Business & Practice

Giuliani, Mukasey Allowed to Remain on Iran Sanctions Case

June 1, 2017, 7:54 PM

Former New York mayor Rudy Giuliani and ex-Attorney General Michael Mukasey can remain involved in the defense of a Turkish businessman charged with undermining financial sanctions against Iran, despite potential conflicts of interest.

U.S. District Judge Richard Berman noted that both Giuliani’s and Mukasey’s law firms represent banks allegedly used by the businessman to launder money through the U.S. financial system for Iran. Giuliani’s firm also represented Turkey.

But the judge allowed them to remain on the case because the defendant, Reza Zarrab, waived the potential conflicts in hiring the two lawyers. Giuliani is associated with Greenberg Traurig LLP, while Mukasey is associated with Debevoise & Plimpton LLP.

The decision ends a months-long courtroom struggle between U.S. prosecutors and defense lawyers over the roles of Giuliani and Mukasey in the case, without a decisive win for either side.

While flagging potential conflicts of interest, prosecutors also shed light on the secretive dealings undertaken by the two lawyers on behalf of Zarrab. The pair, who are both confidants of President Donald Trump, sought high-level meetings with U.S. and Turkish officials in an attempt to resolve the case outside of the courtroom.

‘National Security’

As a result, they were both forced to answer a detailed series of questions from the judge about their activities. In a court filing, Giuliani said he sought to broker the deal by presenting it as a “national security” benefit to both countries. Senior U.S. officials were receptive to the idea, Giuliani said, though he never revealed which U.S. officials he approached. He did, however, acknowledge that he flew to Turkey to meet with President Recep Tayyip Erdogan on Zarrab’s behalf.

The intense focus on the behind-the-scenes negotiations may ultimately make it harder for Zarrab’s case to be resolved outside the normal courtroom process.

Zarrab, a gold trader and businessman who was born in Iran and lived in Turkey, was arrested in Florida last year while on a family vacation to Disney World. He is charged with using his network of companies to move hundreds of millions of dollars through the U.S. financial system on behalf of Iran, which was under increasing sanctions pressure.

Before his arrest in the U.S., Zarrab was caught up in an alleged bribery scheme in Turkey allegedly involving top government officials. U.S. prosecutors said they will present evidence that Zarrab paid tens of millions in bribes to top Turkish banking officials to help carry out the Iranian transactions.

Fully Aware

Turkish officials have been particularly keen to dispose of the case, appealing to U.S. officials to end it and allow Zarrab to return home. In his ruling, Berman said Zarrab appeared to be fully aware of Giuliani’s and Mukasey’s potential conflicts and clearly waived his concerns. The judge said Zarrab’s defense team should be primarily responsible for monitoring the potential conflicts.

Zarrab’s lead defense lawyer, Benjamin Brafman, didn’t return a telephone call seeking comment. A spokesman for the U.S. Attorney’s Office in New York, which is prosecuting the case, declined to comment.

The case is U.S. v. Reza Zarrab, 15-cr-867, U.S. District Court, Southern District of New York (Manhattan).

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