Judge finds Turkish bank lawyers elusive in sanctions case

A Turkish bank charged with evading U.S. sanctions on Iran sent its lawyers into a New York courtroom with a seemingly impossible task Tuesday: Defend us, as best as you can. But don’t acknowledge that you represent us. Don’t say we are aware of the charges. And don’t enter a plea on our behalf. U.S. District Judge Richard M. Berman called the legal maneuvers “kind of crazy” Tuesday. Assistant U.S. Attorney Michael Lockhard said it created an “air of gamesmanship.”

But attorney Andrew Hruska, representing the state-owned Halkbank, said he’s just protecting his client.

An American court, he argued, doesn’t have jurisdiction over a bank headquartered in Istanbul with no U.S. offices or physical operations in the U.S. So, he said, Berman should recuse himself and the bank is disinclined to participate in the criminal proceedings or formally acknowledge it knows of the case.

Berman responded that it doesn’t work that way in New York federal courts and urged Hruska to make his legal applications as part of typical pre-trial motions.

“Courts are busy and courts are in the business of moving cases along,” the judge said. “We don’t give advisory opinions and that’s what you’re asking for.”

The prosecution of the bank, announced nearly three weeks ago, is part of a legal case that began four years ago with the arrest of Reza Zarrab, a wealthy Turkish-Iranian gold trader who hired former New York Mayor Rudy Giuliani to broker a deal between Turkey’s president and the U.S. government to resolve criminal charges. The 2017 talks failed to reach a deal.

Zarrab eventually pleaded guilty to charges and testified against a Halkbank executive, Mehmet Hakan Atilla, who was convicted at trial as Turkey President Recep Tayyip Erdogan derided the prosecution, labeling it an American conspiracy to “blackmail” and “blemish” his country. His spokesman called Atilla’s conviction “scandalous.” Atilla served over two years in prison and returned to Turkey in July after his release.

On Tuesday, Berman asked Hruska if the bank will enter a plea if he rules that he has jurisdiction. Hruska said he’ll have to ask Halkbank officials.

At one point, Berman said he understood from media accounts that prosecutors and bank officials had been negotiating for two years about possible financial penalties that might result from the bank’s actions. He said he could understand if a foreigner did not want to come to the United States and face arrest.

“But this is a corporation. No one is going to jail,” Berman said.

Halkbank was charged with evading sanctions against Iran by processing billions of dollars of Iranian oil revenue. An indictment said the bank illegally moved about $20 billion in Iranian oil and gas revenues, sometimes disguising money movements as purchases of food and medicine so they’d qualify for a “humanitarian exception” to sanctions. For a time Tuesday, U.S. Attorney Geoffrey S. Berman observed the hearing.

Sanctions against Iran have increased steadily in the decades after the Iranian hostage crisis in which 52 Americans were held captive from 1979 to 1981. The sanctions prohibit virtually all U.S. financial dealings with oil-rich Iran.