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By Chad Bray of Dow Jones Newswires
January 7, 2010
Source: Dow Jones Newswires/Wall Street Journal
NEW YORK –A New York management consultant was arrested Thursday on charges he operated a unlicensed money-transfer business between the U.S. and Iran, violating a U.S. trade embargo, prosecutors said Thursday.
Mahmoud Reza Banki, 33 years old, was charged with conspiracy, violating the International Emergency Economic Powers Act and conducting an unlicensed money-transmitting business. He faces up to 20 years in prison on the IEEPA violation count.
A lawyer for Banki didn’t immediately return a phone call seeking comment.
Banki, of Manhattan, is expected to appear before a U.S. district judge in Manhattan later Thursday.
“Our laws recognize a national emergency based upon the threat Iran poses to the security of the United States,” U.S. Attorney Preet Bharara said in a statement. “Banki allegedly paid no heed to the dangers of breaking laws designed to protect our country’s citizens, moving and spending illicit millions.”
Prosecutors from the U.S. Attorney’s office in Manhattan alleged Banki, from January 2006 and September 2009, provided money-transmitting services to residents of Iran by operating a “hawala,” a type of informal value transfer system in which money doesn’t physically cross international boundaries through the banking system.
In the hawala system, funds are transferred by customers to a hawala operator in one country and corresponding funds, less any fees, are disbursed to recipients in another country by hawala associates there, prosecutors said.
Banki allegedly received wire transfers of about $4.7 million from companies and individuals for this purpose, including persons in Saudi Arabia, Kuwait, Latvia, Slovenia, Russia, Sweden, the Philippines and the U.S., prosecutors said.
He allegedly informed an Iran-based co-conspirator when the funds had been received and the co-conspirator disbursed funds there, prosecutors said.
Banki also allegedly used some of the funds to make joint investments in the U.S. with his Iran-based co-conspirator, prosecutors said. He also used funds to purchase a $2.4 million condominium in Manhattan, to invest in securities for himself and the Iranian co-conspirator, and to make credit-card payments.
The case is being investigated by the U.S. Attorney’s office and the U.S. Department of Homeland Security’s U.S. Immigration and Customs Enforcement.
-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com