Abd al-Rahman al-Amoudi was arrested at a Virginia airport on his return from London, according to his lawyer Ashraf Nubani.
Nubani said that indictment against his client was sealed, and that it was premature to make any judgment as to why he had been detained.
However the executive director of the Council on American-Islamic Relations told Aljazeera.net he had heard reports that al-Amudi’s detention was due to his failure to disclose a trip to Libya.
He was specifically charged with violating the International Economic Emergency Powers Act, which prohibits US citizens from visiting Libya without special approval.
He was also charged with violating a portion of the act that forbids US citizens from receiving money from Libya.
According to the affidavit, al-Amoudi made at least 10 trips to Libya using two American and one Yemeni passport.
The affidavit said British customs officials stopped al-Amoudi at Heathrow Airport last month when he was attempting to travel to Damascus, Syria.
They found and seized about $340,000 and questioned him. Awad also spoke of his total disbelief at an arrest which was completely unreasonable.
“I was shocked when I heard about his arrest. Abd al-Rahman is an honourable man who has been a pioneer for Muslim American relations. He has always been an advocate of moderation and tolerance,” said Nihad Awad.
A federal magistrate in the US District Court in Alexandria ordered al-Amoudi to be held without bail pending a Tuesday detention hearing.
But several officials say the investigation goes well beyond anything relating to his travel to Libya.
Michael Mason, the head of the FBI field office in Washington said the Islamic leader was arrested without a warrant but with probable cause.
He has been under investigation for some time as part of a broad probe into Muslim charities and groups mostly in the northern Virginia area.
"Abd al-Rahman is an honourable man who has been a pioneer for Muslim American relations. He has always been an advocate of moderation and tolerance"
Council on American Islamic Relations
Investigators have been looking into whether these groups' funds may have ended up in the coffers of organisations not acceptable to the US administration.
Office raided again
Khalid Turani of the American Islamic Organisation said US federal police had also carried out a raid on the Islamic leader’s house and office in the Fall Church suburb in Washington.
The FBI had already been searched in March 2002 – but no charges, accusations or arrests followed the previous search.
“This is a general case of targeting Muslim activists in the United States using alleged secret evidence, something that pulled back the country to the stage of political detention that had occurred some 50 years ago,” he said.
Al-Amoudi has worked as a representative of the Islamic Society of North America (ISNA) and a vice director of the American-Arab Anti-Discrimination Committee and with the Muslim Student Association (MSA).
He was also one of the founders of a group called the American Muslim Armed forces and Veteran Affairs Council which the Defence Department uses to certify Muslim chaplains for military duty.
The detention also comes as press reports claim that the Pentagon is reviewing the chaplain program, in particular the 12 imams in the military following an arrest of a Muslim chaplain on suspicion of spying at the Guantanamo Bay detention facility.
But no formal charges, either criminal or civil, had been levelled against James Yee.
Since his arrest, two senators have called for a full investigation of Islamist attempts to recruit members of the US Armed Forces.