Turkish Tycoon Has New Muscle on Iran Sanctions Rap

MANHATTAN (CN) — Recently losing his fight to await trial in a "gilded cage," an embattled Turkish gold trader appeared in court Wednesday in a blue prison uniform next to a powerful new advocate: the former solicitor general of the United States.

Attorney Paul Clement, now representing entrepreneur Reza Zarrab, spent three years as the Department of Justice's voice at the U.S. Supreme Court before he became a partner at Bancroft PLLC.

For nearly two hours on Wednesday, Clement tried to convince a federal judge that the Justice Department has applied a "radical" and "unprecedented" interpretation of the International Emergency Economic Powers Act (IEEPA).

The Iranian-born Reza Zarrab, who runs several billion-dollar enterprises, insists that he had simply wanted to go to Disney World with his wife and 5-year-old daughter when he landed in Miami, Fla. in March.

Customs officials asked Zarrab for a password to unlock his phone, which was used to sustain an indictment accusing him of violating trade restrictions against his Persian homeland.

The case has caused a commotion in Turkey, where stocks plummetted upon news of his arrest.

Opponents of Turkish President Recep Tayyip Erdogan praised Manhattan U.S. Attorney Preet Bharara on Twitter for taking down Zarrab, a business ally of the leader, whose arrest fell at a time of unrest in the Erdogan's administration.

In June, Zarrab's attorneys failed to convince U.S. District Judge Richard Berman to let their client post a bail package keeping him in a cushy Manhattan apartment before trial, an arrangement that sparked controversy about a two-tier system of justice.

Unable to avoid jail, Zarrab also recently lost a bid to recuse Berman from the case, based on the judge's criticism of the Erdogan administration as a speaker at the "International Symposium on the Rule of Law and Justice" two years ago in Istanbul.

Hoping to turn the tide today, Zarrab had some new legal muscle by his side.

At the start of the hearing, Judge Berman noted that Clement helped overturn his ruling overturning the NFL's penalty against New England Patriots star quarterback Tom Brady, recently benched for four games for a football-tampering scandal known as "Deflategate."

Berman had thrown out Brady's penalty, but Clement helped the league reinstate its punishment in a Second Circuit appeal.

Perhaps fanning the flames of bias accusations once again, Berman quipped: "I would have appreciated the opportunity to convince you that Tom Brady should have started the season on Game One rather than Game Five, but that's water under the bridge."

After laughter died down in the court, the high-profile lawyering began.

Clement said that, as applied to his non-U.S. citizen client, the ban against financial relations with Iran is less a sanction than a "boycott."

"It would be radical, in the sense that it would expand the whole nature of the sanctions regime," he added.

The former soliticitor general's co-counsel, fellow high-profile attorney Benjamin Brafman, fielded another set of arguments, seeking to suppress the information customs officials found on Zarrab's phone.

"This is not a routine border inquiry," Brafman noted.

At the time of the arrest, Brafman noted, there had been "great controversy" about the FBI's ability to crack open iPhones in the wake of the San Bernardino shootings in California.

"Technology, then, was front and center," the lawyer added.

Brafman said that authorities prodded his foreign client to give up his constitutional rights, at a time when courts had not yet resolved the government's limitations in the electronic age.

Assistant U.S. Attorney Michael Lockhard argued that there was nothing radical, or even remarkable, about authorities' actions.

The prosecutor noted that the IEEPA makes allowances for "external threats" and has an extraterritorial application for U.S. property.

The transaction in question did go through a U.S. bank.

As for the iPhone, Lockhard offered a familiar comparison for why the government believes it was fine to ask a traveler to pick it.

"Just as in the way if you're carrying locked luggage, you may be asked for the keys to your luggage," he said.

Berman asked few questions during the attorneys' presentations, leaving his personal impressions largely inscrutable, as he reserved decision on the matter.

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