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Top Suspect In U.S. Iran Sanctions Case Pleads Guilty, Will Testify

Turkish-Iranian businessman Reza Zarrab (R) and Banker Mehmet Hakan Atilla(L) AP


A wealthy Turkish-Iranian businessman has pled guilty to charges that he helped Iran evade U.S. sanctions and will testify in a sanctions case which U.S. prosecutors said implicates high-level officials in both Turkey and Iran.

Reza Zarrab will take the witness stand to detail a conspiracy that was "so large that it was protected by government ministers in Turkey and Iran," Assistant U.S. Attorney David Denton said as the trial of Zarrab's codefendant, Turkish banker Mehmet Hakan Atilla, opened on November 28 in New York.

Denton said Zarrab will reveal how he and Atilla laundered Iranian oil and gas revenues through the U.S. banking system in violation of U.S. sanctions while giving bribes and kickbacks to high-level officials to cover up the scheme.

Court documents unsealed on November 28 showed that Zarrab, 34, pleaded guilty to bank fraud, money laundering, and other charges secretly on October 26.

The documents say that in 2012, he met with top officials in Iran and Turkey — "including the then-governor of the Central Bank of Iran and the then-finance director of the National Iranian Oil Company" — to discuss transferring Iranian natural gas proceeds to a Turkish bank and bribing a bank executive.

Denton said Zarrab and his co-conspirators also used other schemes to help Iran buy gold, which was then smuggled to Dubai and sold for U.S. dollars or other currencies.

Iran is prohibited from using U.S. dollars or American financial institutions under U.S. sanctions law.

Some transactions prohibited by sanctions were disguised as purchases of food, which fell under a humanitarian exemption to the sanctions regime, Denton said.

Denton said Zarrab has accepted responsibility for "busting sanctions and laundering money," and he now will "tell the inside story and expose the truth behind all those elaborate lies" told to cover up the scheme.

In his opening statement, Attila's defense attorney, Victor Rocco, attacked Zarrab's credibility, portraying him as a sophisticated con man.

Zarab's cooperation agreement was a "deal of a lifetime" that won him release from U.S. jail and a "shortcut back to his lavish life," Rocco said.

Rocco said Zarrab has been "squirreled away somewhere with FBI agents in some unknown place," waiting to testify as early as November 29.

Zarrab and many of the eight other named defendants in the case have close ties with the government of Turkish President Recep Tayyip Erdogan, who has repeatedly called on the United States to release Zarrab, who was arrested last year.

Turkey's deputy prime minister recently called Zarrab, who was born in Iran but has Turkish citizenship and is married to Turkish pop star Ebru Gundes, a "hostage" who is being forced to testify against Turkey's government.

Meanwhile, on November 28, a Turkish prosecutor issued warrants for the detention of two citizens who reportedly are cooperating with U.S. prosecutors.

U.S. prosecutors said the scheme in the New York sanctions trial was originally uncovered by Turkish police and led to Zarrab's arrest in Turkey in 2013 in an investigation that involved several top Erdogan lieutenants and Halkbank, the state bank.

Turkey later dropped the charges, and Ankara now claims they were "fabricated." But U.S. prosecutor Denton said the charges were dropped because bribes were paid to top Turkish officials and led to a purge of Turkish law enforcement and the jailing of some investigators.

"While bribes got rid of the case, they could not get rid of the evidence," Denton said, noting that Zarrab had wiretapped some conversations. "They did not see the light of the day, until now, until this trial in New York," he said.

Atilla, 47, a former top executive at Halkbank, was the architect of an effort to dupe U.S. banks into letting Iran move money around the world and blow "a billion-dollar hole in U.S. economic sanctions," Denton said.

Rocco countered by saying the real mastermind was Zarrab, who he said made "hundreds of millions of dollars he used to buy jets and yachts and people."

Zarrab is "a liar, a cheat, a corrupter of men...a one-man crime wave," Rocco said.

By contrast, his client Atilla "is not corrupt," he told the jury. "He took no bribes. He is a hard-working person like all of you."

Earlier this year, Zarrab hired former New York City Mayor Rudolph Giuliani, an ally of U.S. President Donald Trump, in a failed effort to broker a diplomatic settlement of the case.

With reporting by AP and Reuters