PORTLAND &

The fugitive former director of a defunct Islamic charity pleaded not guilty to federal conspiracy and tax fraud charges after he voluntarily returned to the United States on Wednesday to face the charges more than two years after they were filed.

Pirouz Sedaghaty, 49, also known as Pete Seda, a native of Iran who is a U.S. citizen, made a brief appearance before U.S. Magistrate Judge Thomas Coffin in Eugene after he was arrested at the customs checkpoint at Portland International Airport.

Sedaghaty is accused of helping to smuggle $150,000 out of the United States to aid Muslim fighters in Chechnya while he was secretary of the Al-Haramain Islamic Foundation chapter in Ashland, Ore.

The foundation was based in Saudi Arabia, which dissolved the charity in 2004 after the U.S. Treasury Department designated it an organization that supports terrorism.

Sedaghaty has insisted his chapter of the foundation was not involved, despite its addition to the Treasury Department list in September 2004.

An Internal Revenue Service affidavit filed to support a search warrant for the chapter office in Ashland in February 2004 said Sedaghaty, who attended Southern Oregon University in Ashland, had moved to Dubai in 2003.

But his attorneys declined to say Wednesday where Sedaghaty had been living the past four years.

Tom Nelson, a Portland attorney who accompanied Sedaghaty on a flight from Frankfurt, Germany, said Sedaghaty was glad to return to Oregon, where he had settled after college and established a career as an urban forester and arborist in Ashland.

"Pete has wanted to come home for some time, and he has wanted to clear his name," Nelson said.

Assistant U.S. Attorney Chris Cardani, who is handling the case, declined comment.

But Cardani said a hearing was scheduled for 10:30 a.m. on Aug. 22 before Coffin in Eugene.

Nelson, who is the attorney for the defunct Oregon chapter of Al-Haramain, referred questions about the case to another Portland attorney, Larry Matasar, who is representing Sedaghaty.

Matasar declined comment.

But Nelson said he believes the government case against Sedaghaty is "weak" and noted that despite the tax fraud charge, "not one penny of tax money is at stake here."

Seda's supporters were surprised and pleased that he ended his voluntary exile from his adopted country and began fighting the government's claims that he and Al-Haramain helped fund terrorist groups in Chechnya in 2000.

"He loves America and I think he has enough respect for our (legal) system to believe that he'll get a fair hearing, and I think he will," said David Zaslow, an Ashland rabbi who has kept in touch with Seda via e-mails but said he has not discussed the criminal case with him.

"If he has a case to clear his name, he's not going to do it from outside of the country," Zaslow said. "It's better for him to face the charges here and either prove himself totally innocent or face whatever consequences there are."

Sedaghaty founded the Oregon chapter of Al-Haramain with a Saudi citizen, Soliman al-Buthi, who returned to Saudi Arabia in 2001.

Unlike Sedaghaty, al-Buthi has been labeled a "specially designated global terrorist" and is considered an international fugitive even though he is working as a government official in Saudi Arabia.

Earlier this month, Nelson filed a federal lawsuit in Portland seeking to remove the Oregon chapter of Al-Haramain from the Treasury Department list of organizations that support terrorism.

The lawsuit noted the department's allegation about links to al-Qaida came in a press release, and said the department has never provided the Oregon chapter with any information it used for the designation in order to rebut it, or responded to requests for reconsideration.

The Ashland house where the chapter was based was sold in May 2006 at the direction of the Treasury Department.

The federal investigation of the Oregon chapter of Al-Haramain became public late in 2003, surprising many in Ashland, where Sedaghaty was known for his work to save trees threatened by development, earning local media attention. He also worked to improve relations with Muslims, once appearing in a Fourth of July parade with a pet camel.

David Berger, a semi-retired Ashland attorney and Seda supporter, said the circumstances of Seda's return could bode well toward earning his release from custody after Wednesday's hearing.

"I hope the court understands the fact that his coming here voluntarily is a good indication that he's not going to cut and run," Berger said.

The Oregon chapter of Al-Haramain was charged in the same February 2005 federal grand jury indictment as Sedaghaty and al-Buthi. Sedaghaty was listed as the secretary of the chapter and al-Buthi as its treasurer.

The indictment alleges that Seda filed a false federal tax return for the Oregon chapter in order to cover up sending $150,000 overseas to support Chechen mujahedeen fighting a "jihad" against Russian forces.

The indictment said that "zakat," the requirement that all Muslims donate to charity to help the poor and needy, "has been diverted by Islamic charitable foundations" to assist in "violent jihad," or holy war.

A federal judge in September 2005 dismissed the charges against the foundation at the request of the U.S. Attorney's office in Oregon after federal prosecutors argued it was a waste of time because the foundation chapter was nothing but a corporate shell.

Prosecutors, however, reserved the right to refile the charges against the foundation.

The chapter is at the center of a federal lawsuit challenging the Bush administration warrantless eavesdropping program.

The case, being heard by the 9th U.S. Circuit Court of Appeals in San Francisco, claims the National Security Administration illegally intercepted telephone calls without warrants between al-Buthi and his two American lawyers, Wendell Belew and Asim Ghafoor.

Attorneys for the chapter have offered a call log the Treasury Department mistakenly released to them as evidence. The log since has been ordered returned to the government, which has been keeping it under tight security, allowing it to be seen only by top government officials and select federal judges despite arguments by attorneys that it does not merit such protection.

Sedaghaty established the Oregon chapter of the charity in 1997 with support from the Saudi foundation. He distributed Islamic literature to prisoners and operated the chapter as a prayer house.

But a former worker at the Ashland chapter who wrote a book about his experience has said the chapter promoted Islamic radicalism with its literature.

Both Sedaghaty and Al-Buthi, in newspaper interviews, have denied those claims by Daveed Gartenstein-Ross in his book, "My Year Inside Radical Islam."

Mark Freeman contributed to this story.