Ex-McKinsey Consultant Banki’s Conviction Reversed in Part

October 26, 2011
Mahmoud Reza Banki

Business Week on October 24, 2011 released the following:

“By Bob Van Voris and Patricia Hurtado

(Updates with hearing date in 14th paragraph.)

Oct. 24 (Bloomberg) — Former McKinsey & Co. consultant Mahmoud Reza Banki’s convictions for violating the Iran trade embargo and running an unlicensed money-transfer business were thrown out on appeal.

A federal appeals court in New York today reversed Banki’s June 2010 conviction on three counts that charged him with violating U.S. regulations barring trade with Iran and running an informal transfer business called a hawala.

The court upheld Banki’s convictions on two counts of lying in response to a subpoena from the U.S. Treasury Department about the matter. The court said prosecutors may retry Banki on two of the three overturned counts.

Banki, who has been in U.S. custody since his arrest in January 2010, has served most of his 30-month sentence and is due to be released no later than March, according to the U.S. Bureau of Prisons website.

The decision today may affect the government’s attempt to collect $3.3 million in asset forfeitures it’s seeking in connection with the overturned criminal charges.

Banki, 35, is a naturalized U.S. citizen born in Iran. He has a Ph.D. in chemical engineering from Princeton University.

‘Life Back Together’

“He’s going to be able to put his life back together and live a very productive life,” said Baruch Weiss, a lawyer for Banki.

Banki used a system called a hawala, popular in the Middle East and South Asia, to transfer funds, according to the appeals court.

U.S. Circuit Judge Denny Chin, writing for a three-judge appeals panel, said Banki’s family transferred $3.4 million to him from Iran. He received as many as 56 hawala transfers into his bank account from 44 different people and companies over more than three years, Chin said.

In a hawala, money doesn’t physically move through the banking system across borders. Instead, customers transfer funds to operators known as hawaladars in one country, and corresponding funds are distributed by associate hawaladars in another country. The parallel accounts are later settled by the hawaladars in a variety of ways.

Defense lawyers claimed Banki didn’t violate the law because he got the money from his family and reported the funds to the U.S. government.

“This is a vindication of the defense,” Weiss said of the appeals court decision.

Ellen Davis, a spokeswoman for Manhattan U.S. Attorney Preet Bharara, said his office was reviewing the opinion and had no further comment.

U.S. District Judge John Keenan set a hearing in the case for Nov. 2, according to Weiss.

The case is U.S. v. Banki, 1:10-CR-00008, U.S. District Court, Southern District of New York (Manhattan).”


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