Judge: Turkish bank can't deny knowledge of criminal charges

December 05, 2019 - 4:49 pm

NEW YORK (AP) — A judge cited “extraordinary” and “remarkable” meetings two years ago involving top U.S. and Turkey political figures to intervene in a New York prosecution Thursday as he rejected efforts by a state-owned bank in Turkey to now feign ignorance of criminal charges it faces in the same case.

U.S. District Judge Richard M. Berman in Manhattan said Halkbank, in effect, could be labeled a fugitive if it refused to send lawyers to represent it against the charges.

A message was left with a lawyer for the bank.

At a hearing last month, Berman said legal maneuvers by the bank were “kind of crazy” as its lawyers asked to challenge the right of an American court and Berman in particular to handle the case but refused to enter a plea on the bank's behalf.

Halkbank was charged with evading sanctions against Iran by processing billions of dollars of Iranian oil revenue. An indictment said the bank illegally moved about $20 billion in Iranian oil and gas revenues, sometimes disguising money movements as purchases of food and medicine so they'd qualify for a "humanitarian exception" to sanctions.

Although the bank was not charged until recently, the allegations involving it surfaced in 2015 when a wealthy Turkish-Iranian gold trader was arrested on sanctions charges as he arrived in the U.S. to take his family to Disney World in Florida.

The trader — Reza Zarrab — hired Rudy Giuliani, the former New York mayor, to try to broker a deal between Turkey's president and the U.S. government to resolve the charges. The talks in 2017 failed to result in a deal.

In Thursday's written ruling, Berman said that after Zarrab's arraignment, "an extraordinary, sustained series of Turkey-initiated state to state meetings, contacts, and involvements began — outside the courtroom — between and among Turkish and U.S. officials, lobbyists and attorneys.”

Berman wrote that the objective of the campaign was initially to obtain the release of Zarrab, despite the criminal charges.

The judge said the “remarkable campaign” involved Turkish President Recep Tayyip Erdogan, Turkish Justice Minister Bekir Bozdag, former Turkish Deputy Prime Minister Mehmet Simsek, Berat Albayrak — Erdogan's son-in-law and Turkish minister of finance, and Turkish Minister of Foreign Affairs Mevlut Cavusoglu.

For the Americans, the talks included President Donald Trump, former Vice President Joe Biden, former Attorney General Loretta Lynch, ex- Secretary of the Treasury Steven Mnuchin and former Secretary of State Rex W. Tillerson, Berman said.

Zarrab was represented by Giuliani and former U.S. Attorney General Michael Mukasey.

Berman said the campaign to free Zarrab appears to have morphed into an effort to avoid Halkbank being indicted or paying a potential fine.

“This effort appears to have failed prior to the Halkbank indictment on October 15, 2019,” the judge said.

“If Halkbank wishes the district court to decide its jurisdictional motion, this international bank holds the key to unlock its dilemma: travel to New York and answer the charges or have its legal counsel do so,” Berman said.

“There can be no doubt that Halkbank was notified of the charges against it,” he said.

The judge cited the fact that Halkbank paid for the lawyers for Mehmet Hakan Atilla, who was convicted of five of six criminal charges against him, including conspiring to defraud the U.S., bank fraud and conspiracy to violate sanctions against Iran. Zarrab testified against him.

Atilla was sentenced to two years and eight months in prison.

After Atilla's release from a U.S. prison, he returned to Turkey, where he has since been appointed as the head of Turkey's stock exchange, the judge noted.

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