A Turkish-Iranian gold trader will reveal a multibillion dollar conspiracy to help Iran evade U.S. sanctions at the trial of a Turkish banker in a case that prosecutors say has threatened U.S. national security, attorneys said during opening statements of a federal trial Tuesday.
Assistant U.S. Attorney David Denton said that Reza Zarrab pleaded guilty and will testify that lies told by Turkish banker Mehmet Hakan Atilla “blew a billion-dollar hole in the U.S. economic sanctions against Iran.”
Denton said Zarrab had pleaded guilty to violating U.S. laws, accepting responsibility for “busting sanctions and laundering money” and would “tell the inside story and expose the truth behind all those elaborate lies” told by his co-defendant.
The prosecution in Manhattan has been major news in Turkey.
Turkish President Recep Tayyip Erdogan has repeatedly asked the U.S. to release Zarrab. Turkey’s deputy prime minister recently said that Zarrab was a “hostage” being forced to testify against Turkey’s government.
On Tuesday, a Turkish prosecutor issued warrants for the detention of two citizens for cooperating with U.S. prosecutors. The Istanbul chief prosecutor’s office ordered the arrests of Osman Zeki Canitez and former opposition party legislator Aykan Erdemir, according to Turkey’s state-run news agency, Anadolu Agency.
Denton said that Atilla, 47, deputy CEO of Halkbank, was the architect of a “massively successful” scheme to dupe U.S. banks into letting Iran move money around the world.
Denton said the scheme was discovered by Turkish police before bribes to top public officials in Turkey led to a purge of Turkish law enforcement that included imprisonment for some investigators. Zarrab had initially been arrested in Turkey in 2013 in the probe that involved several top Erdogan lieutenants and Halkbank, the state bank, but the charges were dropped.
“While bribes got rid of the case, they could not get rid of the evidence,” Denton said, noting there were wiretapped conversations by Zarrab. “They did not see the light of the day, until now, until this trial in New York.”
In a retort, defense attorney Victor Rocco said the trial was all about Zarrab, 34, a dual citizen of Turkey and Iran who waged an “economic holy war” against the United States to help Iran move money through banks on three continents and make a fortune for himself.
“By testifying against Mehmet Atilla, Zarrab hopes he can buy freedom, a shortcut back to his lavish life with the rich and famous,” Rocco said. “He’s a liar, a cheat, a corrupter of men … a one-man crime wave.”
Rocco told jurors that Atilla “is not corrupt. He took no bribes. He is a hard-working person like all of you.”
Rocco said that after Zarrab was arrested, he made a plea deal to “get a get-out-of-jail-free card,” possibly gaining witness protection status that would enable him to live with his family in the United States.
The lawyer said Zarrab “made hundreds of millions of dollars he used to buy jets and yachts and people” before his 2016 arrest when he arrived for a Disney World vacation with $100,000 in cash.
He was held without bail until the Federal Bureau of Prisons began listing him earlier this month. Rocco said Zarrab is “squirreled away somewhere with FBI agents in some unknown place.”
He called his cooperation agreement a “deal of a lifetime” that won him his release from a U.S. jail and “shortcut back to his lavish life.”
Earlier this year, Zarrab hired former New York City Mayor Rudolph Giuliani and former U.S. Attorney General Michael Mukasey to try and broker a diplomatic solution to the case.
Since the 2013 arrests in Turkey, Erdogan’s administration has tightened control over the country, arresting at least 50,000 people following a 2016 coup attempt he said was orchestrated by Fethullah Gulen, a Muslim cleric living in Pennsylvania. Several Americans have also been arrested in that crackdown.
Erdogan has demanded that Gulen be handed over to Turkey, perhaps in exchange for detained Americans. Gulen has denied having any role in the coup.
Erdogan has also demanded that Zarrab be freed.
Speculation about a Zarrab plea deal intensified over the summer amid news reports that special counsel Robert Mueller was scrutinizing former Trump administration national security adviser Michael Flynn over his undisclosed lobbying work for the government of Turkey. Among other things, Flynn had written an editorial, published on election day, urging the U.S. to extradite Gulen.