Iran sanction-busting trial may get underway without Zarrab

Bloomberg – The politically charged trial of Iranian-Turkish gold trader Reza Zarrab that’s scheduled to begin next month in New York might start without the key actor: Zarrab himself.

It’s not clear why.

In a court filing late Monday, a lawyer for co-defendant Mehmet Atilla, a deputy chief executive officer at state-owned Turkiye Halk Bankasi AS, wrote that Zarrab “has essentially not participated in the case” since Sept. 6 and “it appears likely that Mr. Atilla will be the only defendant appearing at trial.” The lawyer, Victor Rocco, didn’t offer an explanation in his filing for Zarrab’s possible absence while noting that Zarrab hasn’t filed a request to dismiss the most recent indictment. He declined to comment further when contacted.

There could be any number of reasons why Zarrab wouldn’t show up for the trial, now scheduled to start Nov. 27. He could have reached a plea or cooperation deal with the government. U.S. prosecutors may have agreed to drop the charges. Zarrab’s case might be split off from Atilla’s. Or there could be some other explanation. Zarrab’s lawyer Benjamin Brafman has sought a separate trial for his client. He declined to comment on Tuesday on Zarrab’s participation in the trial.

Zarrab is accused of using his network of companies to move money through the U.S. financial system on behalf of Iran and related companies to help them evade sanctions limitations. He was arrested last year after arriving in the U.S. on a family vacation and is being held in a Brooklyn, New York, jail. Atilla, who is being held in a Manhattan lockup, allegedly conspired with Zarrab to launder hundreds of millions of dollars through the U.S.

Both men deny wrongdoing.

The case has become a flash point in relations between Turkey and the U.S. as it threatens to expose how powerful figures in Turkey may have undermined U.S. sanctions on Iran. It’s entangled the leaders of both countries, with Zarrab hiring politically connected lawyers — former New York Mayor Rudy Giuliani and ex-U.S. Attorney General Michael Mukasey — to help represent him.

Aided Iran

It has also forced one of Turkey’s biggest banks to confront accusations that it helped Iran gain access to the U.S. financial system while Iran was subject to stiff sanctions over its nuclear ambitions.

U.S. prosecutors claim that Atilla and his accomplices helped Halkbank “double-deal by facilitating transactions involving billions of dollars-worth of Iranian oil proceeds on behalf of the government of Iran and related entities, while still maintaining Halkbank’s relationship with the U.S. banks.”

The scheme was carried out through “fraudulent transactions papered over with false documents, front companies, and lies to U.S. regulators,” along with “the bribery of senior Turkish government ministers,”prosecutors wrote in an Oct. 16 filing.

Giuliani Talk With Erdogan Adds Mystery to Sanctions Case

Turkey’s President Recep Tayyip Erdogan has tried to pressure U.S. officials to drop the case since the beginning. He lobbied then Vice President Joe Biden in September 2016 and, according to the Washington Post, demanded that Biden fire Preet Bharara, the U.S. attorney in Manhattan who brought charges against Zarrab. Erdogan also pressed for Zarrab’s release in talks with President Donald Trump.

Erdogan said last month that Trump phoned to speak about Zarrab’s case and told him “he was sorry” about the prosecution, and last week Erdogan complained that U.S. prosecutors are seeking to extract a confession from Zarrab. In March, after Atilla’s arrest, Halkbank said Atilla’s arrest was part of a long-running economic attack on Turkey.

Trump fired Bharara in March, but the case has moved toward trial nevertheless. Jim Margolin, a spokesman for Acting U.S. Attorney Joon Kim in Manhattan, declined to comment.

Broker Deal

Giuliani and Mukasey went to Turkey this year and met with Erdogan in an attempt to broker a settlement. The lawyers, who have served as Trump’s advisers, also sought to meet with top U.S. government officials, according to court filings.

In a speech to his party on Oct. 24, Erdogan accused the U.S. of trying to turn Zarrab into an informant by offering him a reduced sentence.

“We’re following it,” Erdogan said. “When this is all finished, we also know how to stir the world up.”

On Sept. 7, the day after Zarrab’s participation in the case apparently ended, federal prosecutors in New York expanded the indictment to include Turkey’s former economy minister Mehmet Zafer Caglayan and Suleyman Aslan, the onetime chief of Halkbank, as well as some of his aides. None of those people are in the U.S.

The case is U.S. v. Zarrab, 15-cr-867, U.S. District Court, Southern District of New York.