Turkish Trader Achieves Rare Feat in Losing House Arrest Bid

  • Judge sees Zarrab’s wealth as too much of risk that he’ll flee
  • Madoff, mobster Gotti’s son were permitted house detention

House arrest before trial might have been good enough for Bernie Madoff and the son of mob boss John Gotti, but a Turkish-Iranian gold trader isn’t getting that option.

Reza Zarrab’s wealth, extensive international travel experience and lack of ties to the U.S. make it too risky that he’ll flee the country, a federal judge in Manhattan ruled. He ordered Zarrab to remain in jail until his trial on charges that he helped the Iranian government launder hundreds of millions of dollars to avoid U.S. sanctions.

Besides, letting Zarrab stay in a Manhattan apartment and be watched over by private security guards that he agreed to pay would help “foster inequality and unequal treatment in favor of a very small cohort of criminal defendants who are extremely wealthy,” U.S. District Judge Richard Berman said in a ruling Thursday. “It describes a very expensive form of private jail.”

Zarrab had offered to put up a $50 million bond, secured by $10 million in cash. His businesses had revenue of about $11 billion annually, with the trader apparently having said he was exporting a ton of gold a day, the judge said. The 33-year-old also holds Turkish, Iranian and Macedonian passports. He owns 20 homes, luxury cars and was the 56th largest taxpayer in Turkey, Berman said.

Reviewing Decision

Benjamin Brafman, Zarrab’s lawyer, said he was disappointed and is "reviewing the decision to see if an appeal is appropriate." Zarrab has been in U.S. custody since March 21 when FBI agents arrested him just as he and his family arrived for a vacation at Disney World.

While denying Zarrab’s request, Berman conceded other judges have let other wealthy defendants live under house arrest, with private guards, in cases that had grabbed headlines.

Madoff, accused in 2008 of running a $50 billion Ponzi scheme, was freed on $10 million bond and allowed to return to his Manhattan apartment on East 64th Street, even after prosecutors accused him of mailing jewelry to relatives in violation of an asset freeze. He’s now serving a 150-year sentence after pleading guilty to fraud.

Marc Dreier, a New York lawyer accused that same year of defrauding hedge funds out of more than $400 million, was freed on $10 million bail and allowed to stay in his Midtown Manhattan 34th-floor apartment. He was later sentenced to 20 years in prison.

‘Junior’ Gotti

In 1998, John "Junior" Gotti, the son of Gambino crime boss, was awaiting trial on a welter of racketeering charges, but a federal judge in Manhattan freed him on $10 million bail and ordered him to remain under house arrest at his Oyster Bay home.

And Dominique Strauss-Kahn, the former International Monetary Fund chief accused of sexual assault was freed on bond to live in a TriBeCa townhouse after paying a private security firm about $200,000 a month even after prosecutors said he posed a flight risk.

Unlike those defendants, Zarrab is accused of helping Iran, a long-standing foe of the U.S.

“Undermining U.S. sanctions against Iran may well pose a threat to the United States,” Berman said. “Mr. Zarrab’s release may exacerbate that threat.”

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