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In the Courts
Turkish Banker Conspired to Evade U.S. Sanctions
Turkish banker, Mehmet Hakan Atilla, who aided the Government of Iran in evading United States sanctions, was recently convicted following a bench trial in the Southern District of New York. Mr. Atilla was convicted of conspiracies to defraud the United States, to commit bank fraud, to commit money laundering, and to violate the International Emergency Economic Powers Act (IEEPA), along with one substantive count of bank fraud.
Beginning in 1979, under the IEEPA, the U.S. President found that Iranian Government's policies constituted an extraordinary threat to national security, foreign policy, and the economy of the United States. Accordingly, the United States instituted numerous economic sanctions against Iran and Iranian entities to combat that threat. The sanctions prohibited, among other things, financial transactions involving the United States or United States persons and the Government of Iran or Iranian entities.
Mr. Atilla used his position as the Deputy General Manager of International Banking at Halkbank to assist the Government of Iran in completing financial transactions and evading the sanctions. In doing so, Mr. Atilla created false documents to disguise prohibited transactions and made the transactions appear to involve food payments, as food payments fall within the humanitarian exemption to sanctions, thereby disguising Mr. Atilla's illegal transactions as exemptions. This false categorization induced United States banks to unknowingly process international financial transactions in violation of the IEEPA.
Mr. Atilla's scheme was devised in part to protect and hide Reza Zarrab's supply of currency and gold to the Iranian Government, Iranian entities, and Specially Designated Nationals, as determined by the Department of Treasury Office of Foreign Assets Controls. In October 2017, Mr. Zarrab pled guilty to bribing a United States public official and the same conspiracy counts brought against Mr. Atilla before becoming a cooperating government witness. Mr. Zarrab testified that “cooperation was the fastest way to accept responsibility and to get out of jail at once.”
At Mr. Atilla's trial, Mr. Zarrab testified that Recep Tayyip Erdogan, Turkey's prime minister at the time, personally ordered that two Turkish banks be allowed to participate in the scheme. Mr. Zarrab explained that he began working with Halkbank on the scheme in 2012, after bribing Zafer Caglayan, Turkey's then-economy minister, to broker a deal with Suleyman Aslan, Halkbank's then-general manager. Mr. Zarrab stated that he paid Mr. Caglayan bribes amounting to more than $50 million. Zarrab described Mr. Atilla as “the most knowledgeable person about the sanction rules” at Halkbank, and claimed he helped develop the scheme, and that Mr. Atilla and Mr. Aslan instructed him how to carry it out.
Mr. Atilla's convictions carry a maximum sentence of 105 years for all combined crimes. He will be sentenced on April 11, 2018.
– Colleen Snow, Mayer Brown
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