NEW YORK, March 28 (Reuters)
The Iranian chairman of a Maltese bank on Wednesday pleaded not guilty to U.S. charges that he took part in a scheme to evade U.S. sanctions against Iran by funneling more than $115 million from a Venezuelan company to an Iranian company through the U.S. financial system under a construction contract.
Ali Sadr Hashemi Nejad, chairman of Maltese-registered Pilatus Bank, entered his plea at a court hearing before U.S. Magistrate Judge Barbara Moses in Manhattan. Moses denied Sadr's request to be released on bail, saying his wealth and connections around the world pointed to a high risk that he would flee.
Andrew Bauer, Sadr's lawyer, argued during the hearing that his client was unlikely to flee in part because he has ties to the United States, saying he was married to a U.S. citizen and is a legal resident of the country. He said Sadr's wife and children were living in London while their residence in Washington, D.C., was being renovated.
Sadr, 38, was arrested last week on charges including conspiracy to violate U.S. sanctions and money laundering.
Prosecutors said Sadr helped hide the fact that a Venezuelan state-owned energy company was paying his family's Iran-based Stratus Group conglomerate in U.S. dollars through the U.S. financial system under a 2006 construction contract, violating sanctions. They said Sadr used Swiss and Turkish entities to conceal the Iranian connection to the funds.
Prosecutors said that under the contract, the Venezuelan company had agreed to pay a Stratus Group affiliate $476 million to build 7,000 housing units in Venezuela, of which more than $115 million was actually paid. They said the deal arose from agreements between the governments of Iran and Venezuela to cooperate on building housing in the South American country.
Bauer said at Wednesday's court hearing that the payments were not made for the benefit of Iran's government, and that Sadr's father, who founded Stratus Group, was at one point imprisoned in Iran for opposing the government.
Pilatus Bank's assets were frozen by the Malta Financial Service Authority following Sadr's arrest. Six members of the European Parliament this week called for the European Central Bank to reconsider Pilatus' banking license and screen the Maltese banking sector for more financial crime.
Malta's police have said the suspected sanctions busting did not involve Maltese citizens or institutions and that no transactions passed through Malta.
Pilatus has not responded to requests for comment.