It is a neighborhood of green lawns and brick colonials just 10 miles from the White House, a place where bumper stickers proclaim: "Proud to Be An American." Residents of the Prince George's County development call it Barnaby Knolls.
U.S. law enforcement officials have coined another name for it: Hamas Heights.
Documents filed in a recent court case show that a leader of the Palestinian group Hamas, which is formally known as the Islamic Resistance Movement and has been declared a terrorist group by the U.S. government, invested about $1 million to develop the neighborhood in Oxon Hill in the early 1990s. Among the other investors named in the project: relatives of Osama bin Laden and a Saudi businessman now accused of ties to al Qaeda.
No one faces criminal charges in connection with the modest homes, bought mainly by African American, middle-class families. At the time the investors got involved in the project, none had been publicly linked to terrorism by the U.S. government. Bin Laden's family disowned him in the 1990s and faces no terrorist accusations.
Still, U.S. officials have argued in court that the Oxon Hill development was intended, in part, to make money for Hamas and the leader, Mousa Abu Marzook, at a time when neither was on the U.S. terrorist list in the United States. Abu Marzook's attorney denies his client was investing money for Hamas.
What drew such an unusual cast of investors to a sleepy development of cul-de-sacs and broad streets, flanked by homes decorated with flower pots and concrete bird baths? Abu Marzook's attorney, Stanley Cohen, said the Hamas leader wanted "to make a profit," like any normal, free-enterprise-loving businessman. He disputes the government's allegations that his client continued to benefit from it after he was placed on the U.S. terrorist list.
But residents told about the investors were stunned.
"You're kidding. Oh my goodness. What a small world!" said Carrie Keye, 54, who bought her house on Iverson Street for $169,900 in January 1995. She and her husband moved into the neighborhood from Southeast Washington to have a bigger house for their six children, she said.
Development conceived in 1989
Robert Henderson, 69, a retired District garbage-truck driver who bought a colonial with an in-ground pool on nearby Boydell Avenue in the early 1990s, was similarly astonished.
"I knew nothing about the money being from terrorists," said Henderson, his eyes widening.
The buyers said they were furious with the developer, BMI Real Estate Development Inc., but not because they had suspected anything unusual in the financing. The residents said the developer did a shoddy job and did not make promised repairs.
"I figured, one day, something would come out. I'm surprised it's this, though," said Keye, a program analyst at the Pentagon.
Information about the Oxon Hill development emerged in federal court in Alexandria during the trial of an Egyptian-born developer, Soliman S. Biheiri, who was sentenced in January on immigration charges. Some details were previously disclosed by the Washington Times and U.S. News & World Report, but the location and full history of the project had not previously been reported.
The Oxon Hill development was conceived in 1989, six years before Abu Marzook was designated a terrorist by the U.S. government, according to court documents submitted by James Clark, Biheiri's attorney. Abu Marzook, then 38, a slightly built, soft-spoken Palestinian who was working toward a doctorate in engineering at Louisiana Tech University, found land in Oxon Hill that he wanted to buy and develop, the documents say.
Within two years, Abu Marzook moved to the area with his wife and six children. Although he made little impression on his neighbors, he was well-known in Northern Virginia's Islamic community -- and to U.S. agents who were monitoring him. In the early 1990s, while living on a Falls Church cul-de-sac, Abu Marzook became leader of Hamas's political bureau, according to both U.S. officials and his attorney.
By then, houses were going up in Barnaby Knolls. Abu Marzook appears to have had little day-to-day involvement in the project. It was overseen by Biheiri, a businessman who raised $2.1 million for the development of 57 homes, according to his attorney. Almost half of the funds -- $900,000 -- came from an investment account established by Abu Marzook, Clark said. (U.S. authorities estimated the Abu Marzook investment at $1 million.) Other money came from Muslims in the United States and abroad, court documents say.
Company followed Islamic principles
It might seem odd that people such as Abu Marzook or the bin Laden family, a wealthy Saudi clan, were sinking money into four-bedroom colonials in Prince George's County. But such investments reflected a strategy by Biheiri, a Swiss-educated economist, to tap into funds from well-to-do Muslims. And Washington was one place with a significant concentration: More than 25,000 Middle Eastern immigrants settled in the area in the 1990s.
Biheiri appealed to Muslims by setting up a company, BMI Inc., that followed Islamic principles. The company, which branched into leasing and real estate, had offices in New Jersey and Falls Church.
"Every Muslim with money went to BMI. . . . BMI was the newest thing to make Muslim investments," Biheiri's estranged wife, Mashid Fatoohi, told IRS agents in May 2003, according to a document submitted in court.
Biheiri's real estate company went on to develop projects for scores of new homes in Clinton, Landover and Upper Marlboro, in addition to expanding on its original development in Oxon Hill, according to company documents presented in court. It also built homes in Indiana.
And its stable of investors grew.
One was Yassin Qadi, a prominent businessman in Saudi Arabia who put millions of dollars into Biheiri's ventures, including $1 million in 1991 for a BMI construction company that built homes for the suburban Maryland developments, Clark said.
The Treasury Department designated Qadi as a terrorist financier in October 2001, saying that a now-defunct charity he ran, Muwafaq Foundation, was an al Qaeda front. Qadi has disputed the charges.
The U.S. move came years after the homes in Prince George's were built, and there is no allegation Qadi did anything illegal there. Qadi's attorney in Washington said he was not aware that the businessman had put money into local housing. An e-mail message sent to Qadi's London-based attorney was not answered. Biheiri has said he did not believe Qadi was a terrorist.
Biheiri told Customs officials that another participant in the Oxon Hill development was Osama bin Laden's nephew, Abdullah, a Falls Church resident who put about a half-million dollars in his real estate ventures, earning a profit of $70,000, court documents show.
The nephew invested additional money on behalf of Nur and Iman bin Laden, two female relatives of Osama bin Laden, said Biheiri, who noted that he couldn't recall the specific amounts. There has been no allegation that the investments were illegal.
By 1995, as the homes in Oxon Hill were being sold, one of the investors found himself in trouble. In January of that year, the U.S. government declared Hamas a terrorist organization.
Six months later, Abu Marzook was detained at John F. Kennedy International Airport as he returned from a long spell abroad, and his name was added to the U.S. terrorist list. After a two-year legal battle, he was deported to Jordan.
Abu Marzook has denied being involved in terrorism. His lawyer, Cohen, drew a distinction between Hamas's political activists and its military wing, which has claimed responsibility for suicide bombings that have killed hundreds of Israelis in recent years.
Investment fared poorly
The U.S. government rejects that distinction. And the Israeli government accuses Abu Marzook of involvement in Hamas terrorist attacks dating back to 1990.
In the end, it is not clear exactly how much Abu Marzook made or lost from his investments with Biheiri. Spreadsheets seized from Biheiri indicate that Abu Marzook earned more than $250,000 on his BMI housing investments before he was designated a terrorist. But he rolled over his principal and some of his profits into other BMI ventures, the records show. In 1996, the investment fund he established still had nearly $830,000 with BMI's Oxon Hill project, according to the court documents.
BMI became insolvent in the late 1990s, according to the court documents.
Clark, Biheiri's attorney, said that ultimately the Oxon Hill investment fared poorly. Among those who lost money in the project were the bin Laden relatives, according to a statement by Biheiri in the court records.
BMI "really didn't do an appropriate investigation into the demographics in Prince George's County. They couldn't get the money for the houses they thought they were going to be able to get," said Clark.
For the frustrated residents of Barnaby Knolls, it was clear by the mid-90s that something was wrong with the development.
Willie Keye, 44, a corrections officer, said that his family moved into its home on Iverson Street, only to discover that the skylight leaked and that a pipe as thick as a thumb ran across the basement floor.
Initially, he said, he and other neighbors complained to BMI representatives about the problems, but eventually the representatives' phone number changed, and no one could locate them.
Henderson moved from a crime-scarred area of Southeast Washington into his quiet new neighborhood only to discover that his sump pump didn't work, the basement flooded and the basement floor was uneven.
"After they sold the houses, they disappeared," he said. "All they wanted was to get your money."
Staff writer John Mintz and researcher Margot Williams contributed to this report.
