Drug Bust Reveals Hizbullah Link in Los Angeles

Hizbullah has been looking for alternative sources of income as the US and West has clamped down on funding for terrorist groups. That hasn't stopped the flow, as Hizbullah has moved into new business directions: drug sales.

A seemingly small-time drug ring busted this week in Los Angeles was actually targeted for funding the Lebanese terror group Hezbollah, the Daily News has learned.

Prosecutors left out the terror tie when they announced Tuesday that federal agents and local cops had arrested a dozen people for allegedly peddling cocaine and counterfeit clothing in Bell, Calif.

But several sources familiar with the investigation said the predominantly Arab-American gang was believed to have smuggled its crime cash to the Iranian-backed terror group.

"This was a classic case of terrorism financing, and it was pretty sophisticated how they did it," a source close to Operation Bell Bottoms told The News.

The defendants once crammed $123,000 in money orders into a stuffed animal flown to Lebanon, an indictment alleged.

The Justice Department's national security division and an FBI counterterrorism agent have signed all the court filings.

Because information linking the gang to Hezbollah came from classified intelligence, the alleged ringleader and "his siblings and associates" face criminal charges instead of a terror rap.

The Los Angeles Times actually has more details in a story that flew beneath the national radar:

The focus of the federal investigation was Ali Khalil Elreda, 32, who was detained at Los Angeles International Airport last year, accused of trying to smuggle $120,000 in money orders and cashier's checks, hidden in a child's toy, to Lebanon, according to an indictment and an affidavit filed in the case.

In 2005, a Los Angeles County Sheriff's Department official showed a Senate committee a picture of a tattooed shop owner who had been arrested the year before on charges of selling counterfeit high-fashion merchandise. The tattoo was a symbol of Hezbollah, the Iranian-backed guerrillas operating in Lebanon.

In his testimony, Lt. John Stedman, a top supervisor in the department's emergency operations bureau, did not identify the shop owner. Stedman was not involved in the most recent investigation.

But two law enforcement sources said Tuesday that the merchant was Elreda.

Elreda and Hussein Saleh Saleh, 37, both of Bell, were charged in one of two indictments returned in the case with conspiring to smuggle cash out of the United States.

Five years ago, in an interview with The Times, Asa Hutchinson, then the administrator of the Drug Enforcement Administration, said authorities were examining dozens of domestic drug cases with potential links to Islamic terrorists, including a methamphetamine ring allegedly tied to Hezbollah.

During the recent Los Angeles investigation, law enforcement authorities allegedly seized 30 kilograms of cocaine and counterfeit clothing worth hundreds of thousands of dollars.