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NEW YORK | Sat Aug 8, 2009 3:30am IST

NEW YORK (Reuters) - A Yemeni cleric and his associate will soon return to Yemen, U.S. prosecutors said on Friday, after their terrorism conviction was overturned and they were sentenced to time served for a lesser charge.

In a deal with prosecutors, Sheik Mohammed Ali Hasan al-Moayad, 61, and Mohammed Mohsen Zayed, 35, imprisoned since 2003 on terrorism charges, pleaded guilty to conspiring to aid Palestinian militant organization Hamas, which is designated a foreign terrorist group by the U.S. State Department.

They will be released from U.S. custody and returned to Yemen within days, Assistant U.S. Attorney Jeffrey Knox told U.S. District Judge Dora Irizarry in Brooklyn federal court.

The men were arrested in 2003 in a sting operation in Germany. U.S. prosecutors said they told a federal informant posing as an American businessman they would help funnel money to Hamas.

They were extradited to the United States and convicted in 2005 of aiding Hamas. Al-Moayad was sentenced to 75 years in prison and Zayed to 45 years.

But a federal appeals court threw out the verdict and ordered a new trial late last year saying inflammatory evidence may have prejudiced the jury.

The informant in the case was Mohamed Alanssi, who set himself on fire in front of the White House in 2004 to protest his treatment by federal authorities.

"I am satisfied that the pleas in this case do address the broader national security concerns, and that the pleas in this case are in the interest of justice," Irizarry said on Friday.

As he exited the courtroom, Zayed waved to the judge and called out "Thank you very much."

"Mr al-Moayad was, in my opinion, never a terrorist," his lawyer Robert Boyle told reporters. "He went into court, he acknowledged that he violated U.S. law."

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