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Iran Sanctions Case Being Dropped by U.S. Despite Conviction

Bloomberg logo Bloomberg 05/06/2020 Chris Dolmetsch

(Bloomberg) -- In a rare move, federal prosecutors are seeking to withdraw a criminal case against an Iranian banker who was convicted of violating U.S. sanctions.

Ali Sadr Hashemi Nejad, 40, was found guilty in March of helping to funnel $115 million through the U.S. financial system to Iranian entities from a construction project in Venezuela. Prosecutors said Sadr set up a network of companies and bank accounts to mask the involvement of his father, the head of Iranian industrial conglomerate Stratus Group and one of the country’s most successful businessmen.

In a filing on Friday in Manhattan federal court, prosecutors asked a judge for permission to drop the case, citing the likelihood of continued litigation over suppression of evidence. Given the resources that would be required to address all the evidentiary issues, continuing to pursue the case “would not be in the interest of justice,” they said.

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Sadr, who attended Cornell University, lived in the U.S. and kept an apartment in the Georgetown section of Washington. He was convicted of five counts related to sanctions violations, including bank fraud and money laundering, and acquitted of one count of conspiracy.

He testified in his own defense at trial, saying he set up the companies in an effort to diversify his father’s business empire outside of Iran.

‘Extraordinary Motion’

Sadr’s lawyer, Reid Weingarten, said he and his client were aren’t sure why the government brought the “extraordinary motion” to drop the case. Weingarten had already asked U.S. District Judge Alison Nathan to dismiss the case, citing what he said was exculpatory evidence revealed by the government after the verdict, including undisclosed interviews with witnesses.

“We hope it’s that they finally saw the case as we did -- that it never should have been brought and it was compromised from the very beginning,” Weingarten said. “The whole concept of violating sanctions is you’re acting contrary to the interests of the United States. The overwhelming evidence is that this was a fellow who was utterly patriotic, was thrilled to live in the United States, wanted to live in the United States for the rest of his life and was incredibly hostile to the Iranian government.”

The U.S. Attorney’s Office in Manhattan, which brought the case, declined to comment.

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The prosecutors’ move is “highly unusual,” said Anthony Sabino, a law professor at the Peter J. Tobin School of Business at St. John’s University, noting that anything that could be considered exonerating needs to be turned over by prosecutors by law. “This being disclosed after the conviction is highly unusual.”

Sabino said the case draws parallels with those of former Alaska Senator Ted Stevens, who was found guilty in 2008 of seven corruption-related felonies before his verdict was set aside because of misconduct by prosecutors, and former National Security Advisor Michael Flynn, who is currently trying to withdraw his guilty plea for lying to federal agents about conversations with a Russian ambassador.

“This is going to be egg on the face for the prosecutors’ office,” Sabino said. “I just have trouble with it. I allow for all human error. But I just find it difficult to fathom how this could have happened in this particular instance. It’s been known to happen, but it does not add gloss to the resume of the Southern District in this particular case.”

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