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Feds Flip Turkish Crook; Did He Rat on Michael Flynn?

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Posted on : November 29, 2017

Reza Zarrab, a Turkish businessman accused of violating U.S. sanctions on Iran, has pleaded guilty and will testify against his co-defendant, a federal court heard Tuesday. Zarrabs cooperation with federal prosecutors could have implications for Michael Flynn, who allegedly plotted on behalf of Turkish interests to help free Zarrab.

Zarrab, a 34-year-old Turkish-Iranian gold trader, is at the center of an Iran sanctions-busting case in which he used his companies and Turkish state-run banks to trade cash for gold in order to secretly buy oil from Iran. A former deputy general manager of one of those banks, Mehmet Atilla, is charged as part of that same conspiracy.

Atillas lawyers complained that co-defendant Zarrab had vanished in the weeks before trial was to start, an indication that he was no longer cooperating with them but instead federal prosecutors. He is expected to testify Tuesday or Wednesday.

Zarrabs plea deal was unsealed, and he admitted to seven charges listed in a superseding information filed in the case on Oct. 26, 2017.

The seven-count superseding information, filed under seal on Oct. 16 2017, charged Zarrab with conspiracy to defraud the U.S., conspiracy to violate the International Emergency Economic Powers Act, bank fraud, conspiracy to commit bank fraud, money laundering, and conspiracy to commit money laundering. The new charge relates to his bribery attempts while in a U.S. prison.

Zarrab paid a corrections officer to smuggle alcohol and a cellphone into the administrative prison used as a federal jail, according to the superseding information.

Zarrabs cooperation with federal prosecutors raised speculation that he was also cooperating with special counsel Robert Muellers inquiry into Flynn, because it seemed unlikely prosecutors would offer a plea deal to Zarrab in exchange for his cooperation for the comparatively lower-profile trial of Atilla.

Shortly after Zarrab seemed to flip, Flynns lawyers terminated a joint defense agreement with the Trump defense team last week. Flynns lawyer reportedly met with members of the Mueller probe on Monday, ABC News reported, a further indication that the embattled ex-national security adviser is also pursuing a plea deal.

Zarrabs plight was reportedly raised by Turkish interests in a December 2016 meeting with Flynn, who was designated to be President Trumps national security adviser. Flynn was supposedly offered $15 million to arrange Zarrabs release and to kidnap an exiled Turkish cleric living in Pennsylvania, Fethullah Gulen, and bring him to Turkey. (Turkish President Recep Tayyip Erdogan accuses Gulen, a former ally, of orchestrating a failed 2016 coup.)

The Zarrab case has roiled the upper echelons of the Turkish government and stems from a 2013 corruption scandal, which allegedly revealed that top-level ministers took bribes to sign off on the sanctions evasionsand even allegedly captured Erdogan and his son talking about how to hide money.

Erdogan has repeatedly raised Zarrabs release with U.S. officials from the Obama and Trump administrations. Zarrab even retained friends of President Donald Trump, Rudy Giuliani and Michael Mukasey, to negotiate a diplomatic release with the top levels of the Trump and Erdogan administrations.

After the jury was selected Monday, Atillas lawyers asked the judge to delay the trial so they could prepare for a mystery witness.

The government should also make clear that the mystery witness is Mr. Reza Zarrab, Judge Richard Berman wrote in a ruling denying the motion to postpone trial on Monday. This is something that experienced counsel knew or should have known about for months.

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