United States v. Banki

Mahmoud Reza Banki,[https://www.linkedin.com/pub/m-reza-banki/9/3a0/501 "Mahmoud Reza Banki LinkedIn profile page"] is an Iranian-American and a US citizen. He immigrated to the United States in the 1990s to attend college at the University of California at Berkeley and later at Princeton University. He was working at McKinsey & Company at the time of the case.

Between 2006 and 2009, Banki's family sent proceeds of his parents' divorce settlement, approximately $3.4 million to him, from Iran to the US.[https://www.nytimes.com/2010/05/13/nyregion/13hawala.html?_r=0 "To Defendant, a U.S. Success Story; to Prosecutors, a Money Broker to Iran", by Benjamin Weiser], New York Times, May 12, 2010 The money came into a single bank account at Bank of America, over multiple transfers through an informal money transfer systems which the defendant argued was legal and the only means of sending money out of Iran at the time. Banki used the majority of this money to purchase an apartment in downtown Manhattan.

Prosecutors argued that over this three-year period, between 2006 and 2009, Banki had allegedly violated the US-imposed Iran sanctions.

The United States enforces sanctions against several countries worldwide."United States Embargoes" These sanctions are instituted by the Office of Foreign Assets Control (OFAC) under the Department of Treasury of the United States.

The US Treasury's OFAC designates family money as exempt from the sanctions law.[http://www.treasury.gov/resource-center/sanctions/programs/documents/iran.pdf "What you need to know about U.S. Economic Sanctions", by U.S. Department of the Treasury Office of Foreign Assets Control ]

A detailed letter by former head of the Office of Foreign Assets Control (OFAC), Richard Newcomb, to the court during the case of US v. Banki outlined the sanctions regimen and intent; undermining the prosecutor's case against Banki as not being in line with the practices of OFAC or the intent of the sanctions. Nor were the charges in line with the agency's approach while Richard Newcomb was head of the agency:

{{blockquote|"The underlying purpose for these multiple U.S. economic sanctions programs against Iran was to target the Government with the use of economic methods to change the behavior of the leadership in Iran toward the United States and the international community at large, and to thwart Iran's support for and funding of terrorism, its efforts to disrupt the Middle East Peace Process and its development of weapons of mass destruction. Central to the effort was to direct and focus the sanctions impact on the Government of Iran, its leadership, its various agencies, instrumentalities, controlled entities and support structure, including Iran's Revolutionary Guard Corps, and other such organizations necessary for the support and continuation of the current Governmental hierarchy. The industrial and commercial sectors - oil and gas, financial, manufacturing and other sectors that contribute significantly to Iran's economy and the Government's ability to continue its threatening behavior were also of primary concern. The program goal was never intended to target the Iranian people. The Iranian Diaspora is large. As many as 4 million or more Iranians live as expats around the world. It is estimated that there are as many as 800,000 Iranian nationals currently resident in the United States as dual nationals, green card holders or with other visa status. A very large percentage are supporters of U.S. policy toward Iran, and it is the goal of the U.S. government to continue cultivating that support while isolating the government of Iran. In virtually all economic sanctions programs administered by OFAC (with the exception of the 1963 program against Cuba where Cuban nationals were also included as targets), including the Iran sanctions program, it was always understood that there was a dual goal and purpose – to bring as much economic pressure as possible to bear on the intended target without causing unintended hardship and suffering on the civilian population, the very people whose support and assistance the U.S. and the international community will need if and when a successor government emerges."[http://rezastory.com/wp-content/uploads/2016/04/MRezaBanki_RichardNewcombLetter.pdf?iframe=true Former Head of OFAC's letter in support of Mahmoud Reza Banki ]}}

On January 7, 2010, U.S. Immigration and Customs Enforcement (ICE) agents authorized by a grand jury with a search and arrest warrant entered the residence of Mahmoud Reza Banki in New York City and arrested him.[https://www.justice.gov/archive/usao/nys/pressreleases/January10/bankimahmoudrezaarrestindictmentpr.pdf "Manhattan U.S. Attorney Charges Management Consultant For Criminal Violations Of Iran Trade Embargo", January 7, 2010 ] He was arraigned before Judge John F. Keenan on an indictment charging him with three counts: 1. Conspiracy to violate the U.S.-imposed Iran sanctions and conspiracy to run an unlicensed money transmittal system, 2. Violation of the Iran sanctions, and 3. Running of an unlicensed money transmittal business.[http://rezastory.com/wp-content/uploads/2016/04/MRezaBanki_Indictment.pdf?iframe=true Indictment against Mahmoud Reza Banki] The indictment accused Banki of receiving $4.7 million in violation of the Iran sanctions. Prosecutors filed a superseding indictment later changing the amount to $3.4 million and adding two false statement charges to the three initial charges.[http://rezastory.com/wp-content/uploads/2016/04/MRezaBanki_SupersedingIndictment.pdf?iframe=true Superseding Indictment against Mahmoud Reza Banki]

Banki was denied bail.[http://www.newsday.com/business/nyc-consultant-denied-bail-in-iran-trade-case-1.1717479 "NYC consultant denied bail in Iran trade case", by Larry Neumeister], Associated Press, January 21, 2010 He was held in high and maximum security Incarceration in the United States Security Levels detention facilities pending trial.

The indictment charging Banki argued that Banki should have gotten authorization in the form of a license for the money he received:

"(vi) Under the ITR, any United States person who wishes to engage in a transaction otherwise prohibited by the ITR must first file an application for a license and receive approval from OFAC. 31 C.F.R. §§ 56.600, 560.501, and 501.801.".[http://rezastory.com/wp-content/uploads/2016/04/MRezaBanki_Indictment.pdf?iframe=true Indictment against Mahmoud Reza Banki]

On May 10, 2010, a three-week trial commenced where Second Circuit District judge John F. Keenan presided. The trial concluded on June 4 when the jury returned a guilty verdict on all five counts, albeit, guilty on a lesser charge of aiding and abetting rather than running a sanctions violation money transmittal system.[https://www.nytimes.com/2010/06/05/nyregion/05hawala.html?_r=0 "Immigrant Convicted of Violating Iran Embargo", by Benjamin Weiser], New York Times, June 4, 2010

On June 7, 2010, despite the superseding indictment charge of $3.4 million, the same jury agreed to forfeit one bank account associated with a $6,000 transaction as the proceeds of the charges and the guilty verdict. The jury ruled that Mahmoud Reza Banki's other assets including the apartment he had purchased with the family funds he had received was not forfeitable nor was it a direct proceed of any crime.

Judge Keenan overruled the jury only in the case of the forfeiture verdict on the basis that the jury might have been "confused" and awarded the government prosecutors a money judgment order, essentially ignoring the jury verdict on forfeiture and awarding the US Attorney's office $3.4 million, to be paid by Banki.Court transcript: Case: 10-3381; Southern District of New York

The defense objections throughout trial were overruled. One such overruling was the judge's decision not to allow for jury instructions on the family money exception from the sanctions law. Essentially, the jury was not told that transfer of family money is legal; that family money can be sent to and received from Iran and is an exception in the US sanctions law against Iran. This would become a material issue at the appellate level and the primary reason for the reversal of the charges.

Judge Keenan also did not allow the defense to call Richard Newcomb, former head of OFAC, to testify as an expert witness on the sanctions charges despite his qualifications: he had been head of OFAC for 17 years (from 1987 to 2004), where he was the author of the sanctions law. Richard Newcomb was not only the author of the underlying sanctions regulations but in his capacity as head of OFAC he had also been in charge of enforcing the sanctions law not just against Iran but all countries US had sanctions against.[http://rezastory.com/wp-content/uploads/2016/04/MRezaBanki_RichardNewcombLetter.pdf?iframe=true Former Head of OFAC's letter in support of Mahmoud Reza Banki ]

During sentencing, over 120 letters of support were sent to Judge Keenan to ask for leniency. Among those were letters from Nobel Peace Laureate Shirin Ebadi and ex-Director of the Office of Foreign Assets Control (OFAC) Richard Newcomb. In a lengthy letter, Richard Newcomb made the case for Banki's innocence of the sanctions charges and highlighted that through Newcomb's administration of the sanctions program in the US the program was "never intended to target the Iranian people" and that "the Iranian-American community commonly and openly uses remittance forwarding service providers, including hawalas to move family funds back and forth between the United States and Iran, typically with no penalty, civil or criminal."[http://rezastory.com/wp-content/uploads/2016/04/MRezaBanki_RichardNewcombLetter.pdf?iframe=true Former Head of OFAC's letter in support of Mahmoud Reza Banki ][http://www.payvand.com/news/11/jan/1205.html "IABA And Partner Organizations File Amicus Brief in United States v. Banki" Iranian American Bar Association]

On August 16, 2010, Judge Keenan sentenced Banki to 30 months in prison.[https://www.nytimes.com/2010/08/17/nyregion/17banki.html?_r=1 "Man Gets 2 ½ Years for Breaking Iran Embargo" by Benjamin Weiser], New York Times, August 16, 2010

Shortly after being sentenced Banki filed for appeal. The Iranian American Bar Association along with 10 other advocacy and civil rights groups filed a separate amicus brief with the United States Court of Appeals for the Second Circuit. The amicus brief argued that U.S.-Iran sanctions "are not aimed at the Iranian people, and therefore they contain exemptions permitting certain humanitarian transactions and family remittances."[http://rezastory.com/wp-content/uploads/2016/04/amicus-brief.pdf?iframe=true Brief of Amici Curiae In Support of Defendant-Appellant Mahmoud Reza Banki]

For about 11 months (from January 7, 2010, to December 1, 2010) Banki was held in high and maximum-security detention centers in Manhattan and Brooklyn (MCC and MDC).[http://www.bop.gov/about/facilities/federal_prisons.jsp Bureau of Prisons Facilities] For December 2010 Banki was transferred to the Taft Correctional Institution's deportation prison outside Bakersfield in California. In January 2011 Banki was transferred to the lower-security Taft prison, where he remained pending the appellate decision. Upon release Banki had served 665 days, nearly 22 months in prison.

On October 24, 2011, the United States Court of Appeals for the Second Circuit ruled in favor of Banki and reversed the sanctions charges against him. Judge Keenan's court ordered Banki's release on November 2, 2011.[https://www.law360.com/articles/279999/2nd-circ-nixes-conviction-for-iran-money-transfer-system "2nd Circ. Nixes Conviction For Iran Money Transfer System"] By Abigail Rubenstein Law360 October 24, 2011

The Appellate court ruled that Judge John F. Keenan had erred at trial in denying Banki's defense's request to instruct the jury on the law that specifically exempts family money as an exception to the sanctions law, permitting such transfers without the need for a license:

"However, U.S. depository institutions are permitted to handle funds transfers, through intermediary third-country banks, to or from Iran or for the direct or indirect benefit of the Government of Iran or a person in Iran, arising from several types of underlying transactions, including:

a) a noncommercial family remittance;

b) an exportation to Iran or importation from Iran of information and informational materials;

c) a travel-related remittance;

d) a payment for the shipment of a donation of articles to relieve human suffering; or

e) a transaction authorized by OFAC through a specific or general license.".[http://www.treasury.gov/resource-center/sanctions/programs/documents/iran.pdf "What you need to know about U.S. Economic Sanctions", by U.S. Department of the Treasury Office of Foreign Assets Control ]

The final appellate court brief stated: "Banki's conviction [on the sanctions charges] cannot stand".[http://rezastory.com/wp-content/uploads/2016/04/Bankiappellateopinionfeb2012.pdf?iframe=true US Court of Appeals Decision]

Prosecutors reopened the case, seeking a retrial in February 2012. However, after a few months of delay and assignment of a new judge, the case was closed criminally with no option for future civil or criminal prosecution. Rather than pay for the high cost of a second criminal defense trial, Banki agreed to relinquish $710,000 of his assets. In exchange, prosecutors agreed without going through a second trial that Banki was not guilty of the sanctions charges, and that they would not pursue the criminal or civil cases further.

The case was permanently closed on July 24, 2012, with the final word being the success of Banki's appeal, finding that he was not guilty of the sanctions charges for which he had been arrested imprisoned for 22 months. In the final court hearing Banki's prison record was cleared. Judge Engelmayer in clearing Banki's prison record called him a "talented man, even brilliant".[http://iran-times.com/banki-told-debt-to-society-overpaid/ "Banki told debt to society overpaid"] Iran Times The judge also stated: ". . . the damage to Mr. Banki's life brought about by his lengthy incarceration, occasioned by his confinement, cannot be measured only by the 22 months in which he lost his liberty and which he cannot get back".Court transcript: Case: 10-3381; Southern District of New York

Since his release, Banki has completed a Masters' in Business Administration from UCLA Anderson School of Management. Banki spoke about his case for the first time publicly at a TED Conference at UCLA in 2014 in an effort to raise awareness about the justice system.[https://medium.com/@MRezaBanki/my-665-days-in-prison-56a35d2ec511 My 665 days in prison][http://rezastory.com/ted-week Mahmoud Reza Banki's TED talk at UCLA] He also spoke about the uncertain life path he now faces in the US and the difficulty he faces in finding employment due to his continued status as a felon despite his appellate win. There are plans for a documentary of his story.[http://rezastory.com/documentary/ U.S. v Banki Documentary]

Banki's case raises questions not just about the ambiguity and impracticality of the sanctions laws for Iranian-Americans but speaks to the broader impact that the current criminal justice system can have on the path of a "success story".[https://www.nytimes.com/2010/05/13/nyregion/13hawala.html?_r=0 "To Defendant, a U.S. Success Story; to Prosecutors, a Money Broker to Iran" by Benjamin Weiser], New York Times, May 12, 2010

With support from 13 Congressmen and a Senator, Banki filed for a Presidential Pardon.Larry Neumeister, [http://www.bigstory.ap.org/article/a11228a81f304dafa6a836b7704a9cbc Cleared of violating Iran sanctions, man hopes for pardon.] Associated Press The Big Story, December 28, 2016.[http://rezastory.com/pardon Presidential Pardon Efforts]

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• {{caselaw source|case=United States v. Banki, 685 F.3d 99 (2nd Cir. 2011)|courtlistener=https://www.courtlistener.com/opinion/623245/united-states-v-banki/|other_source1=Leagle|other_url1=https://www.leagle.com/decision/infco20120222137|other_source2=Google Scholar|other_url2=https://scholar.google.com/scholar_case?case=15480277678836572804}}

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Category:2011 in United States case law

Category:United States Court of Appeals for the Second Circuit cases

Category:Criminal justice

Category:Informal value transfer systems

Category:International sanctions

Category:Iran–United States relations

Category:United States District Court for the Southern District of New York cases

Category:Trials in New York (state)