By Dan Christensen, FloridaBulldog.org
In a move alarming to victims of Iranian terrorism, including 9/11 survivors and families, the U.S. last week dropped its seven-year-old criminal case alleging that Turkey’s state-owned lender, Halkbank, participated in a multi-billion-dollar scheme to help Iran evade American economic sanctions.
Instead, at the urging of the Trump Administration, Manhattan U.S. Attorney Jay Clayton entered into a deferred prosecution agreement (DPA) with Halkbank without any monetary penalty or admission of guilt. The deal was approved on Wednesday morning by Judge Richard Berman of the U.S. District Court for the Southern District of New York.
If convicted of the sanctions-evasion scheme, Halkbank, whose legal name is Turkiye Halk Bankası A.S., faced hundreds of millions if not several billion dollars in fines. But unless things change, a potentially enormous source of funds for thousands of victims hoping to satisfy judgments they hold against Iran will yield nothing.
The alleged money-laundering and fraud conspiracy, which the government said ran from 2012 to 2016, involved Halkbank helping Iran create a slush fund of more than $20 billion to mislead regulators and evade U.S. sanctions.
After the deal was approved Wednesday, however, the court received a six-page letter from attorneys with Gibson Dunn, the large law firm that represents more than 1,121 victims and family members holding more than $10 billion in unsatisfied federal court judgments against Iran, asking to be heard under the Crime Victims’ Rights Act (CVRA).
“Halkbank’s fraudulent and profitable schemes prevented our clients from collecting on their judgments and simultaneously allowed Iran to take advantage of the U.S. financial market,” the letter says. “At no point did the Government notify us of any plea bargain or deferred prosecution agreement negotiations, nor did it afford our clients the opportunity to confer as the CVRA requires.”
The court docket did not indicate the judge had responded to that request through Monday.
The U.S. announced its intent to enter into the DPA with Halkbank in March. That immediately prompted a letter to the judge objecting to the proposed deal from the umbrella group American Victims of State-Sponsored Terrorism United.
It also prompted five U.S. senators, all Democrats, to declare their intent to probe the Justice Department’s decision to find out, among other things, whether the agency “was pressured by President Trump or other senior administration officials to resolve this case.”
“The timing of this agreement, coinciding with President Trump’s initiation of a war against Iran that he justified in part by citing Iran’s history of terrorist attacks against U.S. citizens, makes the Department’s decision even more incomprehensible. We also note President Trump’s and President Recep Tayyip Erdogan’s personal, financial, and familial interests in ending the prosecution,” the senators wrote.
Through the Trump Organization, the president has substantial financial interests in Turkey regarding a licensing agreement for Trump Towers Istanbul-Şişli. In April 2012, Erdogan, then Turkey’s prime minister, Trump, and his daughter, Ivanka, attended the property’s opening, Newsweek reported.
‘IN THE BEST INTERESTS OF THE UNITED STATES’
Halkbank is among numerous corporations and individuals prosecuted by the Department of Justice for evading petroleum and economic sanctions against Iran. For example, in 2014 BNP Paribas, one of Europe’s largest banks, pleaded guilty to charges of trading with the enemy and violating sanctions under the International Emergency Economic Powers Act, and paid nearly $9 billion in fines and forfeitures. The countries involved were Iran, Sudan, and Cuba.
In court papers, prosecutors justified their request to Judge Berman to formally drop the case against Halkbank as being “in the best interests of the United States.”
The deferred prosecution agreement says Turkey was “instrumental” in achieving the ceasefire between Israel and Hamas that was announced Oct. 13, 2025.
“President Donald J. Trump, Secretary of State Marco Rubio, and leadership within the U.S. Department of State engaged in complex, multifaceted, and multilateral efforts to arrange a ceasefire…The U.S. Department of State contacted the office several months ago to convey that (i) high-level diplomatic discussions between the United States and the Republic of Turkey were ongoing; (ii) the discussions related to addressing the October 7, 2023, attacks by Hamas…and obtaining the release of all hostages; and (iii) in the State Department’s view, a commitment by the United States to resolving the Halkbank matter on mutually agreeable terms was an important component of those diplomatic discussions.”
The agreement goes on to list a new regime of sanctions and anti-money laundering steps that Halkbank must follow going forward.
Indeed, President Erdogan and the Turkish government have for years sought to get the U.S. to drop the case that erupted more than a decade ago out of an embarrassing scandal in Turkey.
The U.S. case against Halkbank grew out of the prosecution of Reza Zarrab, a Turkish-Iranian businessman indicted in 2015 with one of his employees and a senior official with a money-services business owned by an Iranian bank on charges of bank fraud and money laundering.
Zarrab was arrested in Miami in 2016 while on vacation. He is alleged to have shipped gold to Iran in exchange for oil and gas. The gold helped Iran bolster its currency.
Halkbank allegedly facilitated those exchanges by disguising them as permissible trade. Halkbank’s deputy chief executive officer, Mehmet Atilla, was later found guilty in the U.S. of conspiring with Zarrab.
Halkbank’s indictment says, “High-ranking government officials in Iran and Turkey participated in and protected this scheme. Some officials received bribes worth tens of millions of dollars paid from the proceeds of the scheme so that they would promote the scheme, protect the participants, and help to shield the scheme from the scrutiny of U.S. regulators.”
DW, Germany’s international broadcaster, reported in 2016 that Zarrab had “close ties” to President Erdogan and that the U.S. case was threatening his political circle.
“Zarrab was at the center of a 2013 gold corruption scandal in Turkey that ensnared then-Prime Minister Erdogan’s government. Prosecutors in Turkey alleged he bribed high-level officials to facilitate illicit transactions with Iran,” DW reported. “Three ministers were ultimately forced to resign, even though they claimed their innocence.”
Erdogan called the corruption charges a “coup” put together by his enemies and fired Turkish prosecutors and police working the case, DW said. Charges against Zarrab were dropped.
In the U.S., Zarrab soon began cooperating with authorities. In 2017, he pleaded guilty in New York to conspiring to evade U.S. sanctions against Iran, fraud, and money laundering. He later testified against Atilla.
With the Halkbank case now dismissed, Zarrab is scheduled to be sentenced in New York by Judge Berman next month, July 14.
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