By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian bank is close to resolving its dispute with the US Justice Department over the ownership of $13.475m that was seized by the federal authorities for allegedly being generated by a massive fraud.

Deltec Bank & Trust, in filings with the eastern Virginia district court last Thursday, asserted that itself and the US Justice Department “have agreed to terms that will settle all issues” surrounding who is the rightful owner of this sum that was seized by the US Secret Service during its probe into a multi-million dollar international crypto currency scam.

The Lyford Cay-based institution’s spokesperson did not respond to Tribune Business e-mails seeking comment before press time last night, but the move to settle the dispute comes just 23 days after Deltec served notice of its claim to the $13.475m via earlier filings with the same court.

“Claimant asserts that it has a legitimate, lawful ownership interest in the $13.475m that was seized by the US from its account ending in 0328 at Mitsubishi UFJ Trust and Banking Corporation on June 13, 2023 pursuant to a seizure warrant issued by a US magistrate judge,” Deltec said in a document that was signed by its chairman, Jean Chalopin, on January 23, 2025.

The Bahamian bank and trust company’s filing was made in response to the US Justice Department initiating legal proceedings on December 20, 2024, just prior to the Christmas and New Year holidays, where it was seeking an order that the multi-million dollar sum be forfeited to itself.

Deltec acted to stop that happening without a fight and, in last week’s filing just 17 days after its initial move, said the two parties were close to resolving the fate of the $13.475m. “On January 27, 2025, Deltec filed a timely claim to defend against the [US] government’s action, which seeks forfeiture of currency seized from its Mitsubishi UFJ Trust and Banking Corporation Account ending in 0328,” the Bahamian bank said.

“Deltec and the United States, through their counsel, have agreed to terms that will settle all issues pending in this case. Pursuant to Department of Justice policy, the settlement has been approved by the deputy attorney general of the United States.”

But, with other potential claimants to the $13.475m having until March 1, 2025, to intervene the two sides are unable to seek the eastern Virginia court’s approval for their settlement. “Until that period has expired, Deltec and the [US] government will not know whether another person will seek standing to contest the forfeiture,” Deltec said.

“Therefore, at this time, the parties cannot submit their proposed settlement to the court for its approval. If the claim period elapses with no further claims, the parties expect to promptly file a motion for settlement with this court.”

The Bahamian bank is thus making good on a promise it gave when the US Secret Service first seized the funds from its US correspondent account with Mitsubishi UFJ Trust and Banking Corporation on June 13, 2023. It told Tribune Business at that time: “Deltec Bank has been proactively co-operating with the related investigation of the US Attorney’s Office for the eastern district of Virginia in order to provide information and assistance consistent with applicable laws.

“We believe that Deltec Bank has a legitimate claim, under US laws, that the cash seized from its account at Mitsubishi UFJ Trust and Banking should be returned, and it intends to assert such claim as part of the forfeiture process defined under US law.” It has now done exactly that.

The US Secret Service had previously alleged that the $13.475m represented laundered fraud proceeds generated by a scam known as “pig butchering”. This involves scammers and con artists setting up “spoofed” Internet domains and websites, with addresses and features similar to those of legitimate crypto currency trading and investment platforms.

They then target victims with “unsolicited” phone calls, using techniques common to those employed in so-called ‘romance’ frauds to groom them, develop a relationship and gain their confidence. Finally, the victims are fooled into investing in crypto currency via the fake platforms that have been created, with the fraudsters stealing all their money.

The US Justice Department, in its December 20, 2024, legal filings that sought forfeiture of the seized $13.475m to the federal authorities, alleged that this sum was part of a larger $29.5m that was transferred into Deltec’s Mitsubishi account via 224 wire transfers between June 2022 and March 2023. There is nothing, though, to suggest that Deltec, its executives, staff and agents have done anything wrong.

Explaining how the scheme worked, the US Justice Department alleged: “The US claim arises from an investment fraud scheme perpetrated against numerous individual victims. Co-conspirators used social engineering to convince victims to ‘invest’ in fraudulent crypto currency investment websites which, in fact, funnelled victim funds to those perpetrating the fraud, who then laundered those funds frequently to a location outside the US.

“Specifically, the co-conspirators were directing victim monies to a number of US bank accounts in the name of various shell companies. As relevant here, the shell company accounts would generally forward the victim monies in batches to a correspondent account held at Mitsubishi UFJ Trust and Banking Corporation by Bank One.

“From there, the funds were further forwarded to an account ending in 0328 held by Bank Two at Mitsubishi in New York, and then forwarded to two bank accounts at Bank Two in a location abroad.” ‘Bank Two’ is easily identifiable as Deltec.

“As of the filing of this complaint, there are hundreds of victim transactions associated with this scam syndicate that operates primarily through the use of spoofed domains and is responsible for more than $80m directly traceable to reported victim losses,” the US Justice Department added.

“Once it obtained the victims’ funds, the syndicate utilised various money laundering techniques to conceal the nature, source and origin of the victims’ funds. These techniques included the use of money couriers, commercially unnecessary numbers of financial transactions, pooling of victim monies and shell accounts.”

Deltec, in its initial mid-2023 statement on the affair, said: ““The seizure warrants relate to fraud charges against two individual defendants. According to the documents made public by the Eastern District of Virginia, the individual defendants directed the fraudulently obtained money into a number of bank accounts including, among others, a Deltec Bank account at Mitsubishi UFJ Trust and Banking, from which money was seized....

“Deltec Bank is committed to abiding by all relevant anti-money laundering laws and maintains that all actions taken by the bank are in line with applicable policies and regulatory requirements... Deltec Bank takes its responsibility to clients and the financial centre as a whole very seriously, and ensures that the highest standards of conduct are upheld. As a matter of practice, Deltec Bank continuously enhances its compliance and control framework, which is evident in our ability to proactively work with the authorities.”