Geoffrey Berman, U.S. Attorney for the Southern District of New York, arrives at Temple Emanu-El. (Photo by David Handschuh/NYLJ)

Federal prosecutors in the Southern District of New York on Tuesday announced criminal charges against Turkish state-run bank Halkbank in an alleged multibillion-dollar plot to help Iran evade U.S. economic sanctions.

The six-count indictment charged Halkbank with fraud, money laundering and sanctions offenses for its "systemic participation" in the massive scheme, which included designing fraudulent transactions meant to deceive U.S. regulators and foreign banks and then lying to cover up its involvement.

According to the indictment, Halkbank, which is majority-owned by the Turkish government, used a series of money service businesses and front companies in Iran, Turkey and the United Arab Emirates to transfer billions of dollars worth of Iranian oil revenue in violation of prohibitions barring Iran from accessing the U.S. financial system.

High-ranking officials in Iran and Turkey allegedly participated in the scheme, and some officials took tens of millions of dollars in bribes to shield it from the scrutiny of U.S. regulators and banks, prosecutors said.

Tuesday's indictment followed the conviction last year of Mehmet Hakan Atilla, a top Halkbank executive accused of purchasing gold and designing fraudulent transactions to look like purchases of food and medicine by Iranian citizens. Atilla was sentenced to 32 months after a federal jury convicted him on five counts of conspiracy, money laundering and related counts.

"The facts that emerged at the full, fair, and public trial of Halkbank's deputy general manager, which culminated in a jury's January 2018 guilty verdict against him, illustrated senior Halkbank management's participation in this brazen scheme to circumvent our nation's Iran sanctions regime," U.S. Attorney Geoffrey Berman said Tuesday in a statement announcing the charges.

"Halkbank will now have to answer for its conduct in an American court," he said.

In total, Southern District prosecutors have charged nine people in connection with the scheme. Among them was Reza Zarrab, the Turkish-Iranian gold trader who pleaded guilty and later testified against Atilla at trial, saying that the executive had paid $50 million in bribes to Turkey's finance minister.

Before he began working with prosecutors, Zarrab had hired former New York City Mayor Rudy Giuliani to his legal team to meet with Turkish President Recep Tayyip Erdogan and seek a diplomatic solution.

So far, only Atilla and Zarrab have been tried in the case, and the remaining defendants remain at large, Berman's office said.

Tuesday's indictment, however, signaled the next phase of the Justice Department's case and potentially exposed the bank to large fines and forfeitures. The indictment alleged that Halkbank acted as the sole repository for proceeds from Iran's sale of oil and gas to Turkey, and transferred approximately $20 billion worth of restricted funds that otherwise would have exposed it to sanctions under U.S. law.

According to the filing, Halkbank allowed the funds to be used to buy gold that was not exported to Iran and made transfers appear to fall within the so-called humanitarian exception to certain sanctions, which allows for purchases of food and medicine to be made by Iranian customers.

"Halkbank illegally facilitated the illicit transfer of billions of dollars to benefit Iran, and for far too long the bank and its leaders willfully deceived the United States to shield their actions from scrutiny. That deception ends today," said William Sweeney, director in charge of the Federal Bureau of Investigation's New York field office.

The case is being handled by the terrorism and international narcotics unit and money laundering and transnational criminal enterprises units of the U.S. Attorney's Office in Manhattan.

Turkey has denied allegations of wrongdoing by the bank.

The case has been assigned to U.S. District Judge Richard M. Berman of the Southern District of New York.

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