NEW YORK – A management consultant is accused of setting up a system for Iranians to move money internationally in violation of a U.S. embargo, and federal prosecutors used his arrest to show they are trying to stop money from flowing to Iran.
Mahmoud Reza Banki, 33, of New York, ignored the dangers of breaking laws designed to protect the United States when he set up a cash-transfer network known as a hawala, U.S. Attorney Preet Bharara said.
"Our laws recognize a national emergency based upon the threat Iran poses to the security of the United States," Bharara said in a statement Thursday announcing the arrest.
A 2008 State Department report found that only 20 percent of money remitters in the United States had registered with the government even though it is a criminal offense to operate an unlicensed money-transfer business.
The Iran Trade Embargo, initiated in 1995, prohibits U.S. citizens from supplying goods, services or technology to Iran or the government of Iran. Banki was charged with violating the embargo, operating an unlicensed money-transmitting business and conspiracy to do both.
Mark Lebow, a lawyer for Banki, said his client will fight the charges because he is innocent.
He said Banki came to the United States as a youth and attended high school before going to Purdue University, the University of California, Berkeley and Princeton University, where he earned a doctorate in chemical engineering. He said Banki works for McKinsey & Co., a management consulting firm.
Lebow said the money that led to the charges came from his family, which bought the apartment for him.
"The issue is, does this violate the currency-control regulations that are in effect?" he said.
Prosecutors said Banki operated the money-transfer business for the last four years, receiving about $4.7 million from companies and individuals in Slovenia, Russia, Sweden, the Philippines and the United States.
The government said he received the funds with the understanding that an equivalent amount of Iranian currency would be sent to Iranian residents.
Meanwhile, Banki used some of the funds to make joint investments in the United States with an Iran-based co-conspirator, prosecutors said.
The government said Banki bought a $2.4 million Manhattan condominium and made payments on his credit card accounts, including about $55,000 for a single month in the summer of 2007.
If convicted, Banki could face up to 25 years in prison.