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The criminal case against Halkbank moved forward Tuesday as the Turkish state-run bank pleaded not guilty to charges that it had helped Iran evade billions of dollars in U.S. economic sanctions.

In a remote hearing before U.S. District Judge Richard M. Berman of the Southern District of New York, Halkbank's new defense counsel, Williams & Connolly partner Rob Cary, said his client was prepared to respond to allegations of fraud, money laundering and other sanctions-related offenses laid out in an Oct. 15 indictment.

The New York Law Journal monitored the proceedings remotely.

"Halkbank pleads not guilty on all counts," Cary said during a teleconference that lasted about 30 minutes.

Halkbank, through its former King & Spalding attorneys, had refused to formally acknowledge the case against it in Manhattan federal court.

Defense counsel instead sought permission to enter a special appearance on behalf of the bank for the "limited and special purpose" of challenging the court's jurisdiction. Berman denied the unusual request as unsupported by U.S. Court of Appeals for the Second Circuit precedent, in a decision that was later upheld by the Manhattan-based appeals court.

Cary told Berman during Tuesday's hearing that he had been hired to "turn over a new leaf in this case and get a fresh start."

Still, Cary and the Williams & Connolly team inherited the "thorny" issue of Halkbank's planned motion to have Berman recuse himself over unspecified comments he made about the bank both inside and outside the courtroom. Cary, who had previously met with Halkbank twice in Turkey, said that he would need to sit down "face-to-face" with the bank's general manager to discuss the whether to move forward with the contemplated recusal motion and "on what grounds."

Communication with his client, Cary said, has been made more difficult by the novel coronavirus pandemic, which has shuttered entire nations and bought all international travel to a near standstill.

The attorney cited "significant language differences" and asked that briefing on the planned recusal motion be postponed for up to 90 days so that he could meet with the bank's brass in Turkey with the aid of interpreters.

"By that time, surely we would be able to travel again and know where we are," Cary said. "I just don't feel as though I can file a motion like that without sitting down in a room with them."

Prosecutors from the Manhattan U.S. Attorney's Office had opposed any further delay, saying that they were ready to begin producing discovery.

"We all understand and are operating under the new state of affairs created by the COVID-19 situation," Assistant U.S. Attorney Michael Lockard said, "but we think at the same time accommodations have been and can be made" to keep the case moving toward trial.

Berman, however, granted the request, giving Williams & Connolly 70 days to meet with Halkbank in Turkey. A status conference was tentatively set for June 9 at 10 a.m.

Tuesday's hearing was conducted via teleconference, with the parties each participating separately from remote locations. Berman himself said he was working from outside the city, though still within the Second Circuit's jurisdiction.

Halkbank, meanwhile, waived its right to appear personally and authorized its attorneys in a March 27 letter to enter a plea on its behalf.

Berman said that future hearings would hopefully include a "video component," though that capability was "not yet up and running" for Tuesday's arraignment.

Halkbank, which is majority-owned by the Turkish government, is accused in a six-count indictment of using 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 that barred 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.

In total, nine defendants have been charged, including Reza Zarrab, the Turkish-Iranian gold trader who pleaded guilty and later testified against Mehmet Hakan Atilla, a top Halkbank executive who was sentenced to 32 months in prison after a federal jury convicted him on five counts of conspiracy, money laundering and related counts.

The bank is represented by Cary, Dimpy Desai, David Aufhauser and James Kirkpatrick.

Berman on Tuesday granted a motion by Halkbank's former counsel, King & Spalding partner Andrew Hruska, to formally withdraw from the case.

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