Aug. 13— Administration officials are leaving out key facts and exaggerating the significance of the alleged plot to smuggle a shoulder-launched missile into the United States, law enforcement officials told ABCNEWS. They say there's a lot less than meets the eye.

The accused ringleader, British national Hemant Lakhani, appeared today in federal court in Newark, N.J., and was ordered held without bond on charges of attempting to provide material support and material resources to terrorists and acting as an arms broker without a license.

Outside the courtroom, U.S. Attorney Christopher Christie called Lakhani an ally of terrorists who want to kill Americans.

"He, on many occasions, in recorded conversations, referred to Americans as 'bastards' [and] Osama bin Laden as a hero," said Christie.

But what he did not say was just how much of the alleged missile plot was a government setup from start to finish.

For example, Lakhani had no contacts in Russia to buy the missiles before the sting and had no known criminal record for arms dealing, officials told ABCNEWS.

"Here we have a sting operation on some kind of small operator … who's bought one weapon when actually, on the gray and black market, hundreds of such weapons charge hands," said military analyst Pavel Felgenhauer.

Court documents show much of the case is based on the government's key cooperating witness, an informant seeking lenient treatment on federal drug charges, officials told ABCNEWS. He was the first person who led the government to Lakhani.

‘Something They Created’

The missile shipped into the New York area last month was not a real missile — just a mockup — also arranged entirely by the government. The government also arranged the meetings at a New Jersey hotel and elsewhere, where Lakhani allegedly told undercover agents posing as al Qaeda terrorists about his support of bin Laden.

"One would have to ask yourself, would this have occurred at all without the government?" said Gerald Lefcourt, a criminal defense attorney.

In London today, Lakhani's neighbors described him as a quiet man who worked in the garment industry and had faced serious financial problems.

"I would have hoped the United States is thwarting real terrorism and not something manufactured because here all they're doing is stopping something they created," said Lefcourt.

Government officials said the case will show that Lakhani went along with the scheme willingly and was not entrapped. But the question remains whether any of this would have happened if the government had not set it up.

The SA-18 GROUSE (Igla 9K38) is an improved variant in the the SA-7 & SA-14 series of manportable SAMs. As with the earlier SA-14, the SA-18 uses of a similar thermal battery/gas bottle, and the SA-18 has the same 2 kilogram high-explosive warhead fitted with a contact and grazing fuse. But the missile of entirely new design with substantially improved range and speed,. The new seeker and aerodynamic improvements extend its effective range, and its higher speed enables it to be used against faster targets. The SA-18 has a maximum range of 5200 meters and a maximum altitude of 3500 meters. The 9M39 missile SA-18 employs an IR guidance system using proportional convergence logic. The new seeker offers better protection against electro-optical jammers; the probability of kill against an unprotected fighter is estimated at 30-48%, and the use of IRCM jammers only degrades this to 24-30%.