National Security

Accused Gold Smuggler Zarrab Plea May Harm Erdogan

There are signs that Turkish-Iranian gold trader Reza Zarrab, arrested last year and charged with financial crimes including money laundering and violating sanctions against Iran, may be about to enter a plea bargain with federal prosecutors.  Zarrab has been moved to an undisclosed location within federal custody, and authorities have slow-rolled their response to Turkish government attempts to locate him.  More telling, Zarrab’s team of attorneys have missed important filing deadlines, which indicates that they do not expect their client to appear in court.

Zarrab’s trial is currently scheduled to begin next week, on 27 November.  When he failed to appear in court last week beside co-defendant Mehmet Attilla, Attilla’s attorney asked where he was.  “Keep your eyes on the docket,” was the response from District Judge Richard Berman.

Did Zarrab’s Arrest Cause Erdogan’s Purges?

Reza Zarrab came to international attention in 2013, when he was arrested by Turkish police and charged with smuggling gold to facilitate Iranian money transfers.  The scheme included bribery and corruption that involved very senior Turkish officials, including three government ministers.  The fallout threatened to bring down the Turkish government.  President Recep Tayyip Erdogan alleged that the arrest was orchestrated and the charges were fabricated by elements within the security services who were loyal to his arch-enemy, Fethullah Gulen.

This led to speculation that the driving purpose of Erdogan’s purges was to stop Zarrab’s prosecution.

Gulen is a Turkish cleric residing in Pennsylvania who heads an international network of schools and mosques.  He was admitted to the U.S. for political asylum, and remains the top target of Erdogan’s fury.  Erdogan responded to Zarrab’s arrest by conducting a sweeping purge of the police, military, and government officials, claiming there was a massive conspiracy by followers of Gulen to stage a coup against him.  Tens of thousands of civil servants and uniformed forces were dismissed, and thousands were jailed.  The charges against Zarrab were dropped in 2014, and the investigation was closed.  This led to speculation that the driving purpose behind the purges was to stop Zarrab’s prosecution.

When Zarrab was arrested by American authorities in 2016, therefore, Turkish opposition leaders rejoiced.  Reuters reported at the time, “Kemal Kilicdaroglu, leader of Turkey’s main opposition CHP, said he hoped the U.S. investigation would shed new light on the dropped 2013 investigation.  ‘I am sure there are many who won’t sleep comfortably in their beds tonight,’ he told a party meeting in parliament. ‘They will hang out all the dirty laundry, and this way we will learn the whole truth.’”

Legal Dream Team

Zarrab hired the most expensive legal team since the O.J. Simpson trial, ensuring that he had the best representatives for every possible avenue of defense.  To negotiate a diplomatic settlement of his case, he hired Rudolph Giuliani and former Attorney General Michael Mukasey, who flew to Turkey for talks with Erdogan.  The Wall Street Journal reported that he also had discussions with former National Security Advisor Michael Flynn about negotiating a political solution with the incoming Trump Administration.

The lead attorney for Zarrab is Benjamin Brafman, one of New York’s top criminal defense attorneys.  His team includes specialists in appellate law such as former Solicitor General Paul Clement and former assistant attorney general Viet Dinh.  Their presence indicates a preparation to challenge U.S. law, presumably for an eventual Supreme Court appeal.  Indeed, an early motion filed by Brafman challenged U.S. jurisdiction in the case.  Other members of Zarrab’s legal team (he had five law firms and 17 attorneys at last count) include former prosecutors in the U.S. Attorney’s office for the Southern District of New York, which brought the case against him; and specialists in sanctions and money laundering law.

… could be very bad news for Erdogan….

When Zarrab did not meet a filing deadline this week to contest what evidence can be presented to the jury, it was taken as an unmistakable sign that he intends to plead guilty.  In light of the enormous sums already spent on a legal team designed to cover every avenue of defense, there is no chance that the defense would pass up an opportunity so important.

The fact that the Turkish government has been unable to reach Zarrab after he was moved indicates that he does not want to be reached.  That could be very bad news for Erdogan, depending on the nature of the deal Zarrab made, and with which part of the government he made it.  If he made the deal with the U.S. Attorney’s office, it could open up more prosecutions against people connected to Iranian sanctions busting and money laundering.  If he made it with American intelligence agencies, it could open up diplomatic opportunities in bilateral and multilateral negotiations with Erdogan over Turkey’s role in NATO and relations with Iran and Russia.  Either way, Erdogan cannot be pleased with the result.

Keep a close eye on this case.  Whatever deal he made, it is not likely to be apparent to the casual observer.  It is certain, however, to have significant consequences for America’s interests in Europe, the Middle East, and Central Asia.

Bart Marcois

Bart Marcois (@bmarcois) is a Senior OpsLens Contributor and was the principal deputy assistant secretary of energy for international affairs during the Bush administration. Additionally, Marcois served as a career foreign service officer with the State Department. He is a director at the Richard Richards Foundation.

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