Zarrab case "only the end of the beginning" - FBI Special Agent
Turkey’s failing relations with the United States have captured international headlines this month as the NATO allies feud over the continued imprisonment of U.S. Pastor Andrew Brunson on espionage charges described by U.S. President Donald Trump as “phoney.”
Turkey’s economy took a serious body blow when U.S. sanctions and tariff hikes sent the lira into a tailspin. But looming in the background is an older dispute that has the potential to unleash even graver consequences.
Mehmet Hakan Atilla, a former executive at Turkey’s state-run Halkbank, was sentenced in January for a sanctions breaking scheme that illegally transferred billions of dollars for Iran through a complicated web of falsified transactions.
The investigation that led to his sentencing uncovered the involvement of Turkish officials at the highest level, and is likely to result in fines for Halkbank that some have speculated could bankrupt it.
It was FBI agent Jennifer McReynolds who arrested Atilla, as well as the trial’s star witness, Turkish-Iranian gold trader Reza Zarrab, and her part in the investigation earned her the Foundation for Defense of Democracies’ Alberto Nisman Award for Courage on Tuesday.
Nisman was the Argentinian prosecutor who uncovered the involvement of both Iranian and Argentinian government figures in the 1994 bombing of the AMIA medical association in Buenos Aires, and was assassinated in 2015.
"It took courage for Mr. Nisman to engage in the internal battle against the forceful opposition of his own government. Mr. Nisman paid the ultimate price for his courage," said McReynolds. The Argentinian prosecutor's tenacious and courageous search for the truth had been close to her mind as she pursued the criminal network breaking sanctions on Iran, she said.
The FBI investigator related the detailed story of that investigation, which she told her audience was “only the end of the beginning.”
Yet the beginning of this story alone has already captured the agenda in Turkey on more than one occasion. The day news of the arrest came out, Turkish media leapt on the story, and the U.S. attorney in charge of the case became a subject of intense public interest.
"After the arrest, and as we were about to board our flight back to New York, it hit the news. In the short time we were inflight, Turkey had erupted. After landing and turning on our phones, we saw that the former U.S. Attorney Preet Bharara was the biggest trend on Twitter," McReynolds said.
Meanwhile, one of the most important sources in the case, former police supervisor Hüseyin Korkmaz, narrowly escaped prison on charges of membership of the Gülen religious movement accused by Turkey's ruling party of attempting to overthrow the government.
His willingness to put his life at risk for the truth was reminiscent of Nisman, said McReynolds, and the evidence he brought to the investigation was vital.
“The implications from this investigation are far from over. Many other co-conspirators are indicted, who have not yet been brought to justice,” McReynolds said.
The text of McReynolds’ acceptance speech is reproduced in full below, as a courtesy of Foundation for Defense of Democracies, FDD, press team.
It is an honor to be here today, accepting the Alberto Nisman Award for Courage. I first want to thank everyone at the Foundation for Defense of Democracies for all of your critical work. Your commitment to factual research and non-partisan analysis in pursuit of national security makes you a unique and necessary voice. That commitment, in fact, made you one of the first to recognize the gas-for-gold scheme. During trial preparation we came to know you as friends, and we thank you for all of your help.
We would also like to congratulate Ambassador Nikki Haley for receiving the Jeane J. Kirkpatrick Award for Statesmanship. Your clear voice for truth in the battle against threatening forces in the world, is so inspiring.
It is a privilege to have the opportunity to participate in the legacy of Alberto Nisman. Mr. Nisman truly represents courage. It took courage to battle the murderous regime in Iran, with all of the tools of secrecy and terror that it regularly deploys to further its extremist missions. It took courage for Mr. Nisman to engage in the internal battle against the forceful opposition of his own government. Mr. Nisman paid the ultimate price for his courage.
I would like to talk about our investigation of an illicit Iranian finance network that supplied an unprecedented level of support to the regime in Iran. That investigation resulted in the largest sanctions-evasion scheme ever prosecuted in a federal court. It is a story rooted in lies and deceit, a story that unmasks dangerous criminal acts of government officials, bankers and businessmen.
These activities provided billions of dollars’ worth of illicit funding to the regime and its deadly programs. They blew an enormous hole through the economic sanctions that the United States and our allies depended upon as a tool to denuclearize the regime, undermining our U.S. diplomatic position.
I remember January 19, 2015, began as just a regular day. It was a Monday morning and I had just arrived to the FBI office. New York City traffic was particularly congested that day, so I was running a little behind. As I opened the heavy door into the room that contained our Iranian counterintelligence squad, I had a direct view of my desk across the way. I immediately sensed something happened. My fellow teammates looked up. They asked me: Did you hear what happened yesterday? Alberto Nisman was murdered.
The news was a shock. We had been following Mr. Nisman’s investigation of the Iranian perpetrators of the 1994 AMIA bombing. Although we never had the privilege of personally knowing Mr. Nisman, we admired him greatly. His relentless fight against Iran’s terrorist and intelligence activities strengthened our resolve in our own investigations.
January 2015 was a difficult time for us in another way. We were already several years into this investigation but felt like David against Goliath. Over the years, we painstakingly acquired massive volumes of evidence.
We investigated millions of U.S. dollar-clearing payments, and gathered gigabytes of electronic communication data. Days, nights and weekends for years were spent poring over the evidence to uncover the network’s strategies: layered transactions, rotating shell companies, falsified business and customs records, and other efforts.
It was laborious and exhausting, but the team continued to pursue the case. Because having the regime in Iran escape accountability for the deep threat that it remains still today - is simply unacceptable.
From the beginning, we set three goals: first, indict and arrest key facilitators, second, seize and forfeit illegal proceeds, and third, disrupt and dismantle the banking and financial institutions who knowingly violated sanctions to benefit Iran.
We never imagined that what began as an investigation into a single exchange house in Dubai, would uncover a global scheme involving corruption at the highest levels of foreign governments. At the height of the economic sanctions against Iran targeting its military nuclear ambitions and ballistic missiles program, an international conspiracy formed to open a huge financial channel for the regime.
The top levels of the Iranian and Turkish governments, senior executives of Turkey’s government-owned, Halkbank, Iranian bank officers, and Reza Zarrab – a Turkish-Iranian gold trader – all came together. They conceived an ambitious scheme to unlock a huge pool of Iranian oil revenues that were isolated inside Halkbank as a result of the sanctions.
They would use a complex system of gold exports and falsified documents to transfer Iran’s oil revenues from Turkey to front companies in Dubai, where the regime could use them to secretly transfer money anywhere in the world, including through the U.S. financial system.
Later, the co-conspirators would also transfer money under the cover of fake humanitarian shipments, which would have qualified for exceptions under the sanctions, in order to move Iran’s money out of Halkbank. Over four years, this conspiracy unlocked approximately $20 billion of Iran’s restricted oil funds.
The main beneficiary of this money – besides the corrupt officials that were bribed tens of millions of dollars to support and protect the scheme – was the National Iranian Oil Company, or NIOC. NIOC, was an affiliate of the IRGC, a key player in Iran’s nuclear and missile programs and support to Hezbollah, Hamas and other foreign terrorist organizations. This same network moved money for other Iranian interests like Bank Mellat, a designated Iranian government-owned bank and Mahan Air, an Iranian commercial airline designated for supporting the IRGC, Hezbollah and other terrorists.
About one year later, on an evening in March of 2016, I was at home having dinner, when one of our teammates called. He asked: Are you sitting down? Reza Zarrab is flying into Miami on Saturday. Stunned, I questioned him, are you sure it’s our guy? He confirmed. I actually had not been sitting down, but suddenly needed a chair.
Among the challenges we face, it is difficult to arrest defendants who operate from overseas safe havens. While always pursuing arrests, we were focusing on other actions. But one of the benefits of the nuclear deal implemented in January of 2016, was the impression Iranian proliferators had that the past was erased and they could travel freely.
Soon we were on the ground in Miami. In the hours leading up to the arrest, we thought about Alberto Nisman. We tried to imagine how he felt on the eve of exposing the truth about the terrible regime in Iran, after years spent meticulously building his case
After the arrest, and as we were about to board our flight back to New York, it hit the news. In the short time we were inflight, Turkey had erupted. After landing and turning on our phones, we saw that the former U.S. Attorney Preet Bharara was the biggest trend on Twitter.
Zarrab had been arrested more than two years prior in Turkey, on December 17th, 2013, part of a Turkish corruption investigation. But the corruption that the investigation revealed went too high: it went all the way to the cabinet and to the then prime minister’s office. The investigation was quashed, Zarrab and his co-conspirators were released, and the police officers and prosecutors that had conducted the investigation were persecuted, fired, and arrested
At that point, we had long known about the December 17th corruption investigation. We were familiar with the leaked Turkish National Police report outlining evidence of high-level bribes to facilitate illicit Iranian finance with Halkbank’s involvement, and knew about the aftermath it created in Turkey. We combed through that report and compared our investigative results with theirs. It matched perfectly.
Almost immediately after the Miami arrest of Zarrab was public, we started receiving letters. Lots of letters. All had their own stories of persecution. Family members in Turkey fired for doing their jobs, or in Turkish prisons. The same job that we’re doing here, investigating crimes and following the evidence where it leads.
Besides heart-wrenching stories like these, people contacted us with information and records to share. People wanting to assist in our investigation. And one day we received a call from someone who closely knew the lead investigator of the December 17th case, the writer of the leaked Turkish police report. Someone who reminds of us Alberto Nisman, a passionate seeker of justice and truth even when his life depended on it. And it did.
Huseyin Korkmaz was arrested in Turkey for his investigation of Turkish corruption but, by divine intervention, was freed on bail a few months after we arrested Zarrab in Miami. It was a glitch in the Turkish criminal procedure, but he was momentarily free. Knowing of Zarrab’s arrest in the United States, he was as anxious to reach us as we were to reach him
I will let Huseyin tell you the courageous story of his long and dangerous journey to bring the truth to light when he is ready. Until then, I can assure you, the time between our first contact and the day Huseyin arrived to the United States – a time when his life was in limbo as he safeguarded evidence he gathered from those who wished to destroy it - and him - to protect themselves –in many ways was the most distressing period of this entire journey.
In March of 2017, almost one year to the day of Zarrab’s arrest, we received another surprise. We were going over the growing list of subjects, especially evidence of Halkbank and its senior executives’ involvement in the scheme. We asked our analyst to check the names against a few routine databases.
After that request, I recall leaving the office for a meeting across town. By the time I came back up from the subway, we had a hit. Scheduled to arrive into the United States the very next day, was Mehmet Hakan Atilla, the Deputy General Manager of Halkbank. The timing was so coincidental that I had my doubts. Are you sure it’s our guy? I asked again.
Atilla, like many others, had been on our radar since the beginning. And as we gathered more and more evidence, and dug through the Turkish wiretaps and records, we learned just how much he and Halkbank not only knew of Zarrab’s scheme, but helped to design it.
By the end of the week, we charged Atilla and he was arrested.
A few long months of more hard work, and six weeks of trial later, Zarrab pled guilty and cooperated, and Atilla was found guilty by the jury. But the entire time between Zarrab’s arrest, when the investigation became public, and Atilla’s conviction twenty months later, was filled with serious, outside challenges.
High-level foreign officials – like the Turkish ministers of Justice and of Foreign Affairs, and the Turkish President – exerted diplomatic pressure. They lobbied the Department of Justice, the State Department, and even the White House, to release Zarrab and Atilla without a trial. Motions were filed in court attacking the impartiality of the judge. We were accused of being politically motivated.
The Turkish government and Halkbank made an 11th hour attempt to delay the trial. FDD expert witnesses suffered cyber attacks and media harassment. Their associates were criminally charged in Turkey. Our witnesses, their family members and their associates in Turkey and Iran, were threatened, imprisoned or travel banned, and their assets seized. It was reported that foreign prosecutors opened a criminal investigation against us, too.
These efforts all failed. The American criminal justice system proved independent and impartial. Our country provided a fair trial, a just verdict, and a strengthened national security.
So where are we now, after the convictions of Zarrab and Atilla? To paraphrase Winston Churchill: the trial was only the end of the beginning. The implications from this investigation are far from over. Many other co-conspirators are indicted, who have not yet been brought to justice.
The crimes are remarkable for the extent of corruption involved and the staggering volume of money, but also because the timing of the scheme had critical implications for U.S. and global security.
These years represented the height of the economic sanctions against the government of Iran as a tool to force the regime to denuclearize and an effort to avoid the necessity of military force. But when the international community relied on the sanctions to apply maximum pressure, thought it had the regime’s back against the wall, the wall wasn’t there.
These Iranian and Turkish government officials and bankers had broken a hole through the wall, saving the regime from the worst of the pressure during the nuclear negotiations. We may never know what impact it had on the results.
Ravi Zacharias, an author and philosopher, once said: “Justice is the handmaiden of truth, and when truth dies, justice dies along with it.” So thank you to my fellow teammates who continuously strive for truth and who will not let justice die. We thank everyone who supported this case, for our Turkish and Iranian friends, and the Foundation for Defense of Democracies.
We especially recognize the sacrifices of you, the innocent people in Turkey and Iran, who are persecuted for your struggles against oppression and corruption. What you and your families have endured, no one should have to, but even in the darkest hours you have courageously strived for truth and justice.
Very much like Alberto Nisman.