US Drops Bid to Toughen Sentence for Turkish Banker Hakan Atilla

MANHATTAN (CN) – Federal prosecutors have dropped their quest to extend the 32-month sentence of Turkish banker Hakan Atilla, a penalty that the government previously found too light for the largest anti-Iran sanctions scheme in history.

Mehmet Atilla, right, testifies on Dec. 15, 2017, during his trial on corruption charges in New York. The Turkish banker accused of helping Iran evade U.S. sanctions has been convicted by a jury in New York after a trial that sowed distrust between the two nations. Atilla was convicted of five counts, including conspiracy. He was acquitted of one money-laundering charge. (Elizabeth Williams via AP, File)

The about-face emerged Thursday night in a footnote to a brief filed on the deadline for written arguments to the Second Circuit.

“The government filed a timely notice of cross-appeal but is filing today a stipulation withdrawing that notice,” the footnote states.

Turkish President Recep Tayyip Erdogan has long lobbied the Trump administration for Atilla’s release in a case connected to a December 2013 corruption scandal threatening his family, ruling party and state banks.

Atilla, a former manager of Turkey’s state-run Halkbank, was convicted in January of this year for his role in helping funnel billions to Iran through a gas-for-gold trade and fake humanitarian food shipments.

The key witness against him was a gold trader named Reza Zarrab, a former top ally of Erdogan who admitted to paying tens of millions in bribes to top officials of his ruling Justice and Development Party. Zarrab’s testimony that Erdogan ordered the sanctions-busting trades turned him into a state enemy in Turkey, and Erdogan has characterized the case as an attempted “judicial coup.”

In their 84-page brief Thursday, prosecutors called Atilla instrumental to a record-breaking financial crime.

“The charges against Atilla arose out of his participation in the largest known scheme to evade Iranian financial sanctions — a scheme to launder billions of dollars’ worth of Iranian oil proceeds out of the Turkish bank where Atilla worked,” the brief states. “As the Deputy General Manager for International Banking, Atilla was responsible for, among other things, the bank’s relationships with U.S. correspondent banks, Iranian banks, and the Central Bank of Iran, and for the bank’s international corporate finance efforts. The scheme fueled a dark pool of Iranian government-controlled funds that could be clandestinely sent anywhere in the world — including enormous sums of money laundered through the U.S. financial system.”

Evidence from the case showed that the National Iranian Oil Company funneled money to bank accounts at Halkbank, which were then transferred to Zarrab’s companies. Zarrab said he shuttled vast shipments of gold – sometimes via couriers carrying it in suitcases – to Dubai to circulate the money on the global financial market.

Then-President Barack Obama would later close what had been called a “golden loophole,” the illicit trades transformed into fake humanitarian food shipments. One shipment from Dubai purported to be wheat, which does not grow there.

In one of the enduring ironies of the case, the Obama administration zealously prosecuted Zarrab and Atilla after signing the Joint Comprehensive Plan of Action, better known as the Iran deal.

Major figures in the Trump administration have come to Zarrab and Atilla’s aid over violating the very sanctions Trump reinstated.

Former New York City Mayor Rudy Giuliani, an erstwhile anti-Iran hawk who is now Trump’s attorney, briefly represented Zarrab in an attempted prisoner swap between the U.S. and Turkish governments.

Earlier this year, U.S. District Judge Richard Berman told Courthouse News in an interview he was “still stunned” by Giuliani’s role as a “go-between” for Trump and Erdogan.

“Had Rudy succeeded, he and the two presidents I mentioned, would have helped very significantly the country of Iran – which was the beneficiary of the conspiracies to avoid USA sanctions against Iran, i.e. the very heart of the allegations in this case,” Berman said.

In handing down a merciful sentence to Atilla, Berman called the Turkish banker a “cog in the machine.”

Various news outlets reported that Trump and Erdogan have negotiated Atilla’s fate often since then, including in discussions over Andrew Brunson, a U.S. evangelical pastor imprisoned in Turkey for nearly two years before his release in July.

The sentencing motion shows the U.S. government softening its position on Atilla.

Assistant U.S. Attorney Michael Lockard previously emphasized that the sanctions-evasion scheme occurred at a critical moment during negotiations over the Iran deal.

“It was precisely during this critical time-frame that Atilla and his co-conspirators’ monumental sanctions-busting scheme was in full swing, providing Iran access to billions of dollars’ worth of desperately needed funds for its banking system and the [Iran Revolutionary Guard Corps]-linked [national oil companies], including hundreds of millions of dollars routed through the U.S. financial system, and to alleviate the very financial pressure that induced the regime to negotiate its nuclear program,” the prosecutor wrote in April.

Now that Trump has scuttled the Iran deal, the sentencing brief is silent on that topic.

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