(New throughout, adds background on case)
By Brendan Pierson
NEW YORK, Nov 27 (Reuters) - A Turkish gold trader will not go on trial this week on charges of conspiring to evade U.S. sanctions against Iran in a case that has strained Turkish-U.S. ties, a U.S. judge in New York said Monday.
Reza Zarrab, 34, stopped appearing in court in the two months leading up to his scheduled trial, prompting Turkey’s prime minister to suggest he has reached a plea deal with U.S. authorities.
Zarrab and eight other people, including Turkey’s former economy minister and three executives of Turkish state-owned Halkbank, have been charged with engaging in transactions worth hundreds of millions of dollars for Iran’s government and Iranian entities from 2010 to 2015 in a scheme to evade U.S. sanctions.
The prosecutors said the defendants worked to supply gold and currency to Iran and Iranian entities, in violation of the sanctions, sometimes disguising transactions as purchases of food.
Only Zarrab and Mehmet Hakan Atilla, one of the Halkbank executives, have been arrested by U.S. authorities. U.S. District Judge Richard Berman in Manhattan told potential jurors on Monday morning that Atilla, 47, will be the only person on trial.
The trial will begin as soon as a jury is chosen, and is expected to last three to four weeks.
Benjamin Brafman, a lawyer for Zarrab, declined to comment on Zarrab’s absence at the trial. A spokesman for the prosecutors did not immediately respond to a request for comment.
The case is acutely sensitive in Turkey in part because the prosecutors say Turkey’s former economy minister, Zafer Caglayan, was involved in the alleged conspiracy. Caglayan has denied the charges.
Turkish President Tayyip Erdogan’s government has said the case has been fabricated for political motives. This has exacerbated tensions between Ankara and Washington, NATO allies. Investor sentiment toward Turkey has cooled, and traders said the situation was a factor in the lira’s fall to record lows.
Prosecutors said in a court filing four weeks ago that Zarrab once told another defendant he had spoken with Erdogan directly about the alleged scheme.
Turkish Foreign Minister Mevlut Cavusoglu has said he sees in this case the hand of U.S.-based Muslim cleric Fethullah Gulen. Erdogan accuses Gulen of masterminding last year’s failed military coup in Turkey and also of driving an earlier legal case involving Zarrab.
Acting U.S. Attorney Joon Kim last week called the claim that Gulen was behind the U.S. case “ridiculous.” (Reporting By Brendan Pierson in New York; Editing by David Gregorio)