U.S. Targets Turkey-Based Money Laundering Schemes With Links to Senior Turkish Officials

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The U.S. Department of Justice (DOJ) said on Monday that it will seek to extradite Sezgin Baran Korkmaz, a Turkish businessman Austrian authorities arrested on June 19 for his alleged role in money laundering schemes that attempted to defraud the U.S. Treasury of over $1 billion. The suspect’s close links to senior Turkish officials could further strain U.S.-Turkish relations if he turns state’s witness in a U.S. court and exposes the role Ankara has played in facilitating and covering up various illicit financial schemes.

Korkmaz and his investment company, SBK Holding, have ties to Jacob and Isaiah Kingston, who pleaded guilty in July 2019 to defrauding the United States of $512 million in renewable-fuel tax credits through their company Washakie Renewable Energy LLC in Plymouth, Utah. As part of DOJ’s efforts to recover the Kingston brothers’ assets, U.S. prosecutors submitted to a Utah federal court a list of Turkish properties owned by the Kingstons and managed by Korkmaz and SBK Holding. Relatedly, in March 2020, a federal jury in Salt Lake City convicted California businessman Lev Aslan Dermen — a co-conspirator with the Kingstons and business partner of Korkmaz — of fraud and money laundering.

Korkmaz’s connections to Turkish President Recep Tayyip Erdogan and his inner circle make his potential extradition and testimony regarding money laundering and wire fraud charges a sensitive matter for Ankara. In September 2017, Erdogan met with Korkmaz and Jacob Kingston to discuss their investments in Turkey. Erdogan has since been trying to purge a photo of the meeting from the media by Turkish court orders. Korkmaz was also involved in Erdogan’s early outreach efforts to the Trump administration through unregistered lobbyists.

The role Korkmaz played in Ankara’s outreach has grabbed the attention of investigative journalists and U.S. authorities, including Special Counsel Robert Mueller. In September 2017, Korkmaz received a subpoena from Mueller to testify before a grand jury in Washington for “possible violations of federal criminal laws involving the Foreign Agents Registration Act.”

Moreover, the Organized Crime and Corruption Reporting Project exposed last March that Korkmaz played a central role in Erdogan’s September 2018 backchannel diplomacy with the Trump administration to free North Carolina pastor Andrew Brunson from a Turkish prison.

The Erdogan government may have shielded Korkmaz and his associates from U.S. and Turkish legal action until recently, according to video confessions that Turkish mobster Sedat Peker started posting on YouTube on May 2 regarding illicit affairs involving Erdogan’s inner circle. Although both Dermen’s guilty verdict and the Kingston brothers’ plea agreements refer to the role played by Turkey-based individuals and entities in their tax fraud scheme, U.S. prosecutors thanked law enforcement partners in only Luxembourg and Malta “for their assistance in the case,” raising suspicions that Ankara was uncooperative in the process.

In a superseding indictment U.S. prosecutors filed against Korkmaz on April 28 and unsealed on June 21, they allege that Korkmaz offered to provide the Kingstons with “protection from a federal grand jury investigation, as well as civil lawsuits” against their company, “through unnamed government officials code-named the ‘grandfather’ and ‘grandpa.’”

As Korkmaz’s legal troubles have mounted, the Turkish government has pursued a strategy of obstruction guised as cooperation. Last December, Istanbul prosecutors issued a detention warrant against Korkmaz, and Ankara attempted to extradite him from Austria right after his arrest on June 19 to prevent his extradition to the United States. In Turkey, the government could easily manipulate judicial proceedings to prevent embarrassing revelations. Given that Korkmaz’s testimony potentially could shed light on a wide range of illicit financial activities in Turkey and implicate a long list of Turkish entities and individuals, including senior officials, U.S. authorities should take swift action to prevent yet another cover-up attempt by the Erdogan government.

By: Aykan Erdemir – a former member of the Turkish parliament and senior director of the Turkey Program at the Foundation for Defense of Democracies (FDD), where he also contributes to FDD’s Center on Economic and Financial Power (CEFP). For more analysis from Aykan, the Turkey Program, and CEFP, please subscribe HERE. Follow Aykan on Twitter @aykan_erdemir. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.

Source: FDD

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