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. Last Updated: 07/27/2016

FBI Sent Money to Hamas in Late '90s

WASHINGTON -- While former U.S. President Bill Clinton was trying to broker an elusive peace between Israelis and Palestinians, the Federal Bureau of Investigation was secretly funneling money to suspected Hamas figures to see if the militant group would use it for terrorist attacks, according to interviews and court documents.

The counterterrorism operation in 1998 and 1999 was run out of the FBI's Phoenix, Arizona, office in cooperation with Israeli intelligence and was approved by the attorney general, Janet Reno, FBI officials said. Several thousand dollars in U.S. money was sent to suspected terror supporters during the operation as the FBI tried to track the flow of cash through terror organizations, the FBI said in a rare acknowledgment of an undercover sting that never resulted in prosecutions. "This was done in conjunction with permission from the attorney general for an ongoing operation, and Israeli authorities were aware of it," the Bureau said. Efforts to reach Reno for comment were unsuccessful.

One of the FBI's former operatives, Arizona businessman Harry Ellen, recounted the operation in a June 2001 immigration court proceeding. Ellen, a Muslim convert, testified that he was taking a trip to the Gaza Strip to bring doctors to the region in the summer of 1998 when Kenneth Williams, his FBI handler, asked him to provide money to a Hamas figure. Williams wanted "the transfer of American funds to some of the terrorist groups for violent purposes," Ellen testified.

At the same time, Clinton and his negotiators were trying to reinvigorate stalled Middle East peace talks, an effort that culminated in the October 1998 Wye River Accords. Clinton's national security adviser, Sandy Berger, said in an interview that the White House wasn't informed of the FBI's activities.

Ellen testified that the operation ended abruptly in early 1999 when he and Williams had a series of disagreements, disputes that began when Ellen angered the FBI by having an affair with a Chinese woman suspected of espionage. FBI officials said they tried to get Ellen to end the relationship and his work was terminated for failing to follow rules.

Ellen had worked for U.S. intelligence since the 1970s as an "asset," a private citizen paid to provide information or conduct specific tasks. He converted to Islam in the 1980s and began helping poor Palestinians. In 1994, he began assisting the FBI's Phoenix office, which had become a hotbed of cases involving terrorism and intelligence.

Ellen testified that by 1996 his humanitarian work, monitored by the FBI, had won him unprecedented access to groups fighting for Palestinian independence, including Hamas. In a rare meeting Ellen organized, he testified, the major groups created an informal alliance to ensure safe passage to any foreigner providing humanitarian assistance. Ellen was named a spokesman and met several times with Arafat.

Ellen also created a foundation named al-Sadaqa to bring sewing machines, eyeglasses and other assistance to Palestinians. Impressed by Ellen's extraordinary access, Williams insisted the new foundation be funded in part by the FBI, Ellen testified.

In an interview, he said he agreed to help the FBI "not as a snitch but as a good American."