SanctionsIn his recently published book, “The Room Where It Happened,” former national security adviser John Bolton reported that in late 2018 in Buenos Aires, President Trump assured Turkish President Tayyip Erdogan that he would stop the then-ongoing criminal economic sanctions investigation of Halkbank in the Southern District of New York. Halkbank is a bank majority-owned by the Government of Turkey. According to Mr. Bolton, President Trump opined that Halkbank was “totally innocent” and advised that “he would take care of things, explaining that the Southern District prosecutors were not his people, but were Obama people, a problem that would be fixed when they were replaced by his people.” In order to evaluate Mr. Bolton’s explosive assertion, some background is necessary.

Four years earlier, in December 2015, a Southern District grand jury handed up an indictment charging foreign nationals with evading US sanctions against Iran by funneling approximately $20 billion to the Government of Iran through Halkbank. The bank was not named as a defendant at that time. First arrested and detained on the indictment, in March 2016, was Reza Zarrab, a wealthy Iranian-Turkish gold trader. One year later, Mehmet Attila, Halkbank’s Deputy General Manager, was apprehended and held in jail pending trial.

Messrs. Zarrab and Attila pleaded not guilty, sought to have the charges dismissed, and also began preparing for trial. Zarrab’s defense team ultimately included Rudolph Giuliani, one of President Trump’s personal attorneys and a former United States Attorney for the Southern District of New York, and Michael Mukasey, a former United States Attorney General. Prior to trial, Messers. Giuliani and Mukasey attempted to achieve a self-described “diplomatic solution” purportedly involving a prisoner exchange between the United States and Turkey that would result in Mr. Zarrab’s freedom. They failed.

Mr. Zarrab, however, had had enough of pretrial detention and the prospect of a lengthy prison sentence if convicted after trial. Accordingly, on the eve of trial in the fall of 2017, Mr. Zarrab decided to plead guilty and entered into a cooperation agreement with the Southern District. He was released from custody on November 8, 2017, and has not yet been sentenced. Mr. Zarrab testified at trial against Mr. Attila, who was convicted on January 3, 2018.

In May 2018, Mr. Attila was sentenced to 32 months’ imprisonment. With credit for his 14 months in pretrial detention and his good behavior, Mr. Attila was released in July 2019 and returned to Turkey, where he was welcomed at the Istanbul airport by Turkey’s Treasury and Finance Minister, President Erdogan’s son-in-law. Mr. Atilla became the CEO of the Istanbul Stock Exchange three months later.

One week before Mr. Atilla assumed his new position in October 2019, after very lengthy settlement discussions broke down, Halkbank was indicted in the Southern District for its role in the $20 billion scheme to evade US sanctions against Iran. The bank initially refused to submit to the jurisdiction of the district court, but after a failed appeal to the Second Circuit and after being threatened with contempt by the district court, the bank entered a plea of not guilty on March 31, 2020.  At a June 30, 2020, pretrial conference, no trial date was set and the Bank’s counsel stated that the Bank would move to recuse the district judge hearing the case.  Should a trial take place, Mr. Zarrab can be expected to testify again as a government witness.

Begun in 2015 during the Obama administration and actively pursued during the Trump administration, the Halkbank prosecution is now the responsibility of Audrey Strauss, the Deputy United States Attorney for the Southern District of New York who became the Acting United States Attorney after President Trump fired her predecessor, Geoffrey Berman, on June 20, 2020. How the case ultimately is resolved will go far in determining whether or not Mr. Bolton’s account is accurate and, if so, whether President Trump meant what he said in Buenos Aires.