Bloomberg News

Ex-McKinsey Consultant in Embargo Case Again Wins Appeal

February 21, 2012

(Updates with Banki’s lawyer’s comment in third paragraph.)

Feb. 21 (Bloomberg) -- A former McKinsey & Co. consultant whose 2010 conviction for violating a trade embargo with Iran was partially set aside in October may face a retrial on three counts after an appeals court sent the case back to a trial judge.

Mahmoud Reza Banki, a naturalized U.S. citizen born in Iran who was sentenced to two and a half years in prison after his New York jury trial, was freed in November after an appeals panel overturned convictions on three of five counts. The government appealed that ruling and the same panel today issued an amended decision that gives prosecutors the option to seek a retrial on the three counts.

“We’re grateful that the panel largely denied the government’s rehearing petition and that it declined to reinstate any of the convictions,” said Kathleen M. Sullivan, a partner at Quinn Emanuel Urquhart & Sullivan LLP who represents Banki, said in a phone interview.

Banki had been in U.S. custody since his arrest in January 2010 and had served 22 months of his 30-month term before he was released from prison in November.

The defendant, who has a doctorate in chemical engineering from Princeton University, was originally accused of running a “value-transfer” business that essentially moved money to residents of Iran from 2006 to 2009 in violation of the U.S. embargo. Banki received about $4.7 million as part of the transfer process and used the money to buy a $2.4 million condominium, invest in securities and pay credit-card bills, the government charged.

Reported the Funds

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.

In October, a three-judge panel of the U.S. Court of Appeals in New York reversed three counts and said the government could retry Banki on two of them. The appeals court also vacated a charge that he violated the trade restriction and upheld Banki’s convictions on two counts of lying in response to a subpoena from the U.S. Treasury Department about the matter.

Prosecutors in the office of Manhattan U.S. Attorney Preet Bharara then requested a rehearing before the appeals court.

In today’s decision, the appeals panel reversed three counts and sent them back for possible retrial to U.S. District Judge John Keenan in Manhattan, who presided over the 2010 trial. The three charges include conspiring to violate the Iran trade embargo, violating the regulation and operating an unlicensed money-transmitting business.

Jerika Richardson, a spokeswoman for Bharara’s office, declined to comment on today’s ruling or whether the U.S. would seek to retry Banki.

“Mr. Banki remains confident that he would be acquitted by a jury under the proper instructions should the government chose to retry these counts despite the fact that he has served nearly all of his original sentence,” Sullivan said.

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

--With assistance from Bob Van Voris in New York. Editor: Peter Blumberg

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net

To contact the editor responsible for this story: Michael Hytha in San Francisco at mhytha@bloomberg.net.


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