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. Last Updated: 07/27/2016

The Gem Dealer in the Igla Sting

NEW YORK -- Yehuda Abraham is a slight, stooped 76-year-old gem dealer, with a house in Queens, an office in New York's diamond district and shops around the world.

One night last October, prosecutors say, a client entered Abraham's 12th-floor Midtown office and handed him $30,000 in $100 bills, an odd, if believable transaction in the world of international gem dealers. Abraham, by the government's account, counted out every note, then gave the client his business card.

But this was not a jewelry sale, prosecutors allege. It was a secretive deal, with a code number and a cash commission, in which Abraham agreed to transfer the client's money to a bank account in Europe, out of sight of federal regulators.

That transaction, if it occurred as federal prosecutors say, has landed Abraham, an immigrant who came to the United States nearly 50 years ago, in the middle of an international dragnet that prosecutors said took into custody a dangerous arms dealer and his accomplices who were willing to bring missiles into the United States to shoot down jets.

Prosecutors said in federal court Wednesday that Abraham was the money man, a shadowy figure who facilitated the work of terrorists by giving them the means to finance their actions -- the purchase of the missiles -- through an informal money transfer system, known as hawala, which is common in the Middle East and a preferred method of finance for terrorists.

Abraham walked slowly into a federal courtroom in Manhattan on Wednesday, a curious figure described by some as an honest businessman and prominent member of the local Jewish community. His rabbi showed up to offer moral support, and his brothers and sisters and children filled two aisles in the courtroom, as Abraham's lawyer, Larry Krantz, insisted this was a misunderstanding. "I think there is a misconception to his role in this case," Krantz said.

Abraham, president of Ambuy Gem Corp., was arrested Tuesday by federal agents along with Hemant Lakhani, a British citizen, and Moinudden Ahmed Hameed, of Malaysia.

Lakhani has been identified by prosecutors as an international arms dealer and charged with providing material support to terrorists as well as selling arms without a license. Despite prosecutors' claim that Abraham and Hameed aided Lakhani's terrorist dealings, the two have been charged only with conspiring to operate an unlicensed money transmitting business, a charge that at most could mean five years in prison.

"Yes, this elderly gentleman in poor health significantly helped broker the sale of a surface-to-air missile," said Assistant U.S. Attorney Michael Purpura.

But Federal Magistrate Judge Andrew Peck was not persuaded. "I fail to see any allegation that could be read fairly proving or alleging that Abraham was providing money for weapons as opposed to any other black-market activity," Peck said.

Abraham has lived and worked for the last 40 years as a New York gem dealer, a career that has taken him as far away as Hong Kong and Saudi Arabia. Men who worked with him for years on West 47th Street described him as a grandfather, an observant Jew and a well-known proprietor. Their reaction was one of disbelief.

"For a Jew to do something like that, I cannot believe it or understand it," said a 49-year-old jewelry wholesaler. "He's a prominent member of our community. To do something like that is crazy."

Gem merchants acknowledged Wednesday that large amounts of cash flow across international borders every day, but insisted that it is done in legal and documented ways.

In court, Krantz and the prosecutors described Abraham as a wealthy and successful man with more than $1 million equity in his home and shops in Europe, the Middle East and Asia.

But in court papers, prosecutors painted a more sinister picture of Abraham. The papers suggest that he was also involved in the hawala cash transfer system for some time and that he had a good reputation among those who used it. In 2002, the prosecutors said, Lakhani enlisted Abraham to send $30,000 to a bank in Europe. To ensure security of the deal, there would be a code. The person posing as a buyer of missiles -- actually a government cooperator -- was given the serial number of a one-dollar bill. Later, the authorities say, after Abraham counted out the $100 bills in his office, he reached into his pocket and turned over a dollar bill with the exact serial number. The deal was complete, except for Abraham's fee of $1,500, prosecutors said.