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Halkbank Threatened with U.S. Contempt in Iran Sanctions Case

Halkbank Threatened with U.S. Contempt in Iran Sanctions Case

(Bloomberg) -- A U.S. judge threatened to hold Turkish bank Halkbank in contempt and impose fines for refusing to acknowledge the sanctions evasions charges filed against it by federal prosecutors in New York.

The state-owned bank was indicted in October for allegedly participating in a scheme to help Iran access $20 billion in frozen oil revenue. Since then, Halkbank and its lawyers have refused to accept service of the indictment or the legal summons to appear in court, and neither its lawyers nor executives have entered a plea on its behalf.

Raising the stakes for Turkey, U.S. District Judge Richard Berman set a Feb. 10 hearing date and directed federal prosecutors to file legal papers outlining potential court sanctions if the bank continues to ignore the case.

Halkbank had asked to be allowed to make a “special appearance” in New York to seek the case’s dismissal without having to formally respond to the charges, but Berman rejected that request last week.

In a prior case, federal prosecutors secured a guilty plea from the money-laundering mastermind of the scheme and the conviction of a Halkbank senior executive who oversaw it. The case against the bank itself languished for more than a year until prosecutors filed the charges in the wake of Turkey’s Syria incursion and offensive against Kurdish forces along the border.

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

To contact the reporter on this story: Christian Berthelsen in New York at cberthelsen1@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Anthony Lin

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