The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian bank’s $35m damages claim against a payments provider has received a further boost after a US district judge ruled it had established “plausible” claims of “misuse”, “self-dealing” and “misappropriation” of funds belonging to itself and its clients.

Judge Melissa Damian, sitting in the south Florida federal court, handed Deltec Bank & Trust another preliminary legal victory through a September 26, 2026, verdict that totally upheld a magistrate’s August decision to reject the bid by Ibanera, a US-headquartered money service business, to have the Bahamian institution’s lawsuit over alleged “illegal withholding” of its $18m thrown out.

And, in dismissing the challenge by Ibanera and its principal, Michael Carbonara, the magistrate’s ruling, judge Damian found that the payment services provider was acting in a fiduciary capacity by holding some $18m on trust for the benefit of the Lyford Cay-based bank and its clients. Deltec, she added, had made credible allegations which - while unproven - claim Ibanera converted this multi-million dollar sum into crypto and other digital assets without permission for its own benefit.

The Bahamian bank now has three weeks, and a deadline of October 16, to file a new lawsuit containing all the claims against Ibanera that have not been struck out but allowed to proceed. These include breach of fiduciary duty, civil theft and conversion, and defamation over allegations linking Deltec to the FTX crypto exchange’s collapse, although Ibanera and Mr Carbonara succeeded in having the “unjust enrichment” claim against them struck out.

Judge Damian, after considering both Deltec and Ibanera’s written replies to the earlier magistrate’s verdict, rejected the latter’s argument that the payment services agreement (PSA) that governed the two sides’ relationship, “expressly disclaims an agency relationship”. The money services provider had also argued its status as a non-bank limits the extent to which the $18m belonging to Deltec and its clients were governed by US trust and fiduciary laws.

Ibanera’s position has always been that Deltec allegedly failed to comply with its obligations under their payment services agreement, and that the monies were being withheld due to “unauthorised activities” that are now subject to audit and investigation. The judge, though, found in her September 26 verdict that the dispute extends beyond the payment provider’s alleged failure to return the funds and “perform a contractual payment obligation”.

Judge Damian noted that their agreement meant Ibanera was holding the $18m on trust for Deltec and its clients, with the duo retaining ownership of these assets to leave the payments provider acting in a fiduciary or escrow capacity.

“Deltec alleges that Ibanera did not merely refuse to execute Deltec’s payment instructions. It alleges that Ibanera took property that remained Deltec’s, converted approximately $18m of that property from fiat currency to USDC (US dollar crypto), transferred the resulting digital assets to third party exchanges to obtain benefits for itself, concealed those transactions and continued displaying fiat balances that no longer existed,” she ruled.

“Whether Deltec will ultimately prevail in proving these allegations is a matter for another day. At this stage, these allegations plausibly describe misuse and self-dealing with specifically entrusted property, not merely non-performance of Ibanera’s obligation to process a transfer.” Judge Damian added that the payment services agreement “expressly provides that Ibanera holds those funds ‘in trust’ solely for Deltec’s benefit, while ownership remains with Deltec”.

After affirming that Deltec’s breach of fiduciary challenge survives, Judge Damian also upheld the “civil theft and conversion” claims. She reiterated: “Deltec does not merely allege that Ibanera failed to return money owed under the payment services agreement.

“Rather, Deltec alleges that the trust funds remained Deltec’s property, were held in segregated accounts for Deltec’s sole benefit, and could not be used except pursuant to Deltec’s instructions.

“Deltec further alleges that, notwithstanding those restrictions, defendants converted approximately $18m of the trust funds into US dollar crypto, transferred the US dollar crypto to third party exchanges, deployed the assets for their own benefit, concealed the conversion and transfers, and continued displaying fiat balances that no longer existed,” Judge Damian continued.

“These allegations plausibly describe affirmative misappropriation of entrusted property rather than a simple failure to satisfy a contractual payment obligation. The foregoing allegations support the magistrate judge’s conclusion that the alleged conduct goes beyond a contractual failure to return funds.”

The judge added that Deltec’s lawsuit had also sufficiently connected Mr Carbonara to the alleged “civil theft” by claiming it was he who “personally decided in January 2025 that Ibanera would retain Deltec’s trust funds rather than comply with Deltec’s demands for their return”.

Judge Damian wrote: “It further alleges that, on May 5, 2025, ‘at Carbonara’s direction’, Ibanera converted $18m of the trust funds into US dollar crypto and, the following day, ‘at Carbonara’s instruction’, transferred those assets to an exchange to obtain returns for Ibanera.

“Deltec also alleges that Carbonara subsequently directed the transfer of the US dollar crypto to another exchange, knowingly provided false explanations concerning the conversion and location of the funds, and participated in an ongoing scheme to prevent Deltec from recovering them.

“At this stage in the proceedings, these allegations are sufficient to state a claim against Carbonara for civil theft. Moreover, Florida law does not immunise a corporate officer from liability for an intentional tort in which he personally participates merely because the property is formally held by the corporation,” she added.

“Deltec alleges specifically identifiable property that remained its own, was required to be segregated, and was affirmatively converted and transferred at Carbonara’s direction for purposes allegedly unauthorised by Deltec.”

Finally, Judge Damian also rejected Ibanera and Mr Carbonara’s bid to have Deltec’s claim for defamation dismissed on the basis that the latter “plausibly alleged actual malice” was involved in linking the Bahamian bank to FTX’s November 2022 failure.

“Defendants first argue that the statement posted on Ibanera’s website associating Deltec with the FTX fraud is substantially true because public proceedings associating Deltec with persons involved in the FTX fraud actually existed,” she wrote. “But that does not resolve the defamation-by-implication theory Deltec pleads.

“Deltec does not allege that defendants falsely stated that public proceedings existed. Rather, it alleges that Ibanera juxtaposed that fact with statements concerning ‘protective measures’, an ‘ongoing investigation’, collaboration with ‘regulatory authorities’, money laundering and fraud so as to imply both that the allegations concerning Deltec’s connection to FTX were true and that Deltec’s transactions with Ibanera themselves involved illicit activity.

“Deltec identifies that distinction in its response: The alleged ‘defamatory sting’ is not that litigation existed, but that defendants’ publication implied the truth of those allegations and connected Deltec’s current transactions to fraud, money laundering, sanctioned activity or regulatory misconduct,” Judge Damian added.

“Deltec alleges that defendants constructed their own message connecting Deltec’s transactions with Ibanera to an ongoing investigation, regulatory authorities, money laundering and fraud.”

As for the “malice” claim, Justice Damian added: “The magistrate judge correctly concluded that Deltec alleges more than hostility. It alleges that, one day after Deltec filed this action, Carbonara authorised, approved, or directed a communication falsely accusing Deltec of having ‘committed sanctioned transfers’ and seeking someone who could ‘run smear campaigns against Deltec’.

“Deltec alleges that defendants knew the sanctioned transfers accusation was false. It further alleges that, only days later, Carbonara directed Ibanera to publish the challenged website statement; that defendants knew Deltec’s relationship with Ibanera began years after the FTX collapse; and that defendants lacked a factual basis for implying that Deltec’s transactions with Ibanera involved fraud, money laundering, sanctioned activity or a regulatory investigation.

“Deltec therefore sufficiently alleges facts bearing directly on defendants’ alleged knowledge of falsity when the challenged statements were made. Those allegations are sufficient at the pleading stage. The alleged request for a ‘smear campaign’ does not establish actual malice merely because it suggests hostility toward Deltec,” the judge added.

“Rather, considered together with the allegations that defendants knew the sanctioned transfers accusation was false, knew of the temporal disconnect between Deltec’s relationship with Ibanera and the FTX collapse, and nevertheless deliberately associated Deltec with fraud, money laundering and an ongoing regulatory investigation, the allegation provides context supporting a reasonable inference that defendants knew the allegedly defamatory statements or implications were false or recklessly disregarded their falsity.”