Iranian Arrested for $115M Sanctions Evasion Scheme with Venezuelan Connections

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Screenshot Pilatus Bank

38-year-old Ali Sadr Hashemi Nejad was charged in U.S. federal court on Tuesday for his involvement in a $115 million scheme to evade U.S. sanctions against Iran, using a Venezuelan construction project as an instrument.

The six-count indictment includes charges of conspiracy to defraud the United States, conspiracy to violate IEEPA, bank fraud, and money laundering. IEEPA is the International Emergency Economic Powers Act, the 1977 law that gives U.S. presidents the authority to prohibit financial transactions with foreign entities that pose a threat to national security, such as Iran. Sadr could face up to 125 years in prison if found guilty on all counts.

Sadr is the chairman of a Maltese financial institution called Pilatus Bank. According to prosecutors, his family also has the controlling interest in an Iranian conglomerate called the Stratus Group. The Stratus Group was heavily involved in a massive Venezuelan housing project launched in 2005 as part of an agreement between the governments of Venezuela and Iran.

The indictment states that, in connection with his role in this housing project, Sadr “took steps to evade U.S. economic sanctions and to defraud U.S. banks by concealing the role of Iran and Iranian parties in U.S. dollar payments sent through the U.S. banking system.” The scheme had a lot of moving parts, including entities incorporated in Switzerland and Turkey to move money around.

Prosecutors zeroed in on 15 payments totaling about $115 million made through these entities and routed through U.S. banks between 2011 and 2013. Another $2 million in funds from the Venezuelan construction project were wired directly into the United States and used to purchase property in California.

“As alleged, Ali Sadr Hashemi Nejad created a network of front companies and foreign bank accounts to mask Iranian business dealings in Venezuela and evade U.S. sanctions,” Manhattan U.S. Attorney Geoffrey Berman stated.

Reuters notes that Sadr’s Pilatus Bank was involved in litigation with Maltese journalist Daphne Caruana Galizia over a series of articles she wrote that “accused the bank and Ali Sadr of facilitating corrupt political activities and money laundering.”

Galizia, the most renowned investigative journalist in Malta, was assassinated with a car bomb in October 2017 at the age of 53. Her three sons on Wednesday hailed the arrest of Sadr as vindicating their mother’s work. They issued a statement blaming Maltese authorities for failing to “hold Ali Sadr Hashemi Nejad to account,” leaving their mother “to do so alone.”

“The U.S. authorities have now ended the impunity with which Hashemi Nejad operated. Their action vindicates our mother’s work, but it has come at a terrible cost. One of our mother’s sources, a woman who worked at Pilatus Bank, now sits in an Athens prison cell, and our mother is dead,” the statement from Galizia’s sons said.

This is a reference to Maria Efimova, a 35-year-old Russian national who was the inside source for Galizia’s reports on corruption and money laundering. Efimova was charged with making false claims against the police and defrauding a bank, and also faces embezzlement charges from Cyprus. Efimova turned herself into Greek authorities on Tuesday but insists she is innocent of all charges and fears for her safety.

“While the Maltese police were pursuing this source with a European arrest warrant obtained on false charges of misappropriation of a few hundred euros, her former employer was facing charges for laundering hundreds of millions. As if a more damning indictment of the institutional failure in Malta were needed,” Galizia’s sons declared.

Sadr’s arrest has unsurprisingly unleashed political chaos in Malta, but the prosecution could become rather awkward in the United States as well:

Bloomberg News sees Sadr’s arrest as part of an intensifying U.S. crackdown on the illicit transfer of money through America’s financial system, coming just two months after Turkish banker Mehmet Hakan Atilla was convicted of helping Iran evade U.S. sanctions. As U.S. Attorney Berman put it, “The arrest of Sadr shows that U.S. economic sanctions against Iran are for real, and violators will be exposed and prosecuted.”

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