By Michael Fitzgerald

SACRAMENTO, Calif, March 14 (Reuters) Osama bin Laden's al Qaeda deputy, Ayman al-Zawahari, lived in California in 1998 and 1999, a paid FBI informant testified in the trial of a Pakistani-American father and son accused of terrorism-related activity.

Naseem Kahn, 32, yesterday told a Sacramento jury he frequently saw Zawahari coming and going from the mosque in Lodi, California, south of Sacramento in 1998 and 1999, but never talked to him.

Zawahari, an Egyptian believed hiding somewhere in Pakistan, called on Muslims earlier this month to attack the West.

A spokeswoman for the FBI and an official for the US attorney's office declined to say whether Zawahari had lived there or had just passed through town. He is believed to have raised funds during travels in the United States at the time.

''From what I understand ... in terms of his activities in the late 1990s, he really wasn't on the radar then,'' said Karen Ernst, spokeswoman for the FBI in Sacramento.

''I might go visit my sister in the Bay Area and stay for a four-week visit and someone may see me regularly and make the assumption that I am living there, when, in fact, I am just visiting. All this would be speculation.'' At the time, informant Khan was not employed by the FBI. He was hired shortly after the September 11 attacks to infiltrate the Pakistani-American community in Lodi where FBI agents suspected there might be a terrorist.

Khan testified on cross-examination he did not know Zawahari was involved with any terrorist activities until after the attacks on the World Trade Center in New York when he saw pictures of Zawahari on television with bin Laden.

Khan's testimony is key to the prosecution's case in the trial of Hamid Hayat, charged with lying to the FBI and providing material support to terrorists by attending terrorist training camps in Pakistan.

Hayat's father, Umer, 48, is charged with lying to the FBI about his son's suspected attendance at the camps. The federal grand jury indictment in the case says Hamid Hayat intended ''to wage violent jihad against persons real and personal property in the United States.'' Khan secretly recorded conversations with Hamid Hayat, including phone conversations when Hayat was in Pakistan.

Hayat's attorney says his client was in Pakistan to care for his ill mother. Hayat also was married shortly before his return to the United States in May 2005.

Both men have pleaded not guilty and have been in custody since June 2005.

They were arrested shortly after returning from Pakistan and after giving what the prosecutions says are videotaped confessions. The videotapes have been shown as evidence in court in the past two weeks of the trials.

Defence attorneys say their clients were tired from travel and work and simply told their interrogators what they wanted to hear.

REUTERS CS BS0927