Ilhan Tanir
Nov 16 2017

‘Individual-1’ enters Zarrab case, raising speculation of new defendant

U.S. prosecutors may introduce a new witness or defendant in the New York trial of Turkish and Iranian suspects accused of circumventing U.S. sanctions on Iran.

U.S. District Judge Richard Berman has granted the defence access to redacted copies of government evidence, through a protective order in which a witness or defendant, ‘Individual-1” is mentioned.

The court order, which applies from Nov. 14, requires the defence council of Hakan Atilla, deputy chief executive officer of Turkey’s state-run Halkbank, to refrain from showing or disseminating the so-called 3500 Material, which comprises undisclosed prosecution evidence, to persons in or outside of the country, except the defendant’s team.

“The purpose of the restriction might be to hide the identity of a new defendant,” Kevin Snapp, a retired U.S. lawyer who has been watching the case closely, told Ahval. “But it also might be intended to protect the identity of a government witness.”

3500 Material, outlined under the Jencks Act, can include statements by government witnesses, or prospective government witness, other than defendants. Jencks material may also comprise documents relied upon by government witnesses, police notes, reports, or summaries.

Nine suspects including Reza Zarrab, an Iranian-Turkish businessman, Atilla and former Turkish Economy Minister Zafer Cağlayan are being prosecuted on charges of laundering hundreds of millions of dollars through the U.S. banking system to evade the U.S. sanctions. Turkish President Recep Tayyip Erdoğan has taken a close personal interest in the case, including speaking with former President Barrack Obama, asking him to intercede in proceedings, and labelling the case as political.

Former Economy Minister Zafer Çağlayan just before his resignation in 2013
Former Economy Minister Zafer Çağlayan just before his resignation in 2013 (Umit Bektas, Reuters)

Zarrab and Atilla are held in U.S. custody while the others are outside the country. But speculation has mounted that Zarrab may have agreed a plea bargain in return for implicating further suspects. He has not appeared in court since September and Turkey’s government on Wednesday formally requested U.S. authorities reveal his whereabouts.

On Nov. 3, Atilla’s lawyers submitted a memo to Judge Berman requesting the court remove or dissolve a protective order on government evidence. In the same memo, the attorneys wrote: “We would like to discuss the Government's late disclosure, ex parte, to the Court' on Nov. 2, 2017, of Rule 16(d) materials which it contends are classified and should not be disposed to the Defense."

News of Berman’s statement was wrongly reported by some Turkish media, which said it referred to 3,500 documents or tapes that the prosecution had submitted as evidence.

3500 material means “any prior statements of government witnesses and possibly exculpatory evidence in the government's possession as well as evidence that might be used to impeach a government witness,” Snapp said.

Zarrab, who was also implicated in a 2013 oil-for-gold investigation in Turkey that was quashed by Erdoğan, was arrested in the U.S. on his arrival in Miami last year for a family holiday. Atilla was detained at JFK airport in March of 2017 and is accused of helping and sometimes coaching Zarrab to evade U.S. sanctions.

Kenneth Rijock, a financial crimes expert who has been following the Zarrab case closely since late 2013, questioned whether others might be indicted, pointing to the classified material mentioned by Atilla’s lawyers, which he said could involve criminal conduct of another party.

On Oct. 27, U.S. prosecutors stated in a motion that the alleged scheme “involved individuals beyond those whom the Government has publicly charged.”

The trial of Zarrab, Atilla, and other suspects, which also include former Halkbank Chief Executive Officer Süleyman Aslan, will be heard on Nov. 27. A jury is due to be chosen by the prosecution and defence on Nov. 20.

On Thursday, November 16, a final conference before trial will be held before the grand jury trial starts. Hakan Atilla is expected to attend the conference. It remains to be seen whether Reza Zarrab would show up at New York courtroom.

Mark Bentley has contributed to this report.