RICHMOND, Va. — Federal prosecutors tracking a Saudi-backed American foundation accused of ties to terrorists are tightening the screws on their target, levying half a million dollars in contempt-of-court fines and moving to pierce the attorney-client privilege as a way of getting information from a lawyer who represented the foundation.

The case has the elements of an international thriller. The federal officials sprang into action after the terrorist attack of September 11, 2001, with an investigation code-named Operation Green Quest. They say the Saudi-backed Virginia charity spirited $22 million out of America and into a trust on the Isle of Man, a windswept tax haven in the Irish Sea. A Florida professor has become entangled in the investigation, as has a Georgia poultry processing plant that has vigorously defended itself against accusations of terrorist links, to the point of filing a libel lawsuit against CBS News.

Aspects of the investigation, which has been veiled in secrecy, emerged in public on Friday here before a panel of federal judges who ride the U.S. Court of Appeals for the Fourth Circuit. The hearing related to a grand jury investigation into whether a network of Islamic organizations centered in Herndon, Va., funded a range of terrorist groups in the 1990s. Disclosures during the hearing included the fact that a once-prominent Muslim nonprofit, the SAAR Foundation, has been fined $500,000 for contempt of court.

Muslim leaders, including those connected with a group at the center of the probe, the International Institute of Islamic Thought, have complained that prosecutors have used tough tactics in their six-year probe and have little to show for it. The government contends that the inquiry, part of a broader terror-financing investigation known as Operation Green Quest, has played a part in several serious convictions, including that of a prominent Islamic leader, Abdurahman Alamoudi, who was sentenced to 23 years for involvement in a Libyan plot to assassinate the crown prince of Saudi Arabia.

At issue during Friday’s hearing was a subpoena received by a Missouri-based attorney, Bruce Hopkins, who is an expert in nonprofit law and has testified before the House of Representatives on tax exemptions. Mr. Hopkins was the longtime attorney for the now-defunct SAAR Foundation, which was an umbrella group for several Muslim groups that are funded by Saudis. In 2002, law enforcement officers raided the offices and homes of several people and organizations connected to the SAAR Foundation, which had officially dissolved in 2000. In the years since, the group has been fined “more than $500,000” for contempt of court for failing to turn over documents subpoenaed by the grand jury investigation, an assistant U.S. attorney, Gordon Kromberg, told the Fourth Circuit. The fines have not been paid, however, because the SAAR Foundation no longer has assets in its name in this country, Mr. Kromberg said.

Part of the federal investigation is focusing on what became of $22 million that SAAR transferred to an Isle of Man trust, according to an affidavit filed in 2003 by a Customs Service investigator.

The officers of many of the Islamic nonprofit organizations targeted by the probe have refused to sign their annual tax reports since 2003, citing their Fifth Amendment right against self incrimination.

Mr. Hopkins’ subpoena isn’t the only one being resisted. One man supboenaed for a third time as part of the same investigation into terror financing, Sami Al-Arian, is currently on a hunger strike to protest a court order that he testify.

Friday’s arguments focused on whether Mr. Hopkins was protected from responding to the grand jury subpoena because of an attorney-client privilege that made his communications with SAAR confidential. The court’s decision will hinge on the question of whether that legal privilege applies to defunct corporations, such as SAAR. The judges on the panel, Allyson Duncan, Diana Motz, and William Traxler, Jr., did not rule immediately and gave no indication which side they favored.

It was unclear from the hearing whether Mr. Kromberg was seeking Mr. Hopkins’ testimony before the grand jury or just documents in his possession that are related to the SAAR Foundation.

Neither Mr. Hopkins or his lawyer, Douglas Laird, responded to repeated requests for comment. Both are at the same Kansas City firm of Polsinelli Shalton Flanigan Suelthaus PC.

On Thursday, the Appeals court ordered that Friday’s arguments would be open to the public, apparently rejecting secret requests that the sessions be closed. However, at the last moment, the court announced it would lock the public out from a portion of the arguments. After a reporter from The New York Sun objected, the courtroom was re-opened.

The public dockets in the case did not identify the parties. In addition, the attorneys and judges avoided using names, instead describing the parties simply as a “corporation” and a “lawyer.” However, other legal documents reviewed by The New York Sun as well as information from the public record offered strong indications that Mr. Hopkins, SAAR, and a company called Mar-Jac Investments, Inc., were the parties at issue during the court hearing.

Mar-Jac Investments, which was owned, at least partially, by the SAAR Foundation, joined Mr. Hopkins’ attorney in asking that the subpoena be struck down. Mar-Jac Investments has not been charged with any crime.

The exact relationship between Mar-Jac Investments and a poultry processing plant in Georgia called Mar-Jac Poultry, Inc, is unclear, although investigators say the two companies have shared corporate officers and directors. The poultry company’s offices in Gainesville, Ga., were among those searched in the 2002 raids. In 2003, Mar-Jac Poultry filed a libel suit against CBS Broadcasting inc, the Search for International Terrorist Entities Institute, and the Institute’s founder, Rita Katz, over a “60 Minutes” broadcast that included allegations that the poultry company served as a front for money laundering. The suit is still pending in federal court in Washington, D.C. Mar-Jac Poultry denies any wrongdoing and has not been charged with any crimes.