On Nov. 29th, in a Federal Court Room in New York, the FBI's Star Witness, Reza Zarrab, a Turkish-Iranian Gold Dealer, explained how a Money Laundering and Sanctions Evasion operation worked, in a Case brought by the U.S. Government.
In March 2016, when he arrived in Miami for a Disney World vacation, he was arrested by FBI Agents. Over the next 18 months, Zarrab was the Chief Defendant in a Prosecution accusing him and others of a conspiracy to launder almost $1 Billion through banks to help Iran evade Sanctions over its Nuclear program. In this scheme, Zarrab earned $150 Million.
Zarrab hired a Team of 16 Lawyers from some of the most Elite U.S. Law Firms. Then after the 2016 Presidential Election, he enlisted Two Trump confidents, former New York Mayor Rudy Giuliani and ex-U.S. Attorney General Michael Mukasey, who tried to cut a deal for his release through a Prisoner Swap. But those efforts failed.
Over more than a week on the witness stand, Zarrab spun a stunning tale of Corruption and Double-Dealing that reached the highest levels of the Turkish Government, all the way up to President Recep Tayyip Erdogan. The Case has further soured Washington and Ankara's already strained relationship, revealing how America's longtime Ally may have helped Iran undermine Sanctions even as turkey received Millions in U.S. Aid.
How to Launder $1 Billion of Sanctioned Iranian Oil Money Out of Turkey
1. Iran sells Oil to Turkey. But Iran can't take Turkey's Money because of International Sanctions.
2. Turkey deposits the Money into an Account owned by the National Iranian Oil Co. (NIOC) at the Turkish Bank Halkbank.
3. Zarrab's Role begins when the Money is transferred from NIOC's Halkbank Account into another at Halkbank owned by the Iranian Bank Sarmayeh.
4. Halkbank transfers the Money from Sarmayeh's Account to one of Zarrab's Company's Account.
5. Zarrab uses the Money to buy Gold in Turkey. He loads a suitcase with it and gives it to a Courier, who boards a plane.
6. On Customs Forms, the Gold is marked as bound for Iran, but the Courier gets off in Dubai.
7. Zarrab takes Custody of the Gold in Dubai.
8. He sells it in Dubai for Cash in the Local Currency, Dirhams.
9. Zarrab turns the Funds over to a Money-Transfer Company in Dubai, Rostamani Exchange, along with Payments Instructions designated by Iran.
10. Rostamani uses the Money to make outstanding Bill Payments on Iran's behalf, running Dollar-Denominated Transactions through Accounts at Banks in the U.S.
While the scheme worked for the most part, it had begun to unravel. On a foggy New Year's Eve in 2012, a plane carrying a Zarrab shipment was unexpectedly forced to land in Istanbul for refueling. Customs Officials found more than a Ton of Undeclared Gold in the Cargo Hold. The subsequent Probe produced Reams of Wiretapped Audio Recordings, Records of Text Messages, and other Materials.
Nine People have been Charged, including Turkey's former Economy Minister and past Chief Executive Officer of Halkbank, a Major Turkish Bank owned by the Turkish Government. Only one, a Senior Halkbank Executive named Mehmet Hakan Atilla, Zarrab's former Co-Defendant in on Trail. The others have all avoided U.S. Arrest.
Despite Zarrab's efforts, the Sanctions had their intended effect. Iran soon came to the Negotiating Table to discuss modifying its Nuclear Program. with the Sanctions lifted in January 2016. On Zarrab's second day on the Witness Stand, the Erdogan Administration moved to seize his Assets in Turkey and on November 31st, Erdogan said:
We have not broken an embargo.
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