US arrests Pilatus Bank chairman over alleged $115 million sanctions evasion scheme

The chairman of the controversial private Maltese bank Pilatus, Ali Sadr Hasheminejad, has been arrsted in the United States.

Hasheminejad, 38, the son of an Iranian banker and holder of a Saint Kitts and Nevis passport, was arrested on U.S. charges that he participated in a scheme to evade U.S. sanctions and funnel more than $115 million paid under a Venezuelan construction contract through the U.S. financial system, federal prosecutors said on Tuesday.

Hasheminejad, was charged in a six-count indictment filed in federal court in Manhattan accusing him of a role in a scheme to evade U.S. economic sanctions against Iran, prosecutors said.

Hasheminejad was arrested on Monday in Dulles, Virginia, according to court papers reported by Reuters.

READ MORE David Casa wants British authorities to act fast on Pilatus’s London branch

Prosecutors said Hasheminejad's family controlled an Iranian conglomerate called Stratus Group, which had international business operations and that led a project to construct thousands of housing units in Venezuela. The project stemmed from agreements that Iran and Venezuela entered into in 2004 and 2005 calling for cooperation between the two governments in constructing housing units in the South American country.

The indictment said an Iranian company that Stratus incorporated called Iranian International Housing Corporation entered into a $476 million deal in 2006 with a Venezuelan state-owned energy company to build 7,000 housing units.

Hasheminejad belonged to a committee overseeing the project's execution, prosecutors said.

They said Hasheminejad took steps as part of the project to evade U.S. economic sanctions by concealing the role of Iran and Iranian parties in payments sent through the U.S. banking system.

The charges come two months after Turkish banker Mehmet Hakan Atilla was convicted of helping Iran evade U.S sanctions. The government’s star witness against Atilla, who headed international banking at state-owned Turkiye Halk Bankasi AS, was a Turkish-Iranian gold trader who testified about how Halkbank secretly moved Iran’s cash from overseas oil sales through the global financial system to help pay Iran’s bills.

"As alleged, Ali Sadr Hashemi Nejad created a network of front companies and foreign bank accounts to mask Iranian business dealings in Venezuela and evade U.S. sanctions," Manhattan U.S. Attorney Geoffrey Berman said in a statement.

Read also this explainer: Why has Malta’s Pilatus Bank chairman Ali Sadr been arrested in the United States?

The Venezuelan energy company made $115 million in payments to Iranian International Housing Corporation using entities in Switzerland and Turkey to conceal the Iranian connection to the funds, prosecutors said.

Hasheminejad faces six counts, including conspiracy to defraud the United States and conspiracy to violate the International Emergency Economic Powers Act.

Pilatus Bank applied for a licence in Malta in December 2013 and issued its banking permit by the MFSA in 2015.

Pilatus and Hasheminejad had sued the late journalist Daphne Caruana Galizia for defamation in an American court. Court documents obtained by MaltaToday show that Sadr and Pilatus sued Caruana Galizia on 8 May in the Maricopa County superior court, in the state of Arizona, where GoDaddy.com’s headquarters are located.

The lawsuit was filed at the time Caruana Galizia had alleged that the bank had processed a $1 million transfer from a Dubai company to the wife of the Maltese prime minister Joseph Muscat, at the behest of the daughter of Azerbaijani president Ilham Aliyev.

The bank said the articles were false and defamatory. The former bank employee who was the main source for Caruana Galizia's accusations turned herself in to the Greek police on Monday, after a European Arrest Warrant was issued for her by the Cypriot and Maltese authorities, the first to face charges of alleged fraud and the second to testify in court.

Nationalist MP David Casa took to Facebook to express his concern.

"In Malta this crook was allowed to operate with impunity. Pilatus Bank should have NEVER been given a license to operate in Malta," Casa said.