On the orders of France's leading anti-terrorism judge, some 1,300 police poured into the streets and blew down doors of offices of the People's Mujahedeen of Iran early Tuesday in a vast sweep of sites north and west of Paris.
Police also seized large quantities of computer material and sophisticated transmission systems, an investigator said on condition of anonymity.
Maryam Rajavi, wife of Mujahedeen leader Massoud Rajavi, and Saleh Rajavi, Massoud's brother, were among those detained, judicial officials said.
Massoud Rajavi is based in Iraq where the group, also known as Mujahedeen Khalq, has its National Liberation Army of Iran, which has been fighting the Muslim clerical government in Tehran.
In May, however, the army began turning in its weapons to U.S. forces under a surrender agreement.
The French offices raided on Tuesday housed the political arm of the group, which was declared a terrorist organization by the European Union in May 2002. The United States also labels the group a terrorist organization.
The raids were carried out on the orders of French anti-terrorism Judge Jean-Louis Bruguiere for "criminal association aimed at preparing terrorism acts and for financing a terrorist enterprise," the Interior Ministry said.
The sites of the People's Mujahedeen of Iran established in the Paris region "are considered organizational, logistical and operational bases of questionable financing," the ministry statement said.
The Mujahedeen denounced the action.
"The individuals arrested in the unjustifiable raids this morning were all in France legally and had not conducted any illegal activity whatsoever," said a People's Mujahedeen spokesman, Ali Safavi, speaking by telephone from London.
"They have churned out these lies to justify this act which is only to the satisfaction of the terrorist regime that rules Iran," Safavi said. He was referring to the legal grounds used to order the raids.
French judicial officials opened an investigation into possible terrorist links by the group in 2001. However, the prosecutors office only last week added "financing a terrorist enterprise" to the dossier, according to judicial officials.
Still, the officials said the operation had been planned for a month.
It was the first time since the EU named the group a terrorist organization that French authorities moved to detain members.
The money — in $100 bills — was found stashed in a villa in Auvers-Sur-Oise, north of Paris, where the group kept its headquarters, police said. The sweep included buildings in the Yvelines region west of Paris.
Of the 165 people rounded up, 158 were kept for questioning, police said.
The French move against the only armed Iranian opposition group comes after days of demonstrations in Iran by students calling for democracy, which the United States has publicly endorsed.
U.S. forces in Iraq briefly allowed the Mujahedeen's fighters to keep their weapons before demanding their surrender. The Pentagon says the initial arrangement was a temporary measure to avoid a fight with MEK while the war was still going on.
According to the State Department, the Mujahedeen was formed by students in the 1960 to oppose the rule of the Shah of Iran and Western influence in his regime. In the 1970s, it attacked U.S. troops working in Iran.
The Mujahedeen have been based in France since shortly after the 1979 Islamic revolution that toppled the Iranian monarchy and brought Ayatollah Ruhollah Khomeini to power. The group had initially supported the revolution, but later turned against it. It now has offices in several western cities.
Massoud Rajavi was expelled from France to Iraq in 1986 as the French government was trying to improve relations with Iran and help win freedom for nine French hostages in Lebanon.
Rajavi then set up an army in Iraq to attack neighboring Iran.
"Following a philosophy that mixes Marxism and Islam, has developed into the largest and most active armed Iranian dissident group," the State Department says. The group attacked 13 Iranian embassies around the world in April 1992.