Zarrab, one of the wealthiest men in Turkey, is a gold trader who owns and operates a network of money exchange and transfer service companies in Turkey and the United Arab Emirates. He was arrested on March 19, 2016, after flying to the United States to visit Disney World with his wife, a Turkish pop star, and their five-year-old daughter. The case also has significant political and foreign policy implications – at his bail hearing, the government emphasized Zarrab’s purported influence at the highest levels of the Turkish government, claiming that bribery charges against Zarrab in Turkey had been dropped after intervention by then Prime Minister, now President, Recep Tayyip Erdogan. Zarrab remains detained without bail.
Superseding Indictment
Mr. Zarrab has been charged with, among other crimes, conspiracy to defraud the United States and to impede the lawful functions of the United States Department of Treasury’s Office of Foreign Assets Control (“OFAC”),2 and conspiracy to violate the International Emergency Economic Powers Act (“IEEPA”)3 and the Iranian Transactions and Sanctions Regulations (“ITSR”).4 The relevant regulations prohibit, among other things, the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States Person, of goods, technology, or services to Iran or the Government of Iran without a license from OFAC.5 The regulations further prohibit transactions and/or conspiracies designed to evade or avoid the sanctions imposed by the ITSR.6
According to the superseding indictment, between 2010 and 2015, Zarrab conducted financial transactions on behalf of Iranian entities sanctioned by the United States government, including entities owned or controlled by the Government of Iran and entities affiliated with the Islamic Revolutionary Guard Corps (“IRGC”), such as Bank Mellat (an Iranian government-owned bank) and the National Iranian Oil Company (identified at the time by OFAC as an affiliate of the IRGC). The indictment describes about a dozen transactions involving the transfer of funds between non-U.S. companies in either U.S. dollars or euros for the benefit of sanctioned entities. One example involved U.S.-dollar transfers among companies and banks in Turkey, the United Arab Emirates, and Turkmenistan for the benefit of an IRGC affiliate. The transaction was apparently cleared through a U.S. correspondent bank.
Motion to Dismiss
Zarrab’s motion to dismiss the indictment challenged the government’s ability to enforce U.S. economic sanctions against a non-U.S. citizen conducting financial transactions that were lawful outside of the United States. Zarrab argued, in essence, that a non-U.S. person could not be prosecuted in the United States based solely on the supposedly incidental involvement of a U.S. bank. The government responded that Zarrab knew that the alleged transactions would be cleared through U.S. banks and conducted the transactions in a...
