Clear signs of Ahmed Chalabi's "Fall from Grace" with the Bush administration were noted in a May 2004 story in Newsweek which reported that a White House official had accused Chalabi of "playing footsie" with Iranians.
"Top Bush administration officials have been briefed on intelligence indicating that Chalabi and some of his top aides have supplied Iran with 'sensitive' information on the American occupation in Iraq," Mark Hosenball wrote. "U.S. officials say that electronic intercepts of discussions between Iranian leaders indicate that Chalabi and his entourage told Iranian contacts about American political plans in Iraq. There are also indications that Chalabi has provided details of U.S. security operations." 
Ahead of the June 30, 2004, transfer of 'sovereignty' from the U.S to an interim Iraqi administration, it was reported that both the U.S. administrator and the United Nations envoy to Iraq saw no role for Chalabi. The Washington Post also reported that the U.S. government was likely to end the $340,000 monthly contribution to the Iraqi National Congress (INC).
Dr. Ahmed Chalabi (also spelled "Ahmad") is part of a three-man leadership council for the Iraqi opposition group, the Iraqi National Congress (INC), which was created at the behest of the U.S. government for the purpose of fomenting the overthrow of Iraqi dictator Saddam Hussein.
Chalabi, a secular Iraqi Shiite Muslim and mathematician by training, previously served as chairman of the Petra Bank in Jordan, where he engaged in various cloak-and-dagger operations that ended abruptly in August 1989 when he fled the country "under mysterious circumstances" and in 1992 was convicted in absentia for embezzlement, fraud and currency- trading irregularities, sentencing him to 22 years' hard labour. ,
August 2003: a petition is circulating among Jordanian deputies to hold a special session soon in the 110-member house to demand the government take legal steps to seek Chalabi's extradition from Iraq. 
Given the seriousness of the charges and the apparent determination of the Jordanian government to continue to press them despite immense U.S. pressure, it is hard to conclude that they are anything short of well-founded. This has led some observers to suggest that Chalabi is part of a move towards a US-sponsored kleptocracy that would supervise transfer of assets from Iraqi citizens to private Post-war Iraq contractors. He certainly appears to be qualified for such a job.
In March 2002, Seymour Hersh reported in The New Yorker that "A dispute over Chalabi's potential usefulness preoccupies the bureaucracy" within the U.S. government, "as the civilian leadership in the Pentagon continues to insist that only the INC can lead the opposition. At the same time, a former Administration official told me, 'Everybody but the Pentagon and the office of the Vice-President wants to ditch the INC.' The INC's critics note that Chalabi, despite years of effort and millions of dollars in American aid, is intensely unpopular today among many elements in Iraq. 'If Chalabi is the guy, there could be a civil war after Saddam's overthrow,' one former CIA operative told me. A former high-level Pentagon official added, 'There are some things that a President can't order up, and an internal opposition is one.'"