Three activists who travelled to Chicago for this weekend's NATO summit were accused Saturday of manufacturing Molotov cocktails in a plot to attack U.S. President Barack Obama's campaign headquarters, Mayor Rahm Emanuel's home and other targets.

But defence lawyers shot back that Chicago police had trumped up the charges to frighten peaceful protesters away, telling a judge it was undercover officers known by the activists as "Mo" and "Gloves" who brought the firebombs to a South Side apartment where the men were arrested.

"This is just propaganda to create a climate of fear," Michael Deutsch said. "My clients came to peacefully protest."

On the eve of the summit, the dramatic allegations were reminiscent of previous police actions ahead of major political events, when authorities moved quickly to prevent suspected plots but sometimes quietly dropped the charges, or lost the cases in court, later. Toronto computer expert Byron Sonne's ordeal stemming from the G20 summit there two years ago is just the latest example; Sonne spent 11 months in jail on bomb-plot accusations before being cleared of all charges this week by a judge who found he had no ill intent whatsoever.

From left, Brian Church, Brent Vincent Betterly and Jared Chase were arrested in a late-night raid earlier this week. Their lawyer calls it 'all a setup.' (Chicago Police Department)

Prosecutors said the men arrested in Chicago are self-described anarchists who boasted weeks earlier about the damage they would do in Chicago, including one who declared, "After NATO, the city will never be the same." At one point, one of the suspects asked the others whether they had ever seen a "cop on fire," according to the prosecution.

Police Supt. Garry McCarthy dismissed the idea that the arrests were anything more than an effort to stop "an imminent threat." The men allegedly bought fuel at a gas station for the makeshift bombs, poured it into beer bottles and cut up bandanas to serve as fuses.

But defence lawyer Deutsch said those are just some of the wild claims being made about his clients.

"We believe this is all a setup and entrapment to the highest degree," Deutsch said.

Outside the courtroom, he said the two undercover police officers or informants were also arrested during the Wednesday raid, and defence attorneys later lost track of the two.

No history of violent behaviour

The suspects are Brian Church, 20, of Ft. Lauderdale, Fla.; Jared Chase, 24, of Keene, N.H.; and, Brent Vincent Betterly, 24, of Oakland Park, Fla. If convicted on all counts — conspiracy to commit terrorism, material support for terrorism and possession of explosives — the men could get up to 85 years in prison.

The suspects were each being held on $1.5 million bond. Six others arrested Wednesday in the raid were released Friday without being charged.

The three who remained in custody apparently came to Chicago late last month to take part in May Day protests. Relatives and acquaintances said the men bounced around as part of the Occupy movement for the last while and had driven together from Florida to Chicago, staying with other activists.

Court records indicated no prior violent behaviour.

Police are all over Chicago ahead of the weekend NATO summit, including the undercover officers accused of entrapping the three arrested activists. (Darren Hauck/Reuters)

Longtime observers of police tactics said the operation seemed similar to those conducted by authorities in other cities before similarly high-profile events.

For instance, prior to the Republican National Convention in 2008 in St. Paul, Minn., prosecutors charged eight activists who were organizing mass protests with terrorism-related crimes after investigators said they recovered equipment for Molotov cocktails, slingshots with marbles and other items.

The protesters, who became known as the RNC Eight, denied the allegations and accused authorities of stifling dissent. The terrorism charges were later dismissed. Five of the suspects eventually pleaded guilty to minor infractions, and three had their cases dismissed altogether.

Molotov cocktails are dangerous weapons, but it "kind of stretches the bounds to define that as terrorism," said Michael Scott, director of the Center for Problem-Oriented Policing at the University of Wisconsin-Madison. He said police have a history of abusing such tactics, sometimes infiltrating purely peaceful protest groups to search for troublemakers.

'Most ridiculous thing'

Activist Bill Vassilakis, who said he let the men stay in his apartment, described Betterly as an industrial electrician who had volunteered to help with wiring at The Plant, a former meatpacking facility that has been turned into a food incubator with the city's backing.

"All I can say about that is, if you knew Brent, you would find that to be the most ridiculous thing you've ever heard. He was the most stand-up guy that was staying with me. He and the other guys had done nothing but volunteer their time and energy," he said.

Elsewhere around Chicago, demonstrations continued on Saturday. Scattered groups of protesters gathered in some neighborhoods, including several hundred who marched to the mayor's house to decry the recent shutting down of mental health clinics.

Late in the day, another group gathered in the Loop business district and marched down the city's famous Michigan Avenue. Police on horseback and bicycle kept them away from diners at outdoor cafés who ventured downtown despite wide-ranging security precautions.

The largest protests were anticipated for Sunday, when thousands of people were expected to march from a band shell on Lake Michigan to the McCormick Place convention centre, where NATO delegates will meet.