WASHINGTON, July 27 - Five former leaders of the Holy Land Foundation, once the biggest Islamic charity in the United States, were arrested Tuesday on charges that they funneled $12.4 million to Palestinian terrorists. But two other charity officials wanted by the government were able to leave the country recently for the Middle East while they were under criminal investigation.

Law enforcement officials said the arrests represented one of their most important efforts since the Sept. 11, 2001, attacks to stem the flow of money to terrorists from the United States. Holy Land exploited American tax laws "to bankroll terror," said Michael J. Garcia, an assistant secretary at the Department of Homeland Security.

Lawyers for Holy Land promised to fight the charges vigorously, accusing the F.B.I. of fabricating evidence. They said the group had supported orphans, medical relief and other charitable causes in the Middle East and never knowingly gave money to Hamas, a Palestinian terrorist group, or any other organization promoting violence.

"These arrests are a sound bite for this administration in its war on terrorism," said John Boyd, a lawyer for Holy Land. "This is completely unfounded, and if the Holy Land Foundation is given an opportunity to defend itself, it will be able to rebut every charge made in this indictment."

Mr. Boyd accused the Bush administration of timing the announcement of the arrests - which grew out of an F.B.I. investigation into Holy Land dating to 1993 - in order to distract attention from the Democratic convention in Boston.

Law enforcement officials said there was no connection between the arrests and the convention. "These cases are brought when they're ready and can't be brought until they are," Attorney General John Ashcroft said in announcing the arrests at a news conference.

Arrested on Tuesday in the Dallas area were Shukri Abu Baker, the former president and chief executive of Holy Land; Ghassan Elashi, a former board chairman and treasurer; and Mufid Abdulqader, a top fund-raiser. Mohammed El-Mezain, a former chairman of the board, was arrested in San Diego, and Abdulraham Odeh, the group's representative in New Jersey, was arrested in Newark, officials said. In an interview on Monday, Mr. Baker denied that the group had given money to Hamas, and he blamed what he described as an anti-Muslim campaign of intimidation for the government's yearslong investigation.

Two other former Holy Land officials, Haitham Maghawri and Akram Mishal, were able to leave the country recently. Both were charged with providing material support to terrorists in the indictment unsealed on Tuesday in Dallas.

A Justice Department official, speaking on condition of anonymity, said that the two men were believed to have been living in the Dallas area as recently as about six months ago. Although the men were under criminal investigation, the F.B.I. did not have the resources for round-the-clock surveillance, and the Justice Department did not believe that it had enough evidence to bring a criminal case against them at that time, the official said.

It was unclear whether the two men were put on an aviation watch list to guard against them leaving the country, the official said, adding that "we left it up to the F.B.I."

Senator Charles E. Schumer, Democrat of New York, who pushed for tougher scrutiny of Holy Land in the late 1990's, said he was troubled that Mr. Maghawri and Mr. Mishal had left the country while under criminal investigation.

"I wonder why this prosecution has taken so long," Mr. Schumer said in an interview. "I think until recently we have not put the resources needed into tracking groups that finance terrorism, and the fact that they didn't get 24-hour surveillance on these two who escaped is galling and perplexing."

The Justice Department has opened a number of investigative fronts in an effort to reduce the flow of financial aid to terrorist groups, but some of its most visible cases, including the prosecution of a Chicago-based Muslim charity called Benevolence International, have produced mixed results.

The Sept. 11 commission, in its final report last week, found limitations in the government's ability to identify terrorist financing. Former Gov. Thomas H. Kean of New Jersey, the Republican chairman of the commission, said on Sunday on NBC's "Meet the Press" that while the government has focused on trying to dry up terrorist money, "it might be more productive to spend more time following the money, because you can disrupt plots, you can find out what's going on, if you can follow these money trails."

Within months of the Sept. 11 attacks, the Bush administration froze several million dollars in Holy Land's assets. F.B.I. officials said they suspected that founding members of Holy Land in the early 1990's devised a scheme to funnel money to Hamas in support of jihad in Palestine.

The 42-count indictment unsealed on Tuesday charges that Holy Land used hospitals, Islamic committees and other organizations in the West Bank and Gaza that were controlled by Hamas to funnel money to terrorist causes. Payments were then distributed to family members of individuals who were "martyred" or jailed in terrorist attacks, the government charged.

In addition to the charges of providing material support to terrorists, the indictment includes charges of money laundering, conspiracy and the filing of false tax returns, and it seeks the forfeiture of the $12.4 million that government officials say Holy Land provided to Hamas since 1995.

But Holy Land, in a complaint filed on Monday with the Justice Department inspector general, charged that the F.B.I. had fabricated evidence and relied on faulty translations of Israeli materials in building its case.