 He was arrested by the Federal Bureau of Investigation on 19 July 2011, for concealing the transfer of USD 3.5 million from Pakistan's Inter-Services Intelligence (ISI) to fund his lobbying efforts and influence the US government on the Kashmir conflict, in violation of the Foreign Agents Registration Act.His arrest came at a time when relations between Pakistan and the United States were strained in the aftermath of the raid that killed Osama bin Laden in Pakistan, and while US Secretary of State Hillary Clinton was on a visit to India.On 7 December 2011, Fai pleaded guilty to conspiracy and tax evasion (both charges); in March 2012, Fai was sentenced to two years' imprisonment by a US court for ""conspiracy to defraud the US" by concealing transfer of funding from Pakistan's ISI for his illegal lobbying efforts on Kashmir".