As a young, brash gold trader in Turkey, Reza Zarrab helped orchestrate a billion-dollar scheme to launder Iranian oil money, defying U.S. sanctions aimed at choking off Iran’s nuclear program.
The operation came crashing down for Mr. Zarrab with his arrest in the United States a decade ago. Suddenly gaunt and facing decades in prison, Mr. Zarrab started helping federal prosecutors. He described how the Turkish president, Recep Tayyip Erdogan, ordered the scheme. He showed vividly how he helped launder money by trading oil money for gold and how he bribed people, using colored markers to sketch out the transactions on a poster before jurors in a Manhattan courtroom.
His testimony set off political shock waves in Turkey. It was invaluable to federal prosecutors in Manhattan, helping them convict a manager for a Turkish state-owned bank, Halkbank, and paving the way to bring charges against the bank itself. But in March, the Trump administration reached an agreement to drop the prosecution against Halkbank, citing the Turkish government’s help in releasing hostages held by Hamas in Gaza.
And on Tuesday in Manhattan federal court, Mr. Zarrab’s case also reached an anticlimactic conclusion. He received a sentence of time served from Judge Richard M. Berman. Mr. Zarrab had been out of detention but living under federal supervision since 2018.
Robert J. Anello, his lawyer, praised Judge Berman for considering “all the unique circumstances that relate to Mr. Zarrab.”
It was an anticlimactic conclusion to a case that rocked the Justice Department and strained relations between the United States and Turkey, with Mr. Erdogan criticizing it as a plot against his country. Mr. Erdogan fervently lobbied the Trump administration to drop the prosecution against the bank, which he characterized as a continuation of the failed 2016 coup attempt against him.
Mr. Zarrab was born in Iran to a well-known gold trader, who moved the family to Turkey when Mr. Zarrab was young, before relocating again to Dubai amid growing political instability in Turkey. As a teenager, Mr. Zarrab started working for his father’s currency trading business.
By his mid-20s, Mr. Zarrab had launched his own enterprise, facilitating exchanges between traders from countries including Russia, Azerbaijan and Romania. According to prosecutors, his clientele grew to include Iranians who were trying to evade increasingly stringent sanctions.
Mr. Zarrab was arrested in March 2016 when he was on the way to Disney World with his wife and daughter. He was then detained at the Metropolitan Detention Center in Brooklyn for about a year and a half, sometimes living in solitary confinement.
He initially fought the charges, but in October 2017, he pleaded guilty in secret to seven criminal counts, including evading U.S. sanctions and bank fraud conspiracy. The next month, an inmate at the Brooklyn federal detention center approached Mr. Zarrab and informed him that “big people in Turkey” wanted him dead, showing him a knife.
In a letter to the judge before sentencing, Mr. Anello wrote that his client had “revealed corruption on a global scale” through his cooperation with U.S. prosecutors, which had come at a tremendous personal cost. In retaliation, the Turkish government seized more than $170 million in his assets and opened an investigation into Mr. Zarrab on suspicion of espionage, he wrote.
At the trial of a Turkish banker, Mehmet Hakan Atilla, the deputy general manager for international banking at Halkbank, Mr. Zarrab was the star witness for federal prosecutors. He testified that he paid millions in bribes to Turkey’s economic minister and the general manager of Halkbank.
In preparation for his testimony, Mr. Zarrab prepared color-coded diagrams, posters and spreadsheets that showed how funds were transferred. At trial, Mr. Zarrab seemed to acknowledge that it was a practical decision.
“Cooperation was the fastest way to accept responsibility and to get out of jail at once,” he said.
Mr. Atilla was sentenced to two and a half years in prison and later deported back to Turkey.
In Mr. Trump’s first term, Attorney General William P. Barr urged federal prosecutors in Manhattan not to indict Halkbank but instead have it pay a fine. The U.S. attorney at the time, Geoffrey Berman, declined to do so and moved forward with the indictment.
Now, with the case against Halkbank abandoned, Mr. Zarrab’s extensive cooperation had been “rendered largely meaningless,” Mr. Anello wrote to Judge Berman. He noted that under the agreement, Halkbank would not have to pay a single cent in fines.
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