Turkey’s Halkbank ‘Almost Certainly’ a Fugitive, Judge Says

(CN) — Excoriating the Turkish government’s intense campaign to delay and dismiss the record-breaking money-laundering case, a federal judge found Thursday that the state-run Halkbank is “almost certainly” a fugitive.

President Donald Trump and Turkish President Recep Tayyip Erdogan meet in the Oval Office of the White House on Nov. 13, 2019. (AP Photo/ Evan Vucci)

The 27-page ruling from U.S. District Judge Richard Berman emphatically rejects Halkbank’s request for a special appearance that would have let it attack the case without appearing in court.

“If Halkbank wishes the district court to decide its jurisdictional motion, this international bank holds the key to unlock its dilemma: travel to New York and answer the charges or have its legal counsel do so,” Berman wrote.

Halkbank’s firm King & Spalding briefly registered as an agent for the Turkish foreign ministry in 2017.

In statement, the firm’s associate Ana Buling said attorneys will carefully review the ruling with Halkbank to assess their legal options.

“We disagree with the district court’s decision,” Buling wrote.

Turkey’s effort to scuttle a case that has embarrassed Turkish strongman Recep Tayyip Erdogan and U.S. President Donald Trump has been three years in the making, dating back to the arrests gold trader Reza Zarrab in 2016 and Halkbank’s former manager Hakan Atilla a year later.

“Following the arrests of Zarrab and Atilla in the U.S. and after their respective arraignments, an extraordinary, sustained series of Turkey-initiated state to state meetings, contacts, and involvements began — outside the courtroom — between and among Turkish and U.S. officials, lobbyists and attorneys,” Berman wrote.

“The objective of the campaign was, initially, to obtain the release and repatriation of Mr. Zarrab — even though he was in the middle of a U.S. Federal criminal proceeding and heading for trial.”

Zarrab later went on to implicate Erdogan ordering trades through Turkish state-run banks that violated U.S. sanctions against Iran on an unprecedented scale.

Erdogan has been dogged by those allegations ever since the revelation of a 2013 corruption scandal that tied him, his family, and high-ranking members of his ruling Justice and Development party with receiving massive bribes to participate in this shadow economy.

In a footnote of the ruling, Berman rattled off the top-level Turkish officials engaged in this blitz to prevent the controversy from reigniting in U.S. courts.

“This remarkable campaign involved, among others, Turkish President Recep Tayyip Erdoğan; Turkish Justice Minister Bekir Bozdag; former Turkish Deputy Prime Minister Mehmet Şimşek; Berat Albayrak, President Erdogan’s son-in-law and Turkish Minister of Finance; and Turkish Minister of Foreign Affairs Mevlut Cavusoglu,” the footnotes states.

Turkey’s efforts failed to sway the Obama administration, despite meetings between its officials and then-Vice President Joe Biden and U.S. Attorney Loretta Lynch. In the Trump administration, however, Erdogan has made inroads.

“Rudolph W. Giuliani, former New York City mayor and former United States attorney for the Southern District of New York, and Michael B. Mukasey, former United States attorney general & former chief district judge of the Southern District of New York, participated on behalf of defendant Reza Zarrab,” the footnote continues.

Giuliani and Mukasey never appeared in court during the Zarrab case but worked behind the scenes on quasi-diplomatic negotiations between Erdogan and Trump on a prisoner swap that would have freed the key defendant, a move that would have effectively terminated the case.

Apparently not lost on Berman is recent reporting placing Giuliani, who is now President Trump’s attorney, and Mukasey at the center of an Oval Office meeting with then-Secretary of State Tillerson to free Zarrab in fall 2017.

“The Americans who appear for the most part to have been on the receiving end of these efforts include, among others, President Donald J. Trump; Joe Biden, former Vice President of the United States; Loretta Lynch, former United States Attorney General; Steven Mnuchin, United States Secretary of the Treasury; and Rex W. Tillerson, former United States Secretary of State,” the footnote states.

Treasury Secretary Mnuchin, who is under investigation by Senator Ron Wyden for his handling of the Halkbank, appeared for a White House meeting with Jared Kushner and Erdogan’s son-in-law Albayrak.

Ever since federal prosecutors unveiled their indictment for the biggest sanctions-busting scheme to Iran ever charged in U.S. history, Halkbank has resolved not to recognize the jurisdiction of the Southern District of New York.

“My purpose is to make sure that nothing we do or say can be construed as accepting jurisdiction,” King & Spalding attorney Andrew Hruska told the judge last month.

Halkbank’s high-powered legal team instead set down the unusual path of attempting to limit their appearance to attempting to seek Judge Berman’s recusal and dismiss the case on procedural grounds. In its most recent legal brief, Halkbank argued:  “Corporations cannot be ‘fugitives.’” But the position fell flat on Thursday.

“Congress has explicitly authorized the applicability of the fugitive disentitlement doctrine to corporations,” Berman wrote.

Though he found it unnecessary to brand Halkbank a fugitive, Berman made clear that the word fits the bill.

“If the court were to reach this issue, it would almost certainly conclude that the fugitive disentitlement doctrine applies and that the doctrine’s principles would render Halkbank a fugitive,” the ruling states.

In denying Halkbank’s motion for a special appearance, Berman effectively has left Halkbank with the choice of going to court for arraignment or face the risk of contempt of court.

“The court denies Halkbank’s request to enter a ‘special appearance,’” the ruling states.

Berman added that Halkbank can file its requested motions only after arraignment.

The judge did not yet resolve a pending motion from prosecutors to schedule a contempt hearing for Halkbank, whose attorney Hruska at King & Spalding is listed in the ruling as among those deployed in the Turkish government’s lobbying campaign.

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