Halkbank Photo: Shutterstock

Manhattan federal prosecutors are eyeing a proposed February 2021 trial date in the criminal case accusing Halkbank, the Turkish state-run bank, of helping Iran evade billions of dollars in U.S. economic sanctions, as both sides remained at odds over scheduling given COVID-19 concerns.

Halkbank's Williams & Connolly attorneys told a federal judge Tuesday that the global pandemic had made travel to Turkey to meet with their client nearly impossible, and said they would need more time to sort through language issues and interview potential witnesses. They asked that trial in the case be set instead for March 2022.

The scheduling discussion came during a 9 a.m. video hearing before U.S. District Judge Richard M. Berman of the Southern District of New York, the first since Halkbank pleaded not guilty to conspiracy, bank fraud and money laundering charges in March. The New York Law Journal monitored audio of the call remotely.

Halkbank's attorneys plan to proceed with a planned motion to have Berman recuse himself from the case, Williams & Connolly partner Robert Cary said Tuesday. But, he warned, trial preparation presented a host of practical concerns, including the defense team's ability to physically meet with its client.

The "vast majority" of potential witnesses also resided abroad, and counsel would have to retain interpreters to work around language barriers, Cary argued in support of the elongated timeline.

Assistant U.S. Attorney Michael Lockard, meanwhile, pushed for an expedited motion schedule that would prime the case for trial early next year. The government, he noted, had been pursuing related sanctions-busting prosecutions since 2015, and secured a 32-month prison sentence for Halkbank executive Mehmet Hakan Atilla following a trial in 2017.

"This is not a case where we are starting from scratch here on June 30, 2020," Lockard said.

Berman adjourned Tuesday's hearing with the trial date still unresolved.

The judge did, however, order Halkbank to file its recusal motion by July 14, saying he hoped to "move quickly" on the matter. Briefing on that motion was slated to wrap by Aug. 4, and papers on Halkbank's expected "facial challenge" to the October 2019 indictment were due by Sept. 7. It wasn't clear Tuesday whether either motion would require oral arguments.

Halkbank, which is majority-owned by the Turkish government, is accused of using a series of 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.

Prosecutors have said that 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.

Halkbank for months refused to respond to the indictment in Manhattan federal court, and its former King & Spalding attorneys 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. A federal appeals court blocked that move in February.

King & Spalding formally withdrew from the case in March.

Cary told Berman at a March 31 hearing that he had been hired to "turn over a new leaf" in the case, and entered a plea of not guilty on behalf of his client.

Halkbank has long considered a recusal motion based on unspecified comments that Berman made both in and outside of the courtroom, but the precise nature of that request remains unclear.

The bank is also represented by Simon Latcovich, David Aufhauser, Damayanti Desai and James Kirkpatrick of Williams & Connolly in Washington, D.C.

In total, nine defendants have been charged in the alleged Halkbank-linked scheme, including Reza Zarrab, the Turkish-Iranian gold trader who pleaded guilty and later testified against Atilla, who returned to Turkey last July after serving his sentence for conspiracy, money laundering and related convictions.

 

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