On Monday, a desperate FBI informant from Yemen approached the White House with a letter for President Bush, then pulled out a lighter and set his gasoline-soaked jacket ablaze.

Yesterday, as the man, Mohamed Alanssi, lay in serious condition in a Washington hospital, defense lawyers and federal prosecutors in Brooklyn scrambled to assess the damage he had inflicted on a major government investigation into alleged financing of terrorism.

Mr. Alanssi, it turns out, is the prosecutors’ central witness against Sheik Ali Hassan al-Moayad, a Yemeni cleric and Islamic political leader accused of funneling millions of dollars to Al Qaeda and Hamas.

In early 2003, Mr. Alanssi helped investigators lure Mr. al-Moayad and an assistant to Frankfurt, Germany, for a meeting with another FBI informant. That informant posed as an American convert to Islam eager to send money to Osama bin Laden and Hamas.

During the meeting, Mr. Alanssi served as translator for the men, in English and Arabic conversations that are now the main evidence against Mr. al-Moayad and his codefendant, Mohammed Mohsen Yahya Zayed. On the tape, Mr. al-Moayad makes some seemingly incriminating statements, discussing subjects such as martyrdom and meeting with a high-level Hamas leader.

Prosecutors planned to call Mr. Alanssi to testify against the two men in Brooklyn at their trial, set to start in January, on charges related to terrorism financing.

Mr. Alanssi has placed the government’s case in chaos, at least in the short term. Prosecutors now face the prospect of calling a disturbed witness who has expressed deep resentment toward the FBI and an unwillingness to cooperate further with the government.

In another potentially damaging setback for the government, the Washington Post, which had interviewed Mr. Alanssi, reported yesterday that Mr. Alanssi described a series of inducements he said the FBI promised him.

According to the Post, Mr. Alanssi, who is 52 and lives in suburban Virginia, said he was paid $100,000 by the bureau in 2003 and expected to become “a millionaire.” He also reportedly expected to become a permanent resident of this country but eventually grew angry at his treatment by his FBI handler, saying the agency had “destroyed my life and my family’s life.”

“It’s startling,” Howard Jacobs, the defense lawyer for Mr. al-Moayad, said yesterday of Mr. Alanssi’s suicide attempt and his comments.

Prosecutors declined to discuss the case yesterday.

In court papers filed Monday, defense lawyers attacked Mr. Alanssi’s credibility, saying his translations at the meeting in Germany were “inaccurate, incomplete and frequently embellished.” They moved to prevent sections of the taped conversation from being played to jurors.

Yesterday, the defense lawyers seized on Mr. Alanssi’s comments.

Jonathan Marks, Mr. Zayed’s lawyer, said the comments show that Mr. Alanssi was under pressure to make Mr. al-Moayad and Mr. Zayed look guilty at the meeting and to ensnare them in a crime.

“He had a very strong motive to entrap the defendants,” Mr. Marks said. “Many people would do anything to get those benefits.”

Mr. Marks has said in court papers that neither man mentioned Al Qaeda at the meeting, though Mr. al-Moayad did say bin Laden called him “his Sheikh” when they knew each other in the 1980s.

The defense lawyer acknowledged the defendants discussed funneling money to Hamas. But he said they did so only because the two FBI informants “initiated this crime” and offered to give him $250,000 for what the defense lawyer described as Yemeni charities.

According to the Post story, Mr. Alanssi, who reportedly also uses the name Mohamed Alhadrami, approached authorities after the September 11, 2001, attacks and began supplying information about alleged terrorism financing.

Court records also suggest, however, that Mr. Alanssi faced his own legal problems. The records, which include sealed documents, suggest he was charged this year with bank fraud and appears to have been awaiting sentencing in federal court in Brooklyn.

On Monday, the Post received two suicide letters from Mr. Alanssi – one to a Post reporter and the other a copy of a letter he sent to his FBI handler. The two letters were posted on the newspaper’s Web site.

In his suicide letters, a distraught and disturbed Mr. Alanssi said his FBI handler had ignored his request to travel to Yemen to visit his wife, who he said has stomach cancer.

Mr. Alanssi, who also has six children, wrote to the handler, FBI Agent Robert Fuller: “Why you don’t care about my life and my family’s life? Once I testify my family will be killed in Yemen, me too I will be dead man.”

“I am very sorry,” Mr. Alanssi continued, “I will not testify … before I see my family.”

In his letter to the Post reporter, Mr. Alanssi said he feared being jailed and tortured if he refused to testify.

Mr. Alanssi’s letters warned that he planned to “burn my body at unexpected place” and asked to have his remains sent to his family in Yemen along with his possessions.

It is unclear what will happen next in the case, which is being closely watched here and abroad.

Mr. Jacobs said Mr. Alanssi still may testify. He also said Mr. Alanssi may be the “most important witness, but he’s not the whole case.”

Both he and the other defense lawyer, Mr. Marks, said yesterday they were looking forward to seeing Mr. Alanssi on the witness stand under cross-examination.