Court papers filed in the case alleged that the weapon was to be used to assassinate the Pakistani ambassador at that country's consulate across from the United Nations in New York.
The two men — identified as Yassin Aref, 34, the imam of the mosque, and Mohammed Hossain, 49, one of the mosque's founders — were arrested on Wednesday night in a government-run "sting" operation, Deputy Attorney General James Comey told a Justice Department news conference.
Two U.S. law enforcement officials, speaking on the condition of anonymity, said the two men have ties to a group which has been linked to the al Qaeda terror network.
The New York Times reported a top U.S. official said the sting and arrests were intended to send "a disrupting message" to those who might be plotting terror attacks, but that there was no real terrorist plot."
"This is not a case where the defendants were discovered plotting terrorist violence," James B. Comey, the deputy attorney general, said at a news conference, according to the Times. "The terrorist plot in this case is one that the government's agent, the cooperating witness, represented to be under way. It was not real."
The alleged al Qaeda link was not mentioned in legal papers, however, and Comey said he could not comment on it, although he said the pair's background might be brought up by the government later at a detention hearing.
The two are being charged with providing material support to terrorism by participating in a conspiracy to help someone they believed was a terrorist purchase a shoulder-fired missile. The person was in fact a convicted felon working undercover for the government to reduce his prison sentence for document fraud, officials said.
The informant, a non-U.S. citizen, told the men he was associated with Jaish-e-Mohammed, an Islamic extremist group in Pakistan that the U.S. government considers a terrorist organization. According to court records, the informant told the pair that the missile would be used to mount an attack on the Pakistani consulate across the street from the United Nations. The target would be the Pakistani ambassador.
No missile ever changed hands.
Both suspects face up to 70 years in prison and a $750,000, said Comey in a statement.
"Today's charges represent our commitment to infiltrate and expose those who seek to do us harm or to facilitate those who seek to harm our homeland," Comey said. "It is our hope that today's arrests will give pause to anyone considering terrorist activity and cause them to question whether their accomplice is not really one of our agents in the field."
Among the charges were allegations of money laundering, conspiracy to commit money laundering and conspiracy to conceal material support for terrorism.
The Albany case was not related to the Bush administration's terror alerts over the weekend indicating that al Qaeda may be plotting attacks against U.S. financial buildings, officials said. Some have criticized the decision to issue the warning, which was largely based on intelligence that was several years old.
Some mosque members held morning prayers Thursday on a nearby sidewalk and voiced anger over the arrests.
"This, we believe, is an act of … bias and stereotyping - an undo scrutiny of the Muslim community," Faisal Ahmad, a worshipper at the mosque, tells CBS Radio News. "It is certainly difficult on the Muslim community to have these type of investigations, especially in the middle of the night, and to come and find their house of worship closed for prayers.
"Unscheduled visits in the middle of the night are really difficult for the Muslim community and create a lot of fear."
Concerns about terrorists using shoulder-fired missiles to take down commercial airliners were heightened in November 2002 when two SA-7 missiles narrowly missed an Israeli passenger jet as it took off from Mombasa, Kenya. It's believed al Qaeda probably was behind the attack, which coincided with a bomb blast at a nearby hotel.
Last November, a shoulder-fired missile struck a DHL cargo plane at Baghdad International Airport, forcing it to make an emergency landing at the airport with its wing aflame.
The Homeland Security Department has contracted with three companies to develop plans for anti-missile systems that could be used to defend U.S. commercial planes against shoulder-fired rockets.
It's estimated that it would cost about $1 million per plane to install anti-missile systems. There are about 6,800 planes in the U.S. commercial fleet.
The Bush administration has been reluctant to pursue the technology, citing the cost and noting that other security measures adopted since the Sept. 11 attacks have diminished the threat against aircraft.
Last August, three men accused in a plot to smuggle shoulder-fired missiles that could shoot down a commercial airliner were after an international sting operation.
In the sting, the men allegedly tried to sell a dummy Russian-made SA-18 Igla missile to undercover agents posing as terrorists.
Although weapons experts say the Igla is the most sophisticated, accurate and difficult-to-obtain portable rocket, there are other choices for terrorists, including hundreds of American-made Stinger shoulder-fired missiles the United States sold to Afghanistan in the 1980s.
There are also thousands of a class of missile known in the West as the SA-7 Grail and in Russia as the Strela, or Arrow, which have been produced in Russia, Eastern Europe, China, the former Yugoslavia, Egypt and other countries. Some have sold for as little as $500, according to U.S. intelligence.
They tend to weigh just 35 to 40 pounds, and their 5-foot tubes are compact enough to be easily concealed in a large duffel bag.
Although their performance varies depending on the type, the missiles tend to have a minimum range of 600 yards and a maximum of roughly 3 miles, and can hit airborne targets ranging from 50 feet to 10,000 feet.