the 9th Circuit opinion since arguing the case before the panel last December. When he got the news, Wax phoned Seda at a Portland halfway house — where he was serving the final day of his sentence since leaving prison in May.

“Pete was quite pleased to finally have some vindication of his position,” Wax said. “He has denied his guilt from the outset of these proceedings and is quite happy that the circuit has recognized that the trial was not a fair one.”

Amanda Marshall, the U.S. attorney for Oregon, said her office is reviewing the opinion and considering its options. Those range from dismissing the case to holding a new trial to filing appeals that might take the case all the way to the U.S. Supreme Court.

“Any decision about whether we will seek further review will have to be made in consultation with the (U.S. Department of Justice) Criminal Division and Solicitor General’s Office,” Marshall said in a prepared statement.

Government prosecutors withheld “significant impeachment evidence” by not telling the trial court that one of its key witnesses had been paid by the FBI, the appeals court found.

The panel also concluded that FBI agents, who obtained a search warrant from a U.S. magistrate for Seda’s home and the charity’s office, “went well beyond” the limitations imposed by the order when they searched Seda’s computer hard drives.

“The appeal illustrates the fine line between the government’s use of relevant evidence to document motive for a cover-up and its use of inflammatory, unrelated evidence about Osama Bin-Laden and terrorist activity that prejudices the jury,” McKeown wrote.

U.S. District Judge Michael Hogan did not properly follow the Classified Information Procedures Act as he tried the Seda case, the appellate panel found.

The law, known as CIPA, is intended to protect government secrets from disclosure at trial while ensuring that defendants are given substitute documents — typically written summaries — of classified materials. The appeals court found that the substitution approved by Hogan did not provide Seda “with substantially the same ability to make his defense as would disclosure of the specified classified information.”

Government prosecutors in Oregon have used CIPA to protect U.S. secrets in a number of national security cases. Those include the 2002 Portland Seven terrorism case, the 2009 spy case against former CIA officer Jim Nicholson and the trial of Mohamed Mohamud, the man found guilty in January of attempting to set off a bomb at Portland’s 2010 holiday tree-lighting ceremony.

The appellate ruling on CIPA won’t change the law, but it’s likely to give judges who find themselves trying national-security cases some pause, said Tung Yin, a professor at Lewis & Clark Law School who has followed the Seda case.

The ruling, he said, will serve as “a reminder to pay a little more attention to the substitutions and make sure they are crafted neutrally.”

Source: The Oregonian