By Nate Raymond

NEW YORK (Reuters) - A U.S. judge on Monday rejected a Turkish gold trader's bid to dismiss an indictment accusing him of conspiring to conduct hundreds of millions of dollars in transactions for the Iranian government and other entities in order to evade U.S. sanctions.

U.S. District Judge Richard Berman in Manhattan denied the request by lawyers for Reza Zarrab, who contended prosecutors had overreached when they charged a foreign citizen engaging in business abroad that is not illegal under foreign law.

Berman sided with prosecutors, who had contended that Iranian-born Zarrab and others violated the law by using the U.S. financial system to process transactions for his Iranian clients, whose identities he concealed from U.S. banks.

"The court finds that the indictment alleges a domestic nexus between Zarrab and his co-conspirators' conduct and the United States, i.e. the exportation of services from the United States," Berman wrote.

Lawyers for Zarrab did not immediately respond to requests for comment.

Zarrab, 33, was arrested in Florida in March while en route to Disney World with his family.

He has pleaded not guilty, and is scheduled to face trial on Jan. 23.

The case has drawn much attention in Turkey, where prosecutors in 2013 accused Zarrab, along with others, of having paid cabinet-level officials and bank officers bribes to facilitate transactions benefiting Iran.

Turkish President Tayyip Erdogan, who was then prime minister, cast the case as a coup attempt orchestrated by his political enemies. Several prosecutors were removed from the case, police were reassigned, and the investigation was dropped.

In September, Erdogan, whom prosecutors say had "close ties" to Zarrab, said he believes U.S. authorities had "ulterior motives" in pursuing the case.

The case is U.S. v. Zarrab, U.S. District Court, Southern District of New York, No. 15-cr-00867.

(Reporting by Nate Raymond in New York; Editing by Chizu Nomiyama and Meredith Mazzilli)