Federal prosecutors have obtained intriguing evidence that a prominent Muslim activist who helped recruit chaplains for the U.S. military may have had far more extensive contacts with suspected terrorists than was previously known, including meetings with a well-known associate of the September 11 hijackers, NEWSWEEK has learned.

The evidence--some of which has been obtained from German police files--adds a potential new dimension to the widening espionage investigation centered on translators and chaplains at the U.S. naval prison for Al Qaeda and Taliban prisoners at Guantanomo Bay, Cuba. An ex-U.S. soldier who served as an Arabic-language translator at the base was detained yesterday, the third arrest in a case that has prompted the Pentagon to launch a full scale probe into its program for certifying Islamic chaplains in the military.

The Muslim activist, Abdurahman Muhammed Alamoudi, president of the American Muslim Foundation, played a key role in the chaplain program, publicly boasting to reporters that he was first person authorized by the U.S. military to recruit Islamic clerics.

Alamoudi also became a leading public spokesman for Muslim-related causes in the United States, advocating greater political outreach and forging alliances with government officials--in part by donating thousands of dollars in campaign contributions, including $1,000 to both Hillary Clinton and George W. Bush during the 2000 elections. (Both donations were later returned.)

But the activities of Alamoudi have taken on a far different context for federal investigators in light of the activist's arrest last Sunday at Washington's Dulles airport on charges that he made illegal trips to Libya and accepted $340,000 in cash from an agent of a Libyan front group that was handed to him in a small Samsonite-style briefcase in a hotel room in London last August.

The exact nature of Alamoudi's relations with suspected terrorists is still far from clear--and there have been at least some suggestions by former associates that the activist's main interest in allegedly taking the cash may have been to set himself up as a business agent for the Libyan government rather than as one to fund terrorism. (Alamoudi's lawyer yesterday denied he had done anything "illegal, immoral or unacceptable.")