The Justice Department had discussed the possibility of a so-called deferred prosecution agreement with Halkbank, in which it would admit some wrongdoing, perhaps pay a fine, but not face criminal trial, according to two individuals with direct knowledge of the matter, but who spoke on the condition of anonymity to disclose such details.
“The negotiations began to take on a real character over the last several months,” one participant in the matter said last week.
On Tuesday, the Justice Department filed sanctions evasion charges against Halkbank, noting that the “bank’s audacious conduct was supported and protected by high-ranking Turkish government officials,” including some who took “millions of dollars in bribes to promote and protect the scheme.”
The Justice Department has also claimed that Mr. Erdogan was briefed on aspects of the operation in 2013, when he was Turkey’s prime minister.
The fact that officials at Justice Department headquarters, and Mr. Barr himself, were involved in the case was not unusual, former federal prosecutors said, given that it was a delicate case that involved another nation, and was the topic of conversations between the president and a foreign leader.
But the Halkbank case has also drawn attention because of the involvement of players including Brian D. Ballard, a lobbyist who is a friend of Mr. Trump and served as the vice chairman of his inauguration, Rudolph W. Giuliani, the former New York mayor who is now a personal lawyer for Mr. Trump, and Michael B. Mukasey, the former attorney general.
Mr. Ballard was hired by Halkbank as a lobbyist. He and other members of his staff, including former Representative Robert Wexler, a Democrat from Florida, and James P. Rubin, a Clinton-era State Department official, met last year with officials at the White House and the State Department to make the case that any additional steps taken against the bank should be considered carefully given that Turkey is a North Atlantic Treaty Organization ally, according to participants in these meetings.