Iran Scam to Evade Terror Sanctions Busted, NYC Official Says

June 20, 2011 — -- Eleven companies, including Iran's state-sponsored shipping line, were indicted in New York City today for allegedly conspiring to evade U.S. sanctions on trade with Iran by duping major U.S. banks in order to funnel more than $60 million through the Manhattan banks.

"The defendants falsified the records of banks," said Manhattan District Attorney Cy Vance, who filed the indictment, in a conference call, "and in so doing the defendants deceived the Manhattan banks."

The conspiracy indictment seeks to enforce a U.S. ban on trading with Iran that was imposed because, according to the federal government, the country harbors terrorists and participates in the proliferation of weapons of mass destruction.

Iran's national shipping company is alleged to play a key logistical role in that nation's ballistic missile program as well as to serve as a conduit for supplying weapons to terrorist organizations.

The Islamic Republic of Iran Shipping Lines (IRISL), its regional offices and affiliates as well as five individuals were charged in the 319 count indictment with using corporate shells and aliases to "exploit the services of financial institutions located in Manhattan," said Vance.

According to the indictment, the state-sponsored shipping company allegedly sent or received scores of illegal payments through Manhattan banks by using alias names and corporate alter egos in Singapore, the United Arab Emirates, and the United Kingdom.

Among the banks whose security measures were circumvented in the alleged conspiracy were JP Morgan Chase, Standard Chartered Bank, Bank of New York Mellon Corp, HSBC, Deutsche Bank Trust Company Americas, Bank of America, Citibank and Wachovia (now Wells Fargo), the indictment said.

Vance's office said in a statement that "the international shipping industry conducts business primarily in U.S. currency and therefore the firms involved in international shipping must have access to the U.S. financial system. Because IRISL and its sanctioned affiliates were banned from transacting with or through U.S. financial institutions, any use of their real names would have been detected and blocked by U.S. banks."

The Manhattan D.A.'s office noted that "IRISL has violated UN Security Council Resolutions by chartering vessels to transport IRISL cargo containers of ammunition and weaponry from Iran to countries linked to international terrorism."

The statement cited a case in November 2009 in which "36 Iranian cargo containers transporting hundreds of tons of weaponry, including rockets, missiles, mortars, and small arms, were interdicted en route to Syria via the intended port of Beirut."

"It is alleged that this shipment was intended for Hezbollah. This activity – the provision of arms to terrorist organizations – occurred during the time period charged in this conspiracy," Vance said.

"The point of this indictment is that sanctions exist… and to make sanctions work, they have to be enforced," he said. "The sanctions here are designed to shut IRISL down and to make it harder for IRISL and Iran" to achieve their goals.