updated 3/30/2004 8:07:05 PM ET 2004-03-31T01:07:05

A New York gem dealer admitted processing cash transfers for a suspected arms dealer who allegedly tried to smuggle shoulder-fired missiles that could shoot down airliners.

Yehuda Abraham, 76, pleaded guilty Tuesday to operating an unlicensed money transmitting business. He faces up to five years in prison and a $250,000 fine at sentencing July 19.

In pleading guilty before U.S. District Court Judge Katharine Hayden, Abraham said he did not know what the cash was for — and didn’t ask.

Prosecutors said Abraham handled the funds for the initial missile purchase by Hemant Lakhani, a British citizen who allegedly agreed to deliver a missile to U.S. agents posing as buyers. He allegedly obtained the missile from Russian agents posing as sellers.

Prosecutors said Lakhani began arranging to smuggle 50 more shoulder-fired missiles into the United States soon after securing one of the weapons.

According to court documents filed shortly after his arrest last summer, Lakhani, in dealing with an undercover FBI agent he believed to be a Muslim terrorist, was recorded as saying Osama bin Laden “did a good thing” and “straightened them all out.” Bin Laden's al-Qaida organization is believed to have carried out the Sept. 11, 2001 terrorist attacks.

U.S. Attorney Christopher Christie said Abraham’s actions — despite his claim of ignorance as to what the money was to be used for — had the potential to cause grave damage to the United States.

“People who intend to do the kind of business that Mr. Abraham was doing need to know that they could be aiding terrorists who want to kill Americans,” Christie said.

Lakhani, Abraham and Moinuddeen Ahmed Hameed, an Indian citizen, were arrested in August.

Lakhani has pleaded not guilty and is awaiting trial. Hameed is charged with conspiring to operate a money laundering operation as part of a scheme to pay for the missiles.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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