Enforcing Iran sanctions still tangles Iranian-Americans in ‘spider’s web of laws’

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• IVETTE FELICIANO:

  U.S. relations with Iran are symbolized by these closed doors to the Iranian embassy in Washington, reflecting more than three decades of severed diplomatic and economic ties. Sanctions restricting interactions with Iran not only put pressure on Iran's government — they also pose roadblocks, and sometimes legal trouble, for many Iranian-Americans living here.

• MAHMOUD REZA BANKI:

  A dozen agents stormed into my apartment. They slammed me against the wall, and they handcuffed me in my underwear. And then they just took me away.

• IVETTE FELICIANO:

  When FBI agents arrested Mahmoud Reza Banki at his Manhattan apartment in 2010, he thought it was a mistake. A naturalized American citizen, he emigrated to the US in 1994 at the age of 18 to attend college. He then earned a doctorate in chemical engineering at Princeton and worked for the consulting firm McKinsey and Company.

• MAHMOUD REZA BANKI:

  I went from being an ordinary citizen with a shot at the American dream, sleeping in my bed, in my home, to a maximum security cell in an orange jumper.

• IVETTE FELICIANO:

  Federal prosecutors said Banki illegally received more than three million dollars over three years from his family in Iran…and that he posed a flight risk, which persuaded a judge to deny him bail.

• MAHMOUD REZA BANKI:

  This notion of innocent until proven guilty. I never felt that way.

• IVETTE FELICIANO:

  To a lot of people watching this show, $3.4 million is going to sound like a lot of money. What did your parents do in Iran? How did you come into that money?

• MAHMOUD REZA BANKI:

  It was basically money that my parents had saved up over the years and had invested in my uncle's company.

• IVETTE FELICIANO:

  The uncle who owned three power companies and a pharmaceutical company.

  Prosecutors accused Banki of violating sanctions by running an unlicensed money transfer business. Because of strict banking regulations under sanctions, his family had used a money transfer system called a "hawala," popular in the Middle East and South Asia…and legal under US sanctions.

  Cash doesn't cross borders but is given to a broker in one country, who contacts a broker in another, who gives a matching amount to the intended recipient. Both brokers keep a tally on who owes what and settle the debt in future transactions.

  Banki admits the family used the hawala system to send him the funds, and he reported the money on his tax returns. But he denied operating as an unlicensed money broker, as he was charged.

  At trial, a jury found Banki guilty of conspiring to violate sanctions and making false statements. After spending 11 months in jail pre-trial, Banki was sentenced to 30 more months in prison.

• ERICH FERRARI:

  You need to understand that it's not illegal to receive money from a family member in the United States. The type of activity he engaged in is extremely common.

• IVETTE FELICIANO:

  Attorney Erich Ferrari didn't represent Banki but has represented dozens of other individuals and companies investigated for violating US sanctions on Iran. After Banki was convicted, Ferrari was flooded with calls from worried Iranian-Americans.

• ERICH FERRARI:

  So this is where it gets really, really tricky. There's a caveat there that there can be no debiting or crediting of Iranian accounts by a US bank. So people who are engaged in these kind of innocuous, everyday transactions have to go through these other routes.

  And the other routes involve money exchangers and hawala brokers. And really a lot of these investigations are centered on the people who are the ones providing the money, making deposits, as opposed to the beneficiaries. But the beneficiaries oftentimes get caught up in the investigations and come under additional scrutiny as a result.

• IVETTE FELICIANO:

  While Reza Banki was in prison, a federal appeals court ruled his trial jury was not properly instructed about some of the regulations, which it called "ambiguous"…and tossed out parts of his conviction, leading to his early release in 2011.

  Banki's case is just one example of how complicated the sanctions against Iran can be.

  For instance, you can sell property in Iran that you inherited from someone who died, but you can't sell a property that someone who is alive gave you as a gift.

  Or…it's legal for an American to sell certain items to an Iranian company, but brokering the sale on behalf of an Iranian company is prohibited — considered to be exporting a service to Iran.

• ERICH FERRARI:

  I think one of the issues there is that the Iranian-American community doesn't understand the sanctions in that level of detail.

• IVETTE FELICIANO:

  Ferrari points to the case of a researcher currently facing prosecution for attempting to ship a sanctions-permitted medical device to an Iranian hospital without first obtaining a license to do so.

• ERICH FERRARI:

  They're not getting into the weeds of every legal program to understand the ins and outs of it. They just hear something, okay, medical devices are authorized. You can sell your property in Iran. You can sell food to Iran. Things of that nature.

• IVETTE FELICIANO:

  Since the 1980s, sanctions against Iran have stretched into hundreds of pages of laws, executive orders, and regulations — with about a dozen government agencies involved in enforcement.

  Richard Nephew helped strengthen Iran sanctions for the u-s state department during the Obama administration, and is now teaching at Columbia University's Center on Global Energy Policy.

• RICHARD NEPHEW:

  Sanctions are only as good as the psychological fear they create in people engaged in illicit conduct. You want them to be afraid of breaking the rules.

• IVETTE FELICIANO:

  Nephew credits sanctions for pushing Iran to agree to the nuclear disarmament deal implemented in January.

• RICHARD NEPHEW:

  If we hadn't gone through the sanctions regime that we had, I don't think the Iranians would fear the re-imposition of sanctions if they cheat. I would just have to ask the question, would life be much better if Iran had nuclear weapons than if not? And what is the tradeoff you're prepared to take in exchange for not having Iran possess nuclear weapons?

• IVETTE FELICIANO:

  Does it make us safer to have somebody in prison because they were receiving funds from family back in Iran?

• RICHARD NEPHEW:

  Obviously we can find cases where we went too far, and when there was criminal justice, you know, proceedings started against somebody who wasn't doing anything wrong.

  There are also cases in which people have been able to get access to financing, get access to money from illicit sources, and be able to do harm with that. I think ultimately this is just a tension that exists when you're trying to remain open and accessible and permitting these kinds of people-to-people interactions, while at the same time safeguarding your own security.

• IVETTE FELICIANO:

  The Justice Department' handles all criminal investigations of sanctions violations, mostly against individuals. A spokesman told the NewsHour:

  "Our priority is to focus on violations that pose the greatest threat to the national security…" such as "… any goods or services relating to weapons of mass destruction or missile technology."

  He went on to say: "That the U.S. criminally prosecutes Iran's procurement agents has had a chilling effect on their conduct….[and] shuts down a channel for Iran to obtain restricted commodities."

  The Treasury Department's Office of Foreign Assets Control, or OFAC, handles civil violations of Iran sanctions…and since November of 2013 has imposed fines, totaling nearly 530 million dollars in 28 cases, all but one against companies or financial institutions for prohibited commercial activity.

  It's impossible to know how many people are investigated, because the government does not make those numbers public. But some Iranian-Americans say sanctions enforcement intensifies scrutiny on them, not only by the government, but also by institutions like banks and universities.

• JAMAL ABDI:

  There were cases of Iranian-Americans who their bank accounts were closed because they were believed to have at some point been in Iran, and so the banks decided that they couldn't take any risks.

• IVETTE FELICIANO:

  Jamal Abdi is a policy director of the National Iranian-American council, in Washington.

  Some people might say, it's the law, if somebody is violating that, whether they're doing it willingly or unknowingly, those are the rules. Why shouldn't they be investigated?

• JAMAL ABDI:

  It's a fair point. There are laws. We're expected to follow them. The problem here is, the laws are so complex. It is a spider's web of laws. And so you have a lot of people who are not the intended targets of these sanctions, who are not doing anything that actually was of concern regarding Iran's nuclear program or proliferation.

• IVETTE FELICIANO:

  Narges Bajoghli, a dual Iranian-American citizen and New York University anthropologist, says tougher sanctions made NYU nervous about her research.

• NARGES BAJOGHLI:

  It was kind of this scare frenzy that was going around.

• IVETTE FELICIANO:

  In 2013, NYU delayed her planned field study in Iran until attorneys the university hired produced a 30-page document for OFAC to vet — about her work, her upbringing, and personal life. The process took nine months.

• NARGES BAJOGHLI:

  It definitely was beyond the parameters of the research// It really puts the onus, I think, especially on dual nationals to sort of prove where their loyalties lie.

• IVETTE FELICIANO:

  Reza Banki, facing a possible retrial, decided to settle his pending charges. He forfeited $710 thousand, but got to keep the Manhattan apartment he bought with the money his family initially sent him. But he says his criminal conviction has ruined his reputation and made him mostly unemployable. He supports himself doing freelance consulting in technology and finance.

• MAHMOUD REZA BANKI:

  My family insists that I should leave the US. I want to believe that this country, my country, will come through. I choose to move ahead. I choose to look forward. I choose to rebuild this life.