Trump DOJ wants to end biggest Iran sanctions-busting case in U.S. history

Turkey's state-run Halkbank allegedly helped launder $20 billion in Iranian oil money. Trump spent nearly a decade trying to kill the case.

Tuekey’s state-run Halkbank (Photo by OZAN KOSE / AFP)

As Trump’s war in Iran rages, prosecutors seek to end the criminal case of the biggest sanctions-busting scheme in U.S. history that enriched the regime.

All Rise News will cover that legal battle live this week.

The criminal prosecution of the biggest money laundering scheme to Iran in U.S. history may disappear because of a deal Donald Trump’s Justice Department offered to a Turkish state-run bank to avoid a criminal trial.

For the better part of a decade, Trump has tried to end the prosecution of Turkish-Iranian gold trader Reza Zarrab and related criminal cases that grew out of an investigation involving a sanctions-busting conspiracy to launder $20 billion in Iranian oil money.

On Monday, a federal judge revealed that prosecutors offered Turkey’s state-run Halkbank a deferred prosecution agreement that would end the case without a separate financial penalty. Halkbank must only “cooperate in the [U.S. Attorney’s] Office's execution of any criminal or civil penalty” against Zarrab.

The Halkbank case’s tangled history

The Turkish government under strongman Recep Tayyip Erdoğan has been lobbying the United States against the investigation of the money laundering scheme from its inception and found a willing audience with Trump.

According to former National Security Advisor John Bolton, Trump jockeyed to terminate the cases against Zarrab and Halkbank from their inception as a favor to Erdoğan, one of the “dictators [Trump] liked.”

In March 2016, Zarrab was arrested for spearheading the scheme and was briefly represented by Rudy Giuliani, who tried to broker a prisoner swap that would have terminated the case.

When Giuliani’s effort failed, Zarrab turned state’s witness against a manager at Turkey’s state-run Halkbank, delivering testimony that implicated Erdoğan in sanctions-busting trades. A jury convicted the bank’s manager Hakan Atilla, and prosecutors opened a separate case against Halkbank itself in 2019.

A year later, former U.S. Attorney Geoffrey Berman was forced out of his position as the Southern District of New York’s top prosecutor after rejecting then-Attorney General Bill Barr’s pressure to settle the case against Halkbank. Berman told the House Judiciary Committee that Barr wanted to replace him with former Securities and Exchange Commission Chairman Jay Clayton, whom Berman believed was “unqualified” and had “no criminal experience.”

Berman refused to leave unless Barr replaced him with his then-deputy Audrey Strauss, who continued the case against Halkbank.

Clayton, ultimately appointed during Trump’s second term, entered into the six-page deferred prosecution agreement earlier this month.

‘An important component’

Given the scale of the alleged $20 billion money laundering conspiracy, the Halkbank case had potentially profound implications for Erdoğan’s government.

A heavy judgment or settlement could have roiled the Turkish economy, and a public trial could have renewed a corruption scandal that Erdoğan has tried to outrun since 2013, implicating members of his family and his ruling Justice and Development Party.

The agreement reviewed by All Rise News does not appear to include any financial penalty for Halkbank.

Instead, the deal obligates the bank to “cooperate” in the execution of “any criminal or civil penalty, fine, restitution, or forfeiture orders or judgments” against Zarrab.

The agreement justifies the light treatment on Turkey’s help in “obtaining the release of all hostages” abducted by Hamas in the Oct. 7 attacks.

According to the agreement, “an important component” of Turkey’s participation in those negotiations was “a commitment by the United States to resolving the Halkbank matter on mutually agreeable terms.”

“The national security and foreign policy interests furthered by the Agreement are unique and extraordinary: the agreement is an important component of multi-lateral international efforts to secure the release of dozens of living hostages and hostage remains as well as to achieve the cessation of military hostilities resulting from the October 7, 2023, terror attacks that had been ongoing for two years,” prosecutors wrote in a formerly sealed letter.

Halkbank must submit to anti-money laundering compliance review under the agreement.

U.S. District Judge Richard Berman has scheduled a conference to discuss the agreement on Weds., March 11 at 9 a.m. Eastern Time. All Rise News will cover the proceedings live.

Read the deferred prosecution agreement here.