Saajid Badat gave his testimony on Monday through a video link in the ongoing trial in Federal District Court in Brooklyn of Adis Medunjanin, a Queens man accused of plotting with two of his schoolmates to blow up New York subways.
Badat, 33, was convicted in London for his role in a 2001 plot to bring down an American Airlines flight from Paris to Miami with explosives hidden in his shoes.
While Badat's testimony was not directly related to the New York subway terror plot, it was used to corroborate facts about the training in Qaeda-run camps in Afghanistan and Pakistan, a report in the New York Times said.
Badat said he had travelled to Afghanistan in 1999 where he met several members of Al Qaeda, including bin Laden. Medunjanin's friends Zarein Ahmedzay and Najibullah Zazi, accused of plotting with him to attack the city subways, had said they had met some of the Al Qaeda members in Pakistan nine years later.
"It was just the two of us in a room, and he explained to me his justification for the mission," Badat said referring to his meeting with bin Laden and his plot to blow up American planes with shoe bombs.
"He (bin Laden) said that the American economy is like a chain. If you break one link of the chain, the whole economy will be brought down," Badat testified.
"This operation will ruin the aviation industry, and in turn, the whole economy will come down," he said.
Badat said bin Laden had himself dispatched him to board a plane with the bomb sewn in his shoe. It was part of bin Laden's plans to use shoe bombs to detonate planes in mid-air which would in turn bring the American economy down.
The New York Times report said Badat told the Brooklyn court that the 9/11 mastermind Khalid Shaikh Mohammed had personally wished him and the other shoe bomber Richard Reid well on their mission.
However, Badat never went ahead with putting his plan into action as he had become fearful and worried that his family would get dragged into an investigation.
He informed his Qaeda handlers about his decision but did not contact law enforcement, saying he remained committed to the "jihadist ideology," the New York Times report added.
Badat was arrested in November 2003 and sentenced to serve 13 years in prison. He said he now believed the group's leadership manipulated people who went to the training camps.
Another Long Island man Bryant Neal Vinas, who had also gone to Pakistan in 2007 and joined Al Qaeda forces in an attack against American soldiers, testified that he had recommended that Al Qaeda bomb rail road trains in New York and a Walmart store to derail the American economy.
Vinas said he came up with a plan to leave a suitcase aboard a train, while explosives could be hidden inside a television that was being returned to a Walmart.
"It would cause a very big economy hit," Vinas said. "Walmart is the largest retail store in the country."
Medunjanin is accused of traveling to a terror camp in Pakistan in 2008 with Ahmedzay and Zazi.