MANHATTAN (CN) – A Queens man who transferred $300,000 to Iran will serve 10 months in prison, according to a federal judge’s sentencing order. The term falls much lower than 35-year maximum penalty for violating the embargo and even below the minimum 6.5-year sentence called for in sentencing guidelines.
Prosecutors say Reza Safarha, a dual citizen of the United States and Iran, was caught along with co-conspirators through a sting operation. A confidential informant for the FBI asked Safarha, who also goes by Ali, in 2007 and 2008 to use the so-called hawala system to send Iran money earned from the sale of stolen electronics.
In hawala, money does not physically cross international borders through a legitimate banking system. Instead, the money is sent to a “hawaladar” in a foreign country to make the transactions. The system operates on “trust and the extensive use of connections such as family relationships or regional affiliations,” according to a court filing authored by IRS Special Agent Dan McWilliams.
After a February bench trial that lasted slightly more than a week, U.S. District Judge Richard Sullivan found Safarha guilty on all money laundering and conspiracy counts.
Defense attorney Adrian L. DiLuzio noted in a sentencing memo that Judge Sullivan rejected an entrapment defense, but he contended that the evidence showed that his client was “a mere carpet salesman tempted to illegality by a blustering government agent.”
“Not entrapment, as this Court so found, it nonetheless constituted a criminality not initiated by the defendant,” DiLuzio wrote. “It was wrong, but did not emanate from an evil mind. It was reactive rather than calculated. It was not undertaken without regard to the purpose to be served by the money transfer. There was no prospect of terrorism, only investment to obtain financial benefit.”
The government memo also said that a below-guideline range could be appropriate.
“[T]his may be, in the Government’s view, one of those rare cases in which the Guidelines-recommended sentence would be more than necessary to accomplish the purposes of sentencing,” prosecutors wrote.
But they rejected the defense’s request for a time-served sentence as “too lenient.”
“Clearly, the seriousness of the defendant’s crimes and the need for general deterrence require a substantial sentence of imprisonment,” prosecutors said.
“This Office takes violations of the United States’ trade embargo with Iran very seriously,” Manhattan U.S. Attorney Preet Bharara said in a statement. “Reza Safarha employed a form of financial legerdemain to circumvent the embargo, and added insult to injury by doing this to conceal what he believed were the proceeds from the sale of stolen property.”
An Internal Revenue Service spokesperson noted the intricacy of money laundering investigations in an email to Courthouse News.
“The IRS Special Agent assigned to this case testified for approximately 10 hours, which underscores the complexity of financial investigations like these,” Special Agent Joseph Foy wrote. “Hawala networks and the underground financial system are not impervious to law enforcement investigative efforts. Our agency will continue to work with our law enforcement partners and investigate tax evasion, money laundering and related financial crimes.”