Arraignment next week for Islamic charity director

Enaam Arnaout, head of the Chicago-based Islamic charity, is shown in this undated photo.

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VIDEO The leader of an Islamic charity was indicted on racketeering charges for allegedly obtaining donations to support al Qaeda. CNN's Jeff Flock reports (October 10) PLAY VIDEO U.S. Attorney General John Ashcroft announces that the chief of a U.S.-based Muslim charity has been charged with diverting money to al Qaeda (October 9) PLAY VIDEO RELATED Read the indictment: U.S. v. Arnaout  SPECIAL REPORT • Interactive: The hunt for al Qaeda • Audio slide show: Bin Laden's audio message, 2/03 • Terror warning system • Special report: Terror on tape • Special report: War against terror

CHICAGO, Illinois (CNN) -- Arraignment for the executive director of a charitable organization that prosecutors contend passed funds to al Qaeda has been scheduled for next week, and perjury charges under which he had been held since April were dropped.

The moves Thursday came a day after Attorney General John Ashcroft announced other charges had been filed against Enaam Arnaout, 40, of the Chicago suburb of Justice. Arnaout is accused of funneling money to al Qaeda and other terrorist organizations.

Arnaout, executive director of Benevolence International Foundation, is the first U.S. citizen indicted on charges of transferring money to al Qaeda and other terrorist organizations. The Syrian-born naturalized citizen has been in federal custody since he was arrested April 30 on the perjury charges.

Arraignment was set for October 17.

"Arnaout is accused of defrauding charitable contributors by falsely claiming that (BIF) used donated funds solely for humanitarian relief," Ashcroft said. "In fact, funds were being used to support al Qaeda and other groups engaged in armed violence overseas."

In addition to taking money intended for charitable work, BIF also served as a conduit for people who wanted to send money to terrorist groups, Ashcroft said.

The seven counts, listed in an indictment returned Wednesday by a federal grand jury, include conspiracy to engage in racketeering enterprises, conspiracy to provide material support to terrorist organizations, wire fraud, and two counts each of mail fraud and money laundering. If convicted, Arnaout could be sentenced to 90 years in prison without the possibility of parole.

The FBI contends Arnaout has had a decades-long relationship with bin Laden and his associates.

The government froze the charity's assets last year, suspecting it of supporting terrorist activity.

The perjury charges stemmed from papers Arnaout and the charity had filed in support of a lawsuit BIF filed against the federal government, seeking access to its frozen funds.

BIF's main office is in Palos Hills, a Chicago suburb.

-- CNN Producer Tracy Scruggs contributed to this report.

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