A United States jury four Ali Sadr Hashemi Nejad orchestrated a multi-year scheme to funnel more than US$115 million in payments related to a construction project in Venezuela through the US financial system to his Iranian family business, in violation of US. sanctions against Iran.
In a two-week trial the US government established that these payments benefitted Iranian individuals and entities, including the Iranian International Housing Company and its Iranian owner, Mohammad Sadr Hashemi Nejad, Ali Sadr’s father. The jury convicted Ali Sadr of five counts, including conspiring to evade US economic sanctions against Iran, to defraud the United States, and to commit bank fraud.
US Attorney Geoffrey S. Berman was quoted in a Justice Department Statement saying: “As the jury found, Ali Sadr Hashemi Nejad created a network of front companies and bank accounts to mask Iranian business dealings in Venezuela and evade US sanctions. For years, Sadr used front companies in Switzerland, Turkey, and Saint Kitts & Nevis to conceal the fact that $115 million in payments were really for his family business and relatives in Iran. Sadr’s conviction shows that US economic sanctions against Iran are for real, and violators will be exposed and prosecuted.”
The following is a Justice Department summary of the facts established in the indictment, evidence presented during the trial, court documents, and statements in open court:
- Beginning in or about 1979, the US government has repeatedly found that the actions and policies of the government of Iran constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States and declared a national emergency to deal with the threat. In accordance with these presidential declarations, the United States has instituted a host of economic sanctions against Iran and Iranian entities. This sanctions regime prohibits, among other things, financial transactions involving the United States or United States persons that were intended for the Government of Iran or Iranian entities and persons.
- In August 2004, the governments of Iran and Venezuela entered into an agreement, whereby they agreed to cooperate in certain areas of common interest. The following year, both governments supplemented the Agreement by entering into a Memorandum of Understanding regarding an infrastructure project in Venezuela, which was to involve the construction of housing units in Venezuela.
- The Project was led by Stratus Group, an Iranian conglomerate controlled by Ali Sadr and his family with international business operations in the construction, banking, and oil industries. In December 2006, Stratus Group incorporated a company in Tehran, which was then known as the Iranian International Housing Company. IIHC was responsible for construction for the Project. Thereafter, IIHC entered into a contract with a subsidiary of Venezuela’s state-owned energy company, Petroleos de Venezuela, S.A., which called for IIHC to build approximately 7,000 housing units in Venezuela in exchange for approximately $475 million. Stratus Group created the Venezuela Project Committee in Tehran to oversee the execution of the Project. Ali Sadr was a founding member of the Committee and was responsible for managing the Project’s finances.
- In connection with his role on the Project, Ali Sadr took steps to evade US economic sanctions and defraud US banks by concealing the role of Iranian parties in US dollar payments sent through the US banking system. For example, in 2010, Ali Sadr and a co-conspirator used Saint Kitts and Nevis passports and a United Arab Emirates address to incorporate two front companies outside of Iran to receive US dollar payments related to the Project on behalf of IIHC. The first entity, Clarity Trade and Finance, was incorporated in Switzerland, and the second, Stratus International Contracting, J.S., also known as “Stratus Turkey,” was incorporated in Turkey. Both front companies were owned and controlled by Ali Sadr and his family members in Iran, including his father Mohammad Sadr.
- Thereafter, Ali Sadr and others conducted a series of international financial transactions using Clarity and Stratus Turkey for the benefit of Iranian parties in a manner that concealed the Iranian nexus to the payments, in violation of US economic sanctions. Specifically, between April 2011 and November 2013, the Venezuelan petroleum company, at the direction of Ali Sadr and others, made approximately 15 payments to IIHC through Stratus Turkey or Clarity, totaling approximately $115 million.
- During that time, Ali Sadr took several steps to hide the Iranian beneficiaries of these funds, including: (1) changing the name of the Iranian International Housing Company to just the initials, IIHC; (2) directing employees to take down websites and articles from the Internet; (3) lying about the owners of the front companies when asked by the banks; and (4) altering payment vouchers and backdating contracts in order to mislead banks about the source of the funds. SADR and others also specifically directed that payments be routed through banks in the United States to Stratus Turkey’s or Clarity’s bank accounts at a financial institution in Switzerland. The majority of the funds were then transferred to another offshore entity located in Saint Kitts & Nevis, which had been incorporated by Ali Sadr and his father Mohammad Sadr in 2009. Between 2011 and 2013, Ali Sadr’s front companies wired over $8.6 million directly into the United States. Some of those funds were then used to purchase real property in California for the benefit of the Sadr family.
Ali Sadr Hashemi Nejad was convicted yesterday of one count of conspiracy to defraud the United States (maximum penalty: 5 years in prison), one count of conspiracy to violate the anti-Iran sanctions laws (maximum penalty: 20 years in prison), one count of bank fraud (maximum penalty: 30 years in prison), one count of conspiracy to commit bank fraud (maximum penalty: 30 years in prison), and one count of money laundering (maximum penalty: 20 years in prison). Ali Sadr was found not guilty of one count of conspiracy to commit money laundering.
The maximum potential sentences in this case are prescribed by the US Congress. Sentencing will be determined by Judge Alison Nathan after submissions by the government and Ali Sadr’s defence in a month’s time.