MANHATTAN (CN) – Five months after being freed from federal prison for his role in a record-breaking scheme to bust Iran sanctions, ex-Halkbank manager Hakan Atilla pressed ahead Monday at the Second Circuit on an unusual criminal appeal.
Though a reversal would make little practical difference to Atilla, who received a hero’s welcome back in Istanbul this summer after finishing a 32-month sentence, it could set a precedent benefiting Atilla’s former employer, the Turkish government-run Halkbank, which itself is now facing criminal charges.
“The government has not shown that Mr. Atilla was subject to the jurisdiction of the United States,” John Elwood, an attorney for Atilla with the Washington firm Vinson & Elkins, told a three-judge panel this morning.
Halkbank has been making the same argument against jurisdiction since it was indicted in October. A federal judge has set a hearing for February 2020 to decide whether the bank should face sanctions for contempt because it has refused to appear for arraignment.
At Atilla’s hearing Monday meanwhile, U.S. Circuit Judge Rosemary Pooler pressed Assistant U.S. Attorney Michael Lockard on what happened to Reza Zarrab, a former ally of Erdogan who became the government’s star witness in the Atilla case after pleading guilty shortly before trial.
“Mr. Zarrab has pleaded guilty pursuant to a cooperating agreement,” Lockard told the Clinton appointee, adding that the government has not made any sentencing recommendation.
While giving testimony against Atilla, Zarrab implicated the most powerful politicians and financiers in Turkey in his financial crimes.
Two years ago, Zarrab testified that Erdogan personally directed illicit trades in 2014 when Turkish President Recep Tayyip Erdogan had been serving as the country’s prime minister.
Atilla’s appeal attempts to discredit Zarrab’s testimony through a jailhouse recording between Zarrab and his uncle in 2016.
“Here, you have to admit to something you haven’t done,” Zarrab told his uncle back then, according to the translation in Atilla’s appellate brief. “This is how it works here.”
Zarrab denied every making those statements, which U.S. District Judge Richard Berman barred a jury from hearing after finding the recording irrelevant.
Though Atilla’s legal team called that ruling an error, the Second Circuit appeared unconvinced Monday.
“How does this show a motive to testify falsely?” asked U.S. Circuit Judge Richard Sullivan, a recent Trump appointee.
Sullivan noted that Zarrab did not deny committing his crimes during that conversation — only expressing a dim view of the U.S. criminal justice system.
U.S. Circuit Judge Peter Hall, appointed by George W. Bush, also questioned whether anything was wrong with the ruling to not to play the tapes.
“Where’s the abuse of discretion?” Hall asked.
Lockard, a prosecutor in the cases against both Atilla and Halkbank, called Zarrab’s bluster with his uncle implausible.
“It seemed rather far-fetched to believe that a defendant who pleaded guilty was in fact, factually innocent,” Lockard said, citing a similar case.
“The exclusion was proper, and if not proper, harmless,” he added later.
The three-judge panel reserved decision on the appeal by Atilla, who was personally awarded the cushy position running the city’s main stock exchange by Erdogan’s son-in-law in July.
More than two years after Zarrab’s guilty plea, the case continues to capture headlines because of the political wrangling between the Trump and Erdogan governments to free the money-laundering gold trader.
Trump’s personal attorney Rudy Giuliani counted Zarrab as a client in 2017 when the former New York City mayor shuttled between Turkey’s capital of Ankara and the Oval Office to negotiate a prisoner swap that would have scuttled the case.
Giuliani never appeared in the courtroom, but his quasi-diplomatic maneuvering raised eyebrows years before he took similar actions in Ukraine, which now loom large over Trump’s likely impeachment for abuse of power and obstruction of Congress. Echoing the saga in Ukraine, several Senate Democrats continue to investigate whether Trump put his personal interests in Turkey over those of the United States.