Key witness in Halkbank’s Iranian sanctions evasion trial sentenced to time served

MANHATTAN (CN) — A New York federal judge on Tuesday handed a sentence of time served to Reza Zarrab, a key cooperating witness in the U.S. government’s since-dismissed criminal investigation into Turkish state-run lender Halkbank’s role in helping Iran launder billions of dollars to avoid international sanctions.

Citing Zarrab’s extensive “assistance, cooperation and testimony,” U.S. District Judge Richard Berman sentenced the 42-year-old Turkish-Iranian businessman to “time already served,” amounting to 22 months of federal detention following his 2015 arrest.

“He has clearly provided substantial assistance,” Berman said. “Mr. Zarrab’s cooperation was the foundation of the government’s case in the trial of Mr. Atilla.”

Berman, a Bill Clinton appointee, did not impose any restitution, fine or additional forfeiture beyond a total of $376,000 already ordered in the case, citing Zarrab’s financial records showing his inability to pay more.

Zarrab spoke briefly at the sentencing hearing, thanking the U.S. federal government in broken English for taking safety measures to protect him and his family across the length of the litigation.

Zarrab secretly pleaded guilty ahead of trial in 2017 to various crimes related to fraud and money laundering and became a government witness in return for leniency. Still, the sentencing outcome is unsurprising given U.S. federal prosecutors’ decision last month to drop the decadelong criminal money laundering and sanctions probe into Halkbank, largely due to Turkey’s assistance in brokering the Israel-Hamas ceasefire agreement.

Federal prosecutors had accused Halkbank in a criminal indictment of using illegal shipments of gold and fake food to send $20 billion to Iran while lying to the Treasury Department to hide at least $1 billion in illicit payments that made their way through the U.S. financial system.

U.S. prosecutors described Zarrab as one of the “principal architects of a prolific Iranian sanctions-evasion and money-laundering machine that funneled billions of dollars’ worth of the government of Iran’s oil money from sanctions-restricted accounts held at Turkiye Halk Bankasi, A.S.”

In his trial testimony, Zarrab implicated the most powerful politicians and financiers in Turkey in his financial crimes. He testified that Erdogan personally directed illicit trades in 2014 while serving as the country’s prime minister.

Prosecutors for the U.S. Attorney’s Office for the Southern District of New York wrote in a sentencing memorandum that Zarrab provided substantial help to the U.S. when he revealed paying millions of dollars in bribes to government and banking officials in Turkey and provided key testimony at the December 2017 trial of ex-Halkbank manager Mehmet Hakan Atilla.

Atilla was convicted at trial and ultimately served a sentence of over two years in prison. After the trial, Turkey President Recep Tayyip Erdogan called the verdict “scandalous.”

In a presentence memorandum, prosecutors wrote that Zarrab’s October 2017 guilty plea to conspiracy, bank fraud and money laundering charges and the cooperation that followed had been “truthful, complete and reliable” and significant, useful and timely. They also noted he had suffered “danger or risk” as a result of his help.

Zarrab had led a cushy lifestyle in Turkey, even marrying one of the country’s pop stars, but his testimony at trial in the United States about corruption at the highest levels of Turkey’s ruling AK Party led the Erdogan government to freeze his assets.

Zarrab requested a sentence of time served, noting in his sentencing submission that he had already been detained for 22 months in jail, in addition to five months in strict home confinement, followed by 95 months under restrictive bail conditions.

In July 2026, New York federal prosecutors announced a deferred prosecution agreement with the Turkish bank, which they acknowledged largely arose from “multilateral efforts in 2025” involving the Turkish government’s substantial diplomatic assistance in brokering the Israel-Hamas ceasefire, negotiating the release of hostages and returning victims’ remains after the Oct. 7, 2023, attacks in Israel.

“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,” federal prosecutors wrote in a declaration signed by U.S. Attorney Jay Clayton.

Signing off on the deferred prosecution agreement was one of Clayton’s final official acts in the Southern District of New York before he was tapped by President Donald Trump last month to be director of national intelligence.

Following Zarrab’s arrest in 2016, the Turkish government aggressively lobbied two successive U.S. administrations, making inroads with the Trump White House, to kill the prosecution.

Trump’s former personal attorney Rudy Giuliani counted Zarrab as a client in 2017 when the former New York City mayor shuttled between Turkey’s capital of Ankara and the Oval Office to negotiate a prisoner swap that would have scuttled the case.

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