A jailed international businessman will emerge Wednesday as a witness against a Turkish banker charged in a lucrative conspiracy to circumvent U.S. economic sanctions against Iran.
Federal prosecutors revealed Tuesday that Reza Zarrab had cut a deal where he pleaded guilty to conspiracy, fraud and money laundering charges in the case against him and co-defendant Mehmet Hakan Atilla.
He also admitted to conspiracy to commit bribery and having contraband in a federal detention center, according to court paperwork.
The prosecution has strained relations between the U.S. and Turkey, with rumors floating that Zarrab had reached a plea agreement even as Turkish officials charged the U.S. was holding him “hostage.”
Manhattan Federal Court Judge Richard Berman rejected a defense motion for a two-week trial delay after Atilla’s lawyers requested more time to prep for Zarrab’s testimony.
“It is hard to envision this to be a ‘smoking gun’ as the defense contends but, in any event, the defense already knows enough information about the testimony not to be surprised,” wrote Berman in a three-page decision.
“The government should also make clear that the mystery witness is Mr. Reza Zarrab. This is something that experienced counsel knew or should have known for several months.”
Zarrab was accused of conspiring to help the Iranian government and the Turkish state bank rake in hundreds of millions of dollars via financial transactions that violated the sanctions.
Atilla was the deputy CEO of Halkbank, Turkey’s state bank.
Speculation that Zarrab would cut a deal heightened this past summer after ex-Trump administration national security advisor Michael Flynn came under scrutiny for his secret lobbying work for the Turkish government.
Turkish officials reportedly pressured Flynn to help get the case against Zarrab thrown out. Reports indicated Zarrab may also be cooperating with special counsel Robert Mueller’s investigation of the Trump Administration.
In opening statements Tuesday, federal prosecutor David Denton accused Atilla of working with top officials of Iran and Turkey to blow a billion-dollar hole in the sanctions.
Defense attorney Victor Rocco, in his opening, described Zarrab’s agreement as a sweetheart deal that could spare him jail time and perhaps land him in federal witness protection.
“It’s already paid off for him,” Rocco said of the deal. “He’s no longer in jail, he’s squirreled away with some FBI agents, in an unknown place.”
Zarrab, in an effort to reach a diplomatic solution to his woes, had hired former U.S. Attorney General Michael Mukasey and ex-New York mayor Rudolph Giuliani to work on his behalf.
The 34-year-old businessman was arrested last year while in the U.S. for a planned family trip to Disney World. He holds dual citizenship in Turkey and Iran.
His arrest made Zarrab — husband of Turkish pop star and television personality Ebru Gundes — a cause célebre in the Turkish media.
Turkish President Recep Tayyip Erdogan has repeatedly called on American officials to set Zarrab free while the nation’s deputy prime minister recently described the businessman as a “hostage.”
