Barred Tapes Loom Large in Appeal by Turkish Banker

MANHATTAN (CN) – Fighting their client’s convictions for violating U.S. sanctions against Iran, attorneys for Turkish banker Hakan Atilla on Thursday argued the jury should have heard tapes casting doubt on the credibility of the star witness.

Atilla, a former manager of Turkey’s state-run Halkbank, has been locked up in federal prison for more than a year for helping funnel billions to Iran.

The key witness against him was a gold trader named Reza Zarrab, a former top ally of Turkish President Recep Tayyip Erdogan who admitted to paying tens of millions in bribes to top officials of his ruling Justice and Development Party.

Zarrab’s decision to accept a plea deal with U.S. prosecutors on the eve of trial infuriated the Turkish government.

In marathon testimony that lasted a week, Zarrab exposed embarrassing secrets of how Erdogan personally ordered sanctions-busting trades through a corrupt system of paid-off state bureaucrats and cabinet members. Atilla was accused of devising the system, even though he never personally took a bribe.

U.S. District Judge Richard Berman gave Atilla a 32-month sentence, far lighter than prosecutors demanded, for being a "cog in the machine" of a much larger and more lurid scheme.

In their long-awaited appellate brief, Atilla's attorneys contend they should have had the chance to discredit Zarrab with a jailhouse recording of the gold trader’s conversation with his uncle in September 2016.

With trial then still more than a year away, Zarrab told his uncle defendants need to lie to obtain their freedom in the U.S. criminal justice system.

“Here, you have to admit to something you haven’t done,” Zarrab told his uncle, according to the translation in the appellate brief. “This is how it works here.”

Clocking in at more than eight minutes, the expletive-filled tape between Zarrab and his uncle was summarized in trial motions but later reproduced in a transcript in English and its original Azeri. Zarrab was born in Tabriz, Iran, the most populated city in Iranian Azerbaijan.

“Here, when you come around and say, ‘OK, yes, I did this shit,’ look, this leaves you in peace,” Zarrab said at the beginning of the transcript.

Atilla’s appellate attorney John Elwood, of the Washington-based firm Vinson & Elkins, called a federal judge’s exclusion of this evidence “mistaken” and “erroneous.”

“Zarrab’s statements powerfully demonstrate his motive and intent to lie about the very scheme at issue to obtain a reduced sentence,” Elwood wrote in an 81-page brief.

U.S. District Judge Richard Berman ruled the tapes were irrelevant and inadmissible as statements Zarrab denied making.

“The court agrees with the government that ‘Zarrab’s alleged statements to his relative have nothing to do with whether there was a wide-scale plot to launder Iranian oil proceeds through Halkbank or whether Atilla joined that plot,’” Berman wrote at the time.

Despite his seeming willingness to plead guilty in the jailhouse tape, Zarrab fought his charges vigorously for another year through a team of powerful and politically connected attorneys that included former New York City Mayor Rudy Giuliani, ex-U.S. Solicitor General Paul Clement, and ex-Assistant Attorney General Viet Dinh.

Only after their collective efforts failed did Zarrab start cooperating, revealing embarrassing information about corruption in the upper echelons of the Turkish government.

Elwood said his client, Atilla, should have been able to use the tapes to question Zarrab’s motives for turning state’s witness.

“Zarrab’s stated understanding that he needed to lie about the very scheme in which Atilla was charged with participating is not ‘collateral’; it goes to the heart of the government’s allegations in this case,” Elwood writes.

Atilla’s lead trial attorney Victor Rocco, from the New York-based firm Herrick Feinstein, co-signed the brief, which calls the case against his client “unprecedented” in its prosecution of a foreign banker for anti-Iran sanctions.

“This case represents the first time the government has sought to impose criminal penalties for actions taken to evade or avoid the imposition of ‘secondary sanctions’ – i.e., restrictions on accessing the U.S. financial system imposed on foreigners whom the Treasury secretary determines have done business with Iran,” they wrote.

The Manhattan U.S. Attorney’s office declined to comment, and it is not yet known when prosecutors will file their reply brief. Prosecutors have also filed a counterappeal seeking a tougher sentence for Atilla.

Currently serving his sentence in a medium-security federal prison in Pennsylvania, Atilla’s release date is set for July 25, 2019.

Zarrab, who pleaded guilty to several counts of fraud, bribery, sanctions violations, and money laundering, has not yet been sentenced.

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