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Exclusive: Iranian linked to Setad wanted by U.S. for attempted arms smuggling

By Steve Stecklow

(Reuters) - An Iranian businessman linked to a sprawling conglomerate controlled by Iran's supreme leader is wanted by the United States for allegedly trying to purchase hundreds of American-made assault rifles to smuggle into Iran.

Behrouz Dolatzadeh was arrested in the Czech Republic last year and held in custody. He was convicted there in June of attempted arms trafficking and attempting to violate sanctions on Iran. But he was released in September after an appeals court overturned his conviction and the United States failed to request his extradition, according to interviews with Czech officials.

A spokesman for the U.S. Attorney's office in Phoenix, Arizona, where Dolatzadeh was indicted, declined to comment on why no extradition request was filed. Dolatzadeh's defense lawyer in Prague, Michal Marini, says he believes Dolatzadeh is back in Iran.

Iranian corporate filings show Dolatzadeh was appointed in recent years to the boards of three tech companies connected to a massive business empire controlled by Ayatollah Ali Khamenei, Iran's top cleric and most powerful man. The conglomerate's full name in Persian is Setad Ejraiye Farmane Hazrate Emam.

Reuters last month published a three-part series (www.reuters.com/investigates/iran/) detailing how Setad has become one of the most powerful institutions in Iran largely through the systematic seizure and sale of thousands of properties belonging to ordinary Iranians. Iran's state news agency denounced the Reuters series as "disinformation" intended to undermine public trust in the Islamic Republic's institutions.

Asked about Dolatzadeh, a spokesman for Setad said in an email, "We categorically deny any links to Mr. Dolatzadeh and have no knowledge about his whereabouts." He added, "We also strongly deny that Setad or any company in which Setad directly or indirectly holds any interest has had, directly or indirectly, any involvement in arms transactions."

The Setad spokesman said none of the companies on which Dolatzadeh was appointed as a board member "is owned directly or indirectly by Setad or any of its entities."

But documents reviewed by Reuters and Iran corporate filings show that the companies Dolatzadeh joined are connected to each other through their boards, and are all linked to Setad.

SETAD LINKS

Those companies include Mobin Khavar Technology Co, which is a subsidiary of a Setad holding called Iran Mobin Electronic Development Co, according to corporate filings, Iran Mobin's website and internal Iran Mobin documents reviewed by Reuters.

Dolatzadeh also joined the boards of Mobicom and First Mobin Saba Services Co, according to corporate filings. Those two companies are joint ventures between Setad and the Islamic Revolutionary Guard Corps, Iran's elite military unit, according to a person familiar with the matter. Both Setad and the Guards hold stakes in numerous sectors of the Iranian economy and sometimes form joint ventures together, such as when they acquired a majority stake in Iran's largest telecommunications company in 2009.

An internal PowerPoint presentation by Iran Mobin, which features an organizational chart titled "SETAD at a Glance," shows that the electronics company is a unit of Setad. The presentation also includes Mobin Khavar under a list of "Iran Mobin companies." And Mobin Khavar's website states that Iran Mobin is "affiliated with" Setad.

A spokesman for Iran Mobin did not respond to requests for comment about its ownership.

Corporate filings show Iran Mobin representatives sit on the boards of Mobin Khavar and Mobicom. Meanwhile, a Mobicom representative last year was named managing director and a board member of First Mobin Saba Services.

ASSAULT RIFLES

Dolatzadeh was indicted in February 2012 by a federal grand jury in Arizona on charges that included conspiracy to violate the Arms Export Control Act and attempting to violate U.S. sanctions on Iran. He is accused of violating the act by not applying for or obtaining an export license; under sanctions regulations, exporting weapons to Iran is prohibited. Court filings show no evidence Dolatzadeh responded to the charges.

According to the U.S. indictment, around January 2011 an unnamed individual acting on behalf of Dolatzadeh emailed an unidentified company in Arizona seeking a quote for 3,500 M-4 assault rifles. An undercover agent for the U.S. Department of Homeland Security, posing as a sales representative, contacted the go-between and began negotiating a sale. They agreed on a price of $1,850 per rifle and a "transshipment scheme to Syria."

The indictment states that in October 2011, Dolatzadeh travelled to the Czech Republic to inspect some of the weapons. He signed a contract with an unidentified seller to purchase 2,600 rifles made by Colt Defense LLC and 400 rifles made by Bushmaster Firearms International, which were to be "imported into Iran." He later signed a new, modified contract to purchase 500 Colt M-4 rifles. He wired 40,000 euros ($55,000) to a Czech bank account to initiate the transaction, the indictment states.

Spokespeople for Colt and Bushmaster did not respond to requests for comment.

Dolatzadeh agreed to travel again to the Czech Republic to inspect the rifles before they were shipped to Iran, according to the indictment. He was arrested there in February 2012 and placed in custody. A spokesman for the Justice Ministry in Prague said U.S. authorities requested that Dolatzadeh be held following his arrest, but never filed an extradition request.

CONVICTION OVERTURNED

A Czech court convicted him on local charges of attempted arms smuggling and sanctions violations and last June sentenced him to 3-1/2 years in prison, according to a spokeswoman for the municipal court in Prague. But in September, he was freed after an appeals court overturned the conviction, determining it was a case of entrapment by U.S. and Czech authorities who had lured Dolatzadeh to the Czech Republic to commit a crime. Last month, Czech prosecutors appealed the ruling to the Supreme Court.

"Regarding the prosecutor's appeal to the Supreme Court, this does not change anything, because according to Czech law Mr. Dolatzadeh was fully acquitted by the court of appeals and this must be respected," said his lawyer, Marini, at law firm Broz & Sokol & Novak. The prosecutor's office declined to comment.

As for the outstanding indictment in the United States, Marini said his view "is that according to the European Convention on Human Rights Mr. Dolatzadeh cannot have another trial in the U.S., because he was fully acquitted by Czech courts." The U.S. Attorney's office in Phoenix declined to comment.

The Arizona case apparently is not the first time Dolatzadeh was indicted in the United States on attempted smuggling charges. In 1995, Behrouz Dolatzadeh, identified as an official with Iran's Ministry of Defence, was one of seven people indicted by a federal grand jury in Ohio for allegedly conspiring to ship thousands of dollars worth of U.S.-made radio communications equipment to Iran. The spokesman for the U.S. Attorney's office in Phoenix said prosecutors there believe the Ohio case involved the same individual who was indicted last year.

A spokesman for the U.S. Attorney's office in Columbus, Ohio, told Reuters, "There is nothing in the files available to us right now that would indicate the charges were ever dropped." (Additional reporting by Jan Lopatka in Prague and Babak Dehghanpisheh in Beirut; Editing by Simon Robinson)

($1 = 0.7271 euros)

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