Reza Zarrab, a key cooperating witness in the US government’s criminal investigation into Turkish state-run lender Halkbank’s alleged role in helping Iran evade sanctions, is scheduled to be sentenced in July, nearly nine years after he pleaded guilty, Reuters reported on Monday, citing court records.
Zarrab, a Turkish-Iranian gold trader, is due to be sentenced on July 14 in Manhattan federal court.
The scheduling of his sentencing comes as US District Judge Richard Berman separately considers a request by federal prosecutors to dismiss the criminal case against Halkbank under an agreement reached with the bank earlier this year.
Zarrab pleaded guilty on October 26, 2017, to conspiring to evade US sanctions and later testified for prosecutors against Mehmet Hakan Atilla, a former Halkbank executive, at a New York trial.
Atilla was convicted in 2018 of helping Iran evade US sanctions and later returned to Turkey after serving time in a US prison.
In US criminal cases, cooperating witnesses are often sentenced only after the cases in which they may be called to testify are finished.
Zarrab’s long-delayed sentencing therefore comes as the Halkbank case appears to be nearing a possible conclusion.
The Justice Department formally asked Berman on June 11 to dismiss the case against Halkbank, saying it no longer intended to prosecute the Turkish lender.
Prosecutors made the request after Halkbank and the US government reached an agreement in March to end the long-running case, which had been a persistent source of tension between Ankara and Washington.
Halkbank, which had pleaded not guilty, was charged in 2019 during US President Donald Trump’s first term with helping Iran evade American sanctions.
US prosecutors accused the bank of secretly transferring $20 billion in restricted funds, converting Iranian oil revenue into gold and cash and using fake food shipments to disguise transfers of oil proceeds, according to Reuters.
The March agreement does not require Halkbank to pay a fine or admit criminal wrongdoing. It bars the bank from transactions that benefit Iran and requires outside monitoring of its sanctions and anti-money-laundering compliance.
After the deal was announced, Berman paused the case for 90 days to allow Halkbank to demonstrate compliance with the agreement.
Halkbank hired Ernst & Young to review its compliance policies.
In their June 11 filing, prosecutors said the review did not identify any areas of noncompliance and asked Berman to approve their motion to dismiss the case. The judge is scheduled to hold a hearing on June 17 to consider the request.
The Halkbank case had gone through years of litigation in US courts.
In October the US Supreme Court let stand a lower court ruling allowing the prosecution to move forward, rejecting Halkbank’s argument that as a Turkish state-owned entity it should be immune from prosecution in foreign courts.
The case also figured prominently in relations between Ankara and Washington.
Turkish President Recep Tayyip Erdoğan repeatedly criticized the prosecution, calling it unlawful and “ugly,” while Turkish officials pressed US administrations to resolve the matter.
Erdoğan said in October that Trump had told him during a September meeting at the White House and in a later phone call that “the Halkbank problem is finished for us,” according to Reuters.
Zarrab’s case had earlier drawn attention in Turkey because it overlapped with a 2013 corruption investigation that implicated people close to Erdoğan’s government.
During the US trial, Zarrab testified that he paid more than $50 million in bribes to Turkey’s finance minister to help the sanctions-busting scheme continue.
He had been the prime suspect in the 2013 corruption investigation in Turkey but avoided prosecution after the case was quashed by the government, which dismissed it as a judicial coup.
US prosecutors later pursued the sanctions-evasion case in New York, where Zarrab became a cooperating witness and gave detailed testimony about the alleged scheme involving Halkbank, gold trades and transfers designed to move Iranian oil revenue despite US restrictions.
The July sentencing date marks the latest step toward the conclusion of one of the most politically sensitive US criminal cases involving Turkey in recent years.