- At Manhattan DA, Billings set path toward Credit Agricole deal
- Nearly $15 billion paid to settle Iran sanction cases
The massive effort may not have happened if Laura Billings hadn’t gone back, one last time, to a dusty file shoved in a corner of her office.
It was early 2007. Billings, a Harvard-educated prosecutor in the Manhattan District Attorney’s office, returned to an evidence stash that had been part of her office’s attempt to tie a wealthy New York-based foundation to the Iranian government. Billings’ hunch: Blacklisted Iranians connected to the matter had also moved cash through the U.S. financial system, with global banks hiding their tracks.
The inquiries by Billings and others in her office helped establish an investigatory path that has since branched into inquiries by several federal and state agencies into whether more than a dozen global banks handled money for sanctioned entities. Credit Agricole’s settlement on Tuesday -- with the office of Manhattan District Attorney Cyrus R. Vance Jr. as well as the U.S. Justice Department, New York’s Department of Financial Services and the U.S. Treasury’s Office of Foreign Assets Control -- is the 11th sanctions-violation settlement since 2009 between the U.S. and global banks.
Billings recounted her discovery in the old files to Bloomberg News before she rejoined the Department of Justice last month as a federal prosecutor in Washington. Others who worked in the DA’s office at the time said they couldn’t recall this moment. Credit for the cases also rests with the New York state and federal agencies that brought them, with Billings pulling an important early thread.
“Laura’s significant contributions to the sanctions cases were the product of her tenacious work ethic,” said Arthur D. Middlemiss, a former prosecutor who was among Billings’ supervisors at the DA’s office.
Billings said she never set out to pursue a career as a Wall Street watchdog. She joined the DA’s office in 2000 shortly after graduating from Harvard Law School envisioning a life as a prosecutor and advocate for women. But rather than investigating violent sex offenders, she said she was drawn to parsing cases that wove together national security concerns with violations of U.S. banking laws.
“I grew up wanting to be a prosecutor, and there I was, fresh out of law school, in my dream job,” said Billings who found the “endless variety of white collar crime that flowed through New York City” fascinating.
Her then-boss was District Attorney of Manhattan Robert Morgenthau, who spent nearly 35 years running the office. Morgenthau prosecuted Mark David Chapman for the murder of John Lennon and won the conviction of Dennis Kozlowski, the CEO of Tyco Inc., in connection with the theft of more than $100 million from shareholders.
Morgenthau’s office was a rich environment for Billings to hone her craft and branch out. His concern that Iran was circumventing U.S. sanctions and developing a nuclear weapon led him to assemble a team including investigators, prosecutors, an Israeli contractor and contacts at the Central Intelligence Agency.
“We technically didn’t have a sanctions unit, since that is a federal issue, but we had the jurisdiction, talent and legal tools to tackle the same conduct, and that’s what we did,” said Billings.
The case Morgenthau’s office built claimed that the New York-based Alavi Foundation, with ties to Iran holding several million dollars in assets, was secretly run on behalf of the Iranian government.
Despite years of collecting evidence and working closely with the Department of Justice on the case, a New York state case never materialized. Instead, Alavi agreed to settle the case with the federal government by forfeiting a 36-story office building it co-owned in midtown Manhattan.
“We had dug as deep as we could and learned a lot of extremely interesting information. But it became clear that the matters at issue were really for federal law-enforcement and intelligence agencies,” said Billings. There was nothing more to do on Alavi. But Billings wasn’t done.
“I remembered we had bank wires in the Alavi case, so I opened the file and started digging,” she said.
After piecing together the bank records with some additional evidence left over from the Alavi case, Billings determined that many of Wall Street’s largest European-based banks removed the names of Iranian clients from transactions in a way that let them move money in and out of the U.S. through correspondent bank accounts, a blatant violation of U.S. sanctions laws.
“It was clear that the U.S. banks had no idea that this money was coming from Iran,” she said.
Billings put together files that included evidence on as many as 10 banks including Credit Suisse AG, Lloyds Banking Group Plc and Barclays PLC. She eventually amassed evidence against those and several other banks, many of which have since settled and paid fines for making illegal money transfers in and out of Iran. She left the Manhattan DA’s office in December 2008 and joined Miller & Chevalier, a Washington D.C.-based law firm.
In 2009, Lloyds and Credit Suisse settled allegations they removed the Iranian clients’ names from records while transferring money, an illegal process called stripping. Barclays settled a similar case the next year. In all, the Manhattan DA’s office has participated in nine of the 11 agreements.
Billings’ husband, David O’Neil, an attorney whom she met at Harvard Law School and married in 2004, has also taken on big sanctions cases while working for the Justice Department from 2006 to 2014. He’s since moved back to the private sector.
In one of his last big cases at the Justice Department, O’Neil was one of the lead prosecutors on the largest sanctions case in history. In 2014, French lender BNP Paribas SA pleaded guilty to criminal charges and paid $8.9 billion in fines -- one of the many other sanctions cases that originated in the Manhattan DA’s office during Morgenthau’s tenure.