Halkbank Case May Be A Slog In The COVID-19 Age

By Stewart Bishop
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Law360, New York (June 30, 2020, 6:25 PM EDT) -- An attorney for Turkey's state-owned Halkbank on Tuesday told a New York federal judge it didn't envision being ready for trial over an alleged multibillion-dollar scheme to evade American sanctions targeting Iran until the spring of 2022, citing the difficulties brought on by the COVID-19 pandemic.

During a videoconference with U.S. District Judge Richard Berman, attorneys for the defense and government differed widely on when the case could be brought to trial, with one prosecutor proposing a proceeding in February 2021 as opposed to the March 2022 date sought by the defense. Halkbank brought up potential issues in assembling mostly witnesses from overseas in the midst of the coronavirus pandemic.

Judge Berman punted on a date for the proceeding, instead focusing on Halkbank's planned motion for seeking the judge's recusal for the case.

An attorney for Halkbank, Robert Cary of Williams & Connolly LLP, didn't elaborate on the bank's coming bid for Judge Berman's removal, but the bank has previously signaled that it would seek the recusal of Judge Berman for allegedly making statements that "call into question the court's impartiality."

Prosecutors say Turkey's Halkbank flouted U.S. sanctions on Iran by allowing the country to access some $20 billion in funds, including proceeds from oil and gas sales to Turkey.

Halkbank, or Turkiye Halk Bankasi AS, is accused of doing an end-around U.S. restrictions on business with Iran starting in 2012 via a scheme to buy gold and then sell it in the United Arab Emirates.

Judge Berman presided over the criminal trial of former Halkbank executive Mehmet Hakan Atilla, who was convicted in January 2018 with the help of Reza Zarrab, a Turkish-Iranian businessman who pled guilty and cooperated with the government. Attila was sentenced to 32 months in prison. 

Zarrab's testimony caused shockwaves in Turkey over the week he spent on the witness stand, during which time he made statements implicating the country's leader, President Recep Tayyip Erdoğan, in the massive scheme to move Iranian oil money out of Halkbank.

Atilla, who had been in custody since his March 2017 arrest at John F. Kennedy International Airport, was released in July 2019.

Prosecutors say Halkbank conspired with government officials in Turkey and Iran, Iranian banks, and Turkish businessmen to evade U.S. sanctions on Iran. Halkbank executives are accused of helping Iran gain access to proceeds from oil and gas sales to Turkey via illicit gold transactions and bogus purchases of food and medicine in order to qualify for a humanitarian exception to U.S. sanctions.

Halkbank in March made a counsel switch to Williams & Connolly from King & Spalding LLP.

Before taking on new attorneys, rather than face arraignment, counsel for Halkbank sought to enter a limited and special appearance solely to file motions to dismiss for lack of personal jurisdiction and to have Judge Berman recused from the case.

However, Judge Berman took a dim view of Halkbank's request, saying he had found no instance where a special appearance was required to seek recusal. Moreover, if Halkbank wanted the court to decide its jurisdictional motion, the judge said it must first travel to New York to answer the charges or have its counsel do so.

The bank was eventually arraigned in March, more than five months after it was indicted.

Cary initially signaled that the Turkish bank wanted a "fresh start" with new representation and that in 28 years of practice, he had never filed a recusal motion. But Tuesday, he said Halkbank would move forward with that application.

Judge Berman said he would expect the recusal motion by July 14, with an omnibus pretrial defense motion to follow on Aug. 10, but he held off on setting a trial date.

Halkbank is represented by Robert Cary, David Aufhauser, James Kirkpatrick and Damayanti Desai of Williams & Connolly LLP.

The government is represented by Michael Lockard, Sidhardha Kamaraju and David Denton of the U.S. Attorney's Office for the Southern District of New York.

The case is USA v. Zarrab et al., case number 1:15-cr-00867, in the U.S. District Court for the Southern District of New York

--Additional reporting by Pete Brush. Editing by Steven Edelstone.

For a reprint of this article, please contact reprints@law360.com.

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1:15-cr-00867

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New York Southern

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December 15, 2015

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