Image: Pete Seda
Myles Murphy  /  Ashland Daily Tidings via AP file
Pete Seda, left, who was head of the Al-Haramain Islamic Foundation, was convicted in October of tax fraud and conspiracy for helping another official with the group smuggle $150,000 out of the U.S. to Saudi Arabia in 2000. Seda's lawyers are preparing an appeal.
updated 12/22/2010 3:23:36 AM ET 2010-12-22T08:23:36

A federal judge Tuesday ordered the U.S. government to pay more than $2.5 million in attorney fees and damages after he concluded investigators wiretapped the phones of a suspected terrorist organization without a warrant.

U.S. District Court Judge Vaughn Walker said the attorneys for the Ashland, Ore., chapter of the now-defunct Al-Haramain Islamic Foundation should receive $2.5 million for waging its nearly five-year legal challenge to the Bush administration's so-called Terrorist Surveillance Program.

Walker also awarded $20,400 each to Wendell Belew and Asim Ghafoor, two of the foundation's Washington-based lawyers. They had their phone conversations with Al-Haramain principals monitored, the judge said.

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Earlier this year the judge found that investigators illegally intercepted the electronic communications without warrants. Government lawyers have refused throughout the litigation to disclose whether investigators eavesdropped, "although the fact of such surveillance is not in doubt," the judge concluded.

The Department of Justice lawyer who defended the program in court for the Bush administration and then the Obama administration, Anthony J. Coppolino, didn't return a phone call late Tuesday.

'Critical intelligence'
The judge refused to award any punitive damages, saying the investigators didn't act in bad faith in following the guidelines of the controversial program exposed by The New York Times in 2005.

"The record shows that the government had reason to believe that Al-Haramain supported acts of terrorism and that critical intelligence could be obtained by monitoring Al-Haramain," the judge said.

The Treasury Department froze the assets of the Ashland chapter and declared it a "specially designated global terrorist" on Sept. 9, 2004. Treasury officials believe the Ashland chapter delivered $150,000 overseas to "support terrorist activities by the Chechen mujahideen," the judge concluded.

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Pete Seda was convicted in October of tax fraud and conspiracy for helping another official of Al-Haramain smuggle the $150,000 out of the U.S. to Saudi Arabia in 2000. Seda's lawyers are preparing an appeal.

The eavesdropping was initially discovered when Treasury Department officials mistakenly turned over a document to Al-Haramain lawyers that appeared to be a top-secret call log.

Even though lawyers were ordered to give back the document and not rely on it in the lawsuit, they were still able to convince Walker with other evidence that they were warrantless wiretap targets.

Generally, government investigators are required to obtain search warrants signed by judges to eavesdrop on domestic phone calls, e-mail traffic and other electronic communications. But Bush authorized the surveillance program shortly after 9/11, allowing the National Security Agency to bypass the courts and intercept electronic communications believed connected to al-Qaida.

Bush ended the program in January 2007.

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