By Luc Cohen
NEW YORK, July 14 (Reuters) – A key cooperating witness in the U.S. government’s criminal investigation into Turkish state-run lender Halkbank’s alleged role in helping Iran evade sanctions avoided prison time at his sentencing hearing on Tuesday.
Reza Zarrab was sentenced to time served by U.S. District Judge Richard Berman at a hearing in Manhattan federal court. Prosecutors had urged the judge to take his cooperation with their case into account in determining his punishment.
The sentencing marked the conclusion of a long-running criminal case that had been an irritant between NATO allies Turkey and the United States. Relations have improved since President Donald Trump’s return to the White House last year, as well as the Justice Department’s decision earlier this year to end its prosecution of Halkbank itself.
Zarrab, a 42-year-old Turkish-Iranian gold trader, pleaded guilty on October 26, 2017 to conspiring to evade U.S. sanctions.
He testified against former Halkbank official Mehmet Hakan Atilla at trial in New York in 2017. Atilla was convicted of helping Iran evade U.S. sanctions.
TURKEY-U.S. TIES IMPROVE
The U.S. separately charged Halkbank in 2019 with secretly transferring $20 billion of restricted Iranian funds, converting oil revenue into gold and cash to benefit Iranian interests, and documenting fake food shipments to justify transfers of oil proceeds.
The bank had pleaded not guilty. Turkish President Recep Tayyip Erdogan called the case unlawful and “ugly.”
Berman formally dismissed those charges last month, after the Justice Department said in March it had reached a deal with Halkbank to end the case in exchange for the bank hiring a monitor to review its sanctions and anti-money laundering compliance.
The Justice Department said the agreement arose out of Turkey’s role in securing a ceasefire last year between Israel and Hamas.
Washington and Ankara are experiencing their best ties in decades. In a visit to Ankara for a NATO summit earlier this month, Trump said he would lift U.S. sanctions on Turkey over its 2019 purchase of Russian defense systems and signaled a willingness to sell the country F-35 fighter jets.
ZARRAB ARRESTED A DECADE AGO
For Zarrab, the sentencing concludes a decade-long legal odyssey that began with his arrest in Miami in 2016 on a family trip to Disney World.
He served 22 months in jail before being released in 2018. He has been free on bail since then.
Zarrab had previously forfeited a boat valued at $288,690 and $88,102.59 in cash to the U.S. government. Berman imposed no additional forfeiture or fine, noting that Zarrab was unemployed and had a negative net worth.
Zarrab’s lawyers have said in court papers that Turkey had seized $172 million worth of his assets in retaliation for his cooperation. In 2017, Turkey’s state-run Anadolu news agency said the Istanbul prosecutor’s office had decided to seize Zarrab’s assets as part of an investigation against him.
Turkey’s then-Prime Minister Binali Yildirim said at the time he hoped Zarrab would “turn back from his mistake” in cooperating with U.S. prosecutors, reiterating Ankara’s view that the criminal case was aimed at putting pressure on Turkey and its economy.
In brief comments before Berman formally imposed the sentence, Zarrab thanked the court and U.S. law enforcement for looking out for the safety of himself and his family.
(Reporting by Luc Cohen in New York; Editing by Alistair Bell)
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