Turkish Gold Trader To Reveal How He Helped Iran Evade Sanctions

NEW YORK, NY — Turkish gold trader Reza Zarrab pleaded guilty to charges and will reveal how he helped Iran skirt U.S. sanctions in an "economic jihad," a federal prosecutor said on Tuesday. Zarrab will become a major witness against Turkish banker Mehmet Hakan Atilla, Assistant U.S. Attorney David Denton said.

The scheme to evade U.S. sanctions against Iran since 2011 allowed billions of dollars to be moved and threatened America's national security, the prosecutor said.

Defense attorney Victor Rocco attacked Zarrab's credibility in his opening statement, saying the case was really about Zarrab's crimes. Zarrab cut a deal to obtain a get-out-of-jail-free card, the defense attorneysaid, possibly joining the U.S. witness protection program so he and his family can live in America.

The case in New York City against Zarrab and Atilla, deputy CEO of Halkbank, has strained relations between the U.S. and Turkey.

Tuesday's revelation came as defense attorney Robert Fettweis asked for a two-week delay of Atilla's trial. Fettweis said he needed time to prepare for Zarrab's testimony and said prosecutors recently released 10,000 pages of evidence — including emails — linked to Zarrab.

U.S. District Judge Richard Berman denied the request and said lawyers should've known for months that Zarrab would testify.

Assistant U.S. Attorney Sidhardha Kamaraju said Zarrab would take the stand Wednesday. Zarrab stopped appearing in court weeks ago fueling speculation that he'd cut a deal and was cooperating with federal officials. A prosecutor said in court Tuesday that Zarrab would testify as part of a plea deal but gave no other details on it.

The prosecution in Manhattan has been major news in Turkey. Turkish President Recep Tayyip Erdogan has repeatedly asked the U.S. to release Zarrab, who is married to Turkish pop star and TV personality Ebru Gundes. And recently, Turkey's deputy prime minister said Zarrab was a "hostage" being forced to testify against Turkey's government.

On Tuesday, a Turkish prosecutor issued warrants for the detention of two citizens for cooperating with U.S. prosecutors. The Istanbul chief prosecutor's office ordered the arrests of Osman Zeki Canitez and former opposition party legislator Aykan Erdemir, according to Turkey's state-run news agency, Anadolu Agency.

Zarrab, a 34-year-old dual citizen of Turkey and Iran, was arrested on a trip to the U.S. in 2016 as he prepared to take his family to Disney World.

Earlier this year, Zarrab hired former New York City Mayor Rudolph Giuliani and former U.S. Attorney General Michael Mukasey to try and broker a diplomatic solution to the case.

Zarrab had initially been arrested in Turkey in 2013 as part of a sweeping corruption investigation involving several top Erdogan lieutenants and Halkbank, the state bank.

But prosecutors and police involved in the corruption accusations were removed from duty and the charges were later dropped.

Since then, Erdogan's administration has tightened control over the country, arresting at least 50,000 people following 2016 coup attempt he said was orchestrated by Fethullah Gulen, a Muslim cleric living in Pennsylvania. Several Americans have also been arrested in that crackdown.

Erdogan has demanded that Gulen be handed over to Turkey, perhaps in exchange for detained Americans. Gulen has denied having any role in the coup.

Erdogan has also demanded that Zarrab be freed.

Speculation about a Zarrab plea deal intensified over the summer amid news reports that special counsel Robert Mueller was scrutinizing former Trump administration national security adviser Michael Flynn over his undisclosed lobbying work for the government of Turkey. Among other things, Flynn had written an editorial, published on election day, urging the U.S. to extradite Gulen.

Zarrab was charged in the U.S. with conspiring to help the Iranian government and Halkbank make hundreds of millions of dollars in financial transactions that violated U.S. sanctions. Some of the transactions were made through U.S. financial institutions, investigators said, clearing the way for a prosecution in New York.

By TOM HAYS and LARRY NEUMEISTER, Associated Press