Fai, who appeared before the US District Court in Alexandria, Virginia for a detention hearing today, was released into the custody of his wife and placed under home detention.
The FBI, which arrested Fai last week on charges of being an ISI agent who lobbied for Pakistan on the Kashmir issue in the US, had carried extensive search of his home in Fairfax, Virginia a suburb of Washington and the office of Kashmir American Council (KAC) in Washington, a few blocks away from the White House.
62-year-old Fai, headed KAC, which espoused the cause of Pakistan on Kashmir and campaigned against India in the US.
US Attorney Gordon Kromberg informed the Alexandria court and defence attorney that he "intends to offer into evidence" or even disclose in proceedings information obtained and derived from electronic surveillance and physical search conducted under the Foreign Intelligence Surveillance Act.
The FBI has alleged that Fai received money from the Government of Pakistan, the ISI in particular, to lobby on their behalf in the US.
FBI says he violated the law as he did not register himself or the KAC as registered agent for foreign government.
While neither the FBI nor the Department of Justice were willing to divulge any details of the material seized from his home and office.
However, it is learnt that federal agencies have obtained huge cache of material from Fai's residence and office which would strengthen its point that Fai worked for the foreign government in violation of the rule of the land.