Treasury issues subpoenas in investigation into funding for pro-MEK lobby campaign

The U.S. Treasury Department has issued subpoenas in an investigation into several prominent former senior American officials taking hundreds of thousands of dollars in speaking fees to promote a controversial Iranian terrorist group, the Mujahedin e-Khalq (MEK).

Among the former cabinet level officials whose speaking agencies have received subpoenas in the investigation are former Pennsylvania governor and DNC chair Ed Rendell, former Pennsylvania governor and Department of Homeland Security chief Tom Ridge, former FBI director Louis Freeh, and former Chairman of the Joint Chiefs of Staff Gen. Hugh Shelton, NBC's Michael Isikoff reported Friday. Rendell first disclosed that his speaking agency had received a subpoena in the investigation in a report by the Washington Times' Guy Taylor last week.

The Treasury Department investigation, which dates back to last summer, is seeking to understand where the money for the pro-MEK lobbying campaign is coming from, people familiar with the investigation said. At least 11 subpoenas have been issued to date in the probe, one source briefed on it said Friday.

The investigation "is targeted less at individuals, and more at where the money is coming from," said Reza Marashi, a former State Department official whose group, the National Iranian American Council, advocates against taking the MEK off the terrorism list, in an interview with Yahoo News Friday.

Several U.S. government agencies--including Treasury, the State Department, and the FBI--"are putting their heads together on this," he said.

The Treasury Department, contacted by Yahoo News Friday, declined to comment on the investigation. However it did note that the U.S. government considers the MEK a terrorist group, thus forbidding American citizens from taking money from it either directly or indirectly, without a license from the Treasury Department.

"The MEK is a designated terrorist group; therefore U.S. persons are generally prohibited from engaging in transactions with or providing services to this group," Treasury Department spokesman John Sullivan told Yahoo News in an emailed statement Friday. "The Treasury Department takes sanctions enforcement seriously and routinely investigates potential violations of sanctions laws."

The emergence of the investigation comes as supporters of the MEK are lobbying for it to be taken off the State Department's list of designated terror groups, an issue which is currently under review by the State Department. But few of his old colleagues at the State Department Iran desk believe the group should be taken off the list, Marashi reported Friday. A former senior U.S. intelligence official told Yahoo News Friday the United States should have nothing to do with the group, whose leader Marjam Rajavi urged her followers as recently as 2003 to set themselves on fire after she was taken into custody by French police.

Founded as a Marxist-Islamist movement in the 1960s which advocated armed violence to topple the U.S.-backed Shah of Iran (and killed Americans in that campaign), the MEK has continued to use terrorism to attack the regime which succeeded him. It is widely despised as a cult terrorist group among Iranians of all political persuasions, among other reasons, for having allied with Iraq's Saddam Hussein to wage war against Iran in the 1980s. The group also has reported ties to Israeli intelligence, which some reports say has used it as a proxy group to carry out attacks and gather intelligence inside Iran. Other reports have claimed the MEK has been a cut-out for Israeli intelligence claims about Iran's nuclear program.

A legacy of its twenty year alliance with Saddam, the MEK currently has some 3,000 members at Camp Ashraf in Iraq. The current Shiite-led Iraqi government, with close ties to Iran, is hostile to the group and has signaled its intent to close the camp. The United States has recently persuaded some 800 members of the camp to move to another Iraqi location, Camp Liberty, to try to defuse a potential humanitarian crisis.

Attorneys and Washington policy experts said they did not find the investigation surprising, given how conspicuous the American public relations and lobbying campaign--featuring television, newspaper and even bus stop ads over the past year--has been on behalf of a group that is on the U.S. terror list.

"Honestly, this is not a surprise to me," Douglas Jacobson, a Washington attorney who specializes in international trade law, told Yahoo News in an interview Friday. "First of all, OFAC [the Treasury Department Office of Foreign Assets Control] reads the newspapers to get info. This is a clear situation that merits an inquiry."

Asked if the former officials could argue they were just exercising their free speech rights to speak in favor of a group, Jacobson said they could only make that case if they did not take money from the terrorist group, either directly or indirectly. It did not appear, given the investigation, that the former officials or their speaking agencies had applied for a license or waiver from Treasury's OFAC to represent the group, he said.

"It all goes back to the funds," he said.

The former officials are reported to have received from $20,000 to $30,000 per speech for the MEK, plus travel expenses. Rendell "has received $160,000 over the past year for appearing at about seven conferences and rallies" his office told NBC.

Calls by Yahoo News Friday to the office of Tom Ridge, and Ridge's speaker's bureau the Washington Speakers bureau were not returned. A spokesman for Louis Freeh told Yahoo News Friday that he did not have immediate comment on the case.

The irony, both Jacobson and Marashi said, is that for all the hundreds of thousands of dollars that have been spent on the MEK public relations campaign, it is unlikely to affect the State Department's decision.

"This is a big waste of their money," Jacobson said. "These decisions are based upon the facts. They are based upon evidence and they are based upon foreign policy determinations."

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