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Wall Street Journal / News - Politics

Turkish Banker Convicted in New York of Plotting to Help Iran Evade Sanctions

A federal jury found a Turkish banker guilty of conspiring to help Iran launder money and cover up a billion-dollar scheme to evade U.S. sanctions.


By

Nicole Hong

In a high-profile trial that stoked tensions between the U.S. and Turkey, a federal jury has found a Turkish banker guilty of conspiring to help Iran launder money and cover up a billion-dollar scheme to evade U.S. sanctions.

Mehmet Hakan Atilla, 47 years old, was convicted Wednesday of five of the six counts against him, including bank fraud, conspiracy to commit money laundering and sanctions evasion. He was acquitted of one count of money laundering.

After three weeks of testimony, the 12 jurors deliberated for four days to reach the verdict.

Mr. Atilla could now face up to decades in prison. He will be sentenced on April 11.

Victor Rocco, a lawyer for Mr. Atilla, said he is “disappointed” with the verdict and intends to appeal. Mr. Atilla is “sad, but he’s intent on clearing his name,” Mr. Rocco said.

Mr. Atilla’s wife, who was sitting in the audience, buried her head in her hands and appeared to cry as the verdict was read.

The trial was closely followed, largely due to the identity of the government’s star witness: Reza Zarrab, a wealthy gold trader who has connections to top Turkish officials and is a household name in Turkey.

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Mr. Zarrab had been charged in the same indictment as Mr. Atilla, but moments before opening statements of the trial began, the defense and prosecution revealed Mr. Zarrab had pleaded guilty and would be testifying against Mr. Atilla.

During seven days on the witness stand, Mr. Zarrab’s testimony linked Turkey’s President Recep Tayyip Erdogan and other top Turkish and Iranian officials to the sanctions-evasion scheme. In one exchange, Mr. Zarrab said that in 2012, he was told by Turkey’s economy minister at the time that Mr. Erdogan had personally ordered two Turkish banks to help Iran conduct financial transactions that had been blocked by U.S. sanctions.

Mr. Zarrab’s testimony prompted almost daily criticism of the case from Turkish officials, adding to a growing list of disagreements straining U.S.-Turkey relations. Mr. Erdogan said Turkey didn’t violate U.S. sanctions and recently told lawmakers the trial was “an acrobatic play” that had “nothing to do with law, justice or trade.”

There were often long lines to enter the courtroom during the trial, with even overflow rooms packed to capacity with Turkish journalists and other observers.

The verdict boosts the U.S. government’s efforts to enforce its sanctions regime overseas, using the global financial system’s reliance on U.S. dollars to get jurisdiction over foreign individuals working abroad. Before the trial, the defense unsuccessfully tried to dismiss the case by arguing the charges were an overreach of sanctions laws, saying the allegations had no connection to the U.S.

Joon Kim, the acting Manhattan U.S. attorney, said in a statement: “You can choose willfully to help Iran and other sanctioned nations evade U.S. law, or you can choose to be part of the international banking community transacting in U.S. dollars. But you can’t do both.”

Both Messrs. Atilla and Zarrab are non-U.S. citizens who had been living in Turkey and were arrested after they flew to the U.S. Seven others charged in the case haven’t been arrested and are believed to be overseas.

U.S. economic sanctions against Iran began in the 1970s and have become increasingly restrictive. Any international bank that violates these sanctions could lose their ability to conduct business in U.S. dollars.

Using multicolored diagrams, audio recordings, emails and spreadsheets, prosecutors pieced together an elaborate scheme in which the government of Iran used Halkbank , the Turkish state-owned bank where Mr. Atilla worked, to illegally access billions of dollars worth of Iranian oil sales that had been frozen by U.S. sanctions.

Prosecutors said Mr. Atilla, a former deputy manager at Turkish state-owned bank Halkbank, was “indispensable” to the scheme. Photo: ozan kose/Agence France-Presse/Getty Images

Prosecutors said Mr. Atilla, a former deputy manager at Halkbank, was “indispensable” because the scheme needed someone who knew how to conceal the Iranian origin of transactions from U.S. banks. Even after Treasury officials warned Mr. Atilla about Iranian money possibly flowing through Halkbank, Mr. Atilla lied and reassured them of the bank’s due diligence, the government said.

“Atilla and his lies played a crucial role in giving Iran access to U.S. dollars and American banks, access that U.S. laws were meant to preclude,” said David Denton, an assistant U.S. attorney, in the government’s opening statement.

The defense painted Mr. Zarrab as the chief architect of the scheme, saying Mr. Atilla wasn’t aware that other employees at Halkbank were helping Iran launder money.

Mr. Atilla “is a blameless pawn, collateral damage in a story that belongs in ‘The Twilight Zone,’ not in an American courtroom,” Mr. Rocco said.

The guilty verdict indicates jurors believed Mr. Zarrab’s testimony, despite attempts by the defense to undermine his credibility. Mr. Atilla’s lawyers called Mr. Zarrab “the king of bribes” and said he didn’t need Mr. Atilla to “teach him how to cheat.”

Mr. Zarrab pleaded guilty to seven charges and must still face sentencing before a U.S. judge. Prosecutors have agreed to help ensure his safety, including the possibility of witness protection in the U.S. for his family. Mr. Zarrab is married to a Turkish pop star.

Mr. Zarrab became well-known in 2013, after he was arrested in Turkey as part of an investigation into high-level corruption, including the inner circle of Mr. Erdogan, who was then the prime minister. Mr. Erdogan called the investigation a conspiracy against him, and the investigation was dropped. Several officials involved in the prosecution were demoted or jailed.

One of these local police officials testified at Mr. Atilla’s trial, saying he fled Turkey with files of evidence that he later gave to U.S. authorities.

Write to Nicole Hong at nicole.hong@wsj.com

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