Halkbank's Atilla Wins Leniency From Judge Over Iran Plot

(Bloomberg) -- A senior banker at one of Turkey’s largest banks got a break from a U.S. judge, who sentenced him to less than three years in prison for aiding an Iranian plot to evade sanctions and launder $1 billion in oil revenue through the U.S. financial system.

Federal prosecutors had sought a sentence of at least 15 years for Mehmet Hakan Atilla, 47. Now, with credit for good behavior and the time he spent in jail awaiting trial, Atilla could return to Turkey by the middle of next year. Atilla, who headed international banking at Turkiye Halk Bankasi AS, remains employed by the bank, according to his lawyers.

During a three-hour sentencing hearing in Manhattan federal court Wednesday, U.S. District Judge Richard Berman said he found the crime to be serious, and cited repeated instances in which he concluded Atilla perjured himself during the trial. But he also said Atilla was “a cog in the wheel” and “at times, a reluctant participant” in the plot.

His crime "appears to have been driven by loyalty to his career, employer Halkbank and to his country,” Berman said.

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The sentencing wraps up a two-year case that became a diplomatic lightning rod between U.S. and Turkey, with prosecutors presenting evidence of corruption at the highest levels of the Turkish government. Top Turkish bankers and politicians helped Iran evade severe economic sanctions imposed by the U.S. The most severe sanctions were lifted after Iran agreed to suspend its nuclear program in a multinational deal that took effect in January 2016. President Donald Trump withdrew the U.S. from the agreement last week and said the sanctions will be reimposed.

"What I used to consider a priority has profoundly changed," Atilla said in a statement read by one of his lawyers, Cathy Fleming, during the hearing. "As of now, apart from my family, I have no other priorities.”

Atilla will get credit for the 14 months he’s already spent in prison. He was not sentenced to probation or to pay a fine or restitution.

Atilla was Halkbank’s point person for interacting with U.S. officials who were enforcing the Iranian sanctions during the Obama administration. Prosecutors accused him of using knowledge gleaned from detailed briefings with Treasury officials to give direction to a network of people moving money on Iran’s behalf.

The mastermind was Turkish-Iranian gold trader Reza Zarrab, who agreed to plead guilty and cooperate on the eve of trial, spending several days on the witness stand. In addition to implicating Atilla, Zarrab described a vast bribery and corruption scheme that involved millions in payments to government ministers and banking executives, all done with the blessing of Turkey’s President Recep Tayyip Erdogan.

Turkish Banker Guilty in U.S. of Iran-Sanctions Conspiracy

Under the U.S. sanctions, proceeds from Iran’s international oil sales were required to be deposited at a handful of major banks, including Halkbank, and could only be used under limited circumstances, such as for humanitarian aid.

Zarrab and others schemed to get Iran’s money out of the bank by disguising transactions as legitimate gold trades or food shipments, moving funds to different accounts within Halkbank and then wiring it out of the country, where it could be used to make payments on Iran’s behalf. As much as $4 billion was laundered, with $1 billion converted into U.S. dollars and moved through banks in New York, according to prosecutors.

Atilla appeared to be a marginal figure in the case. In addition to Zarrab, evidence showed the deep involvement of Halkbank’s chief executive at the time, Suleyman Aslan, and other executives and government officials. Atilla, by contrast, wasn’t named as a defendant until almost a year after the indictment was unsealed. He was arrested in March 2017 on a business trip to New York to promote a securities offering and has been held in prison ever since.

Though nine people were charged, including Aslan and Turkey’s former economic minister, Mehmet Zafer Caglayan, the others managed to evade U.S. custody and haven’t faced trial. After the sentencing, Turkey’s Foreign Ministry said Atilla didn’t receive a fair trial and was convicted on the basis of “forged evidence and false statements fabricated” by followers of U.S.-based cleric Fethullah Gulen, whom Turkey says masterminded a failed 2016 coup.

“By convicting a foreign government official, this court made an unprecedented decision regarding the implementation of the U.S. sanctions legislation,” the ministry said in a statement Thursday. “The credibility of the legal proceedings has completely evaporated.”

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Atilla was convicted of five counts including conspiracy to launder money and sanctions evasion. Evidence presented during the monthlong trial included wiretapped telephone conversations in which he gave instructions on how to fabricate documents to cover up the plot, and testimony that he was present in meetings where the plans were hatched. He was convicted in January and plans to appeal.

Under federal sentencing guidelines, Atilla faced life in prison because of the amount involved in the scheme. Berman quickly rejected that, saying it wouldn’t be “fair, appropriate or reasonable.”

Some of the evidence in the case came from an investigation conducted by Turkish police that was quashed by Erdogan’s administration but subsequently provided to U.S. prosecutors by a disaffected policeman.

One of the prosecutors, Michael Lockard, argued that Atilla was a significant figure in the conspiracy, noting that participants referred to one of the laundering strategies as "Atilla’s method," and that his three-year involvement lasted longer than any other employee’s at Halkbank. He noted that the evasion strengthened Iran’s hand during negotiations over the agreement to contain Iran’s nuclear program.

"This is a case about nuclear capability by the world’s foremost state sponsor of international terrorism," he said at the sentencing.

But Berman cited trial testimony that showed Atilla at times didn’t have full knowledge of the sanctions-evasion plan, and on another occasion had "thrown a wrench into the deal" and interfered with it. And though Turkish bank and government officials were paid millions in bribes, Berman noted Atilla derived no benefit from the scheme.

The case is U.S. v. Atilla, 15-cr-867, U.S. District Court, Southern District of New York (Manhattan).

©2018 Bloomberg L.P.

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