United States v. Banki
Late June 2012, the case of United States of America v. Mahmoud Reza Banki was permanently closed. Rather than re-try Banki, prosecutors dropped the pending criminal charges against Banki and closed the case, criminally and civilly.
Banki was arrested on January 7, 2010 on charges of violating the U.S. imposed Iran sanctions related to money he received from his family in Iran. He was denied bail and kept in prison for 22 months. Over this period he was tried and found guilty and sentenced to a 30-month prison term.
On October 24, 2011, the Second Circuit Appellate court overturned the substantive convictions. The Appellate court ruled that receiving family money is indeed permitted under the sanctions law. Banki was released from prison on November 2, 2011.
On July 24, 2012, in the final court hearing, Banki’s prison record was cleared. During the hearing he said he had lived through “the darkest hours” while in prison. “I watched my life pass me by. Those days will never be replaced,” he said.
Reference documents give more details and timeline for this case and there are initial plans for a documentary.
On January 7, 2010, the U.S. Attorney for the Southern District of New York announced that naturalized U.S. citizen Mahmoud Reza Banki, born in Iran, had been arrested for criminal violations of the Iran Trade Embargo. Banki is an accomplished scientist and consultant who holds two bachelor’s degrees from the University of California at Berkeley, a PhD from Princeton University and was working as a management consultant at McKinsey & Company at the time of his arrest. Banki was denied bail despite several attempts and securing several million dollars in bond. On March 17, 2010, the US Attorney filed a superseding indictment in United States District against Banki. On Friday, June 4, 2010, jury found Banki guilty of the charges. On Monday, June 7, 2010, the jury agreed to forfeit one bank account associated with a $6,000 transaction as the proceeds of the charges and the basis for their guilty verdict. District court judge John F. Keenan thereafter overruled only the jury’s forfeiture verdict on the basis that the jury might have been confused and awarded the U.S. Attorney’s office $3.4M in a money order judgment to be paid by Banki. Sentencing was set for July 16, 2010. Banki was finally sentenced on August 16, 2010, to two and a half years in prison.
Banki received a series of family remittances in the US from his family in Iran, using the Hawala method. He declared each of these transfers in voluntary self-disclosures to the Internal Revenue Service and in detailed documents to the Office of Foreign Assets Control. Office of Foreign Assets Control. The indictment in US v. Banki notes on the bottom of page 5:
|“||(vi) Under the ITR, any United States person who wishes to engage in a transaction otherwise prohibited by the ITR must first file an application for a license and receive approval from OFAC. 31 C.F.R. §§ 56.600, 560.501, and 501.801.||”|
Banki did not ask for and receive the required license for each exchange. Judge John F. Keenan denied the Banki’s defense request to instruct the jury on the law that specifically exempts family money (i.e. family money exemption) from the sanctions regulations:
|“||However, U.S. depository institutions are permitted to handle funds transfers, through intermediary third-country banks, to or from Iran or for the direct or indirect benefit of the Government of Iran or a person in Iran, arising from several types of underlying transactions, including:
Shortly after August 16, 2010, Banki filed for direct appeal. On August 25, 2010, the Iranian American Bar Association announced that it would file an amicus curiae brief with the United States Court of Appeals for the Second Circuit on United States v. Banki. It has also hired lawyers to request further guidance from OFAC on import of goods from Iran. On September 1, 2010, the Financial Crimes Enforcement Network issued an advisory on "Informal Value Transfer Systems", referencing United States v. Banki. On October 24, 2011, a federal appeals court threw out Banki's conviction for violating the Iran trade embargo, citing that the US law states that family remittances are exempt. Specifically the appellate court found four reasons, each of which by themselves would suffice for overturning the guilty verdict: 1. Family remittances are not prohibited, 2. Judge failed to instruct the jury on the family remittance exemption, 3. Rule of lenity favors Banki, 4. Judge failed to instruct jury on elements of money transmittal. Even though the court vacated the charges, winning on appeal sets aside the charges and still allows for a retrial.
After winning on appeal on October 24, 2011, Banki was released from prison after 22 months of incarceration on November 2, 2011. U.S. District Judge John F. Keenan signed papers ordering Banki’s immediate release 
U.S. Attorney Office for the Southern District of New York initially decided for a retrial of Banki in March 2012. However, later in June 2012, they dropped the charges against Banki and closed the case with a final procedural court hearing held on July 24, 2012.
- "Ex-McKinsey Consultant Banki Won’t Serve More Prison Time"
- "Ex-McKinsey Consultant Banki Wins Release From Prison". Bloomberg Businessweek. November 2, 2011.
- "Banki Told Debt to Society Overpaid"
- “References, timeline and documentary plans”
- "Manhattan U.S. attorney charges management consultant for criminal violations of Iran trade embargo"
- "Conspiracy to violate IEEPA and the ITR and to conduct an unlicensed money transmitting business"
- "Immigrant convicted of violating Iran embargo", June 6, 2010, New York Times
- "Consultant Convicted of Violating Embargo", by Nick McCann, June 9, 2010, Courthouse News Service
- "Man Gets 2 ½ Years for Breaking Iran Embargo", by Benjamin Weiser, New York Times, August 16, 2010
- "Immigrant Convicted of Breaking Trade Sanctions on Iran", by Benjamin Weiser, New York Times. June 4, 2010
- An overview of O.F.A.C. Regulations involving Sanctions against Iran. OFAC.
- IABA to File Amicus Brief in Appeal Before Second Circuit
- IABA Hires Lawyers to Request Further Guidance from OFAC
- "Informal Value Transfer Systems", Financial Crimes Enforcement Network, September 1, 2010