Theft, fraud in Europe fund terrorist group, police say

PARIS —  There is no honor among thieves, the angry Algerian said.

Bassam Rifai was fuming that a member of his own gang in Zurich, Switzerland, had made off with expensive stolen merchandise, according to a wiretap in an investigation of alleged terrorism financing.

“The group was in the mountains in Algeria waiting for the money,” Rifai said, according to a transcript. “And he ripped me off. He stole computers I wanted to send to them in the mountains.... We all know you have the right to kill if someone touches one of three things: religion, honor and money. Half was for the cause of Allah. For five months, I got up at 5 a.m. to prowl to make that sum.”

A few months after that conversation last year, Swiss police arrested Rifai and three other suspects. Now, interconnected investigations are trying to prove that muggings in Switzerland, burglaries in Spain and tax fraud in Italy helped fund bombings and ambushes by an extremist Islamic group in Algeria.

The cases explore the ground-level mechanics of terrorism financing, and raise the specter that logistics cells in Europe could transform into an advance guard for attacking the West. They also show the difficulties of prosecuting an offense on the blurry line between crime and extremism.

The money allegedly flowed to an Algeria-based network that recently had renamed itself Al Qaeda in the Maghreb and declared allegiance to Osama bin Laden’s terrorism network, part of an attempt to reinvent itself as a regional movement.

Algerian security forces not long ago seemed to have the group on the run, but it has regained strength, sending fighters to Iraq, training recruits in the Sahara and working to federate networks across North Africa in a wider struggle.

“They have proclaimed the internationalization of their combat, certainly continuing to target Algeria, but also Western countries,” a top French intelligence official said.

The network has bombed the convoys of foreign contractors in Algiers and also may be tied to a recent botched suicide bombing in Morocco and a Moroccan operative captured in Spain. In February, police in the northeastern Spanish town of Reus arrested Mbark Jaafari, a semiprofessional boxer known as “The Tiger,” who is accused of sending 32 recruits to train or fight in Algeria, Iraq and Afghanistan, police say. U.S. anti-terrorism agents suspected him of plotting against U.S. targets, a senior Spanish law enforcement official said.

“That was an alert the Americans gave us, that he wanted to do something against American interests in Europe,” the Spanish official said.

In contrast, financing cells dedicate themselves mostly to criminal activity and can be anarchic, with suspects stealing from each other and fighting over money, investigators say. But police assert that they have uncovered direct links to attacks and leaders in Algeria.

A deadly ‘wedding’

While under surveillance by Italy’s Financial Guard in 2005, suspects in Milan got a phone call from an Algerian militant exulting about a “wedding” in a town called Biskra. Investigators allege that the word is extremist code for an attack and that an ambush in Biskra had killed a dozen Algerian soldiers two days earlier.

The Italian suspects had advance knowledge of attacks carried out by the militants they helped fund, according to the testimony of an associate.

“These people in Italy always have firsthand news about what happens in Algeria,” he said, according to documents. “I remember Ammar telling me about an attack beforehand. He specifically told me, ‘In 10 days there will be an attack on the police in Bad el Oued.’ ”

The half a dozen suspects in Italy were mostly in their 30s and 40s, often veterans of combat in Bosnia and Algeria. They are accused of raising money through a restaurant, an electronics firm and an import-export company, as well as from contributions from around Europe. The nominally legitimate businesses evaded taxes and engaged in other skulduggery, investigators say.

A suspect in Naples owned a bus company that was used by clandestine cash couriers who rode the buses to the French port of Marseilles, then traveled by sea to Algeria, investigators say.

“Twice a week they sent three or four trusted people carrying about $2,000 apiece,” said Lt. Col. Domenico Grimaldi of the Financial Guard. “That adds up over time.”

The group also allegedly used false identities to make illegal wire transfers. The total allegedly provided to Algerian militants exceeds $2 million, Grimaldi said.

The Italian investigation has tangential links to the Swiss case. But Swiss police first targeted the gang in Zurich with the help of Spanish investigators who rounded up a burglary ring in the Spanish city of Malaga. The connected Swiss and Spanish cells allegedly stole computers, cellphones and other goods to fund the Algerian group’s “second zone” in central Algeria, according to investigative documents.

Rifai, the 30-year-old Algerian in Zurich, exchanged dozens of calls and messages with fugitive kingpins, according to the documents. On May 25, 2005, he got a text message from the front line, the documents say.

“My brother, the news is that more than 30 tyrants have been killed,” the message read. “Allah is great. For the moment we need financial support and above all computers.”

Police worry that North African networks could decide to use the financing cells to strike in Europe. The finance cases allegedly have links to suspects charged with plotting to bomb the High Court in Madrid.

‘Odor of the martyr’

The suspects in Italy showed little appetite for hands-on violence, but the Swiss group seemed angrier, investigators say. Rifai cheered a television news report about the deaths of four Israelis in a bombing and rhapsodized about the glory of “martyrdom,” according to a transcript.

“They should give you an explosives belt!” he said, according to the transcript. “The odor of the martyr.... I tell you, it is an odor.”

Police became alarmed in late 2005 when wiretaps suggested that Rifai and a Libyan associate talked about using a grenade launcher to shoot an El Al jet on the tarmac at an airport, according to documents and investigators. El Al diverted several flights, but the suspected plot never developed, according to documents and investigators.

Despite painstaking surveillance, the Swiss charges could be difficult to prove, say anti-terrorism officials familiar with the case. Defense lawyers deny that concrete links to extremism exist and argue that conversations were inaccurately translated or analyzed. Charges against several suspects are likely to be reduced to robbery and theft, officials said.

The difficulties are inherent in such complex investigations. In the wake of the Sept. 11 attacks, a number of high-profile prosecutions against Arab tycoons and Islamic charities around the world faded after initial fanfare. Because terrorist groups do not need large sums, it is best to go after immediate sources of cash, said prosecutor Luigi Orsi, who headed the Milan investigation.

“In five years, I have changed my vision of the problem,” Orsi said. “It is almost impossible to concretely connect big businessmen, charities, diplomats, money masterminds, to the ‘soldiers’ in the field. There are too many filters.

“So we have changed strategy. The focus now is the street level.”

rotella@latimes.com