The Golden Loophole

Filed on Wednesday, September 6, 2017, by acting United States Attorney Joon H. Kim

Chapter 5 — Saving Reza Zarrab

Did Reza Zarrab really think that throwing himself at the mercy of the US judicial system would enable him to skirt death by indirectly invoking the protection of American authorities? It’s hard to know for sure but certainly Zarrab’s presence in a United States courtroom was certainly going to make a lot of people very nervous. His youth and the impetuous nature of his trip to Florida made him very dangerous in the eyes of many others with far greater reputations. Clearly, he was not the true mastermind of the operation. Zarrab was merely a flamboyant errand boy caught up in a wildly profitable international intrigue that involved some of the most powerful people on the planet.

Zarrab’s arrest sent a strong message to Turkish bankers and politicians complicit in his scheme. The US would not tolerate fraud and evasion of state sanctions. His arrest also gave notice to the US banks doing business with Halkbank. The implications of a criminal investigation would have likely unleashed a wave of fear throughout the offices of bank executives and their compliance officers, causing them to put their legal representatives on notice. Zarrab’s calculated entry into the United States criminal justice system served to make him practically untouchable, if he started talking it would be virtually impossible to silence him.

A trial implicating US banks in a massive money laundering scheme was a political bombshell that had to be avoided at all costs. Rubber stamping documents that valued sugar at $250 a pound was not an oversight, it was outright fraud. Claims that tons of humanitarian aid were delivered on ships and trucks equipped to carry far less tonnage made due diligence of Turkish documentation by US banking institutions a complete farce. In many respects, Zarrab had torn a page right out the Pentagon’s corrupt procurement process.

Given this set of desperate conditions it comes as no surprise that Donald Trump’s National Security Adviser, Michael Flynn, entered the picture. Flynn’s business contacts in Turkey, his lobbying efforts on behalf of the Turkish government and his US national security credentials made him a perfect candidate for a covert operation to bury the story. On the other hand, if Flynn had been involved in advising Zarrab or any of the Turkish officials involved in the sanctions busting scheme, the arrest and trial of Zarrab would spell complete disaster. Flynn would have to act quickly if major consequences were to be avoided.

To this end it’s alleged that Flynn and his son met secretly with Turkish officials to discuss kidnapping Fethullah Gulen. Gulen was a moderate Islamic imam living in the US who fled Turkey in the late 90s. Gulen’s critical assessment of the Erdogan administration had made him a perfect foil for the Turkish leader. Instead of accepting responsibility for his failed policies Erdogan blamed the Gulenists. He claimed Gulen’s supporters formed a parallel government withing the government and he blamed these Gulenists for an attempted coup d’etat in 2015. Choosing to kidnap Gulen would afford Flynn and Erdogan with a badly needed and well-timed distraction that would keep Zarrab’s story off the front pages in both countries.

A solidly clandestine operation that masked the true hand behind Gulen’s return to Turkey would enable Erdogan to orchestrate a show trial that would keep a lid on the widespread allegations of corruption roiling his administration. The trial would also serve to fire up Erdogan’s base and create a political smoke screen that would further solidify his power. This additional power would confer upon Erdogan the freedom to lobby for Zarrab’s release without fear of the political consequences at home. The ultimate aim of Flynn’s intervention was to deliver a diplomatic solution to a criminal charge that would keep details of how Zarrab laundered billions out of US newspapers and media outlets. At the end of the day it would be a win-win proposition for everyone.

It didn’t quite work out that way. Flynn’s “pie in the sky” deal reflected a national security apparatus run amok and completely disconnected from reality. How Gulen could have possibly orchestrated a coup that would have toppled Erdogan’s regime from Saylorsburg, Pennsylvania remains a complete mystery. Gulen’s failing health and his spartan living quarters at the Golden Generation Worship and Retreat Center in Saylorsburg hardly form the components of a viable opposition party.

Furthermore, Flynn’s plan to pluck Gulen from the remote 25-acre wooded estate was extremely risky and highly illegal. Doing the job for 15 million dollars, as alleged by representatives of NBC News and the Wall Street Journal, made Flynn’s actions even more sinister. Former CIA director James Woolsey, who was present at the September 19, 2016, consultation with Flynn, Erdogan’s son-in-law, Berat Albayrak, and Turkey’s Minister of Foreign Affairs, Mevlüt Çavuşoğlu, described their plans as falling along the lines of “a covert step in the dead of night to whisk this guy away”. Woolsey advised against the operation and immediately informed U.S. Vice President Joe Biden of his concern.

Woolsey’s contact with Biden served to alert the Obama administration to the intelligence community’s growing interest in the alarming actions and motives of Trump’s soon to be National Security Advisor. The date of Flynn’s meeting had come shortly after the Republican National Convention and just 6 weeks prior to the national election. Such a revelation, coming on the heels of Flynn’s convention speech histrionics, carries a special irony when viewed through the clarifying lens of historical fact. Was he projecting his own political and criminal baggage upon a Republican audience so desperate to defeat Hilary Clinton that he could distract everyone, Republicans and Democrats alike, from the true nature of his own political shenanigans?

Further revelations of Flynn’s foreign entanglements and his failure to be truthful about his contact with Russian Ambassador Sergei Kislyak culminated in Flynn’s resignation from the Trump administration on February 13, 2017. He left under a cloud of suspicion after serving just 24 days. It was the shortest tenure of any National Security Advisor in the history of the position. President Trump asked FBI Director James Comey to drop the investigation of Flynn’s connections to the Russian diplomat the following day.

In light of Trump’s unusual request to Comey, news of Flynn’s unsavory connections to Turkish politicians received scant attention. Was this done to deflect interest from the larger and more salacious story of Flynn’s involvement with corrupt Turkish politicians involved in a money laundering scheme so large that it effected the economies of several countries?

Robert Mueller has since interviewed Woolsey about his meeting with Flynn, Albayrak and Çavuşoğlu as part of his independent investigation. That meeting took place on October 27, 2017; approximately one year after Woolsey advised Flynn against kidnapping the aging imam. President Trump, always curious to know what the opposition had in terms of counter-intelligence, enjoyed a “lengthy conversation” with Woolsey over dinner at Mar-a-Lago one month later. [November 26–27] Trump has carried on this type of informational debriefing with nearly every person interviewed by the Special Prosecutor. It is a form of wholesale witness tampering so egregious that no one seems to know what to do about it.

Flynn’s off the record association with Albayrak and Çavuşoğlu was highly irregular for a retired 3-Star General about to become a US National Security Director. Çavuşoğlu was the founder of Turkey’s notoriously corrupt Justice and Development Party (AKP)and Albayrak, Erdogan’s son-in-law, had been implicated in a scheme to smuggle oil produced by ISIS through Turkey. Meeting with these men was completely outside the boundaries of traditional State Department protocols and clearly suggestive of a premeditated effort to engage in kidnapping and quite possibly, extortion. Woolsey’s alarm served as yet another early warning signal to US intelligence agencies that Trump was bringing onboard a host of criminal associates deeply involved in circumventing the diplomatic community at large. A creative and culturally attuned intelligence analyst might even suggest that the colorful events leading up to the meeting were an indication that the bungling and small minded petty thievery depicted in HBO’s smash hit The Sopranos had metastasized and come home to roost as America’s new political reality. Going forward, international politics was more likely to be conducted like a reality television show portraying international crime families staging very public media events while they privately plotted collusion or going to war with each other.

When Flynn’s dangerously unhinged proposal fell upon deaf ears it appears that a quasi-legal remedy to Zarrab’s nerve wracking presence in the US judicial system was going to be required if the wider story of his arrest was to be kept quiet. To this end, the Trump administration’s foremost legal scholar and former New York City Mayor, Rudolph Giuliani, traveled to Turkey in late February, 2017. Former US Attorney General Michael Mukasey accompanied Trump’s old friend and legal consigliere. While in Turkey they met privately with President Erdogan, hoping to broker a prisoner exchange. Turkish authorities had a US pastor alleged to be part of Gulen’s network under house arrest and it was hoped that a private, diplomatic exchange could be facilitated to avoid a messy criminal trial involving Zarrab. Despite the high ranking stature of all of the participants involved, the meeting failed.

Erdogan was wise to demure. Flynn’s resignation less than two weeks earlier on Feb 13, 2017, left little margin for the Turkish side to accurately assess the quickly evolving developments. In all likelihood, the timing of the visit must have made Guiliani and Mukasey appear to be desperate “statesmen” who were tone deaf to the corruption controversies swirling around the Turkish leader’s administration. Accepting Zarrab’s return would have exposed Erdogan to a public relations nightmare. If Guiliani or Mukasey had consulted Twitter before they left for Turkey they would have seen that the nation’s Twittersphere was exploding with ardent support for Preet Bharara, the prosecutor responsible for the arrest of Reza Zarrab.

President Trump fired Bharara approximately two weeks later on March 11, 2017. The move immediately ended Bharara’s effort to prosecute the case and kept the probe into Zarrab’s connections with the Turkish government, Michael Flynn and American banks out of the media spotlight. Trump’s decision also served to interfere with the prosecution of a Russian real estate company accused of laundering money through properties listed in New York City. Bharara’s replacement, acting Attorney General for Southern New York Joon Kim, would continue to prosecute each case but both investigations were served a temporary set back by Trump’s action.

On a third front, Trump’s firing of Bharara may have also set into motion the release of a Russian spy arrested and accused of espionage by Bharara in 2016. The spy, Yevgeny Buryakov, had been accused of recruiting Trump Foreign Policy Advisor Carter Page as an agent of the Russian intelligence services. After Trump fired Bharara, Buryakov was released from prison early and deported back to Russia. The move would later deny Mueller access to a critical witness. In all three instances, the President’s dismissal of the acting Attorney General served to obstruct and delay judicial oversight.

Despite Trump’s controversial intervention, the fate of Reza Zarrab, and his continued silence, remained a deep concern to many powerful players in the US and Turkey. Giuliani and Mukasey, still anxious to help, worked indefatigably to seek ways to extend and wield their considerable power on behalf of Zarrab, Flynn and Trump.

Undeterred by the glaring conflict of interest posed by their past legal work for the same US banks victimized in Zarrab’s scheme they submitted their affidavits to the Manhattan court overseeing Zarrab’s trial on April 14, 2017. To overcome the obvious conflict of interest inherent in their desire to represent Zarrab the court documents sent to District Judge Richard Berman suggested that their involvement in the case would not involve trial appearances. It was a show of extraordinary legal maneuvering that laid bare their thinly veiled attempt at impartiality. Judge Berman, justifiably upset, skewered Giuliani and Mukasey for their disingenuous claims. The obvious avoidance of Zarrab’s intimate connections to Iran was undeniably misleading. According to Berman, Iran was the “elephant in the room” and both affidavits, almost identical in their wording, made no mention of Iran at all. Instead both statements called upon the court to seek a diplomatic solution to a politically sensitive issue. In other words Giuliani and Mukasey were hoping that Berman would would simply make the case go away.

“Senior officials in both the US government and the Turkish government remain receptive to pursuing the possibility of an agreement that could promote the security of the United States and resolve issues in this case. Indeed, one of those officials stated that out of necessity he has grown used to functioning in an atmosphere that includes inaccurate and ill-intentioned leaks. That receptiveness is hardly surprising when one considers that none of the transactions in which Mr. Zarrab is alleged to have participated involved weapons or nuclear technology, or any other contraband, but rather involved consumer goods, and that Turkey is situated in a part of the world strategically critical to the United States. However, even the best-intentioned officials can find their efforts compromised by leaked information and misinformation. The court should treat most seriously any apparent effort to subvert an entirely lawful and not at all unprecedented attempt by Mr. Zarrab’s lawyers to pursue possible assistance that may benefit the national interests of the United States, on a state-to-state basis, that can be achieved in this case”.


Rudolf W. Giuliani

From the affidavit filed by Giuliani April 14, 2017

The motives of a such political “arrangement” are dubious at best. Securing Zarrab’s freedom without a trial, or public notice, might avert a public relations nightmare but it would undermine fiduciary responsibility and likely enable further criminal behavior on the part of the banks involved. Transparency is key to rooting out financial corruption. Money-launderers must work in tandem with corrupt bank personnel to be successful. A clean bank allegedly seeking criminal justice should never allow its legal representatives to play both sides of an issue involving bank compliance, especially when the support calls into question the complicity of the banks themselves.

To that end, an examination of the court documents and affidavits signed by Giuliani and Mukasey reveal a shaky house of cards that is “legal” by the slimmest of margins. Giuliani works as a lawyer for Greenberg Traurig, LLP. He is also a shareholder in the same firm. Mukasey serves as a counselor for Debevoise & Plimpton. Both firms have extensive ties to major banking institutions. HSBC, JP Morgan Chase, Deutsche Bank, UBS, Bank of America, Standard Charter, Wells Fargo and Citibank are counted among their clients. In the Superseding Indictment against Reza Zarrab and eight other defendants issued by the Southern District of New York it is alleged that at least one U.S. bank was involved in the scheme. This bank is referred to as “U.S. Bank–1”.

However, in each affidavit both counselors sought to minimize their roles in their firms, minimize their actions on behalf of bank clients and announced their desire to seek a “diplomatic” solution to Zarrab’s criminal activity. The consistency and character of their language throughout both affidavits is striking. The affidavits do not reflect any desire to get to the bottom of the case, arrest Zarrab or seek damages. It may sound obvious but he is their client. How and why Giuliani and Mukasey have elected to invoke a series of legal loopholes to represent a man who willing subverted US law is a grim reminder that the willingness to take any sort of work despite moral, ethical and national interest considerations is often rooted in one simple motivation, greed.

Also noted in the documents provided by Giuliani and Mukasey is a one year contract, established in 2014, between the Turkish Government and Gephardt Group Government Affairs, LLC. Gephardt Group is a Delaware Limited Liability Corporation, headed by former House Majority Leader Dick Gephardt. In the contract the Gephardt Group offers its premier lobbying services to the Government of Turkey, with the promise to represent and promote the interests of Turkey for a fee.

Section of services agreement between Gephardt group and Turkey. Originally filed under seal by Attorney Benjamin Brafman on behalf on Mssrs. Giuliani and Mukasey.

The pay to play scheme gets even darker when another contract posted in the affidavits reveals that Greenberg Traurig has a sub-contractual agreement to represent the Gephardt Group. In the document attached, “Rob” is Robert Mangas, a lawyer working for Greenberg Traurig, LLP who was tasked with providing legal counsel to the Gephardt Group. The letter, dated July 28 of 2014, was sent to Mangas by Thomas J. O’Donnell, the Managing Partner of Gephardt Group Government Affairs, LLC.

Section of letter from Thomas J. O’Donell of Gephardt Group Govt Affairs sent to Greenberg Traurig legal counsel Robert Mangas. Originally filed under seal by Attorney Benjamin Brafman on behalf on Mssrs. Giuliani and Mukasey.

Wrap your head around that one for a minute. Turkey hires Gephardt to clean up their reputation and Gephardt hires the legal counsel representing the banks Zarrab is defrauding. It’s a circular defense reminiscent of the shell games off-shore banking institutions use to obscure ownership of assets. It’s all spelled out in black and white and yet all leads go no where. Good luck getting to the bottom of it. Everybody is on the same page and no one is talking, especially not to anyone seeking the truth.

The last and final known effort to negotiate Zarrab’s diplomatic release came about a month after Giuliani and Mukasey filed their affidavits. Turkish President Recep Erdogan made a scheduled visit to the White House on Tuesday May 16, 2017. During the course of the day a press conference was held at the White House to reaffirm the strength of the US-Turkish alliance. Both Presidents declared their mutual commitment to fighting terrorism and Trump conveniently ignored Erdogan’s violent crack down on the Turkish civil service. If there was any discussion of Zarrab or his money laundering activities it was conducted in private.

Later that afternoon, Erdogan and his security team returned to the Turkish embassy to find a protest directed at the Turkish President taking place outside the building. Before entering the embassy, the Turkish President stood passively behind his limousine and watched his security team viciously attack the unarmed protesters as they held up signs and chanted political slogans.

Throughout the following day the violent attack dominated the news cycle. The Voice of America video documenting the event became a haunting display of Turkey’s approach to opposing political viewpoints and Erdogan’s armed security detail made a mockery of Trump’s obsequious deference to the thuggish regime.

The camera work documenting the melee, provided by the United State’s own international public broadcasting network, was so good it appeared surreal. Erdogan’s entire entourage was either participating in the aggressive action or merely watching the assault unfold while rush hour traffic flowed past, bathed in the waning golden light of a perfect May afternoon. Journalists and bloggers across the country expressed their disbelief. Never before had a senior diplomatic security crew so violently attacked a group of peaceful protestors.

On the following day Assistant Attorney General Rod Rosenstein signed an order appointing Robert Mueller to the position of Special Counsel for the Russian investigation. Donald F. McGahn II came into the White House Oval Office and formally notified President Trump at 5:35 pm. Had Erdogan been forewarned of the impending investigation? It would certainly seem so. Trump’s freedom to negotiate a diplomatic solution had been dealt a serious blow by the announcement. Zarrab was a political time bomb and President Erdogan stood to lose everything if the U.S. judicial system carried out their mandate.

Originally published at




Accomplished cyclist, computer geek, chef and Emmy Award winning audio engineer. Aspiring to be an open source investigative journalist.

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Robert Qua

Robert Qua

Accomplished cyclist, computer geek, chef and Emmy Award winning audio engineer. Aspiring to be an open source investigative journalist.

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