Prosecutor says Pilatus set up with ‘criminal proceeds’ from sanctions-busting Venezuela housing project

The US government attorney prosecuting Pilatus bank owner Ali Sadr Hasheminejad has linked his Malta bank with “criminal proceeds” from the US dollar payments made from the Venezuelan government to the Iranian family’s business group.

Geoffrey Bearman, who is leading the sanctions-busting case against Hasheminejad, still detained in a US prison, declared that €8 million and 1 million Swiss francs from the payments made to the Hasheminejads on a Venezuelan housing construction project, were used to set up Pilatus Bank.

Hasheminejad is charged with breaching US sanctions on Iran by processing dollar payments from the Venezuelan housing project, using the US banking system, to pay the money into the Hasheminejads’ business group Status, which was responsible to build the housing project.

READ MORE Pilatus bank owner Ali Sadr Hasheminejad’s net worth is over $24 million, lawyers tell court

Hasheminejad is also charged with money laundering throughout the dollar transactions to the Iranian beneficiaries.

In his opposition to a request for bail, which Hasheminejad is requesting with a package of over $30 million in bonds from family and friends, Bearman poured cold water over Hasheminejad’s lawyers claims of the banker’s equity in Pilatus.

The bank is now under controllership by the Maltese financial regulator after it froze its operations.

“Whatever assets remain after the bank is unwound by the Maltese authorities will be ‘significantly’ less than $12.9 million. But, more significantly, regardless of how much money the defendant ultimately receives, his equity in Pilatus Bank is forfeitable because it constitutes criminal proceeds directly linked to the Venezuela project – the defendant used money from the project (CHF 1 million (Swiss Francs) and €8 million) to establish and capitalize Pilatus Bank in 2013,” Bearman said.

The US attorney also alleged that Hasheminejad’s $1.5 million Washington D.C. apartment was also forfeitable “because it was purchased with criminal proceeds linked to the Venezuelan project”; as were the California pistachio farms, with an alleged $5.7 million.

But Bearman also said that properties owned by the Hasheminejads in the US were also forfeitable – namely his mother’s Shokouh Azad’s apartment in Maryland and his sister Pegah Sadr’s West Hollywood apartment and Malibu land.

“At a minimum, approximately $24.5 million of the defendant’s and his family’s assets that would secure the proposed $20 million bond are forfeitable and/or encumbered. Accordingly, the core of the defendant’s proposed bail package cannot reasonably assure the defendant’s presence at trial because the defendant and his family members risk losing the bulk of the security whether the defendant flees or not.”

From left to right: Ali Sadr Hasheminejad’s Washington DC apartment, the Malibu land bought by his sister Pegah, his mother’s Maryland apartment, and Pegah Sadr’s West Hollywood apartment

Geoffrey Bearman is insisting that Hasheminejad’s bail package was “inadequate given the defendant’s substantial incentive and ability to flee, and given his access to significant resources overseas.”

Hasheminejad has previously accepted to have travel limited to the tristate area and be electronically tagged.

But Bearman insists that Hasheminejad’s two sisters claimed to have no knowledge of their ownership interest in their father’s businesses, which he said were not credible in light of emails between the defendant and his sister that discuss their interests in some of their father’s companies.

In an email presented in court, Hasheminejad writes to Pegah Sadr telling her: “All of these companies [including Stratus International Contracting] belong to our family including you, me, and negarin [sic].”.

Bearman also said that almost a quarter of the bond pledges made to secure Hasheminejad’s bail came from members of the defendant’s family, and approximately one-third from people who live outside the United States and have offered property located outside the United States. “The former stand to lose their pledged property anyway pursuant to forfeiture, while there is no reasonable danger that the government could successfully seize the property of the latter if the defendant were to flee. Accordingly, this bond too suffers from fundamental flaws, and it cannot reasonably assure that the defendant will not flee if released after spending two months in custody, and when he faces the prospect of spending many more years in federal prison if convicted.”

In a reaction, Nationalist MEP David Casa said this was “overwhelming evidence” that Pilatus Bank was involved in criminal activity. He said he had already drawn attention to strong suspicions concerning the legitimacy of the capital used to set up the bank in multiple letters to the ECB, the EBA, Moneyval and the MFSA. During a meeting with MEPs at the TAX3 Committee, MFSA representatives informed MEPs that during the due diligence process they had commissioned an ‘intelligence report’ by a foreign independent firm that cleared Pilatus Bank. The MFSA would not divulge the identity or further elaborate on the contents of this document.

“That this whole affair has been a train wreck for the MFSA is not in question. The MFSA should have protected Malta’s financial sector. Instead, it allowed Keith Schembri’s banker to set-up shop and conduct criminal activity with complete impunity. If the ‘intelligence report’ that the MFSA claims was commissioned exists,c it should be published immediately. It might slightly mitigate the huge damage this whole affair is doing to the MFSA’s reputation and for establishing whether this is a case of gross negligence or complicity. What is certain at this point is that it is either one or the other.”