Grants Pass, OR -

An appeals court has overturned the conviction of a founder of the U.S. branch of an Islamic charity on charges he smuggled money out of the country to help Chechen rebels fight Russian forces.

The ruling Friday from the 9th U.S. Circuit Court of Appeals in San Francisco says the government turned what was really a tax fraud case into a terrorism case.

In granting a new trial to Pete Seda, the founder of the new defunct Al-Haramain Islamic Foundation in Ashland, Ore., the court said the government failed to provide a fair summary of classified material to the defense, failed to disclose that a prosecution witness had been paid and exceeded the scope of a search warrant used to search computers seized from the foundation.