(CNN) -- A judge ordered on Tuesday that a Pakistani-American man accused of improperly lobbying for the Pakistani government be released, according to the U.S. Attorney's Office.
Syed Fai, the head of the Washington-based Kashmiri American Council, faces charges that he failed to disclose his group's ties to the Pakistani government and its Inter-Services Intelligence Agency. Federal agents say the intelligence service funneled at least $4 million to the group, which lobbied U.S. officials over the disputed territory of Kashmir.
U.S. Magistrate Judge John F. Anderson set bail at $100,000.
He also ordered Fai be released into the custody of his wife, who must surrender her passport, if he posts bail. Fai's passport is already in the custody of the U.S. government.
Fai, who was charged earlier this month, will be placed under electronic surveillance and will not be allowed to have contact with his co-defendant, possible witnesses or representatives of a foreign government outside the presence of his attorney.
The KAC organized seminars, lectures and conferences on Kashmir, and Fai attended a dinner with members of Congress in 2008, according to an FBI affidavit.
A second man charged in the case, U.S. citizen Zaheer Ahmad, is believed to be living in Pakistan. Both face up to five years in prison if convicted of conspiring to violate the Foreign Agents Registration Act, which requires lobbyists acting on behalf of another nation to register with the U.S. government.
At least one U.S. congressman, Pennsylvania Republican Rep. Joe Pitts, has donated $4,000 he received from the two defendants to charities in his district.
Federal agents said the two hoped to tilt U.S. policy in Pakistan's favor on Kashmir, a Himalayan territory disputed between India and Pakistan since Pakistan's independence from Britain in 1947. Both nations claim the entire region, which has been divided between them by a U.N.-monitored cease-fire line.
The dispute has been the flashpoint in two wars between the nuclear-armed south Asian rivals.
CNN's Carol Cratty contributed to this report.